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Health and Human Services Agency recommending the Board adopt and authorize the Chair to sign Resolution 017-2026, which exempts Board Procurement Policy C-17 competitive bidding requirements for specified Behavioral Health Services Act (BHSA) services during Fiscal Years 2026-2029.
FUNDING: Combination of Federal Medi-Cal, State BHSA, 1991 Mental Health Realignment, 2011 Behavioral Health Realignment, Federal Drug Medi-Cal Organized Delivery System, various grant funding, and other non-general fund sources.
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DISCUSSION / BACKGROUND:
In March 2024, California voters passed Senate Bill (SB) 326, the BHSA, through Proposition 1, also known as the Behavioral Health Transformation (BHT), which is replacing the Mental Health Services Act (MHSA) of 2004 and will take effect on July 1, 2026. The BHSA provides the opportunity for the State of California (State) to transform the mental health and Substance Use Disorder (SUD) system of care to support individuals with the most significant needs, including those that are seriously ill and unhoused. The BHSA requires counties to submit Integrated Plans (IP) to California Department of Health Care Services (DHCS) that outline how it will utilize all available behavioral health funding sources, including BHSA funds, to meet local needs and reduce disparities in behavioral health services. The BHSA IP will also facilitate local and statewide data collection by providing baseline data on services and planned expenditures and supporting analysis of county goals and outcomes.
HHSA’s first three-year BHSA IP, covering Fiscal Years 2026-2029, is due to DHCS by June 30, 2026, with the submission process requiring transparency and community engagement. Following the passage of SB 326, HHSA Behavioral Health Division staff began engaging in BHT listening sessions and reviewing the statutory changes. HHSA is required to submit a BHSA IP that consolidates all behavioral health funding sources and programs, replacing the County’s previous MHSA Three-Year Expenditure Plan, which focused solely on MHSA-funded programs.
DHCS released BHSA policy guidance to counties in modules beginning in February 2025. To date, three modules have been released in which the first two introduced BHSA components and allowable use of funds, and the third module provided the 100-page BHSA IP template and comprehensive budget template and clarified data and content requirements. These tools allowed counties to more adequately consider how to engage community members in the required Community Planning Process (CPP), which is a pre-requisite to the finalization of the BHSA IP draft. DHCS continues to update templates, most recently on October 30, 2025, and additional modules are expected beyond the July 1, 2026, implementation date, including the Behavioral Health Outcomes, Accountability, and Transparency Report due in January 2028.
To meet community engagement requirements, HHSA has launched outreach efforts to begin synthesizing the most concrete details of the BHSA policy and to develop consistent community training on BHSA. On July 21, 2025, a request for community providers to host Open Forum meetings was sent to community-based organizations within the County’s current behavioral health system of care, other collaborative partners, and Behavioral Health Commissioners. Open Forum meetings included BHSA training and open discussions around BHSA and the overall perspectives on community behavioral health needs.
Between August 18, 2025, and October 3, 2025, seven Open Forum meetings and four BHSA specific stakeholder meetings were held with a total of 150 community members in attendance. On September 17, 2025, a special Open Forum meeting was hosted by HHSA to present the populations of focus identified from community perspectives and those required by DHCS. Additionally, seven Public Focus Groups were held from December 2, 2025, through December 17, 2025, to gather specific community perspectives on how HHSA staff may develop BHSA IP details for non-mandated services. In addition to the various community meetings, BHSA requires a 30-day public comment period, anticipated to be February 2026, and a Public Hearing before the Behavioral Health Commission in March 2026. A new requirement under BHSA is that counties must submit their draft BHSA IP to DHCS by March 31, 2026, allowing DHCS to reserve the right to direct any required changes to the County BHSA IP prior to Board approval.
The County has approximately 60 contracts for services with providers that meet BHSA requirements. Historically, many of these agreements resulted from formal competitive solicitations, failed competitive solicitations, or were determined to meet a bidding exemption allowed under Board Procurement Policy C-17 (Policy C-17). Due to the substantial changes prompted by the BHSA and the uncertainty of programming due to potential DHCS changes after March 31, 2026, HHSA staff cannot finalize programmatic concepts until mid-March, following the completion of CPP activities and staff's integration of community input with statutory and regulatory requirements. Specific programs included in the BHSA IP cannot be confirmed until after DHCS returns its comments on the County's draft plan, due back in June 2026. Following the close of all public forums and DHCS acceptance of the County’s IP, HHSA will bring the BHSA IP to the Board for approval. This timeline does not allow for the County’s standard competitive procurement process outlined under Policy C-17 to occur as the specified BHSA associated contracts need to be executed by July 1, 2026.
Pursuant to Policy C-17, competitive bidding is required for service agreements over $100,000. Policy C-17 states, where State and federal funding is involved, State and federal regulations must also be consulted for competitive procurement requirements. State law under SB 326 and Proposition 1 do not impose such requirements on BHSA funded contracts. Consequently, to enable HHSA to meet the implementation timeline for the BHSA IP and execute the necessary BHSA associated agreements timely, HHSA recommends the Board to adopt and authorize the Chair to sign the attached Resolution to approve BHSA-related contracts for the specified services (Access Outreach and Engagement, Adult and Children’s Outpatient Services, Inpatient and Residential Treatment and Care, Crisis Remediation and Prevention, Housing Supports and Stability, Early Intervention, and SUD services), and any amendments thereto, to be exempt from competitive procurement, when not required by other funding sources, during the active BHSA IP three-year period covering Fiscal Years 2026-2029.
ALTERNATIVES:
Should the Board decline to approve this resolution, HHSA would continue to provide services through existing contracts and either perform competitive bidding or pursue Board requests for exemptions with the resulting contracts, in accordance with Policy C-17 standards, but would be unable to meet several BHSA requirements, resulting in the potential for fines and sanctions.
PRIOR BOARD ACTION:
N/A
OTHER DEPARTMENT / AGENCY INVOLVEMENT:
County Counsel
CAO RECOMMENDATION:
Approve as recommended.
FINANCIAL IMPACT:
There is no Net County Cost associated with this agenda item. However, if the item is not approved, contracts for required services will lapse, which could result in fiscal sanctions.
CLERK OF THE BOARD FOLLOW UP ACTIONS:
Clerk of the Board to obtain signature of Chair on one original Resolution.
STRATEGIC PLAN COMPONENT:
N/A
CONTACT:
Olivia Byron-Cooper, MPH, Director, Health and Human Services Agency