Most States Deepen Mental Health Budget Cuts Begun in 2009

Although some states have boosted general fund appropriations for their fiscal year (FY) 2012 mental health budgets, these increases will do little to reverse the effects of devastating cuts over the past three years, according to a report by the National Alliance on Mental Illness (NAMI). Twenty-eight states and the District of Columbia have cut more than $1.6 billion from their general fund mental health budgets since FY 2009, and even in states where 2012 funding has increased, the levels are still below what they were in 2009.

South Carolina leads the list, having cut 39.3% of its mental health budget between FY 2009 and FY 2012. Other states with cuts of more than 30% over this period include Alabama (36.0%), Alaska (32.6%), and Illinois (31.7%). The report notes that even though many states are experiencing larger-than-expected revenue growth in FY 2012, several states have cut funding from 2011 levels. The report singles out three states for making recent cuts that are “draconian in magnitude”: California, $177.4 million; New York, $95.2 million, Illinois, $62.2 million. When the recent cuts are added to those made between 2009 and 2011, they total $764.8 million in California, $204.9 million in New York, and $187 million in Illinois. California has also “virtually divested itself of accountability” for its residents living with serious mental illness, shifting responsibility to counties and making steep reductions in its state mental health staff, “ensuring that it will be unable to monitor how 58 counties spend allocated funds.”

In the remaining 22 states where the percentage change in allocations between 2009 and 2012 is positive, general fund mental health budgets have increased by about $487 million overall. However, the report cautions that any such increases are offset by the loss of Medicaid funds in June 2011, when an enhanced federal match rate for Medicaid provided by the stimulus package since October 2008 expired, resulting in the projected loss of $14 billion for state Medicaid programs [see story on Kaiser Foundation report below].

To make up for these lost federal revenues—and to tap into needed federal matching funds—some states have shifted state general fund mental health dollars to Medicaid recipients. The report raises particular concerns about such shifts, which have left many non-Medicaid recipients with serious mental illness without services. For example, in July 2010, Arizona eliminated virtually all services for 12,000 individuals with serious mental illness who do not qualify for Medicaid. In Ohio, the state added millions of dollars to services for Medicaid recipients between FY 2011 and FY 2012 and cut millions of dollars in services for non-Medicaid recipients.

The 14-page NAMI report updates, with FY 2012 data from publicly available documents, a NAMI report released in March 2011. The current report concludes with three policy recommendations. The first is to protect and strengthen mental health services and restore funds lost from spending cuts, because “after four or more years of budget cutting, states and communities simply cannot withstand more reductions in public mental health services.” The second recommendation is to improve data collection and outcomes measurement for mental health services, because the quality of these processes “is still inadequate.” The report notes an encouraging development from the National Committee for Quality Assurance, which is creating quality measures for schizophrenia treatment, inpatient treatment, medications, mental health treatment for children and adolescents, and long-term care for people with disabilities. Finally, the report urges that states should do all they can to preserve access to acute care, including inpatient treatment and crisis stabilization programs, and long-term care services, noting recent research showing that about 4,000 psychiatric hospital beds have been eliminated since 2010.

The report, which includes several tables providing state-level data, is available on the NAMI Web site at www.nami.org.