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SR-106-040 (4) lOA SEP 2 8 2004 CCS:JH:F:\HSD\SHARE\COMMISSIONS-ADVISORY BOARDS\DC\Staff Reports\Prop 63 092804.doc Council Meeting: September 28, 2004 Santa Monica, California TO: Mayor and City Council FROM: City Staff SUBJECT: Transmission of Letter from Disabilities Commission Requesting the City Council Support Proposition 63, Mental Health Services Act Introduction The Disabilities Commission is requesting that the City Council take action to support Proposition 63, the Mental Health Services Act. Prop. 63 will appear on the November 2004 ballot. Backaround Briefly, Prop. 63: · Imposes an additional 1 % surcharge on individual taxable income over $1 million to provide dedicated funding for expansion of mental health services and programs. . Prohibits current funding for mental health programs from being reduced because of funding from the new tax. . Provides funds to counties to expand services and develop innovative programs and integrated service programs for mentally ill children, adults and seniors. . Requires the state to develop mental health service programs including prevention, early intervention, education and training programs. . Creates a new commission to approve certain county programs and expend itu res. SEP 2 8 2004 1 lOA BudaetlFinanciallmpact The recommendation presented in this report does not have any budget or financial impact. Recommendation The Disabilities Commission recommends that the City Council supports Proposition 63 and directs staff to take appropriate action to communicate the support of the measure. Prepared by: Janet Hand, Sr. Admin. Analyst, Human Services Division Community and Cultural Services Department, for the Disabilities Commission Attachments: I - Letter from the Disabilities Commission II - Text of Proposition 63 2 ATTACHMENT I August 30, 2004 Honorable Richard Bloom, Mayor City Council Members City of Santa Monica 1685 Main Street Santa Monica CA 90401 Dear Mr. Mayor and City Council Members; The Disabilities Commission respectfully asks the City Council to consider our request to support Proposition 63, the Mental Health Services Act, which will appear on the ballot for the November 2, 2004 general election. Prop. 63 will expand mental health care programs for children and adults, persons currently disabled by mental illness, persons showing signs of mental illness in need of prevention services, and to families and caregivers of those affected. Funding from the state and county for mental health care has not kept pace with the needs at the local level. The budget for community mental health programs is the first to be cut whenever monies are short. State hospitals were once the placement of choice out of necessity. In 1963 when Aid to the Totally Disabled became available for the first time to the mentally ill, patients had income to live outside of institutions. Mostly to cut costs, State hospitals were shuttered. In 1967-68,3,700 state jobs were eliminated due to closures. (L.A. County Department of Mental Health, First 40 Years: The Story of Public Mental Health.) Mental illness is the leading cause of disability in the world (World Health Organization). In the U.S., one in four individuals will be affected by a serious mental disorder in their lifetime. In Service Area 5 (Westside) the L.A. County Department of Mental Health has one directly operated clinic, Edelman Westside Mental Health Center, and 19 contract agencies. Of the 2,400 clients seen annually at Edelman MHC, 870 (27.6%) are Santa Monica residents. Six of the 19 contract agencies are in Santa Monica and at least four others located outside of the city also serve large numbers of Santa Monica residents. One of these agencies, Westside Center for Independent Living, has a Community Services Specialist based in Santa Monica whose clients are comprised primarily of people with mental disabilities. Approximately 630 Santa Monica residents are seen also or unduplicated at four of the Santa Monica contract agencies. These are Center for Healthy Aging, Step Up on Second, St. John's Child and Family Center and St. Joseph Center. At the opec Access Center, 60% of the clients (1,800 people) in FY 03-04 had a mental disability. OPCC's Daybreak Center and Shelter served 628 women who are homeless and mentally ill, a 21 % increase from the previous year. In the 2000 census, there were a total of 24,224 people in Santa Monica who reported having a disability. Of the 652 Santa Monica residents aged 5-15 years with a disability, 53% reported havjng a mental limitation (Adrian Overton, RAND Corp., Santa Monica Community Profile 2003). For all age groups (age 5 years and up), the incidence of mental limitation was reported to be 15% or 3,687. In California, community resources for treatment and support are primarily funded by county Departments of Mental Health (DMH), which, in turn, are primarily funded with State and some federal dollars. In June, the Los Angeles County Board of Supervisors cut $28.6 million from the county DMH budget for this fiscal year in response to cuts in the state DMH budget and the Los Angeles County budget. This has resulted in service cuts at both county DMH facilities and private non-profit agencies. Countywide, DMH is restricting treatment for 35,000 patients without health insurance. In the Santa Monica area, Didi Hirsch Community Mental Health Center is closing its Venice office, forcing 220 clients to transfer to one of the center's two other locations. In DMH Service Area 5 (Westside), 2,500 uninsured clients (30%) will have their services terminated because of the cut in the L.A. County DMH budget. Prop. 63 specifies that services be provided through an "integrated services" model, which addresses the person as a whole. Integrated services include outreach, medical care, short and long-term housing, prescription drugs, vocational training, and access to client-run services. In treating both housed high utilizers of mental health services and people with a chronic mental disability who are homeless, this model has proved, in statewide pilot and permanent programs, to be highly successful, as well as to reduce costs. In Santa Monica, there are approximately 1,037 people who are homeless on any given night. Approximately one-third sleep in shelters or utilize similar programs and the rest live on the street. Sixty-two percent served by the Santa Monica system in FY 03-04 reported having a disability; the majority of these are psychological. To fund expanded community services, Prop. 63 calls for a 1 % surcharge on income over $1 million per year. The County of Los Angeles may realize as much as $100 million the first year. Statewide, 50,000 more adults would be eligible for benefits. The initiative will directly raise approximately $700 million dollars per year for mental health services in California by year three. With this additional revenue, California would also qualify for additional federal funds, raising the annual total to more than $1 billion. To oversee spending, the initiative creates a Citizens' Oversight and Accountability Commission to annually review each county's expenditure plan's compliance with the initiative. The public need for mental health treatment is significant and is growing. On the Westside, the county Dept. of Mental Health serves 7,500 clients. Based on the prevalence of under-reporting, stigma and lack of insurance coverage for mental health, thousands more undoubtedly go without treatment. When individuals go untreated, the costs to the person and to society are staggering. Child abuse, homelessness, unemployment, and criminal behavior and associated conduct