Memorandum
Date: June 23, 2026
To: The Honorable Brad Rasmussen, Chair, Lake County Board of Supervisors
From: Elise Jones, Director of Behavioral Health Services
Subject: Consideration of the Behavioral Health General Fund Loan Repayment Options and Fiscal Stabilization Update
Executive Summary:
Background
Behavioral Health previously received General Fund support in the form of bridge financing to maintain operations during a period of significant statewide behavioral health reform, electronic health record transition, delayed revenue conversion, and major changes to Medi-Cal payment methodology.
The remaining balance is $2 million.
This loan was not the result of a single-year operating deficit or a discretionary program expansion unsupported by revenue. Rather, it occurred during a period in which Lake County Behavioral Health Services was implementing major state-required reforms while simultaneously expanding access to care, increasing Medi-Cal service delivery, building the Drug Medi-Cal Organized Delivery System, implementing Mobile Crisis, transitioning through CalAIM payment reform, and absorbing delays and disruptions related to claims processing and cash conversion.
The Department has since taken substantial corrective action to stabilize operations, improve fiscal controls, strengthen revenue tracking, and reduce ongoing risk. The FY 2026-27 Mental Health and Substance Use Disorder Services budgets were approved by the Board, and the Department is continuing to implement fiscal stabilization measures intended to preserve access while improving long-term sustainability.
Current Fiscal Context
Behavioral Health's current fiscal challenge is best understood as a cash-flow and timing issue rather than a simple budget variance. Under the current Medi-Cal behavioral health financing structure, the Department must deliver services, incur costs, pay providers, and front local match or Intergovernmental Transfer funding before reimbursement is fu...
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