But the plan won't leave either group out in the cold, according to health officials.
The patients will all be transferred to private facilities and other living arrangements in the community, with the cost of their housing and care services still provided by the state if needed, said Brian Hepburn, executive director of the Maryland Hygiene Administration, which oversees the state's public mental health system.
The employees will be shifted into other, currently vacant positions in the state's mental health system, mostly at Spring Grove but possibly at Springfield Hospital Center in Sykesville or Clifton T. Perkins Hospital Center in Jessup as well, Hepburn said.
"There will be no layoffs. They will all be absorbed into vacancies," Hepburn said.
"The overall impact on patients and employees, you can say it's neutral," he said. "There're some people who would say there's a big benefit."
The assisted living unit at Springfield, which currently has 40 patients and 40 employees, will also be closed under the governor's proposal.
Together, the closures will save the state $3.8 million, according to the governor's office.
About $1.1 million of that savings will be diverted directly into the budget for community care funding, which will be tapped for a variety of services in the care of those patients who will be displaced from Spring Grove and Springfield, including renter subsidies for patients who find independent living situations, Hepburn said.
That funding will remain in the state's mental health budget for future patients, Hepburn said.
The federal government will also provide matching funding for some community placements, which would further offset the cost of patient care to the state, aside from diminished state overhead and employee costs at the hospitals, Hepburn said.
Community-based state support for mental health patients is what mental health advocates recommend, and is in line with a trend toward deinstitutionalization of patients in favor of community placements, home-based services and treatment at community hospitals, state health officials said.
"It's a sound approach," said Dr. Joshua Sharfstein, the state's health secretary. "Not only for Marylanders as patients, but for Marylanders as taxpayers."
What the transition will look like if O'Malley's plan is adopted is to be determined, officials said, but will involve the health department working directly with the hospitals, private care facilities and Baltimore County's Core Service Agency, the local authority responsible for mental health services, Hepburn said.
Robert Blankfeld, head of the county's Core Service Agency, declined to comment.
Any decision on how to use the space vacated by the assisted living unit would be made following the transfer of patients, Hepburn said.
Whether the change will have any impact on the overall future of the sprawling hospital campus, which has been exhaustively studied as a potential location for redevelopment, is unclear.
The final version of a study by the Department of Health and Mental Hygiene on possible redevelopment of Spring Grove — with a focus on creating a new, more modern hospital while making way for county recreational space, a University of Maryland, Baltimore County expansion, and mixed-used development — that was required last session by the legislature is expected to be released soon.
A separate report on the mental health system's overall capacity needs, also required by the legislature, is in the works.
Hearings on the Department of Health and Mental Hygiene's budget are scheduled in the Senate on Feb. 10 and the House on Feb. 13.