A nationally lauded program that has helped thousands of mentally ill homeless men and women break the cycle of psychiatric hospitalization, jail time and street life is now on California Gov. Arnold Schwarzenegger's list of budget cuts.




The governor has proposed eliminating Integrated Services for Homeless Adults With Serious Mental Illness, which receives $55 million annually, as part of his attempt to close a budget gap estimated at more than $3 billion.




Mental health advocates, clients and concerned legislators are lobbying fiercely to save the program, which served as the blueprint for California's ongoing efforts to radically retool the state's mental health system.




They have pledged to sue the administration if they fail, contending that the cut would violate the 2004 voter-approved Proposition 63, which aimed to remake the state's mental health system in the image of the homeless program's "whatever it takes" style of treatment, and prohibits the state from reducing mental health funding below its commitment at the time the measure passed.




Proposition 63 channels funds from a — percent income tax on Californians earning more than $1 million a year to mental health care and ultimately will bring billions of dollars into a starved system. But advocates fear that the gains will be neutralized if successful existing programs are cut with the other hand.




"If we don't succeed (in stopping the cut) it sends a signal to the state government and county governments that they can do similar things," said Democratic state Sen. Darrell Steinberg, an author of the legislation that created the homeless program and Proposition 63.




If the program is eliminated in the coming days or weeks, as many as 4,700 men and women could face a return to homelessness, advocates say.




The proposed cut comes three years after Schwarzenegger praised the program in his budget for creating "significant savings at the local level." In the eight years since it was instituted, it substantially has reduced costly hospitalization and jail time for participants, while increasing the number of days they are able to work.




Among them are people like Karen Balsamico. For most of a decade, Balsamico bounced around the streets, homeless shelters and hospitals of San Rafael and San Francisco, tormented by schizophrenia and weakened by heart disease and diabetes.




Then in 2001, a caseworker plucked the quiet woman from a psychiatric emergency room and enrolled her in a state-funded program that is so successful that it has been held up as a national model.




Today, Balsamico, 57, rents her own apartment and works at a food pantry. She has a caseworker, peer counselors and a web of other medical and psychiatric workers available to her at any time for emotional support, medication adjustments &

or just about anything else.




"This program has given me confidence and stability," Balsamico said recently. Without it, "I'm afraid I could get lost in the crowd again."




In a form letter response to people who have flooded Schwarzenegger's office with pleas to save the program, the governor justified his proposed cut, saying that the homeless mentally ill program "was one of the few voluntary or nonmandated programs available for consideration for reduction."




Department of Finance spokesman H.D. Palmer said the governor has not made a final decision on eliminating the funding.




But Steinberg said he is hopeful that Democrats will refuse to approve a budget unless the funding is restored.




The program at stake was created as a $10-million pilot project in 1999, enrolling 1,000 people in Los Angeles, Stanislaus and Sacramento counties. It achieved almost immediate successes. Within six months, participants had registered a 75 percent reduction in hospitalization and significant declines in time spent on the street or in jail.




Marvin J. Southard, mental health director of Los Angeles County &

which receives nearly one-third of the state funds and serves 1,700 people &

called the program "stunningly effective" and said he'll search for a way to compensate if it is cut. But that effort would come in the midst of a financial crisis that has the department curtailing services elsewhere.