Red Tape Blamed For Nearly $2 Billion In Unspent Mental Health Funds

SACRAMENTO (CBS13) — Nearly $2 billion set aside by the state to fund mental health services is stacking up, unspent in counties across California.

The money is coming from Prop 63, a tax on high-income residents passed by voters more in 2004.

As of June 2017, $1.6 billion has piled up across California, sitting in county coffers. Those dollars should be funding services for the mentally ill.

"The fact that there are these large surpluses being sat on by many counties has been very frustrating because the need is tremendous," said Sacramento Mayor Darrell Steinberg.

In 2004, the then-Assemblyman co-authored Proposition 63, a one percent income tax on people making more than $1 million a year. The tax is intended to expand existing mental health programs. Voters passed it and the money is doled out each year to counties. But a state audit in 2017 found massive amounts of the money are untouched.

"Unfortunately, it's kind of the perfect storm," said Sacramento County spokeswoman Kim Nava.

In Sacramento County alone, leftover Proposition 63 money has piled up over the last five years, with a surplus of more than $100 million in 2017. That money has also racked up $1.5 million in interest during that same time period.

So, why isn't the county spending this money?

"Even though the money has been there, it's been earmarked for programs that are going to be stood up," Nava said.

Sacramento County says it's tried to put the funds to work, but cites pushback from communities about proposed mental health facilities in their neighborhoods and a lack of mental health workers.

Maggie Merritt is with the Steinberg Institute, a nonprofit founded in 2015 that's focused on mental health policy and Proposition 63 resources. She says part of the problem is the lengthy process to even get the funds.

"It often takes up to a year to get those dollars out the door."

People like Rick Smith who are battling mental illness and living on the streets say services are desperately needed.

"I'm baffled how could there be all that money," said Smith, "There are some places out there, but they're full."

Critical dollars to address a critical public need now creating a new push to get the cash into communities.

"Let's just get the money out to make sure that more people get the help," Steinberg said.

Sacramento County says to date, it has already spent more than $300 million on mental health services since Prop 63 was passed.