REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
June 23, 2026
FROM
JOSHUA DUGAS, Acting Director, Department of Behavioral Health
SUBJECT
Title
Subrecipient Agreement with Sierra Health Foundation: Center for Health Program Management for Proposition 36 Funding Disbursement
End
RECOMMENDATION(S)
Recommendation
1. Approve Proposition 36 Subrecipient Agreement, including non-standard terms, and its related attachments, with Sierra Health Foundation: Center for Health Program Management for the disbursement of Proposition 36 allocated funding, in the amount of $1,232,943, for the provision of services to individuals for treatment-mandated felonies in lieu of traditional sentencing, for the period of March 1, 2026 through March 31, 2028.
2. Authorize the Chair of the Board of Supervisors, Assistant Executive Officer, Deputy Executive Officer, or the Director of the Department of Behavioral Health, to execute and submit the Proposition 36 Subrecipient Agreement, and any subsequent non-substantive amendments to the Subrecipient Agreement, on behalf of the County, subject to review by County Counsel.
3. Direct the Director of the Department of Behavioral Health to transmit the Proposition 36 Subrecipient Agreement, along with any subsequent non-substantive amendments to the Subrecipient Agreement, to the Clerk of the Board of Supervisors within 30 days of execution.
(Presenter: Joshua Dugas, Acting Director, 252-5142)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Foster Sustainable Development Through Strategic Partnerships.
Provide for the Safety, Health and Social Service Needs of County Residents.
FINANCIAL IMPACT
Approval of this item will not result in the use of Discretionary General Funding (Net County Cost). The Proposition 36 Subrecipient Agreement (SA) in an amount not to exceed $1,232,943 is funded through a one-time allocation from the State Department of Health Care Services (DHCS). These non-competitive grant funds are provided to County Behavioral Health Departments (CBHDs) to support the implementation of Proposition 36 (2024). CBHDs must spend at least 50 percent of funds on planning and capacity-building activities to expand and accelerate services. No local match is required for funds used solely for these activities. Any funds used for behavioral health treatment services require a 25 percent local match; however, DBH will not use SA funds for treatment services and will only use funds for capacity-building activities. As a condition of receiving funds, CBHDs must collaborate with designated entities and submit required data and outcomes to DHCS. Adequate appropriation and revenue have been included in the Department of Behavioral Health’s (DBH) 2025-26 and 2026-27 budgets and will be included in future recommended budgets.
BACKGROUND INFORMATION
DBH is responsible for providing mental health and substance use disorder (SUD) services to San Bernardino County (County) residents experiencing severe mental illness and/or SUD. Through its Substance Use Disorder and Recovery Services (SUDRS) division, DBH delivers a comprehensive continuum of SUD prevention, treatment, and education services to County communities. These services are facilitated via contracts with community-based organizations and County-operated clinics to promote prevention, intervention, recovery, and long-term resiliency for individuals and their families.
The California Department of Health Care Services (DHCS) administers funding through administrative entities like the Sierra Health Foundation: Center for Health Program Management (The Center) for the disbursement of funds for SUD services. DBH has provided SUD services through intergovernmental agreements with DHCS since 1994.
On November 5, 2024, California voters approved Proposition 36 which modified previous legislation to increase accountability for certain drug and theft crimes. A central pillar of Proposition 36 is the creation of a “treatment-mandated felony,” a new statute which allows prosecutors to charge individuals with a felony for drug possession if they have two or more prior drug-related convictions. The statutory intent of a “treatment-mandated felony” is to allow individuals charged under this statute the opportunity for dismissal of charges if the individual completes court-ordered treatment.
Proposition 36 did not include a dedicated funding source for these legal mandates when the legislation was passed in November 2024. Through the State 2025 Budget Act (Chapter 5, Statutes of 2025, Assembly Bill [AB] 102), effective June 2025, the California State Legislature included a one-time $50,000,000 allocation intended for Proposition 36 behavioral health-related implementation. The specific allocations for each CBHD throughout the State were determined by DHCS, in consultation with the Judicial Council. AB 102 funding is intended to support CBHDs in establishing the necessary infrastructure to conduct assessments, coordinate with the courts, and deliver Proposition 36 mandated treatment services.
