As 2025 arrives, the implications of California’s Proposition 1, the Behavioral Health Infrastructure Bond, are becoming clearer. This ambitious $6.38 billion general obligation bond, passed in March 2024 and encompassing Senate Bill 326 and Assembly Bill 531, promises to address critical gaps in behavioral health care and housing infrastructure.

But where is the money coming from, and where is it going?

Expanding Behavioral Health and Housing Infrastructure

Proposition 1 will fund the development of 11,150 new units across the Golden State, including 4,350 supportive housing units, with 2,350 dedicated to veterans, and 6,800 mental health and substance use treatment facilities. Additionally, it will establish 26,700 outpatient treatment slots, potentially serving thousands of Californians annually.

Per the California Budget and Policy Center, Proposition 1's funds will be allocated as follows (the quotations below are sourced from CalBudget's official Proposition 1 funding report):

$2.893 billion for grants to develop voluntary and involuntary behavioral health treatment facilities.

BHCIP projects include short-term crisis stabilization facilities, acute and subacute care, crisis and community-based mental health residential, substance use disorder residential, community and outpatient behavioral health services, and other longer-term treatment and rehabilitation options. -Cal Budget & Policy Center

$1.5 billion for grants to counties, cities, and tribal entities.

Tribal entities will receive $30 million of these funds.

$1.065 billion for loans or grants to create supportive housing for veterans.

Specifically, veterans experiencing or at risk of homelessness with behavioral health challenges.

$922 million for loans or grants to create additional supportive housing units.

For people experiencing or at risk of homelessness with behavioral health challenges.

By funding these projects, Proposition 1 builds on programs like the Behavioral Health Continuum Infrastructure Program (BHCIP), with streamlined local review processes for eligible projects.

Financial Impacts on the State Budget

California has a long history of funding infrastructure through bonds, but this approach comes with trade-offs. The estimated cost of repaying Proposition 1’s bond debt over 30 years is approximately $9.3 billion, including interest, with annual payments projected at $310 million. These funds will be drawn from the General Fund, which currently allocates 2.5% of its budget to repay bond obligations.

While Proposition 1 enables large-scale investments in behavioral health and housing, it reduces the flexibility of discretionary funds for other public services. "Repaying the bond portion of Prop. 1 is a trade-off," notes the California Budget & Policy Center, "slightly reducing funds for other vital public services that may already serve Californians with behavioral health conditions and those experiencing homelessness."

Ongoing Challenges and Uncertainties

A significant portion of Mental Health Services Act (MHSA) dollars—30%, as shown in the chart below—will now be redirected to housing interventions, including rental and operating subsidies. While this reallocation aims to sustain the facilities created by the bond, questions remain about whether these funds will be sufficient.

As the California Budget & Policy Center points out, "It is uncertain whether these funds and those from other sources will be sufficient to ensure adequate upkeep, staffing, and care for the Californians receiving housing and services through these projects."

A Necessary Investment

Proposition 1 represents a critical step toward addressing California’s behavioral health and housing crisis. However, its financial implications highlight the delicate balancing act of meeting immediate needs while maintaining flexibility for future investments. As the state begins to allocate bond funds, policymakers must ensure these resources are deployed effectively to maximize their impact on Californians in need.

This measure, while costly, builds on past investments and creates a pathway for transformative change—if sustained through robust operational support and careful fiscal oversight.