(a) As used in this section, “department” means the State Department of State Hospitals.

(b) (1) The department shall implement a growth cap program for all counties for individuals committed pursuant to § 1370 of the Penal Code. The department shall charge counties penalty payments as described in this subdivision to implement the growth cap program.

(2) The baseline number of individuals determined to be incompetent to stand trial on felony charges for each county shall be the number of felony incompetency determinations made in the 2021-22 fiscal year for each county. For any county with zero felony incompetency to stand trial determinations in the 2021-22 fiscal year, the baseline shall be set at one individual.

(3) (A) Commencing with the 2022-23 fiscal year and each fiscal year thereafter, for each felony incompetent to stand trial determination that exceeds the baseline number identified in paragraph (2), a county shall pay the penalty amount described in subparagraph (C).

(B) The department shall reconcile the total county incompetent to stand trial determinations against the baseline by September 30 each year.

(C) Calculations shall be based on the published per individual rate set forth by the department for state hospital treatment for individuals found incompetent to stand trial on a felony charge, as follows:

(i) Each county shall make penalty payments equivalent to 50 percent of the rate for the 5th, 6th, and 7th individual felony incompetent to stand trial determinations over the baseline, 75 percent of the rate for the 8th and 9th individual felony incompetent to stand trial determinations over the baseline, and 100 percent of the rate for the 10th and all subsequent felony incompetent to stand trial determinations over the baseline.

(ii) (I) Commencing with the 2026-27 fiscal year and each fiscal year thereafter, a county with a felony mental health diversion or community-based restoration contract with the department shall, for the third and any subsequent individual felony incompetent to stand trial determinations over the baseline, make penalty payments equivalent to 100 percent of the rate.

(II) Commencing with the 2026-27 fiscal year and each fiscal year thereafter, any county without a felony mental health diversion or community-based restoration contract with the department shall, for the third and any subsequent individual felony incompetent to stand trial determinations over the baseline, make penalty payments equivalent to 150 percent of the rate.

(D) Commencing with the 2022-23 fiscal year, the department shall periodically notify the superior court and relevant county agencies of each county, including, but not limited to, the county administrator, behavioral health department, sheriff, public defender, and district attorney of the total number of felony incompetent to stand trial determinations made in that county for the current fiscal year compared to the baseline determination for that county.

(E) Commencing with the 2023-24 fiscal year, each county shall remit payment to the department in an amount equal to the amount identified in the invoice issued to the county administrator or their designee by the department. The penalty payment shall be due no later than 90 days after the date that the invoice is received by the county. The penalty funds shall be collected as revenue by the department and deposited by the Controller into the Mental Health Diversion Fund, created pursuant to subdivision (c).

(F) A county may pay these penalty payments from any local funding source available, including funds received by the county through contracts issued by the department to the county for purposes of serving the felony incompetent to stand trial population.

(G) Commencing with the 2023-24 fiscal year, and each fiscal year thereafter, notwithstanding any other budgetary or accounting requirements, the department shall make the final determination of the proper budgeting and accounting of the penalties received, deposited, and disbursed from the Mental Health Diversion Fund to each county as appropriate.

(c) (1) The Mental Health Diversion Fund is hereby created in the State Treasury. The fund shall receive penalty payments from each county as collected by the department pursuant to this section. All moneys in the fund are reserved and continuously appropriated, without regard to fiscal years. The funds collected in the fund shall be used for the purpose of supporting county activities that will divert individuals with serious mental illnesses away from the criminal justice system and lead to the reduction of felony incompetent to stand trial determinations.

(2) Activities supported by the funds collected in the Mental Health Diversion Fund shall include one or more of the following:

(A) Prebooking mental health diversion to serve those with serious mental illness and prevent their felony arrest. The target population that shall be served are individuals demonstrating psychosis manifesting as hallucinations, delusions, disorganized thoughts, or disorganized behavior at the time of the interaction.

(B) Postbooking mental health diversion to serve those with serious mental illness and who are likely to be found incompetent to stand trial, to prevent the incompetent to stand trial determination and divert the individual from incarceration. The target population that shall be served are individuals diagnosed with a mental disorder as identified in the most recent edition of the Diagnostic and Statistical Manual of Mental Disorders, including, but not limited to, bipolar disorder, schizophrenia, and schizoaffective disorder but excluding a primary diagnosis of antisocial personality disorder, borderline personality disorder, and pedophilia, and who are presenting non-substance-induced psychotic symptoms.

(C) Reentry services and support to serve those who have been restored to competency following a felony incompetent to stand trial commitment and directly released to the community from jail.

(d) (1) Beginning in the 2024-25 fiscal year, each county that has received funds from the Mental Health Diversion Fund shall submit an annual report to the department, on or before October 1 of each fiscal year, identifying how funds were used in the prior fiscal year.

(2) The department shall, by no later than July 1, 2024, publish an administrative letter to counties outlining the required form and content of the report.

(3) Annual reports submitted by each county subject to this section shall include, without limitation, the number of individuals served, the services and support provided, and the projected impact to the number of felony incompetent to stand trial determinations by the county.

(e) Commencing with the 2023-24 fiscal year, and each fiscal year thereafter, the department shall submit a schedule to the Controller of disbursements of funds from the Mental Health Diversion Fund to each county. Disbursements for each county shall equal the amount of county payments made to the department in accordance with subdivision (b).

(f) Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement, interpret, or make specific this section by means of a departmental letter or other similar instruction, as necessary.

(Amended by Stats. 2023, Ch. 311, Sec. 28. (SB 883) Effective January 1, 2024.)