California Promised Billions For School Mental Health. Instead, Districts Got A Paperwork Nightmare

When the staff at Plumas Charter School first heard about California’s plan to fund on-campus mental health care, it seemed like the perfect solution for a rural community short on doctors. The small school had endured a brutal stretch of student trauma, including pandemic isolation, nearby wildfires, and a car accident that killed a classmate.

According to reporting by KFF Health News, the school used temporary federal funds to hire a full-time therapist and a wellness coach to support struggling students.

The state’s new billing program was supposed to permanently cover those salaries by forcing health insurance companies to reimburse schools for behavioral care. Instead, it turned into an administrative roadblock. Plumas Charter employees spent two years attending webinars, filling out forms, and researching digital health systems.

When they asked the state for help, they waited months for replies. The school finally received its first reimbursement check in April for $8,000, leaving at least $12,000 in claims still outstanding.

“In theory, this should be a good program,” said Taletha Washburn, the school’s executive director, to KFF. “We’re too small, and our funds are too limited to just keep waiting.”

Plumas Charter is not alone. Out of roughly 1,000 public schools, community colleges, and universities signed up for Governor Gavin Newsom’s initiative, fewer than one-fifth had filed a single claim as of June 1. More than half of all California school systems have opted out of the program entirely.

While state officials told schools the program could bring in $500 million a year, the state’s third-party administrator, Carelon Behavioral Health, has approved just $11.3 million across 186 educational agencies. Meanwhile, the state paid Carelon $65 million to run the system.

Because the promised insurance money never materialized, school districts across the state are now handing out thousands of pink slips to counselors and therapists. Many of these mental health workers were originally hired using temporary federal pandemic aid that has since dried up. The state has added 1,855 school counselors since 2021—far short of the 10,000 Newsom originally promised.

“One of the things that makes people hate government is when we make a promise and then we struggle to keep that promise because we can’t get the administrative part of it up and running,” State Assembly Member Dawn Addis, a Democrat and former special education teacher, told KFF.

Newsom’s office declined to comment for this story. However, at a press conference regarding the state budget, the governor defended the overall project, stating that “no other state in the nation has done more.” He added, “Making investments in wellness, not just physical health, but mental health for our kids, is a good investment.” Newsom did not answer when asked directly if he considered the program a success.

The administrative workload has been particularly difficult for smaller, rural districts where employees wear multiple hats. At Plumas Charter, the human resources director also runs the business office, and the gym teacher doubles as the discipline coordinator. Binders of complex state documentation sit stacked on office desks. Twice, the state rejected the school’s application, pointing to missing data or technical requirements. When staff complained about online billing errors, state officials suggested they mail in paper forms instead.

State officials argue that the program is simply facing normal growing pains for a massive policy shift. Autumn Boylan, a deputy director at the Department of Health Care Services, told lawmakers that her office has loosened requirements and extended deadlines based on feedback. “It’s not a problem of claims being submitted and not paid. It’s a problem of claims not yet being submitted for payment,” Boylan said, noting that reimbursement volumes have begun to grow.

Even in larger districts, the money is slow to arrive. The Anaheim Elementary School District has successfully clawed back $1.1 million since early 2025, but that represents less than 30% of the mental health services it actually provided. In that largely Latino district, school officials noted that parents are often hesitant to hand over insurance info due to fears of federal immigration raids.

Experts say the messy rollout shows the risk of trying to fix too many things at once. While other states chose to focus on single goals—like universal mental health screenings in Illinois or expanded basic coverage in Colorado—California tried to overhaul its entire school billing framework overnight.

Tom Insel, the former head of the National Institute of Mental Health and an adviser to Newsom, noted that while the policy was ambitious, the execution has fallen short.

“What we struggle with in California is: We spend the money, but we don’t always see the outcomes,” Insel said to KFF. “It’s sobering to realize… that you could actually get the programs, get the money, get everything that you want from the policy side, but the execution just isn’t there.”