burden our jails, schools, hospital emergency rooms and board and care homes. By contrast, mental health treatment works. The price is significant, but it is effective and cost efficient in the long run. To summarize, Prop. 63 imposes an additional surcharge on taxable income over $1 million. Increased revenues will allow for expansion of services to mentally ill children, adults and seniors; facilities improvement; and education and training programs. Prop. 63 prohibits current funding for mental health services from being reduced and would supplement, not replace, FY 03-04 state budget expenditure levels. The initiative also creates a commission to approve certain county programs and expenditures. (Please see the attached full text of the initiative.) A summary of the estimate by the Legislative Analyst and Director of Finance of the fiscal impact on state and local governments shows: · Additional revenues of approximately $250 million in 2004-05, $680 million in 2005-06, $700 million in 2006-07, and increasing amounts annually thereafter, with expected comparable increases in program expenditures by the state and counties. · Unknown savings to the state and local agencies potentially amounting to hundreds of millions of dollars annually on a statewide basis from reduced costs for state prison and county jail operations, medical care, homeless shelters, and social services programs. Proposition 63 is currently endorsed by more than 150 agencies, local governments, professional associations and professionals and 25 individual state senators and assembly members, including: · California Medical Association · California Police Chiefs Association . Board of Supervisors of the City and County of San Francisco . Sacramento, Oakland, and Santa Barbara City Councils . Boards of Supervisors of San Mateo, Marin, Santa Clara and Santa Barbara Counties . State Senator Sheila Kuehl Since its formation in 2002, the Disabilities Commission has pledged an ongoing commitment to mental health in our community. The funds generated by Prop. 63 are greatly needed and will directly benefit the residents of Santa Monica. On behalf of the Disabilities Commission, I urge you to join the many organizations, local and regional governments, non-profit agencies and individuals and support Prop. 63, the Mental Health Services Act. Your consideration is appreciated. Thank you. Sincerely, Christofer Arroyo, Chair Attachment II MENTAL HEALTH SERVICES ACT SECTION 1. Title This Act shall be known and may be cited as the "Mental Health Services Act." SECTION 2. Findings and Declarations The People of the State of California hereby find and declare all of the following: (a) Mental illnesses are extremely common; they affect almost every family in California. They affect people from every background and occur at any age. In any year, between 5% and 7% of adults have a serious mental illness as do a similar percentage of children N between 5% and 9%. Therefore, more than two million children, adults and seniors in California are affected by a potentially disabling mental illness every year. People who become disabled by mental illness deserve the same guarantee of care already extended to those who face other kinds of disabilities. (b) Failure to provide timely treatment can destroy individuals and families. No parent should have to give up custody of a child and no adult or senior should have to become disabled or homeless to get mental health services as too often happens now. No individual or family should have to suffer inadequate or insufficient treatment due to language or cultural barriers to care. Lives can be devastated and families can be financially ruined by the costs of care. Yet, for too many Californians with mental illness, the mental health services and supports they need remain fragmented, disconnected and often inadequate, frustrating the opportunity for recovery. (c) Untreated mental illness is the leading cause of disability and suicide and imposes high costs on state and local government. Many people left untreated or with insufficient care see th'eir mental illness worsen. Children left untreated often become unable to learn or participate in a normal school environment. Adults lose their ability to work and be independent; many become homeless and are subject to frequent hospitalizations or jail. State and county governments are forced to pay billions of dollars each year in emergency medical care, long-term nursing home care, unemployment, housing, and law enforcement, including juvenile justice, jail and prison costs. (d) In a cost cutting move 30 years ago, California drastically cut back its services in state hospitals for people with severe mental illness. Thousands ended up on the streets homeless and incapable of caring for themselves. Today thousands of suffering people remain on our streets because they are afflicted with untreated severe mental illness. We can and should offer these people the care they need to lead more productive lives. (e) With effective treatment and support, recovery from mental illness is feasible for most people. The State of California has developed effective models of providing services to children, adults and seniors with serious mental illness. A recent innovative approach, begun under Assembly Bill 34 in 1999, was recognized in 2003 as a model program by the President's Commission on Mental Health. This program combines prevention services with a full range of integrated services to treat the whole person, with the goal of self-sufficiency for those who may have otherwise faced homelessness or dependence on the state for years to come. Other innovations address services to other underserved populations such as traumatized youth and isolated seniors. These successful programs, including prevention, emphasize client-centered, family focused and community-based services that are culturally and linguistically competent and are provided in an integrated services system. (f) By expanding programs that have demonstrated their effectiveness, California can save lives and money. Early diagnosis and adequate treatment provided in an integrated service system is very effective; and by preventing disability, it also saves money. Cutting mental health services wastes lives and costs more. California can do a better job saving lives and saving money by making a firm commitment to providing timely, adequate mental health services. (g) To provide an equitable way to fund these expanded services while protecting other vital state services from being cut, very high-income individuals should pay an additional one percent of that portion of their annual income that exceeds one million dollars ($1,000,000). About 1/10 of one percent of Californians have incomes in excess of one million dollars ($1,000,000). They have an average pre-tax income of nearly five million dollars ($5,000,000). The additional tax paid pursuant to this represents only a small fraction of the amount of tax reduction they are realizing through recent changes in the federal income tax law and only a small portion of what they save on property taxes by living in California as compared to the property taxes they would be paying on multi- million dollar homes in other states. SECTION 3. Purpose and Intent. The People of the State of California hereby declare their purpose and intent in enacting this Act to be as follows: (a) To define serious mental illness among children, adults and seniors as a condition deserving priority attention, including prevention and early intervention services and medical and supportive care. (b) To reduce the long-term adverse impact on individuals, families and state and local