Seven years after voters approved a new tax to fund services for people with mental illness, California has slashed so much money from mental health departments that it now leads the nation in such cuts.

Counties have laid off psychiatrists, reduced hospital bed space and shut down mental health clinics.

And the $7.4 billion generated by the mental health tax?

Much of it has gone to a cottage industry of consultants earning up to $200 an hour, as well as a host of new programs that in many cases are only loosely linked to prevention, treatment and recovery.

The Bay Area News Group examined spending to date under the Mental Health Services Act of 2004, after reporting in May concerns expressed by the chairman and former chairwoman of a Santa Clara County watchdog group. They charged that local spending under the act has resulted in frivolous programs and enriched private contractors at the expense of people desperately in need of care.

The newspaper group found problems are evident statewide, despite years of warnings from a high-level whistle-blower and other mental health authorities.

"The state of California clearly did not comply with the law and they did not keep and honor the contract with the voters," said Rose King, co-author of the Mental Health Services Act, which appeared on the November 2004 ballot as Proposition 63. "It's a corruption of purpose, and it's a boondoggle for consultants and entrepreneurs at the expense of core services."


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Designed to create new county programs and expand existing ones, the act veered off course after the state Department of Mental Health piled on burdensome and unnecessary guidelines, according to county directors who oversee the spending. Going beyond the language of Proposition 63, the funds were restricted so they could not be used to enhance state and county-funded services that were later gutted by the economic downturn. That created an odd predicament: County mental health budgets were devastated on one side of the ledger, while on the other they were flush with money for use only on new clients in new programs.

State mental health officials did not respond to repeated requests to explain the regulations. But in a 2007 letter to King, the state's former mental health director, Stephen Mayberg, explained that the department sought to first serve mentally ill people who were homeless and cycling through jails and emergency rooms -- essentially those who were outside the system.

Two-tier system

When California's crippling recession and accompanying budget cuts hit, the result was two tiers of care -- "a Cadillac system for selected new clients, and a dysfunctional, deteriorating system for those already inappropriately served," said King, a former legislative staffer and adviser to the state attorney general. "Why do counties need to recruit new clients when they need to look no further than their clinic waiting rooms?"

In the past two years, $587.4 million has been cut from state mental health spending -- a 16.3 percent reduction, the National Alliance on Mental Illness reported in March. The number of people served by that spending in California dropped from 658,314 in 2007 to 442,691 last year. The additional Proposition 63 money generated by a tax on incomes above $1 million -- an annual average of $1 billion -- has gone to county-specific plans.

But the flourishing-on-one-side, broke-on-the-other condition of county mental health departments has created some curious scenarios:

  • In Santa Clara County, patients released from acute-care hospital beds wait a month for follow-up appointments because of budget cuts. Meanwhile, so much time was spent planning how to use Proposition 63 prevention funds that a three-year deadline arrived with no programs launched. As a result, the county nearly had to return $8.2 million to the state.

  • Contra Costa County shut two residential centers for disturbed juveniles, an adult outpatient clinic and a hospital psychiatric unit. But the county managed to launch a "Hip-Hop Car Wash" for juvenile offenders in need of independent living skills.

  • San Francisco has laid off psychiatrists in its general hospital and cut acute psychiatric beds from 87 to 21. Yet it spent $294,000 on peer-led support teams for people who hoard and clutter.

    In a whistle-blower complaint submitted to the state auditor in November 2009 -- and five months later to the Legislature -- King called Proposition 63 a noble cause gone awry.

    The concerns of King and others about "two-tier" spending were echoed in a 2008 Department of Finance report, and just last year by the California Mental Health Directors Association, which called for a moratorium on the "unnecessary" state regulations that "significantly deviated" from what voters enacted in 2004.

    Prop. 63's promise

    Defenders of Proposition 63 acknowledge the problems to date. But they point instead to the act's promise of overhauling traditional approaches to mental health care.

    "Proposition 63 is helping thousands of people who would otherwise have nothing in a grossly underfunded system," said Senate President Pro Tem Darrell Steinberg, the architect of the Mental Health Services Act.

    Steinberg agreed that "the core system is falling apart," but added, "That's not Proposition 63's fault. What would the mental health system look like without Proposition 63? There would be nothing, virtually nothing."

    Steinberg pointed to roughly 25,000 Californians who have received an array of services tailored to their needs, as reliance on forced hospitalizations and institutional care gives way to more long-lasting, community-based options. In Los Angeles and San Diego, according to regional studies, clients in these "full-service partnerships" have spent less time hospitalized, homeless and in jail.

    But many mental health experts -- and Steinberg himself -- agree that the act got off to a bad start.

    That's due in large part to the state's interpretation of the law -- and the requirement that counties create six plans, with six sets of guidelines and six lengthy processes for each county to gather comments from concerned parties.

    "You're in a situation where you're losing revenue and other resources, and you can't use the other money to bail it out," said Stephen Kaplan, interim director for San Mateo County's Behavioral Health and Recovery Services. "It's a challenging balancing act to do both at the same time."

