How Is It Funded?

Mobile crisis programs cost less than police response per case, and when you add the downstream costs they prevent (ER visits, jail bookings, repeat crises), the gap widens further. As of September 2024, 21 states have opted into Medicaid¹‘s enhanced 85% federal match for mobile crisis services under ARPA, with the funding window open through March 2027. Durham’s HEART program generates $902 in net savings per call, leading NBER researchers to conclude it “pays for itself through fiscal externalities.”²

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The Cost Comparison That Matters

The first thing a budget director will ask is what it costs. SAMHSA data shows mobile crisis programs cost 23% less per case³ than police response. Denver’s analysis found that processing mental health crises through the criminal justice system, arrest, booking, court proceedings, incarceration — costs four times more than mobile crisis response⁴. Guilford County, North Carolina documented $400,000 in direct savings and 170 staff hours⁵ freed through a single targeted intervention.

$902

Net savings per call. Durham’s HEART program costs $1,191 per response but generates $2,093⁶ in fiscal savings. NBER conclusion: “the program pays for itself through fiscal externalities.” When surveyed, 95% of Durham residents expressed willingness to pay, valuing it at $102.91/year, more than eight times the per-resident cost.

But the per-case comparison understates the real economics. The larger savings come from what the program prevents: emergency room visits that don’t happen because crises are resolved in the community, jail bookings that don’t happen because people get treatment instead of arrest, and repeat 911 calls that don’t happen because case managers connect people to ongoing services. SAMHSA data shows mobile crisis programs reduce follow-up hospitalization costs by 79%⁷.

Madison, Wisconsin’s CARES team handled over 3,500 calls in 2024 on a budget of $1.7 million.⁸

Ohio is investing $51 million in statewide youth mobile crisis⁹ services. The governor’s framing: “MRSS reduces strain on other emergency services that might not be appropriate in this kind of situation.” The program is free to families, “no one will receive a bill, because Medicaid and state funds pay for the services.”¹⁰

Mobile crisis response is free to users. For individuals with Medicaid, insurance is billed with no copays or deductibles. For uninsured individuals, the city absorbs the cost as a public safety service.

The Medicaid Breakthrough

85%

Federal match rate. Oregon became the first state approved¹¹ for 85% Medicaid reimbursement for mobile crisis services under the American Rescue Plan Act (2021). By November 2023, 13 states had obtained CMS approval¹²; by September 2024, 21 states had opted in, according to Andrew Anderson and Jillian Jorem at Johns Hopkins¹³, writing in the Milbank Quarterly (April 2025). The Kaiser Family Foundation’s tracking analysis documents the state-by-state progress.

The 85% match for three years is designed to give states time to build infrastructure and demonstrate value before the enhanced rate sunsets on March 31, 2027. After that, states transition to standard Medicaid match rates, which vary by state but typically remain substantial. The Milbank analysis highlights Ramsey County, Minnesota as a sustainability model¹⁴: by billing Medicaid and private insurers directly, the county has made its mobile crisis teams financially self-sustaining beyond the ARPA window. Montana offers the cautionary tale¹⁵, the state found that mobile crisis programs cost more than originally projected, and when insurance reimbursement proved inadequate (Montana doesn’t reimburse mobile crisis through Medicaid or private insurers), two programs in Great Falls and Billings shut down entirely¹⁶.

States that use the three-year window to build programs, collect outcomes data, and demonstrate cost savings are well-positioned to continue at standard match rates. States that treat it as free money without building the sustainability case are vulnerable when the enhanced rate expires.

The Medicaid pathway has a significant limitation: it only covers Medicaid beneficiaries. When a crisis team responds to an uninsured person, which happens regularly — there’s no federal reimbursement. Cities still need to fund those responses through general revenue, state grants, or other sources. This means Medicaid is the base of the funding stack, not the whole thing.

How Cities Actually Pay For It

Every established program layers multiple funding sources. No single revenue stream covers the full cost, and programs that depend on one source are the most vulnerable when budgets tighten or grants expire.

At the federal level, SAMHSA provides grants specifically for crisis response programs, and the American Rescue Plan Act gave many cities the startup capital to launch or expand, one-time pandemic relief dollars that let communities build what could then be sustained through other sources. Additional HHS grants support training, evaluation, and specific program components. Federal funding is best understood through the ARPA experience: many cities used pandemic relief dollars to launch programs, then faced fiscal cliffs when those one-time funds expired. Federal grants are essential for starting up, but cities that treated them as operational funding without building sustainable sources underneath are now in budget crises.

At the state level, the scale of investment varies enormously, but the direction is consistent. Ohio committed $51 million for statewide youth mobile crisis services across all 88 counties. Montana invested $8 million for statewide expansion, including $500,000 specifically for workforce development curriculum. Indiana created a competitive “Mobile Crisis Accelerator Program” providing up to $1 million per organization. Minnesota mandated a statewide crisis response program with state funding for county implementation. Virginia found a different path entirely — it’s one of six states funding crisis services through telecommunications fees, a small charge on phone bills that creates a dedicated, sustainable revenue stream that doesn’t compete with the general fund. Virginia is one of only six states that have enacted legislation to fund crisis services through telecom fees¹⁷, according to The Center Square.

At the local level, the general fund remains the backbone of most programs. Philadelphia commits $9 million annually. San Diego County’s expansion is part of a billion-dollar overhaul of mental health services. Madison runs its CARES team on $1.7 million. Harris County recently brought the program fully in-house with county employees, absorbing the full cost into county operations, a decision driven by the conviction that permanent programs require permanent budget lines, not annual grant renewals.