budgets resulting from untreated serious mental illness. (c) To expand the kinds of successful, innovative service programs for children, adults and seniors begun in California, including culturally and linguistically competent approaches for underserved populations. These programs have already demonstrated their effectiveness in providing outreach and integrated services, including medically necessary psychiatric services, and other services, to individuals most severely affected by or at risk of serious mental illness. (d) To provide state and local funds to adequately meet the needs of all children and adults who can be identified and enrolled in programs under this measure. State funds shall be available to provide services that are not already covered by federally sponsored programs or by individuals' or families' insurance programs. (e) To ensure that all funds are expended in the most cost effective manner and services are provided in accordance with recommended best practices subject to local and state oversight to ensure accountability to taxpayers and to the public. SECTION 4. Part 3.6 (commencing with Section 5840) is added to Division 5 of the Welfare and Institutions Code, to read: PART 3.6 PREVENTION AND EARLY INTERVENTION PROGRAMS 5840. (a) The Department of Mental Health shall establish a program designed to prevent mental illnesses from becoming severe and disabling. The program shall emphasize improving timely access to services for underserved populations. (b) The program shall include the following components: (1) Outreach to families, employers, primary care health care providers, and others to recognize the early signs of potentially severe and disabling mental illnesses. (2) Access and linkage to medically necessary care provided by county mental health programs for children with severe mental illness, as defined in Section 5600.3, and for adults and seniors with severe mental illness, as defined in Section 5600.3, as early in the onset of these conditions as practicable. (3) Reduction in stigma associated with either being diagnosed with a mental illness or seeking mental health services. (4) Reduction in discrimination against people with mental illness. (c) The program shall include mental health services similar to those provided under other programs effective in preventing mental illnesses from becoming severe, and shall also include components similar to programs that have been successful in reducing the duration of untreated severe mental illnesses and assisting people in quickly regaining productive lives. (d) The program shall emphasize strategies to reduce the following negative outcomes that may result from untreated mental illness: (1) Suicide. (2) Incarcerations. (3) School failure or dropout. (4) Unemployment. (5) Prolonged suffering. (6) Homelessness. (7) Removal of children from their homes. (e) In consultation with mental health stakeholders, the department shall revise the program elements in Section 5840 applicable to all county mental health programs in future years to reflect what is learned about the most effective prevention and intervention programs for children, adults, and seniors. 5840.2 (a) The department shall contract for the provision of services pursuant to this part with each county mental health program in the manner set forth in Section 5897. SECTION 5. Article 11 (commencing with Section 5878.1) is added to Chapter 1 of Part 4 of Division 5 of the Welfare and Institutions Code, to read: Article 11. Services for Children with Severe Mental Illness. 5878.1 (a) It is the intent of this article to establish programs that assure services will be provided to severely mentally ill children as defined in Section 5878.2 and that they be part of the children's system of care established pursuant to this Part. It is the intent of this Act that services provided under this Chapter to severely mentally ill children are accountable, developed in partnership with youth and their families, culturally competent, and individualized to the strengths and needs of each child and their family. (b) Nothing in this Act shall be construed to authorize any services to be provided to a minor without the consent of the child's parent or legal guardian beyond those already authorized by existing statute. 5878.2 For purposes of this article, severely mentally ill children means minors under the age of 18 who meet the criteria set forth in subdivision (a) of Section 5600.3. 5878.3 (a) Subject to the availability of funds as determined pursuant to Part 4.5, county mental health programs shall offer services to severely mentally ill children for whom services under any other public or private insurance or other mental health or entitlement program is inadequate or unavailable. Other entitlement programs include but are not limited to mental health services available pursuant to MediCal, child welfare, and special education programs. The funding shall cover only those portions of care that cannot be paid for with public or private insurance, other mental health funds or other entitlement programs. (b) Funding shall be at sufficient levels to ensure that counties can provide each child served all of the necessary services set forth in the applicable treatment plan developed in accordance with this Part, including services where appropriate and necessary to prevent an out of home placement, such as services pursuant to Chapter 4 of Part 6 of Division 9 (commencing with Section 18250). (c) The Department of Mental Health shall contract with county mental health programs for the provision of services under this article in the manner set forth in Section 5897. SECTION 6. Section 18257 is added to the Welfare and Institutions Code to read as follows: 18257. (a) The Department of Social Services shall seek applicable federal approval to make the maximum number of children being served through such programs eligible for federal financial participation and amend any applicable state regulations to the extent necessary to eliminate any limitations on the numbers of children who can participate in these programs. (b) Funds from the Mental Health Services Fund shall be made available to the Department of Social Services for technical assistance to counties in establishing and administering projects. Funding shall include reasonable and necessary administrative costs in establishing and administering a project pursuant to this chapter and shall be sufficient to create an incentive for all counties to seek to establish programs pursuant to this chapter. SECTION 7. Section 5813.5 is added to Part 3 of Division 5 of the Welfare and Institutions Code, to read: 5813.5. Subject to the availability of funds from the Mental Health Services Fund, the Department of Mental Health shall distribute funds for the provision of services under Sections 5801, 5802 and 5806 to county mental health programs. Services shall be available to adults and seniors with severe illnesses who meet the eligibility criteria in Welfare and Institutions Code Section 5600.3(b) and (c). For purposes of this act, seniors means older adult persons identified in Part 3. (a) Funding shall be provided at sufficient levels to ensure that counties can provide each adult and senior served pursuant to this Part with the medically necessary mental health services, medications and supportive services set forth in the applicable treatment plan. (b) The funding shall only cover the portions of those costs of services that cannot be paid for with other funds including other mental health funds, public and private insurance, and other local, state and federal funds. (c) Each county mental health programs plan shall provide