Budget Cuts Hit Mental Health, Substance Abuse Services

Marcia P. Coggs Health & Human Services Center, 1230 W. Cherry St. Photo taken June 13, 2025 by Graham Kilmer.

Milwaukee County’s Behavioral Health Services (BHS) division, which provides mental health and substance abuse services, will likely have to absorb a $17.6 million budget cut next year.

A combination of declining state and federal revenues and the county’s own $46.7 million budget gap led Milwaukee County Executive David Crowley to include the cuts in his recommended budget.

Declining Medicaid enrollment is the primary reason for the cuts, according to the BHS budget. Medicaid reimbursement from the state, which provides funding for county behavioral health programs, is expected to decrease by $15 million, according to Matthew Fortman, Department of Health and Human Services (DHHS) fiscal administrator. The division will also see approximately a $2.1 million decrease in grant funding, he added.

“We should note that roughly half of the year-over-year decline in Medicaid revenue is not a true loss of funding, but instead a right-sizing of the budget based on current utilization trends… The remainder of the Medicaid loss is due to higher volumes of uninsured consumers in our [mental health] programs and lower cost report revenue from year-over-year declines in cost reportable expenses,” Fortman said.

Medicaid enrollment in Wisconsin has been dropping since June 2023, when the COVID-19-era policy of automatic re-enrollment ended. After the onset of the pandemic, Congress stopped annual enrollment to preserve health care access. Recipients are again required to begin submitting annual applications certifying their eligibility, which is primarily determined by income.

From May to June 2023, enrollment in all Medicaid programs dropped by 52,386 recipients, according to Wisconsin Department of Health Services data. As of August 2025, Medicaid enrollment has declined by 376,902 since the return of annual enrollment.

“In order to balance their budget, [BHS] made reductions of $7 million in contracts, mainly for non-mandated services to the detox center and [Alcohol and Other Drug Abuse] prevention and advocacy services,” said Steve Cady, research and policy director in the Office of the Comptroller, during a meeting of the Milwaukee County Board’s Finance Committee

The budget for Community Access to Recovery Services (CARS), which funds services for persons experiencing substance abuse disorder, is being reduced by approximately $7 million. Program revenue is going down to reflect declining utilization and Medicaid enrollment for individuals in the programs, as well as lost grant funding.

On top of declining Medicaid enrollment, county departments across the government were forced to reduce tax levy spending to help the county close a large budget gap in 2026. In May, Crowley told department heads to prepare for 10% reductions in property tax revenue in each of their budgets.

Community-based treatment facilities are also seeing cuts. In total, the budget for these services will be reduced by $2.3 million. A $2.9 million contract with the Matt Talbot Detoxification Center is being eliminated. Ending the contract will give BHS $1.9 million in block grant funding to use on other recovery services. Another $700,000 in alcohol and drug abuse prevention contracts is also slated for elimination. BHS is reducing its workforce by approximately 32 full-time employees, though 23 employees will be shifted to DHHS.

BHS is a constituent division of DHHS. The division’s budget and policy are controlled by the Milwaukee County Mental Health Board. State law puts a ceiling and a floor on how much the county can spend on BHS. If the annual budget is somewhere between the two figures, the county board is obligated to approve the spending.

When Crowley’s budget was released on Sept. 30, four county supervisors signed onto a statement criticizing the budget for reducing spending in BHS while increasing funding for the county criminal justice system.

“Nearly half of the tax levy is spent on law enforcement and incarceration—including courts, the sheriff, district attorney, County Jail and the [Community Reintegration Center]—while behavioral health services are facing a proposed $17.6 million cut,” said supervisors Juan Miguel Martinez, Justin Bielinski, Anne O’Connor and Caroline Gómez-Tom. “This is not how we make Milwaukee the healthiest county in Wisconsin. Milwaukee County faces strict state-imposed levy caps that limit flexibility, yet the budget continues to prioritize reactive approaches over prevention, forcing difficult choices that undermine public health and community well-being.”

Update: Story has been updated to include comment from DHHS provided following publication.