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States Have Money to Spend on Mental Health, but It May Not Last

States Have Money to Spend on Mental Health, but It May Not Last
Clayton “Cole” Cole
Clayton Cole carries a portrait of his brother, Lee Cole, as he hikes near Colorado Springs, Colorado, to the spot where his brother took his own life. Colorado is among the states planning to spend federal COVID-19 relief money on behavioral health services.
Christian Murdock The Gazette via The Associated Press

DENVER — Colorado’s known as a mecca for healthy, outdoorsy types. Yet a higher share of state residents than the national average struggle with mental illness, suicidal thoughts or heavy drug or alcohol use, according to federal surveys.

The COVID-19 pandemic—with its accompanying job losses, school closures and bereavements—has made the situation worse.

Now Colorado policymakers are gearing up to spend big on mental health and substance use disorder services, thanks to the March federal COVID-19 relief package, the mammoth American Rescue Plan Act.

Lawmakers this spring voted to spend $550 million that Colorado received under the law on behavioral health services. That’s on top of grants for such services that the law earmarked for the state, as well as emergency funds allocated to Colorado schools that can be spent on efforts to improve students’ mental health.

The extra money authorized by the legislature and block grants alone add up to more than a third of what the state typically spends on behavioral health each year, said Robert Werthwein, director of the state’s Office of Behavioral Health.

“Very rarely do you get to make this kind of investment into the infrastructure of behavioral health,” he said. 

Legislators in at least seven other states—Illinois, Indiana, Maryland, Ohio, Virginia, Vermont and Washington—also have set aside millions of federal dollars for mental health and substance use disorder services, according to the National Academy for State Health Policy, a nonpartisan research organization with offices in Washington, D.C., and Portland, Maine.

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This fiscal year, lawmakers saved money and spent big on services and tax cuts.

Health officials in those states hope the influx of cash will be a game-changer. They’re planning to spend it on everything from mental health awareness campaigns to mobile crisis teams and bonuses for psychiatric hospital staff.

But there’s a catch. After the relief funds run out—the money must be spent by the end of 2026—state leaders will have to find other ways to fund any programs, services or staffing increases they spend federal dollars on now.

State leaders need to make sure they don’t start a successful new program only to get rid of it five years later, said Dr. Brian Hepburn, executive director of the National Association of State Mental Health Program Directors, an Alexandria, Virginia-based membership organization.

“If it’s just a blip—if this is just a one-time only, and we’re only seeing an improvement over the next couple of years, that’s not very helpful,” Hepburn said.

Policymakers’ approaches to spending the money vary, said Hemi Tewarson, executive director of the National Academy for State Health Policy. In some states, they’re focused on short-term uses for the funds, such as professional development programs. Other state officials are planning to invest in longer-term commitments and figure out a sustainable funding plan later, she said.

Colorado lawmakers have assigned themselves the tough task of coming up with a plan for spending the one-time funds in a way that transforms the state’s behavioral health system.

“I think everybody is kind of in the place of: We know these are one-time dollars. How can we spend those dollars in a way that’s going to have a long-term impact?” said Colorado state Rep. Serena Gonzales-Gutierrez, a Democrat. “And that’s hard.”

She’s vice chair of a task force that will make spending recommendations for $450 million of the behavioral health funds. The task force began meeting last month, but won’t make any decisions until the end of the year.

Right now, members are pondering a variety of Colorado’s mental health and substance use challenges, such as access and affordability problems and workforce shortages. “Those things are all on the table,” Gonzales-Gutierrez said.

An Influx of Cash

The COVID-19 pandemic has exacerbated some worrying behavioral health trends.

A growing share of U.S. adults have in recent years said they’ve experienced a mental illness, according to federal surveys. After the pandemic hit in 2020, the share of U.S. residents reporting symptoms of anxiety and depression rose, and overdose deaths shot up by 31% compared with the year before.

In Colorado, calls and texts to the state crisis hotline jumped by 25% last year. Hospitals have been so inundated with children experiencing psychiatric crises that in May, Children's Hospital Colorado declared a state of emergency for youth mental health.