for services in accordance with the system of care for adults and seniors who meet the eligibility criteria in Section 5600.3(b) and (c). (d) Planning for services shall be consistent with the philosophy, principles, and practices of the Recovery Vision for mental health consumers: (1) To promote concepts key to the recovery for individuals who have mental illness: hope, personal empowerment, respect, social connections, self-responsibility, and self-determination. (2) To promote consumer-operated services as a way to support recovery. (3) To reflect the cultural, ethnic and racial diversity of mental health consumers. (4) To plan for each consumer's individual needs. (e) The plan for each county mental health program shall indicate, subject to the availability of funds as determined by Part 4.5, and other funds available for mental health services, adults and seniors with a severe mental illness being served by this program are either receiving services from this program or have a mental illness that is not sufficiently severe to require the level of services required of this program. (f) Each county plan and annual update pursuant to Section 5847 shall consider ways to provide services similar to those established pursuant to the Mentally III Offender Crime Reduction Grant Program. Funds shall not be used to pay for persons incarcerated in state prison or parolees from state prisons. (g) The department shall contract for services with county mental health programs pursuant to Section 5897. After the effective date of this section the term grants referred to in Sections 5814 and 5814.5 shall refer to such contracts. SECTION 8. Part 3.1 is hereby added to Division 5 of the Welfare and Institutions Code commencing with Section 5820 to read: PART 3.1 EDUCATION AND TRAINING PROGRAM 5820. (a) It is the intent of this Part to establish a program with dedicated funding to remedy the shortage of qualified individuals to provide services to address severe mental illnesses. (b) Each county mental health program shall submit to the department a needs assessment identifying its shortages in each professional and other occupational category in order to increase the supply of professional staff and other staff that county mental health programs anticipate they will require in order to provide the increase in services projected to serve additional individuals and families pursuant to Parts 3, 3.2, 3.6, and 4 of this Division. For purposes of this Part, employment in California's public mental health system includes employment in private organizations providing publicly funded mental health services. (c) The department shall identify the total statewide needs for each professional and other occupational category and develop a five-year education and training development plan. (d) Development of the first five-year plan shall commence upon enactment of the initiative. Subsequent plans shall be adopted every five years. (e) Each five-year plan shall be reviewed and approved by the California Mental Health Planning Council. 5821. (a) The Mental Health Planning Council shall advise the Department of Mental Health on education and training policy development and provide oversight for the department's education and training plan development. (b) The Department of Mental Health shall work with the California Mental Health Planning Council so that council staff is increased appropriately to fulfill its duties required by Sections 5820 and 5821. 5822. The Department of Mental Health shall include in the five-year plan: (a) Expansion plans for the capacity of postsecondary education to meet the needs of identified mental health occupational shortages. (b) Expansion plans for the forgiveness and scholarship programs offered in return for a commitment to employment in California's public mental health system and make loan forgiveness programs available to current employees of the mental health system who want to obtain Associate of Arts, Bachelor of Arts, Masters Degrees, or Doctoral degrees. (c) Creation of a stipend program modeled after the federal Title IV-E program for persons enrolled in academic institutions who want to be employed in the mental health system. (d) Establishment of regional partnerships among the mental health system and the educational system to expand outreach to multicultural communities, increase the diversity of the mental health workforce, to reduce the stigma associated with mental illness, and to promote the use of web-based technologies, and distance learning techniques. (e) Strategies to recruit high school students for mental health occupations, increasing the prevalence of mental health occupations in high school career development programs such as health science academies, adult schools, and regional occupation centers and programs, and increasing the number of human service academies. (f) Curriculum to train and retrain staff to provide services in accordance with the provisions and principles of Parts 3, 3.2, 3.6, and 4. (g) Promotion of the employment of mental health consumers and family members in the mental health system. (h) Promotion of the meaningful inclusion of mental health consumers and family members and incorporating their viewpoint and experiences in the training and education programs in subdivisions (a) through (f). (i) Promotion of the inclusion of cultural competency in the training and education programs in subdivisions (a) through (f). 5ECTIO~ 9. Part 3.2 Commencing with Section 5830 is added to Division 5 of the Welfare and Institutions Code to read: Part 3.2 Innovative Programs 5830. County mental health programs shall develop plans for innovative programs to be funded pursuant to paragraph (6) of subdivision (a) of Section 5892. (a) The innovative programs shall have the following purposes: (1) To increase access to underserved groups. (2) To increase the quality of services, including better outcomes. (3) To promote interagency collaboration. (4) To increase access to services. (b) County mental health programs shall receive funds for their innovation programs upon approval by the Mental Health Oversight and Accountability Commission. SECTION 10. Part 3.7 (commencing with Section 5845) is added to Division 5 of the Welfare and Institutions Code to read: PART 3.7. OVERSIGHT AND ACCOUNTABILITY 5845. (a) The Mental Health Services Oversight and Accountability Commission is hereby established to oversee Part 3, the Adults and Older Adults Systems of Care Act; Part 3.1, Human Resources; Part 3.2, Innovative Programs; Part 3.6, Prevention and Early Intervention Programs; and Part 4, the Children's Mental Health Services Act. The Commission shall replace the advisory committee established pursuant to Section 5814. The Commission shall consist of 16 voting members as follows: (1) The Attorney General or his or her designee. (2) The Superintendent of Public Instruction or his or her designee. (3) The Chairperson of the Senate Health and Human Services Committee or another member of the Senate selected by the President pro Tempore of the Senate. (4) The Chairperson of the Assembly Health Committee or another member of the Assembly selected by the Speaker of the Assembly. (5) Two persons with a severe mental illness, a family member of an adult or senior with a severe mental illness, a family member of a child who has or has had a severe mental illness, a physician specializing in alcohol and drug treatment, a mental health professional, a county Sheriff, a Superintendent of a school district, a representative of a labor organization, a representative of an employer with less than 500 employees and a representative of an employer with more than 500 