Behavioral Health Director Scott Kenelly emphasized the importance of public input while making this shift during a recent presentation to the Board of Supervisors. Photo courtesy of Butte County Department of Behavioral Health

GRIDLEY, CA (MPG) - Gridley hosted the first in a series of regional meetings as Butte County prepares for sweeping changes under California’s new Behavioral Health Services Act, which takes effect July 1, 2026. 

The law replaces the Mental Health Services Act, approved by voters in 2004 adding a 1% tax on the state’s highest earners, to introduce new mandates for housing, documentation and expanded eligibility for individuals with substance use disorders even if they do not have a co-occurring mental illness, Butte County officials said.

Behavioral Health Director Scott Kenelly emphasized the importance of public input while making this shift during a recent presentation to the Board of Supervisors.

Under the new rules, Butte County must split its $8.4 million Behavioral Health Services Act funding into three fixed categories: 35% for services and support, 30% for housing and 35% for intensive care programs. The housing requirement marks a major departure from past practice. 

“Behavioral health departments have not historically paid for housing,” Connelly said, noting that Butte County currently spends only 2% of its behavioral health budget on housing. 

To meet the new 30% mandate, Butte County will need to dramatically reallocate funds to include rental subsidies or purchasing facilities for long-term use for homeless or high-risk individuals, which may result in reduced funding for other services.

“We could potentially purchase a motel, purchase a building and pay for someone to operate that facility,” Connelly said.

The third category, Full-Service Partnerships, described as “whatever it takes” programs, includes intensive treatment teams such as Butte County’s SEARCH teams and youth intensive teams, which serve severely mentally ill individuals and emotionally disturbed youth. The county currently spends about 37% of its budget on these services, requiring only minor adjustments to meet the new threshold, Connelly said. 

The most significant impact will fall under Behavioral Health Services and Supports. While Behavioral Health Services Act requires 35% of funding to be allocated, Butte County currently dedicates 61% of its Mental Health Services Act budget to these services. Connelly stated that the county will need to adjust current programs to fit the new funding categories and noted that many local programs may experience budget reductions.

“The amount of funding that's going to be remaining for community-based programs after we satisfy all those requirements is extremely limited,” Connelly said.

Programs at risk include both county-operated and contracted services. Internal teams that may be affected include mobile crisis units, triage and referral teams, vocational services (WORK program), wellness centers in Gridley, Paradise and Oroville, staffing and training programs and prevention initiatives such as Live Spot and Strengthening Families.

Contracted programs currently funded through Mental Health Services Act include vocational training (STEP), crisis residential care (Bellavita), youth drop-in centers, peer support shelters and cultural outreach programs such as Stonewall Alliance, Promotoras and the Hmong Cultural Center.

Connelly said the county cannot continue funding all these programs and still meet Behavioral Health Services Act’s categorical requirements.

The Aug. 21 meeting at the Gridley Community Center was the first in a series of regional forums hosted by Butte County Behavioral Health to gather public feedback ahead of the 2026 transition to the new funding model.

Additional meetings were held in Oroville, Paradise, Chico and online. The Behavioral Health Advisory Board meets monthly on Wednesdays at 3 p.m. at the county’s training center at the Plaza, in Oroville, with in-person and virtual options available.

The timeline to transition to the new funding model includes public input this fall, followed by budget development, plan writing, state review and final approval in early summer 2026. 

“The Department of Health Care Services looks at our plan, tells us what we can or cannot spend funding on, makes suggested changes, and then it comes to the (Board of Supervisors) for review and approval,” Connelly said. 

Existing Mental Health Services Act contracts expire June 30, 2026, and providers must respond to new requests for proposals to continue receiving funding, Connelly said.

More information and meeting schedules are available on the Butte County Behavioral Health website.