On January 6, 2026, DHCS, through The Center, issued instructions for completing a Request for Information (RFI) due February 27, 2026. On February 25, 2026, the County Chief Executive Officer executed a Grant Summary Form authorizing the DBH Director to submit the RFI materials, which were sent to The Center on February 27, 2026.
On May 14, 2026, DBH was notified of the award and received instructions for executing the SA. DBH received the SA for review on June 1, 2026, despite a term start date of March 1, 2026. Retroactive approval is now requested, as this is the earliest date available following required program, fiscal, administrative, and legal reviews. There was no impact on services caused by the retroactivity. However, if the execution of this agreement is delayed further, it could lead to administrative issues affecting the implementation of Proposition 36 funding allocated for the County. DBH will use Proposition 36 funds to expand capacity for SUD treatment, court coordination, and administrative efficacy.
1. The County may not terminate the agreement for convenience.
• The County standard contract allows the County to terminate the contract for convenience with 30 days written notice.
• Potential Impact: There is no ability for the County to terminate for convenience and is bound to the obligations in the agreement for the term of the agreement.
2. The agreement does not include the standard County insurance requirements, including that the County be named as an additional insured.
• The County standard contract requires contractors to carry appropriate insurance at limits and under conditions determined by the County's Risk Management Department.
• Potential Impact: Without any of the standard County insurance requirements, including being named as an additional insured, the County has no assurance that The Center will be financially responsible for claims that may arise under the agreement, which could result in expenses to the County.
3. The agreement imposes insurance obligations on the County.
• The County standard contract does not impose any insurance obligations on the County.
• Potential Impact: The County will need to be mindful of the insurance obligations and ensure compliance to avoid a breach of the agreement terms.
4. The County is required to indemnify The Center for claims arising out of any breach of the Agreement by the County, the performance of services by the County and any subcontractor’s actions or omissions in its performance of services. The Center may also offset any indemnification payment amount against any amounts payable to the County under the Agreement.
• The County standard contract does not include any indemnification or defense by the County of a contractor.
• Potential Impact: By agreeing to indemnify The Center, the County could be contractually waiving the protection of sovereign immunity. Claims that may otherwise be barred against the County, time-limited, or expense-limited could be brought against The Center without such limitations and the County could be responsible to defend and reimburse The Center for costs, expenses, and damages, which could exceed the total Agreement amount.
5. All disputes arising under the Agreement must be settled by binding arbitration.
• The County standard contract does not require arbitration.
• Potential Impact: Binding arbitration decisions are not appealable. In addition, disputes that might otherwise be settled in small claims court would incur arbitration costs that could exceed the costs of a small claims action, and the Agreement amount.
6. The prevailing party is entitled to recover attorneys’ fees and costs.
• The County standard contract requires each party to bear its own costs and attorney fees, regardless of who is the prevailing party.
• Potential Impact: If either party institutes any legal proceedings related to the Agreement, the prevailing party will be entitled to recover attorneys’ fees, which could exceed the total Agreement amount.
DBH recommends approval of the SA, including non-standard terms, to receive Proposition 36 allocated funding in order to expand capacity for SUD treatment, court coordination, and administrative efficacy. Approval of Recommendation No. 2 authorizes the Director of DBH to execute the Proposition 36 SA and grants delegated authority for any non-substantive amendments, eliminating the need to return to the Board for approval thereby easing the administrative burden for the distribution of Proposition 36 funds.
PROCUREMENT
N/A
REVIEW BY OTHERS
This item has been reviewed by Behavioral Health (Diana Barajas, Administrative Supervisor I, 383-3940) on June 3, 2026; County Counsel (Dawn Martin, Deputy County Counsel, 387-5455) on June 1, 2026; Risk Management (Stephanie Pacheco, Staff Analyst II, 386-9039) on June 2, 2026; and County Finance and Administration (Iliana Rodriguez, Administrative Analyst, 386-8392) on June 5, 2026.