employees, and a representative of a health care services plan or insurer, all appointed by the Governor. In making appointments, the Governor shall seek individuals who have had personal or family experience with mental illness. (b) Members shall serve without compensation, but shall be reimbursed for all actual and necessary expenses incurred in the performance of their duties. (c) The term of each member shall be three years, to be staggered so that approximately one-third of the appointments expire in each year. (d) In carrying out its duties and responsibilities, the Commission may do all of the following: (1) Meet at least once each quarter at any time and location convenient to the public as it may deem appropriate. All meetings of the Commission shall be open to the public. (2) Within the limit of funds allocated for these purposes, pursuant to the laws and regulations governing state civil service, employ staff, including any clerical, legal, and technical assistance as may appear necessary. (3) Establish technical advisory committees such as a committee of consumers and family members. (4) Employ all other appropriate strategies necessary or convenient to enable it to fully and adequately perform its duties and exercise the powers expressly granted, notwithstanding any authority expressly granted to any officer or employee of state government. (5) Develop strategies to overcome stigma and accomplish all other objectives of Parts 3.2, 3.6 and the other provisions of the Act establishing this Commission. (6) At any time, advise the Governor or the Legislature regarding actions the state may take to improve care and services for people with mental illness. (7) If the Commission identifies a critical issue related to the performance of a county mental health program, it may refer the issue to the Department of Mental Health pursuant to Section 5655. 5846. (a) The Commission shall annually review and approve each county mental health program for expenditures pursuant to Parts 3.2 for Innovative Programs and Part 3.6 for Prevention and Early Intervention. (b) The department may provide technical assistance to any county mental health plan as needed to address concerns or recommendations of the Commission or when local programs could benefit from technical assistance for improvement of their plans submitted pursuant to Section 5847. (c) The Commission shall ensure that the perspective and participation of members and others suffering from severe mental illness and their family members is a significant factor in all of its decisions and recommendations. 5847. Integrated Plans for Prevention, Innovation and System of Care Services. (a) Each county mental health program shall prepare and submit a three year plan which shall be updated at least annually and approved by the department after review and comment by the Oversight and Accountability Commission. The plan and update shall include all of the following: (1) A program for prevention and early intervention in accordance with Part 3.6. (2) A program for services to children in accordance with Part 4 to include a program pursuant to Chapter 6 of Part 4 of Division 9 commencing with Section 18250 or provide substantial evidence that it is not feasible to establish a wrap- around program in that county. (3) A program for services to adults and seniors in accordance with Part 3. (4) A program for Innovations in accordance with Part 3.2. (5) A program for technological needs and capital facilities needed to provide services pursuant to Parts 3, 3.6 and 4. All plans for proposed facilities with restrictive settings shall demonstrate that the needs of the people to be served cannot be met in a less restrictive or more integrated setting. (6) Identification of shortages in personnel to provide services pursuant to the above programs and the additional assistance needed from the Education and Training Programs established pursuant to Part 3.1. (7) Establishment and maintenance of a prudent reserve to ensure the county program will continue to be able to serve children, adults and seniors that it is currently serving pursuant to Parts 3 and 4 during years in which revenues for the Mental Health Services Fund are below recent averages adjusted by changes in the state population and the California Consumer Price Index. (b) The department's review and approval of the programs specified in paragraphs (1) and (4) shall be limited to ensuring the consistency of such programs with the other portions of the plan and providing review and comment to the Mental Health Services Oversight and Accountability Commission. (c) The programs established pursuant to paragraphs (2) and (3) of subdivision (a) shall include services to address the needs of transition age youth ages 16 to 25. (d) Each year the Department of Mental Health shall inform counties of the amounts of funds available for services to children pursuant to Part 4 and to adults and seniors pursuant to Part 3. Each county mental health program shall prepare expenditure plans pursuant to Parts 3 and 4 and updates to the plans developed pursuant to this Section. Each expenditure update shall indicate the number of children, adults and seniors to be served pursuant to Parts 3 and 4 and the cost per person. The expenditure update shall include utilization of unspent funds allocated in the previous year and the proposed expenditure for the same purpose. (e) The department shall evaluate each proposed expenditure plan and determine the extent to which each county has the capacity to serve the proposed number of children, adults and seniors pursuant to Parts 3 and 4; the extent to which there is an unmet need to serve that number of children, adults and seniors; and determine the amount of available funds; and provide each county with an allocation from the funds available. The department shall give greater weight for a county or a population which has been significantly underserved for several years. (f) A county mental health program shall include an allocation of funds from a reserve established pursuant to paragraph (6) of subdivision (a) for services pursuant to paragraphs (2) and (3) of subdivision (a) in years in which theoallocation of funds for services pursuant to subdivision (c) are not adequate to continue to serve the same number of individuals as the county had been serving in the previous fiscal year. 5848. (a) Each plan and update shall be developed with local stakeholders including adults and seniors with severe mental illness, families of children, adults and seniors with severe mental illness, providers of services, law enforcement agencies, education, social services agencies and other important interests. A draft plan and update shall be prepared and circulated for review and comment for at least 30 days to representatives of stakeholder interests and any interested party who has requested a copy of such plans. (b) The mental health board established pursuant to Section 5604 shall conduct a public hearing on the draft plan and annual updates at the close of the 30Dday comment period required by subsection (a). Each adopted plan and update shall include any substantive written recommendations for revisions. The adopted plan or update shall summarize and analyze the recommended revisions. The mental health board shall review the adopted plan or update and make recommendations to the county mental health department for revisions. (c) The department shall establish requirements for the content of the plans. The plans shall include reports on the achievement of performance outcomes for services pursuant to Parts 3, 3.6 and 4 funded by the Mental Health Services Fund and established by