Alliance Alert: Some first look takeaways from the Governor’s 2026-27 Budget Proposal: at first review, many OMH and OASAS related spending proposals were previewed in the Governor’s recent State of the State address (see our previous First and Second Look summaries).
Most notably, this year’s proposal includes a 1.7% Cost of Living Adjustment. We are grateful to the Governor for starting the negotiations and will work with the legislature and the Administration to fully fund our requested 2.7%.
We are very disappointed that the Governor did not carve behavioral health services out of the state’s managed care program and will be working with our colleagues on this and several other issues.
Also see below for some details around the OASAS budget, and on the crucial concerns the Governor has around the impact of pending federal cuts and policy changes across state agency spending, most notably Medicaid. See more later today…..
In the meantime, here’re some initial details
Office of Mental Health
Specifically, the Budget will:
- Equip an Entire Generation with Mental Health First Aid Training. The State will invest an additional $17.5 M to expand the Teen Mental Health First Aid training to be available to all tenth graders in New York State. This training equips students with the skills to identify, understand, and respond to signs of mental health and substance use challenges, including the impacts of bullying and school violence.
- Create a ‘Schools of Distinction in Prevention’ Designation. The FY 2027 Executive Budget commits $100,000 for OMH to establish a ‘Schools of Distinction in Prevention’ designation to recognize schools that meet key benchmarks in mental health and substance use prevention. Ten selected schools will receive technical assistance and implementation grants to respond to the youth mental health crisis.
- Expand Youth Safe Spaces. The FY 2027 Executive Budget commits $500,000 to designate two additional community organizations as Youth Safe Spaces. Youth Safe Spaces provide young people a place to access behavioral health wellness resources, foster positive relationships with peers, and provide life skills training and employment resources.
- OMH and OASAS Supportive Housing Programs. The FY 2027 Executive Budget invests over $71 million to increase rates for OMH and OASAS housing programs to help ensure that residential providers have sufficient resources to maintain housing capacity for these populations to support recovery and avoid more costly emergency room visits and inpatient care.
- Integrate Behavioral Health Services. Governor Hochul will help streamline services and remove barriers to care by creating a single joint license for providers who deliver both mental health and addiction services, improving access, coordination, and clinical outcomes for individuals with co-occurring disorders/comorbidities. OMH and OASAS will also develop a new “Co-Occurring Capable” (CoC) designation to help individuals identify the providers that will best meet their needs.
- Support First Responders’ Mental Health. OASAS and OMH will collaborate to establish a First Responder Behavioral Health Center of Excellence. A $1 million investment will support development of culturally appropriate behavioral health programming and supports comprised of resource networks, training, and technical assistance through a peer-led model that is accessible to emergency response agencies across the state. This builds upon the Governor’s ongoing commitment to support first responders including through grants to local organizations conducting wellness training and suicide prevention awareness efforts.
Multi-Agency Budget Actions
Targeted Inflationary Increase. The Executive Budget includes a Targeted Inflationary Increase of 1.7 percent to voluntary operated providers of services for OPWDD, OMH, OASAS, Office of Children and Family Services (OCFS), Office of Temporary and Disability Assistance (OTDA), and the State Office for the Aging (SOFA). For Mental Hygiene agencies, the Targeted Inflationary Increase provides an additional $162.2 million ($268.4 million including Federal matching funds) for OPWDD, OMH, and OASAS programs in
FY 2027, and will provide fiscal relief to providers to address rising operating costs and enable them to offer more competitive wages to their staff.
Minimum Wage. The Executive Budget invests an additional $53.5 million in State funds to support minimum wage increases for staff at programs licensed, certified, or otherwise authorized by OPWDD, OMH, and OASAS.
Office of Addiction Services and Supports
Build Community with Guided Recovery Action through Congregational Engagement (GRACE).
An investment of $250,000 will support OASAS in developing resources tailored to faith-based leaders to help them recognize the signs of substance use disorder, reduce stigma, and connect individuals and families to care. OASAS will collaborate with the Department of State’s Interfaith Advisory Council to engage faith-based organizations serving underserved areas, particularly communities of color.
