Community Mental Health Services Block Grant


The Substance Abuse & Mental Health Services Administration (SAMHSA), Center for Mental Health Services (CMHS) provides grant funds to establish or expand an organized community-based system of care for providing non-Title XIX mental health services to children with serious emotional disturbances (SED) and adults with serious mental illness (SMI).  States are required to submit an application for each fiscal year the State is seeking funds.  These funds are used to: (1) carry out the State plan contained in the application; (2) evaluate programs and services, and; (3) conduct planning, administration, and educational activities related to the provision of services.

In 1992 the ADAMHA Reorganization Act (ARA, PL 102-321) was passed establishing the Substance Abuse and Mental Health Services Administration (SAMHSA).  The ARA also separated the mental health and substance abuse funds into two separate grants.

CMHS distributes the Community Mental Health Block Grant funds to 59 eligible States and Territories through a formula based upon specified economic and demographic factors.

States must apply for the grants and submit a bi-annual plan and annual implementation report for providing comprehensive community mental health services to adults with a serious mental illness and children with a serious emotional disturbance (SED).

The block grant also requires that the State must have and maintain a State Mental Health Planning Council that meets specific membership requirements.  One of the many roles of the Planning Council is to review the State mental health plan and implementation report and provide recommendations for modification when necessary.

Source of Funds   

The Community Mental Health Services Block Grant is the Center for Mental Health Services (CMHS). CMHS is one of three centers within the Substance Abuse and Mental Health Services Administration (SAMHSA), and an agency of the U.S. Department of Health and Human Services (HHS)

The California State Department Health Care Services (DHCS) administers the block grant and allocates the funds each year to the 58 local county mental health plans (MHPs). The MHPs and their contracted providers deliver a broad array of treatment and support services that include over 150 individual programs supported by the block grant.

Fiscal Forms

Quarterly: Report forms:

For current versions of the DHCS 1784QTR Quarterly Financial Status Report form and DHCS 1785QTR Quarterly Grant Cash Transaction Report, please send an email to:

Year-End Report forms:

To request current versions of the cost report guidance and enclosures, please send an email to:

  • MHBG Letter YE Cost Report Guidance
  • DHCS 1784 YE Financial Status Report
  • DHCS 1785 YE Grant Cash Transaction Report                                     
  • DHCS 1767 YE Federal Grant Expenditure Report
  • DHCS 1767-S YE Federal Grant Expenditure Report Summary

Peer Review

Federal statute requires independent peer reviews to assess quality, appropriateness, and efficacy of services utilizing Block Grant funding.  The former Department of Mental Health entered into a Memorandum of Understanding with the California Mental Health Planning Council to conduct the reviews.  No fewer than 5% of counties will be reviewed annually.

Funding: Purpose

The CMHS requires that States develop a comprehensive public mental health system that has as one of its goals to move care for adults with SMI and children with SED from costly and restrictive inpatient hospital care to the community. States and territories may expend block grant funds only to carry out their annual plan, to evaluate programs and service carried out under the plan, and for planning, administration, and educational activities related to providing services. Although the block grant is a small percentage of California’s mental health budget, it is viewed as providing an important and flexible funding source to support a broad range of activities specific to the needs of each county. The DHCS awards most of the funds to counties based on a legislated formula, and the remainder through a competitive process that encourages both innovation and use of best practices.

Funding: Who's Eligible?

Funds are allocated to county mental health departments to be used for community mental health services for a specific target population. Target populations of the funding are Adults and Older Adults with SMI and Children with SED, as defined in the Federal Register.

Funding: Limitations/Restrictions/Prohibitions

Funds cannot be used for the following:

  • Inpatient services
  • Cash payments to intended recipients of health services
  • Purchase or improve land or buildings                                                                          
  • Purchase of major medical equipment
  • Provide financial assistance to any entity other than a public or nonprofit private entity

Financing: Matching Funds Requirements

The MHBG does not require a State match, however, it requires a statutory maintenance of effort to document that the State has maintained expenditures for community mental health services at a level that is not less than the average level of such expenditures maintained by the State for the 2-year period preceding the fiscal year for which the State is applying for the grant.

