Exclusive: Funding for safety net services are evaporating in Santa Cruz County. Can local nonprofits soften the blow?

By PK Hattis | pkhattis@santacruzsentinel.com | Santa Cruz Sentinel

UPDATED: October 25, 2025 at 2:53 PM PDT

De La Garza, the executive director of Community Action Board of Santa Cruz County, was speaking alongside four other nonprofit leaders to a group of local philanthropic donors and community leaders brought together at Community Foundation Santa Cruz County’s headquarters in Aptos. They were there to explain just how serious the fallout has been and will continue to be from recent state and federal actions mainly in response to H.R. 1, the spending bill passed by Congress and signed by President Donald Trump in July.

In a recent survey of 109 local nonprofits, the Community Foundation found that a majority had already experienced financial funding cuts, 33% had made or were preparing to make staffing cuts and 20% had cash reserves of two months or less. Many had shifted their focus to fundraising efforts or were searching for new revenue streams.

But the event was also imbued with De La Garza’s ethos and a challenge to find ways to support those most impacted by the changes, even if replacing the evaporating funding is an infeasible task.

“There’s no making up for what we’re going to lose in the next two years from federal and state sources. We just can’t,” Community Foundation CEO Susan True told the Sentinel. “What is impressive to me about this group is their ability to strategize how we can make the cuts hurt the least, how we can protect what’s most important to the families that they serve.”

‘Difficult decisions’

H.R. 1 includes nearly $1 trillion in cuts to Medicaid — known as Medi-Cal in California — over the next decade along with heightened work requirements and eligibility verification rules that experts have warned will result in fewer people receiving coverage. Earlier this month, county Human Services Director Randy Morris told the Santa Cruz County Board of Supervisors that about 78,000 people across the county are Medi-Cal beneficiaries and, of that total, about 40,000 will be impacted through the combination of federal shifts and state changes; some in reaction to the federal moves.

Health care institutions that serve a large Medi-Cal population, such as Watsonville Community Hospital, have been put in serious financial peril because of a reliance on reimbursement revenue. Tony Nuñez, chair of the Pajaro Valley Health Care District Board, said the hospital expects to see an ongoing annual revenue reduction of between $3.5 million and $7 million due to the Medicaid cuts.

“(It) makes it really challenging for us to continue to provide the service as we do and so we have some really difficult decisions to make going forward; we have some really difficult moments in front of us,” said Nuñez. “And it’s not just us.”

Donna Young, CEO of Watsonville-based Salud Para La Gente, said the health care provider is also facing a 10% revenue drop due to state and federal changes.

Salud Para La Gente is a federally qualified health center and Young said the federal and state changes are nothing short of an “existential threat.” Hospitals and federally qualified health centers are both mandated to provide services to community members in need, regardless of insurance status. As reimbursements dry up, these institutions will be left to shoulder the financial burden, Young and Nuñez explained.

“We are really threatened right now with cutbacks to funding,” said Young.

Laura Marcus, CEO of Dientes Community Dental, was also a panelist at the Wednesday event. She explained how her organization, which provides dental care low-income patients, has undergone a period of significant expansion in the past 10 years, in large part due to the Affordable Care Act — which allowed more people to have insurance.

Dientes grew from one clinic with eight chairs to now running five clinics across the county that support 75,000 dental visits annually. But, she added, adult dental care is optional for states and when budgets tighten, that service is often the first to get dropped and patients stop visiting the dentist when they don’t have coverage.

During the 2008 financial crisis, she said the adult benefits were eliminated from Medi-Cal and Dientes — which had a single clinic at the time — and experienced a 50% patient drop.

“But we were able to pivot. We provided more care for kids, and then we tried to raise more money so we could provide free care to those that were suddenly uninsured,” said Marcus. “We can’t do that today. Not with five clinics and 150 staff and 18,000 people needing services.”

Marcus said Medi-Cal is already poised to drop dental benefits for adults with an Unsatisfactory Immigration Status in July, in a move that she said will impact 3,000 Dientes patients.

Food benefits were also a major point of focus at the event. County officials have previously explained that the county is facing an immediate loss of $16.8 million due to H.R. 1 cuts to food programs such as CalFresh and cascading reductions for years to come. When that happens, explained Second Harvest Food Bank Santa Cruz County CEO Erica Padilla-Chavez, hungry families will turn to the food bank.

“It’s $78 million annually through (CalFresh) that comes into Santa Cruz County,” said Padilla-Chavez. “I don’t have the ability to fill that gap, nor will I ever.”

The timeline for the food bank stepping up its responsibilities to hungry residents was also shifted into high gear recently due to the ongoing federal government shutdown. State officials announced Wednesday that the shutdown will likely take CalFresh benefits offline starting Nov. 1 and California Gov. Gavin Newsom, in response, said he would deploy California National Guard troops across the state to assist with food bank operations.

Doubling down

Even amid the onslaught of bad news, the nonprofit leaders didn’t want Wednesday’s audience — or the public — to think they were embracing an attitude of resignation. Just the opposite, they said.

Several speakers said rather than pulling inward to protect their own organizations, the nonprofits have taken a collaborative stance and have banded together to weather the storm.

Young said with federal health care changes slated to take effect next year, her team is doubling down on efforts to help residents enroll in Medi-Cal through the end of this year. That’s happening alongside programs where medical workers venture out to local farms to provide health screenings, blood pressure checks and more to farmworkers.

“I feel supported by our community, I feel supported by our leaders,” said Young. “I know that together, I can literally pick up the phone, or text, or email and we will help each other.”

About 45% of the people Second Harvest serves are from the immigrant community, said Padilla-Chavez. But many are afraid to venture out to the food bank due to federal government rhetoric and actions around immigration enforcement. To help address these concerns, Padilla-Chavez said Second Harvest has launched a home delivery system in collaboration with other local partners.

“We know accessing food should not be a fearful thing,” said Padilla-Chavez. “We’ve heard countless stories of people saying, ‘I don’t even like to go to the store out of fear.’”

In addition to that, Padilla-Chavez said all of the local nonprofits are looking to create better operational efficiency within their organizations without staffing cuts, as that is an area of high cost.

De La Garza also spoke to the pervasive sense of fear that has blanketed the local immigrant community. She said the Community Action Board and other nonprofits have ramped up efforts to help local immigrant families create Childcare Safety Plans that protect children if a parent is detained or deported.

De La Garza said the Pajaro Valley and greater South County region is also still recovering from devastating floods in 2023, so her group has worked to keep its attention focused on those supportive efforts as well.

Marcus said Dientes opened its fifth clinic off of Penny Lane in Watsonville in August, despite difficulties on the horizon.

“That’s really a motto at Dientes: Dare to lead, be brave, take the chances; because people need us,” said Marcus, “and we need you.”

Nuñez said what makes him hopeful is some of the outside-the-box thinking and innovative strategies that are arising out of the current chaos.

“We’re trying to address some of the challenges by being strategic and by expanding services, knowing that we can’t stay doing the same thing we are currently doing and expect that we are going to simply survive,” he said. “There needs to be change, there needs to be partnership, there needs to be innovation.”

The Sentinel reported in August that the health care district was planning to reengage with other regional providers that have the financial resources to assume operational responsibility of Watsonville Community Hospital. And yet, there remains an air of unpredictability that continues to hover over the nonprofit landscape, which has kept local service providers on their toes and makes their collaborative efforts all the more crucial.

“We kind of know what’s going to happen based on the policies that are being passed. But who are we kidding, we are living in a dysregulated time,” said Padilla-Chavez. “We don’t know what we’re going to wake up to tomorrow and we’re going to have to be responsive.”