the department. (d) Mental health services provided pursuant to Parts 3 and 4 shall be included in the review of program performance by the California Mental Health Planning Council required by Section 5772(c)(2) and in the local mental health board's review and comment on the performance outcome data required by Section 5604.2(a)(7). Section 11. Section 5771.1 is added to the Welfare and Institutions Code to read: 5771.1 The members of the Mental Health Services Oversight and Accountability Commission established pursuant to Section 5845 are members of the California Mental Health Planning Council. They serve in an ex officio capacity when the Council is performing its statutory duties pursuant to Section 5772. Such membership shall not affect the composition requirements for the Council specified in Section 5771. SECTION 12. Section 17043 is added to the Revenue and Taxation Code to read: 17043. (a) For each taxable year beginning on or after January 1, 2005, in addition to any other taxes imposed by this part, an additional tax shall be imposed at the rate of 1 % on that portion of a taxpayer's taxable income in excess of one million dollars ($1,000,000). (b) For purposes of applying Part 10.2 (commencing with Section 18401), the tax imposed under this section shall be treated as if imposed under Section 17041. (c) The following shall not apply to the tax imposed by this section: (1) The provisions of Section 17039, relating to the allowance of credits. (2) The provisions of Section 17041, relating to filing status and recomputation of the income tax brackets. (3) The provisions of Section 17045, relating to joint returns. SECTION 13. Section 19602 of the Revenue and Taxation Code is amended to read: 19602. Except for amounts collected or accrued under Sections 17935, 17941, 17948, 19532, and 19561, and revenues deposited pursuant to Section 19602.5, all moneys and remittances received by the Franchise Tax Board as amounts imposed under Part 1 0 (commencing with Section 17001), and related penalties, additions to tax, and interest imposed under this part, shall be deposited, after clearance of remittances, in the State Treasury and credited to the Personal Income Tax Fund. SECTION 14. Section 19602.5 is added to the Revenue and Taxation Code to read: 19602.5 (a) There is in the State Treasury the Mental Health Services Fund (MHS Fund). The estimated revenue from the additional tax imposed under Section 17043 for the applicable fiscal year, as determined under subparagraph (B) of paragraph (3) of subdivision (c), shall be deposited to the MHS Fund on a monthly basis, subject to an annual adjustment as described in this section. (b) (1) Beginning with fiscal year 2004-2005 and for each fiscal year thereafter, the Controller shall deposit on a monthly basis in the MHS Fund an amount equal to the applicable percentage of net personal income tax receipts as defined in paragraph (4). (2) (A) Except as provided in subparagraph (B), the applicable percentage referred to in paragraph (1) shall be 1.76 percent. (B) For fiscal year 2004-2005, the applicable percentage shall be 0.70 percent. (3) Beginning with fiscal year 2006-2007, monthly deposits to the MHS Fund pursuant to this subdivision are subject to suspension pursuant to subdivision (f). (4) For purposes of this subdivision, Onet personal income tax receiptsO refers to amounts received by the Franchise Tax Board and the Employment Development Department under the Personal Income Tax Law, as reported by the Franchise Tax Board to the Department of Finance pursuant to law, regulation, procedure, and practice (commonly referred to as the 0102 ReportO) in effect on the effective date of the Act establishin~ this section. (c) No later than March 1,2006, and each March 18 thereafter, the Department of Finance, in consultation with the Franchise Tax Board, shall determine the annual adjustment amount for the following fiscal year. (1) The Oannual adjustment amountO for any fiscal year shall be an amount equal to the amount determined by subtracting the Orevenue adjustment amountO for the applicable revenue adjustment fiscal year, as determined by the Franchise Tax Board under paragraph (3), from the Otax liability adjustment amountO for applicable tax liability adjustment tax year, as determined by the Franchise Tax Board under paragraph (2). (2) (A) (i) The Otax liability adjustment amountO for a tax year is equal to the amount determined by subtracting the estimated tax liability increase from the additional tax imposed under Section 17043 for the applicable year under subparagraph (B) from the amount of the actual tax liability increase from the additional tax imposed under Section 17043 for the applicable tax year, based on the returns filed for that tax year. (ii) For purposes of the determinations required under this paragraph, actual tax liability increase from the additional tax means the increase in tax liability resulting from the tax of 1 % imposed under Section 17043, as reflected on the original returns filed by October 15th of the year after the close of the applicable tax year. (iii) The applicable tax year referred to in this paragraph means the 12-calendar month taxable year beginning on January 1 st of the year that is two (2) years before the beginning of the fiscal year for which an annual adjustment amount is calculated. (B) (i) The estimated tax liability increase from the additional tax for the following tax years is: Tax Year Estimated Tax Liability Increase from the Additional Tax 2005 $ 634 million 2006 $ 672 million 2007 $ 713 million 2008 $ 758 million (ii) The Oestimated tax liability increase from the additional taxO for the tax year beginning in 2009 and each tax year thereafter shall be determined by applying an annual growth rate of seven (7) percent to the Oestimated tax liability increase from additional taxO of the immediately preceding tax year. (3) (A) The Orevenue adjustment amountO is equal to the amount determined by subtracting the Oestimated revenue from the additional taxO for the applicable fiscal year, as determined under subparagraph (B), from the actual amount transferred for the applicable fiscal year. (B) (i) The Oestimated revenue from the additional taxO for the following applicable fiscal years is: Applicable Estimated Revenue From Additional Tax Fiscal Year 2004-05 $ 254 million 2005-06 $ 683 million 2006-07 $ 690 million 2007 -08 $ 733 million (ii) The Oestimated revenue from the additional taxO for applicable fiscal year 2007 -08 and each applicable fiscal year thereafter shall be determined by applying an annual growth rate of 7 percent to the Oestimated revenue from the additional taxO of the immediately preceding applicable fiscal year. (iii) The applicable fiscal year referred to in this paragraph means the fiscal year that is two (2) years before the fiscal year for which an annual adjustment amount is calculated. (d) The Department of Finance shall notify the Legislature and the Controller of the results of the determinations required under subdivision (c) no later than ten (10) business days after the determinations are final. (e) If the annual adjustment amount for a fiscal year is a positive number, the Controller shall transfer that amount from the General Fund to the MHS Fund on July 1 of that fiscal year. (f) If the annual adjustment amount for a fiscal year is a negative number, the Controller shall suspend monthly transfers to the MHS Fund for that fiscal year, as otherwise required by paragraph (1) of subdivision (b), until the total amount of suspended deposits for that fiscal year equals the amount of the negative annual adjustment amount for that fiscal year. SECTION 