DHCS does not require a county match for the “base funding” or the “dual diagnosis set-aside.” However, funds awarded under a competitive grant are subject to the requirements set forth in the State RFA/RFP process, which may include a match.

Distribution Formula

Funds are distributed per the Cigarette and Tobacco Products Surtax fund formula or can be distributed for the development of innovative programs, in consultation with the California Behavioral Health Directors Association and upon appropriation by the Legislature (Welfare and Institutions Code).

Length of Funding Availability

Federal law requires that the funds awarded to the States be obligated and expended within two years. CMHS operates on an October to September fiscal year while California operates on a July through June fiscal year.  Block grant funds that are awarded in October cannot be allocated until the State Budget is approved the following July.  Counties must incur expenditures before receiving payments from their MHBG allocation.  Payments are based on actual expenditures documented on quarterly expenditure reports, which are due to the Department of Health Care Services 20 days after the end of the quarter: 

  • October 20th
  • January 20th
  • April 20th
  • July 20th

MHBG allocations that are unexpended will no longer roll forward to the next fiscal year.  Counties must fully expend their MHBG allocations by September 30and will have until October 20 to submit an additional expenditure report to account for prior year's expenses. Additional expenditure reports submitted after October 20 will not be reimbursed. Payments are not made until all necessary documents are received and applications have been approved.

Data and Other Reporting Requirements

In order to receive the formula allocation, each county is required to submit an annual application or expenditure plan that includes a narrative detailing their intended use of the funds. In addition, the county application must include a Federal Grant Detailed Provider Budget for each program, and signed assurances accepting the Block grant funds under the conditions established by governing federal and State laws, regulations and guidelines, as well as specific conditions included in their county application.                                                                                                         

Each county must provide financial reporting on a quarterly basis and also an annual cost report. Additionally, counties are required to submit a one-page data sheet for each program funded with the block grant. That data sheet is used to provide information to the federal government as part of the State Plan.

Public Comment Process

Under the authority of the Public Health Service Act, the Secretary of the Department of Health and Human Services, through the Center for Mental Health Services (CMHS), Substance Abuse and Mental Health Services Administration (SAMHSA), awards block grants to states to establish or expand an organized community-based system for providing mental health services for adults with serious mental illness and children with serious emotional disturbances.  States are required to submit bi-annual applications and an annual plan update for MHBG funding.  The funds awarded are to be used to carry out the State Plan contained in the application, to evaluate programs and services set in place under the Plan, and to conduct planning, administration and educational activities related to the provision of services under the Plan.

The State Plan: A Description of the State Service System

  1. Identification and analysis of the service system’s strengths, needs and priorities; and
  2. Performance goals and action plans to improve the service system

Block Grant legislation stipulates that as a condition of the funding agreement for the grant, State’s will provide opportunity for the public to comment on the State Plan.  States will make the Plan public in such a manner to facilitate comment from any person (including Federal or other public agency) during the development of the Plan (including any revisions) and after the submission of the Plan to the Secretary of the Department of Health and Human Services.

A request of approval of a modification to the Plan may be made at any time during the year.  Comments on the Plan may be made at any time during the year.  Comments will be considered in any modification or formulation of the Bi-Annual Plan.

To receive an electronic version of the most current MHBG Bi-Annual Plan, send your request to:

You may forward any comments on the Plan to Email Address:

Statutory Citations/Reference Documents

  • Title XIX of the Public Health Service Act as amended by Public Law (P.L.) 102-321 and P.L. 106-321 (Children's Health Act of 2000), and the related Code of Federal Regulations.
  • 2 CFR Part 200, also known as the Uniform Guidance is available at the Electronic Code of Federal Regulations.
  • Definition of Adults with SMI and Children with SED, as published in the Federal Register May 20, 1993 (Volume 58, No. 96)
  • Welfare and Institutions Code, Sections 5700 and 5700.1.
  • State Administrative Manual (SAM) applicable provisions for Federal block grant reporting.

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Last modified date: 6/4/2021 9:23 AM