Proposition 1 Forces More County Contract Cancellations 

A 2024 state ballot measure that directed bond funds toward new behavioral health projects is forcing the county to end longstanding contracts and to inject uncertainty into its mental health system. 

San Diego County officials report they’ve now cancelled 29 contracts in preparation for Proposition 1 reforms that shift how counties can spend state taxes on incomes above $1 million and take effect in July. The 2024 measure sought to encourage counties to focus more on serving people with the most serious behavioral health challenges and to invest billions of dollars in behavioral health infrastructure projects across the state. The state has already awarded tens of millions of dollars to San Diego County-backed projects. 

Among the programs that have lost county funding around the same time: a National Alliance on Mental Illness San Diego program providing support and treatment coordination to patients discharging from the San Diego County Psychiatric Hospital, an Urban Street Angels program that links housing insecure young adults who have repeatedly needed emergency mental health services with care and transitional housing and a collaborative effort with the city focused on underserved children and families who use city parks. 

The county says it must make those tough calls to ensure programs it funds meet new criteria tied to Proposition 1 and other state behavioral health reforms, and also to make sure that county services are financially sustainable. 

Contractors running 10 clubhouses that offer people with serious mental illnesses support and services including vocational training also face an uncertain future. 

While the county’s initial round of Proposition 1-related contract cuts late last year focused on prevention programs that could potentially receive state funding instead, the latest wave hit programs working with patients and families who have already fallen into crisis.  

Nadia Privara Brahms, the county’s behavioral health services director, said the state reforms have forced the county to focus on core treatment programs, namely those that can bill Medi-Cal to support their services. The others, she said, are “good programs that don’t meet those standards.” 

“We have to manage a network and look at resources accordingly,” Privara Brahms said. “This is not a reflection of any of these programs.” 

The difficult cuts have come as the county also cheers state bond funding awards. The county recently got word it will receive $99.5 million to build a behavioral health campus in the Midway District. The state previously awarded the county nearly $30 million in Proposition 1 funding for a substance use treatment facility in National City and a crisis residential care facility for children. 

The recent grant announcement, the largest in the state, also coincided with the county’s release last week of a proposed spending plan that reflects changes tied to Proposition 1 and other state reforms. 

Proposition 1 is also ushering in big funding changes for some programs backed by the Mental Health Services Act, now renamed the Behavioral Health Services Act to cover addiction care.  

For years, counties have relied on a 1-percent state tax on millionaires for about a third of the funding they receive to pay for a wide variety of mental health programs and services, including prevention programs.  

Proposition 1 gives counties less discretion over how they use that money starting in July. It called for counties to prioritize aiding people with serious behavioral health conditions including addiction with housing and wrap-around programs known as full-service partnerships designed for people with complex needs. The ballot measure also shrunk the pot of money counties receive to support prevention programs, pilot innovation projects and some clinical care – and handed more money to the state. Now the state is set to dole out funds for prevention programs and counties across the state are making excruciating decisions about many longstanding programs.  

Late last year, the county cancelled a number of prevention program contracts. Earlier this year, the county announced it would also cut several programs that coordinate and connect people who have already struggled with ongoing care. 

One of those programs was Urban Street Angels’ Just Be U program, which focuses on housing insecure young adults ages 18-25 with serious mental illnesses who aren’t connected to ongoing care but have repeatedly ended up in hospitals or jails. 

Urban Street Angels CEO Eric Lovett-Maerz said the program offered participants transitional housing and intensive holistic care. Over six years, he said the program served 266 high-need youth, all of whom were referred to medical and behavioral health providers. Seventy-four percent of participants didn’t return to homelessness and 110 started working.  

“Urban Street Angels’ Just Be U program was their last hope, and it took time to build that trust and serve them,” Lovett-Maerz said. 

Now the nonprofit is winding down a program that the county once cheered as an innovative success.  

Lovett-Maerz expects to lay off five staff and is moving seven to other jobs. 

NAMI San Diego is also preparing for an end to its Next Steps program at the San Diego County Psychiatric Hospital. The program, which has been in place for about 15 years, staffs the county hospital daily with addiction counselors and support specialists with lived experience who help patients and their families navigate to ongoing care and services for up to 90 days after they leave the hospital. 

NAMI San Diego CEO Cathryn Nacario said she was shocked to learn the program had gotten the axe given its focus on people in acute crisis and robust, evidence-backed support from trained peers. She questioned why the county didn’t further explore Medi-Cal billing options to keep the program alive. 

“It’s a great program and it’s wildly successful,” Nacario said.  

Nacario said the county’s decision means 22 NAMI employees will need to find new jobs. A couple already have. 

Privara Brahms said the county hopes to lean into care management approaches that were the hallmarks of those two programs and a few others while trying to maintain financial stability under Proposition 1. 

Meanwhile, the city is also grappling with what to do next after the county nixed grant funding it supplied for a partnership on a preventive program that was part of the city’s Parks After Dark initiative. The program provided safe places, entertainment and activities for high-risk children and families. 

City spokesperson Benny Cartwright said the city is in talks with outside partners about addressing the funding gap for this summer’s Parks After Dark season. 

Others who operate county-contracted clubhouses that serve San Diegans with serious mental illnesses are also beset with uncertainty.  

By the end of June, 10 contracts with six subcontractors who run the region’s clubhouses are set to end. They’re now awaiting bidding processes to see if those contracts will be renewed. The programs had historically been funded with millionaire- tax funds. 

Privara Brahms said the goal is to adjust service offerings and county contracts to align with reforms tied to both Proposition 1 and the state’s separate BH-CONNECT initiative, which aims to increase access to community-based behavioral health services.  

The county wants to ensure clubhouses can be reimbursed for services via Medi-Cal and is evaluating how to design programs to make them financially sustainable over the long haul. 

Privara Brahms said the county intends to maintain the level of clubhouse services it now has and sign new contracts in time to avoid any gaps in services. 

But providers whose contracts are set to expire at the end of June are uneasy. 

Absent a bidding process and details that would come with it, clubhouse providers are uncertain about what the changes could mean for their programs. 

Deaf Community Services of San Diego operates a National City clubhouse that serves adults who are deaf or hearing impaired. It’s concerned about what the shift to Medi-Cal billing could mean for its participants and that its clubhouse could lose the low-barrier model it’s long had. For example, the nonprofit fears changes the county is floating could require participants to receive treatment that has historically been voluntary to be eligible for services that help them or mean that people who previously qualified for services no longer do. 

“Many deaf individuals with functional impacts from language deprivation and systemic marginalization may not fit neatly into clinical billing categories, even when trauma-related conditions are present,” the nonprofit wrote in a statement. “Eligibility depends on documentation standards, not lived experience or demonstrated need.” 

Nacario of NAMI said her organization is feeling significant uncertainty too. The nonprofit received two contract cancellation notices and two expiration notices for its four clubhouses. At the same time, its leases for two of its locations are ending and NAMI is unsure where it should look for new ones absent details from the county.  

“We’re in the dark,” Nacario said. “We have no idea what this new model is going to look like, where they’re going to be located, what they’re going to be.” 

Privara Brahms said last month the county is moving as quickly as it can on the bidding process and may provide short-term extensions to clubhouse providers if needed.  

She acknowledged enacting state reforms has been a challenging process for both providers and county staff. 

“We are in a state of transformation internally and organizationally,” Privara Brahms said. 

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