By JAKE SEGAL and KAREN LARSEN
Call 988 in California and someone picks up. In parts of the state, a mobile crisis team might arrive at your door instead of police. Through Proposition 1, the state is putting billions into treatment beds, supportive housing, and youth services. On paper, California is in the middle of the most ambitious behavioral health expansion in the country.
And yet, about two-thirds of adults and adolescents in need of care don’t get treatment. A behavioral health system that you can’t staff is just a blueprint, not a strategy.
Even as demand for mental health and substance use treatment surges, the supply of trained professionals is not keeping pace. California needs 375,000 behavioral workers by 2030, doubling positions statewide. State officials estimate a 38% shortfall in psychiatrists and a gap of roughly one-third among the 100,000 licensed therapists needed. Rural and underserved communities are especially hard hit; many have no child and adolescent psychiatrists at all. And shortages extend beyond doctors and therapists. Clinical social workers, addiction counselors, peer support specialists, and community health workers are also in short supply.
Building on State Leadership
California is not starting from scratch. The Department of Health Care Access and Information (HCAI) already administers several scholarship and loan repayment programs that encourage clinicians to practice in high-need settings, including loan repayment for nurses, licensed mental health providers, substance use disorder counselors, and psychiatric nurse practitioners. Through the BH-CONNECT federal waiver, HCAI is rolling out five workforce programs over 2025–2030, including a Medi-Cal Behavioral Health Student Loan Repayment Program.
These are important efforts, but they aren’t scaled to the size of the crisis. Loan repayment awards are often a fraction of a graduate’s full debt, and have limited availability. Even the largest programs will only target a few hundred providers; California needs thousands more.
Repayment alone doesn’t solve the immediate affordability problem: people can’t enter training if they can’t pay rent while they are doing it.
A $1 Billion Statewide Workforce Fund for California
California should create a statewide Behavioral Health Workforce “Pay It Forward” Fund: a $1 billion pool that lends money to trainees at zero interest, gets paid back as they get good jobs, and lends those same dollars out again.
Unlike a one-time grant program that disappears at the end of the budget cycle, a revolving fund is designed to recycle repayments to support future cohorts. It stretches public and philanthropic dollars further, while not increasing debt burden if there’s no payoff for trainees.
These funds provide zero-interest loans to cover tuition as well as critical living expenses while completing training and/or licensure. Repayments are recycled to support future cohorts. And graduates who work in high-need public systems can be eligible for retention-based loan forgiveness.
In the wake of federal changes that severely curtail access to affordable loans for graduate degrees—through Grad PLUS caps under HR1—the need is ever greater.
Beyond financing tuition, these models help close affordability gaps for peers, substance use counselors, and navigators–workers who may not carry large student loans but face meaningful financial barriers during training itself. They can also be adapted to support incumbent workers seeking additional credentials, further strengthening retention.
This model is not theoretical—it’s being piloted today in San Diego, where a county-led program (supported by one of our organizations, Social Finance) launched in 2025 to address an 8,000-worker shortfall in the region. Similar revolving workforce funds are operating in states such as New Jersey, Indiana, and Massachusetts, demonstrating how finite public investments can support long-term workforce pipelines and worker retention while building accountability into the system.
The Stakes Are High
Behavioral health policy changes don’t work without the workforce to deliver. A Pay It Forward Fund won’t close the gap alone. But without something like it, the rest of the investment can’t do what it was designed to do.
Karen Larsen, LMFT, is the CEO of the Steinberg Institute and formerly served as the Director of Yolo County’s Health and Human Services Agency. Jake Segal is managing director for the public sector practice of Social Finance
