June 2002

Many States Reporting Cost-Cutting Measures for Children's Mental Health Services

A substantial number of states report scaling back children's mental health services in fiscal years 2002 and 2003, largely because of overall budget shortfalls. States, along with local jurisdictions, are the primary financers of children's mental health services delivered by community mental health centers and other community-based program providers. Although all states receive substantial amounts of federal Medicaid and S-CHIP matching funds to finance mental health services to children eligible for coverage, they receive little federal monetary assistance to support the many private nonprofit providers that serve uninsured and underinsured children and those with the most complex conditions. Federal Community Mental Health Services Block Grants provide small grants -- on average, $8 million per state in fiscal year 2002 -- to fund services for all age groups. Federal grants for Comprehensive Community Mental Health Services for Children and Their Families provide smaller amounts -- under a total fiscal year 2002 budget of only $96.7 million -- to support community-based systems of care for children with serious emotional disturbances,1 but these 6-year grants have not been awarded to all states and they carry substantial matching requirements.2 As a result of these federal financing policies, state mental health authorities have tended to see their role primarily as gap filling to meet the numerous needs of uninsured, underinsured, and seriously emotionally disturbed children.