This spring, lawmakers voted to spend $550 million of the $3.8 billion of flexible funds Colorado received under the American Rescue Plan Act on mental health and substance use disorder services, with $100 million allocated immediately (it was spent on more than a dozen line items, among them jail-based services and workforce training) and the rest to be allocated later.

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While Democratic support was unanimous, GOP members were divided. In the Senate, for instance, 4 of 15 Republicans voted against the final bill.

“The majority of our caucus did support the bill,” said Sage Naumann, communications director for the Colorado Senate Republicans. “As for the other four, it was most likely a difference on strategy, especially when it comes to things like substance abuse disorder.”

There’s plenty of bipartisan support in Colorado for mental health services, he said. “On 80% of the discussion on mental health, substance abuse, suicide prevention, those kinds of things, we tend to find common ground with our colleagues across the aisle.”

Democratic lawmakers in Indiana also made behavioral health a priority this year, opposing an initial budget plan that would have cut behavioral health funds by $26 million. “We kept pushing back and advocating against those cuts,” said state Sen. Shelli Yoder, a Democrat and assistant minority caucus chair.

The conflict ended after President Joe Biden signed the American Rescue Plan Act, Yoder said. With $3 billion in flexible federal funds on the way, the Republican-controlled legislature approved a budget that spent $100 million of the federal dollars on mental health services.

“We’re making record investments in Hoosier health and mental health, something we particularly need right now,” said Republican Senate President Pro Tempore Rodric Bray during an April news conference on the budget agreement. Bray could not be reached for comment by publication time.

Shenetha Shepherd, press secretary for the Indiana Senate Democrats, said that policymakers at the state Division of Mental Health and Addiction will decide how to spend the $100 million.

The American Rescue Plan Act also authorized $3 billion in behavioral health block grants for all states and territories, hundreds of millions more for everything from youth suicide prevention to community clinics, and $112 billion for schools. Districts can use the money in a variety of ways, including to hire counselors and bolster mental health services.

Steering Clear of the Funding Cliff

A task force of 16 Colorado policymakers—advised by a subpanel of mental health advocates, hospital representatives and others with a stake in the behavioral health system—are now discussing how to spend the $450 million lawmakers set aside last session.

Task force members are generally in favor of making four $100 million investments, rather than spreading the money thinly across many priorities, said Vincent Atchity, chair of the subpanel. He’s the president and CEO of Mental Health Colorado, an organization that advocates for people with mental health or substance use disorders.

Mental Health Colorado wants to spend at least $165 million to add hospital and residential psychiatric treatment beds statewide, and improve recovery services. “We have an acute lack of available resources to properly manage care, in terms of inpatient capacity,” he said. 

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Werthwein said any new spending must be sustainable. “We have to be careful not to create a cliff effect.” The money could perhaps be spent on workforce training, he said, or on facilities.

Colorado may be able to use Medicaid dollars to pay for new programs over the long term, he suggested. Medicaid is the public health insurance program for low-income and disabled people that’s jointly funded by states and the federal government.

Policymakers in other states may be making the same calculation. For instance, many states are using their American Rescue Plan Act block grants to improve and expand behavioral health crisis response teams and call centers, said Hepburn of the National Association of State Mental Health Program Directors. Such boosts have been a priority for states since the federal government moved to make 988 a nationwide suicide and mental health crisis emergency number starting in 2022.

States seeking to fund crisis services over the long term could learn from Arizona, Hepburn said, which in recent years changed its Medicaid rules to cover the cost of its expanded crisis services.

It’s also possible that state lawmakers could just vote to increase spending on services or staffing in future years.

In Virginia, for instance, Democratic Gov. Ralph Northam announced in July a plan to spend $485 million—a mix of American Rescue Plan Act funds and state dollars—on bonuses for state psychiatric hospital staff, substance use disorder treatments and supportive housing, among other services.

Virginia’s General Assembly pushed Northam to commit to include salary increases for facility staff in his next budget, noted Alison Land, commissioner of the Virginia Department of Behavioral Health and Developmental Services, in an emailed statement.

Indiana's Yoder said she hopes increased mental health and substance use spending will, at least in part, pay for itself by allowing more residents to fully participate in the economy.

“We need every Hoosier engaged in the economy and participating,” she said. “And when people are struggling with substance use disorder, that makes it very challenging.”

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