15. Part 4.5 (commencing with Section 5890) is added to Division 5 of the Welfare and Institutions Code, to read: PART 4.5. MENTAL HEALTH SERVICES FUND 5890. (a) The Mental Health Services Fund is hereby created in the State Treasury. The Fund shall be administered by the department of Mental Health. Notwithstanding Section 13340 of the Government Code, all monies in the Fund are continuously appropriated to the Department, without regard to fiscal years, for the purpose of fu"nding the following programs and other related activities as designated by other provisions of this Division: (1) Part 3 commencing with Section 5800, the Adult and Older Adult System of Care Act. (2) Part 3.6 commencing with Section 5840, Prevention and Early Intervention Programs. (3) Part 4 commencing with Section 5850, the Children's Mental Health Services Act. (b) Nothing in the establishment of this Fund, nor any other provisions of the Act establishing it or the programs funded shall be construed to modify the obligation of health care service plans and disability insurance policies to provide coverage for mental health services, including those services required under Section 1374.72 of the Health and Safety Code and Section 10144.5 of the Insurance Code, related to mental health parity. Nothing in this Act shall be construed to modify the oversight duties of the Department of Managed Health Care or the duties of the Department of Insurance with respect to enforcing such obligations of plans and insurance policies. (c) Nothing in this Act shall be construed to modify or reduce the existing authority or responsibility of the Department of Mental Health. (d) The Department of Health Services, in consultation with the Department of Mental Health, shall seek approval of all applicable federal Medicaid approvals to maximize the availability of federal funds and eligibility of participating children, adults and seniors for medically necessary care. (e) Share of costs for services pursuant to Parts 3 and 4 shall be determined in accordance with the Uniform Method for Determining Ability to Pay applicable to other publicly funded mental health services, unless such Uniform Method is replaced by another method of determining co-payments, in which case the new method applicable to other mental health services shall be applicable to services pursuant to Parts 3 and 4. 5891. The funding established pursuant to this Act shall be utilized to expand mental health services. These funds shall not be used to supplant existing state or county funds utilized to provide mental health services. The state shall continue to provide financial support for mental health programs with not less than the same entitlements, amounts of allocations from the General Fund and formula distributions of dedicated funds as provided in the last fiscal year which ended prior to the effective date of this Act. The state shall not make any change to the structure of financing mental health services, which increases a county's share of costs or financial risk for mental health services unless the state includes adequate funding to fully compensate for such increased costs or financial risk. These funds shall only be used to pay for the programs authorized in Section 5892. These funds may not be used to pay for any other program. These funds may not be loaned to the state General Fund or any other fund of the state, or a county general fund or any other county fund for any purpose other than those authorized by Section 5892. 5892. (a) In order to promote efficient implementation of this Act allocate the following portions of funds available in the Mental Health Services Fund in 2005-06 and each year thereafter: (1) In 2005-06, 2006-07, and in 2007-0810% shall be placed in a trust fund to be expended for education and training programs pursuant to Part 3.1. (2) In 2005-06, 2006-07 and in 2007-08 10% for capital facilities and technological needs distributed to counties in accordance with a formula developed in consultation with the California Mental Health Directors Association to implement plans developed pursuant to Section 5847. (3) 20% for Prevention and Early Intervention Programs distributed to counties in accordance with a formula developed in consultation with the California Mental Health Directors Association pursuant to Part 3.6. Each county's allocation of funds shall be distributed only after its annual program for expenditure of such funds has been approved by the Oversight and Accountability Commission established pursuant to Section 5845. (4) The allocation for Prevention and Early Intervention may be increased in any county which the department determines that such increase will decrease the need and cost for additional services to severely mentally ill persons in that county by an amount at least commensurate with the proposed increase. The statewide allocation for Prevention and Early Intervention may be increased whenever the Oversight and Accountability Commission determines that all counties are receiving all necessary funds for services to severely mentally ill persons and have established prudent reserves and there are additional revenues available in the Fund. (5) The balance of funds shall be distributed to county mental health programs for services to persons with severe mental illnesses pursuant to Part 4 for the Children's System of Care and Part 3, for the Adult and Older Adult System of Care. (6) 5% percent of the total funding for each county mental health program for Parts 3, 3.6 and 4 shall be utilized for Innovative Programs pursuant to an approved plan required by Section 5830 and such funds may be distributed by the department only after such programs have been approved by the Oversight and Accountability Commission established pursuant to Section 5845. (b) In any year after 2007-08, programs for services pursuant to Parts 3 and 4 may include funds for technological needs and capital facilities, human resource needs, and a prudent reserve to ensure services do not have to be significantly reduced in years in which revenues are below the average of previous years. The total allocation for purposes authorized by this subdivision shall not exceed 20% of the average amount of funds allocated to that county for the previous five years pursuant to this Section. (c) The allocations pursuant to subdivisions (a) and (b) shall include funding for annual planning costs pursuant to Section 5848. The total of such costs shall not exceed 5% of the total of annual revenues received for the Fund. The planning costs shall include funds for county mental health programs to pay for the costs of consumers, family members and other stakeholders to participate in the planning process and for the planning and implementation required for private provider contracts to be significantly expanded to provide additional services pursuant to Parts 3 and 4. (d) Prior to making the allocations pursuant to subdivisions (a), (b) and (c), the department shall also provide funds for the costs for itself, the Mental Health Planning Council and the Oversight and Accountability Commission to implement all duties pursuant to the programs set forth in this section. Such costs shall not exceed 5% of the total of annual revenues received for the Fund. The administrative costs shall include funds to assist consumers and family members to ensure the appropriate state and county agencies give full consideration to concerns about quality, structure of service delivery or access to services. The amounts allocated for administration shall include amounts sufficient to ensure adequate research and evaluation regarding the effectiveness of services being