Open Up To 15 New Youth Clubhouses. OASAS will open up to 15 additional Youth Clubhouses, including through co-location with existing Recovery Community and Outreach Centers. To help ensure equity and close gaps in programming, underserved communities will be prioritized. Clubhouses are a non-clinical model that offers safe and healthy spaces for young people to connect with peers, learn life-skills, engage in recreational activities, and participate in a variety of other activities.
Host a Youth-Led Prevention Symposium. OASAS will host a youth prevention symposium to promote peer-led engagement for young people around the dangers of substance use and the availability of community-based resources. OASAS also will develop a comprehensive youth-focused campaign using social media, television, and digital streaming.
Address Problem Gambling Through Expanded Access to Specialized Prevention and Treatment Services. As access to gambling opportunities, including online sports betting increases, New York needs a comprehensive approach serving those
in need of support. The FY 2027 Executive Budget provides funding to establish a Gambling Addiction Workforce Institute, integrate gambling peer and supportive services into recovery and outreach centers, and conduct a 10-year study to assess trends
in the impact of gambling. The Budget also includes legislation to ensure insurance coverage for treatment of all addiction disorders by aligning the Insurance Law with the Mental Hygiene Law and recent changes to the Diagnostic and Statistical Manual of Mental Disorders (DSM-5).
Invest in Cannabis Prevention Strategies, Education, Training and Treatment. As revenues from the licensing and sales of cannabis distributors’ increases, OASAS will utilize new resources to expand access to appropriate treatment services, help to prevent underage use, educate the public regarding cannabis use, and distribute supplies to keep our families and communities safe.
Opioid Settlement Fund Investments. New York is leading the nation in ensuring revenue from
settlements with opioid manufacturers is supporting the organizations offering prevention, treatment, harm reduction, and recovery services. As the lead agency and administrator of the Opioid Settlement Fund, OASAS has made over $454 million available to date. In line with recommendations from the Opioid Settlement Fund Advisory Board, OASAS has developed and expanded initiatives to increase access to medication treatment, support street outreach teams in engaging with individuals not connected to services, ensure prevention activities reach underserved communities, enhance recovery supports, distribute lifesaving overdose prevention supplies, and recruit and retain a skilled workforce.
The Executive Budget provides authority for OASAS to build on these efforts with resources anticipated to be available in FY 2027.
FEDERAL FUNDS MANAGEMENT AND RISKS
New York State maintains robust controls on spending, and these extend to the receipt and expenditure of federal funds. End-to-end federal funds management allows the State to monitor the federal landscape, advocate for necessary aid, and centrally manage risk.
New York State regularly monitors key federal activities to identify and mitigate risks to the State and its Financial Plan. Federal action in a wide array of policy areas can have significant implications for the State, its economy, and the Financial Plan.
Notable near-term risks to the Financial Plan include:
- Implementation of H.R. 1. The law includes significant changes to Medicaid, SNAP and federal tax law that are expected to drive significant costs to the State in FY 2027 and outyears.
- Haphazard administration of federal grant programs. Abrupt attempts to cancel or otherwise alter the terms of federal grants has caused confusion and delay in the implementation of many federal programs. Multiple states, including New York, have been forced to seek judicial relief on numerous occasions as a result.
- Final FFY 2026 appropriations. Despite being more than three months into FFY 2026, Congress has yet to finalize all twelve annual appropriations bills for the Federal fiscal year. Cuts to federal funding for significant programs on which New Yorkers rely could force the State to make corresponding cuts to such programs.
- Expiration of transportation investment programs last reauthorized by the Infrastructure Investment and Jobs Act. Significant federal programs for highway and transit improvements expire at the end of FFY 2026 (September 30, 2026).
- Impending cuts to the Medicaid Disproportionate Share Hospital (DSH) program. Cuts to Medicaid DSH would have a significant impact on New York’s safety net hospitals. These cuts are already in law and require legislative action to be repealed or delayed.