Abstract
The study investigates changes in state mental health spending under the Alcohol. Drug Abuse, and Mental Health (ADAMHA) block grant. A central issue has been whether state policy makers would decide to compensate for Federal cutbacks, or would follow suit and cutback their own spending. Budgetary data were collected and analyzed with multivariate statistical procedures. The findings indicate that the mental health block grant has had a stimulative effect on state mental health spending in general and on community care spending in particular. Nevertheless, the former federally funded CMHCs have faced major cutbacks as states have shifted their resources to other community agencies more attuned to the needs of the chronically mentally ill. These effects are also associated with the states' fiscal capacities, degree of decentralization, presence of extensive mental health services, and policies for targeting the chronically psychotic.
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