provided and achievement of the outcome measures set forth in Parts 3, 3.6 and 4. (e) In 2004-05 funds shall be allocated as follows: (1) 45% for Education and Training pursuant to Part 3.1. (2) 45% for Capital Facilities and Technology Needs in the manner specified by paragraph (2) of subdivision (a). (3) 5% for Local Planning in the manner specified in Subdivision (c) and (4) 5% for State Implementation in the manner specified in subdivision (d) (f) Each county shall place all funds received from the state Mental Health Services Fund in a local Mental Health Services Fund. The Local Mental Health Services Fund balance shall be invested consistent with other county funds and the interest earned on such investments shall be transferred into the Fund. The earnings on investment of these funds shall be available for distribution from the Fund in future years. (g) All expenditures for county mental health programs shall be consistent with a currently approved plan or update pursuant to Section 5847. (h) Other than funds placed in a reserve in accordance with an approved plan, any funds allocated to a county which have not been spent for their authorized purpose within three years shall revert to the state to be deposited into the Fund and available for other counties in future years, provided however, that funds for capital facilities, technological needs or education and training may be retained for up to ten years before reverting to the Fund. (i) If there are still additional revenues available in the fund after the Oversight and Accountability Commission has determined there are prudent reserves and no unmet needs for any of the programs funded pursuant to this Section, including all purposes of the Prevention and Early Intervention Program, the Commission shall develop a plan for expenditures of such revenues to further the purposes of this Act and the Legislature may appropriate such funds for any purpose consistent with the Commission's adopted plan which furthers the purposes of this act. 5893. (a) In any year in which the funds available exceed the amount allocated to counties, such funds shall be carried forward to the next fiscal year to be available for distribution to counties in accordance with Section 5892 in that fiscal year. (b) All funds deposited into the Mental Health Services Fund shall be invested in the same manner in which other state funds are invested. The Fund shall be increased by its share of the amount earned on investments. 5894. In the event that Parts 3 or 4 are restructured by legislation signed into law before the adoption of this measure, the funding provided by this measure shall be distributed in accordance with such legislation; provided, however that nothing herein shall be construed to reduce the categories of persons entitled to receive services. 5895. In the event any provisions of Part 3 or Part 4 of this Division are repealed or modified so the purposes of this Act cannot be accomplished, the funds in the Mental Health Services Fund shall be administered in accordance with those sections as they read on January 1, 2004. 5897. (a) Notwithstanding any other provision of state law, the Department of Mental Health shall implement the mental health services provided by Parts 3, 3.6 and 4 of this Division through contracts with county mental health programs or counties acting jointly. A contract may be exclusive and may be awarded on a geographic basis. As used herein a county mental health program includes a city receiving funds pursuant to Section 5701.5 (b) Two or more counties acting jointly may agree to deliver or subcontract for the delivery of such mental health services. The agreement may encompass all or any part of the mental health services provided pursuant to these parts. Any agreement between counties shall delineate each county's responsibilities and fiscal liability. (c) The department shall implement the provisions of Parts 3, 3.2, 3.6 and 4 of this Division through the annual county mental health services performance contract, as specified in Part 2, Chapter 2, Section 5650 et seq. (d) When a county mental health program is not in compliance with its performance contract, the department may request a plan of correction with a specific time-line to achieve improvements. (e) Contracts awarded by the Department of Mental Health, the California Mental Health Planning Council, and the Mental Health Services Oversight and Accountability Commission pursuant to Parts 3, 3.1, 3.2, 3.6, 3.7, 4, and 4.5 may be awarded in the same manner in which contracts are awarded pursuant to Section 5814 and the provisions of subdivisions (g) and (h) of Section 5814 shall apply to such contracts. (f) For purposes of Section 5775, the allocation of funds pursuant to Section 5892 which are used to provide services to Medi-Cal beneficiaries shall be included in calculating anticipated county matching funds and the transfer to the department of the anticipated county matching funds needed for community mental health programs. 5898. The department shall develop regulations, as necessary, for the department or designated local agencies to implement this Act. In 2005, the director may adopt all regulations pursuant to this Act as emergency regulations in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 2 of Title 2. For the purpose of the Administrative Procedure Act, the adoption of regulations, in 2005, shall be deemed an emergency and necessary for the immediate preservation of the public peace, health and safety, or general welfare. These regulations shall not be subject to the review and approval of the Office of Administrative Law and shall not be subject to automatic repeal until final regulations take effect. Emergency regulations adopted in accordance with this provision shall not remain in effect for more than a year. The final regulations shall become effective upon filing with the Secretary of State. Regulations adopted pursuant to this section shall be developed with the maximum feasible opportunity for public participation and comments. SECTION 16 The provisions of this Act shall become effective January 1 of the year following passage of the Act, and its provisions shall be applied prospectively. The provisions of this Act are written with the expectation that it will be enacted in November of 2004. In the event that it is approved by the voters at an election other than one which occurs during the 2004-05 fiscal year, the provisions of this act which refer to fiscal year 2005-06 shall be deemed to refer to the first fiscal year which begins after the effective date of this Act and the provisions of this Act which refer to other fiscal years shall refer to the year that is the same number of years after the first fiscal year as that year is in relationship to 2005-06. SECTION 17 Notwithstanding any other provision of law to the contrary, the department shall begin implementing the provisions of this Act immediately upon its effective date and shall have the authority to immediately make any necessary expenditures and to hire staff for that purpose. SECTION 18 This Act shall be broadly construed to accomplish its purposes. All of the provisions of this Act may be amended by a 2/3 vote of the Legislature so long as such amendments are consistent with and further the intent of this Act. The Legislature may by majority vote add provisions to clarify procedures and terms including the procedures for the collection of the tax surcharge imposed by Section 16. SECTION 19 If any provision of this Act is held to be unconstitutional or invalid for any reason, such unconstitutionality or invalidity shall not affect the validity of any other provision.