    Services shuttered

    San Mateo County just eliminated in-home crisis services for 30 children and cut six beds from an inpatient psychiatric unit. It stopped serving 425 students as part of a school-based service and reduced a psychiatric residency program, cutting the future patient load by 925 clients.

    Similar scenarios unfolded statewide.

    In recent years, Fresno County closed an inpatient psychiatric crisis center, flooding far more costly emergency rooms with psychotic and suicidal patients brought in by police. In Riverside County, budget cuts have eliminated screening and timely treatment for the nearly one-fourth of jail inmates suffering from mental illnesses. Sacramento County officials face a lawsuit over cost-saving measures that would upend treatment for about 5,000 patients.

    Despite its facility closures, Contra Costa County has been approved for $124.3 million in Proposition 63 funds to date. The county paid two consulting teams, the Results Group and Grace Boda of the Center for Vital Partnership, as much as $200 an hour to gather public comments and develop plans to satisfy state requirements.

    That spending is an additional task for acting Mental Health Director Suzanne Tavano, who is now overseeing $1.6 million in county cuts to her budget. But Tavano said without the Proposition 63 funds, her system would be "devastated." Although some core services have shrunk, she noted, there are now 45 new initiatives for overlooked populations, including Pacific Islanders and lesbian, gay and transgender youths.

    Those efforts are well-intentioned, said Teresa Pasquini, who serves on the Contra Costa County Mental Health Commission, a local oversight board. But she is personally outraged by the spending priorities. Pasquini said the Hip-Hop Car Wash, for example, "is a great program, but it's not about anybody with psychotic disorders going out and washing cars and getting better."

    And the Results Group's work? "It was a dog and pony show," she added. "We have done a superb job of painting the pony pink."

    Pasquini, who has a son and a sibling with severe mental illness, said she walked her neighborhood getting signatures for Proposition 63. But after six years on oversight boards and committees she now questions the 61/2-year-old law that taxes millionaires.

    "If I were a millionaire," she said, "I'd be screaming from the rooftop."

    Santa Clara County paid the MIG consulting firm rates as high as $195 an hour. Another consultant who wrote the county's plans, Jean McCorquodale, received an increasingly large hourly salary, which grew from $95 in 2005 to $150 an hour this year.

    In contrast, county psychiatrists receive from $64 to $86 per hour.

    Contractors' rates are approved by county mental health directors, but spending plans have been reviewed by state authorities -- until recent state budget cuts eliminated that oversight.

    Public input

    County mental health directors say they needed to hire consultants to coordinate public input collected at hundreds of committee meetings, conferences, trainings and round-table sessions -- in Contra Costa County for example, as many as 1,800 people provided comments -- and to write up the final spending plans.

    Steinberg, the Senate leader, said he agreed that in some cases the consultant-coordinated efforts led to "overkill." But, he added, the intention was good -- to allow previously unheard voices such as family members and patients themselves help design a new mental health system. "And it was incredibly empowering to advocates who for decades had felt unheard," Steinberg said.

    But others are angered by the spending, including many who have suffered from the years of declining core mental health services.

    Roberta and Sid Bernstein, of Sunnyvale, are among them. They have spent 18 years battling to get their now-51-year-old son to stay on anti-psychotic medications and in treatment. The Bernsteins' son had earned an MBA and a law degree when he became paranoid and delusional, attempting suicide several times.

    Yet recently, the Santa Clara County mental health system afforded him psychiatrist visits that lasted only 20 minutes -- little time for anything but a painful injection of Risperdal. Earlier this year, he was denied access to a locked psychiatric ward during a bad spell -- and has since gone missing.

    "Patients are not getting the care they need," said Sid Bernstein, a retired Lockheed engineer who had eagerly supported Proposition 63. "And hearing about billions of dollars that are available to improve the situation and are not being used appropriately makes us pretty angry."

    Nonetheless, state officials have continued to tout the Mental Health Services Act with little critical evaluation. Most often cited is a 2010 report by UC Berkeley's Nicholas C. Petris Center on Health Care Markets and Consumer Welfare -- a $1 million report that made the claim that the "full-service partnerships" reduced homelessness by 100 percent.

    "You have to question some of that -- 100 percent reduction in homelessness?" said Sandra Naylor Goodwin, executive director of the California Institute for Mental Health. "It's kind of mind-blowing. It looked great, but how did they get there?"

    King's complaint called the coziness of the Proposition 63-created consulting industry into question. It's no small wonder, Pasquini said, that there are so few outspoken critics of Proposition 63.

    "It's like a pot of gold,'' she said, "and they don't want it to go away."

    Contact Karen de Sá at 408-920-5781.

    DIMINISHING MENTAL HEALTH SERVICES

    A state tax to fund mental health services has generated $7.4 billion since it began in January 2005. But regulations have restricted the money to new programs -- even as California's overall service has declined:

    $587.4 M

    Amount cut from state mental health spending, a reduction of 16.3 percent over the past two years.

    442,691

    Number of people served by California's mental health services in 2009, a decrease from 658,314 in 2007.