The layered funding model documented in durable programs layers all three: Medicaid reimbursement as the base, state grants or dedicated revenue streams for expansion and workforce development, and the local general fund for the remainder which includes services to the uninsured. Programs funded solely through expiring grants are now facing fiscal cliffs. Programs that stacked sources, like Harris County, which absorbed the program into permanent county operations, have institutional permanence.

The ARPA Cliff

Many programs launched on American Rescue Plan Act funds, one-time federal pandemic relief dollars that are now expiring. This is the most immediate fiscal risk facing mobile crisis programs.

Programs that planned for the ARPA expiration, used the startup window to build outcomes data, cultivate council support, demonstrate cost savings, and secure Medicaid approval, are surviving the transition. They used ARPA to prove the concept and then built a permanent funding base underneath it.

Programs that treated ARPA as operational funding without a sustainability plan are now in budget crises. The grant gave them enough runway to build a program but not enough to sustain it, and the political cost of shutting down a program people rely on is higher than the cost of funding it would have been.

The consistent pattern from cities with durable programs: use grants for startup costs, hiring, training, vehicles, dispatch integration, technology — and build operational funding from sustainable sources from day one. Programs that relied on expiring federal grants for ongoing operations, including CAHOOTS and Montana’s shuttered teams, proved structurally fragile.

The Liability Offset

$3B+

Liability settlements. Local governments representing 25 of the nation’s largest police and sheriff’s departments paid out over three billion dollars over ten years to settle civil lawsuit claims related to police encounters.

The Law Enforcement Action Partnership’s analysis makes the direct connection: cities should “assess the liability risk of sending community responders to low-risk calls not in a vacuum but in comparison to the liability risk of the status quo, handling those same calls by dispatching police.”

Police encounters with people in behavioral health crisis carry liability risk under both state tort law and federal civil rights statutes. The U.S. Department of Justice’s investigation of the Phoenix Police Department found officers “fire Tasers at people with little or no warning” during behavioral health encounters and “fail to recognize that a person’s disability may impact whether they can understand commands.”

Mobile crisis teams eliminate this category of liability by design. Unarmed clinicians responding to behavioral health calls don’t use force. The safety record, zero or near-zero injuries across every documented program, means the liability risk of civilian response has not materialized. The liability cost of police response to these same calls has been documented in the billions.

The In-House vs. Contractor Cost Decision

Employment structure affects both cost and quality.

Contracting with a nonprofit provider is faster and cheaper at launch, you skip the process of creating new city job classifications, negotiating benefits, and building HR infrastructure. St. Petersburg partners with Gulf Coast Jewish Family & Community Services. Austin’s EMCOT is run by Integral Care.

But in-house employment is more durable. Harris County transitioned from contractors to county employees for a reason: direct oversight, clearer accountability, better benefits, and better retention. Portland designated crisis responders as formal first responders with full employment benefits explicitly to attract and retain talent.

Polling supports the in-house model.¹⁹ When Harris County residents were asked about employment structure for mobile crisis responders, 78% agreed that “all first responders responsible for public safety should be public employees working for a county agency.” Seventy-five percent agreed that public employment would lead to higher-quality recruits because “private contractors are subject to minor shifts in budget situations or political administrations.” And 74% agreed that “public agencies are harder to eliminate when political administrations or budget situations change.”¹⁹

The cost tradeoff: in-house is more expensive per employee (benefits, pension contributions, civil service protections) but produces better retention, lower turnover costs, and stronger institutional integration. Many cities start with contractors for speed and transition to in-house as the program matures.

How Cities Frame The Fiscal Case

The fiscal argument that tested strongest across both parties in message research: mobile crisis response prevents the same crisis from happening again and keeps officers where they’re needed most.¹⁸

Cities that built durable budget support documented the same cost offsets: reduced repeat 911 calls, officers redeployed to violent crime, fewer ER visits, fewer jail bookings, lower liability exposure, and sustainable federal reimbursement covering 85% of costs for Medicaid beneficiaries.

What Budget Committees Have Asked

Cities that presented mobile crisis programs to budget committees documented a consistent set of fiscal questions.

Budget staff asked for startup costs separated from operating costs. Startup includes hiring, training, vehicles, equipment, dispatch technology, and communications infrastructure. Operating includes annual salaries and benefits, fleet maintenance, clinical supervision, and data collection systems.

Revenue offsets: Medicaid reimbursement (which requires state approval and depends on whether the state is among the 21 with the 85% ARPA match), state grant programs, and dedicated revenue streams like Virginia’s telecom fees.

Cost-avoidance data from established programs: Durham’s 10,000+ officer hours returned to patrol, Oklahoma City’s 57% reduction in mental health dispatches, Guilford County’s $400,000 in documented savings. The NBER finding that Durham’s program generates $902 in net fiscal savings per call is the strongest single data point anchoring these projections.²

The Bottom Line

Durham’s NBER evaluation found $902 in net fiscal savings per call. SAMHSA documented 23% lower per-case costs and 79% hospitalization cost reduction. Twenty-one states have opted into the 85% Medicaid match, with the enhanced rate expiring March 2027. Durable programs layer Medicaid, state grants, and general fund. Programs built solely on expiring grants, including CAHOOTS and Montana’s shuttered teams, collapsed when funding expired. The honest limits of the fiscal evidence, concentration in one rigorous cost-benefit study and unresolved Medicaid sustainability after the enhanced rate expires, are covered in What Are The Risks?