Proposed 2025-26 Budget

Overall Budget Summary

The Proposed Budget recommends staffing of 580.0 full-time equivalent (FTE) positions, including negotiated salary and benefit increases, which is a reduction of 3.0 FTE positions. Appropriations total $193,588,250, funded by revenues of $164,755,053, a General Fund contribution of $26,833,197, and a District Sales Tax contribution of $2,000,000.

The Budget reflects status quo federal and State funding, including increases in funding for Child Welfare and Adult Services programs. It also includes a net reduction of $4.4 million in State funding for housing assistance programs and $1.0 million in Social Services funding for substance abuse and subsidized employment training. The budget eliminates $1.2 million in one-time expenditures and re-budgets from the prior fiscal year, while maintaining mandated and essential services.

The Budget recommends the transfer of 3.0 FTE Personnel Technicians to the Personnel Department. Other staffing changes include the 2024-25 mid-year reclassification of 1.0 FTE Administrative Services Manager to 1.0 FTE Assistant Chief of Fiscal Services, and a request to extend four limited term positions for an additional year. The limited term positions are 1.0 FTE Departmental Administrative Analyst, 1.0 FTE Social Worker II, and 2.0 FTE Program Coordinators.

Social Services

The Proposed Budget recommends a decrease in staffing to 544.0 FTE positions, including negotiated salary and benefit increases. Appropriations total $119,951,564, funded by revenues of $114,315,859 and a General Fund contribution of $5,635,705.

The Social Services budget contains increased funding of $1,238,116 for Child Welfare to work on a comprehensive prevention plan and $1,117,687 for Adult Protective Services to continue existing work on programs for an aging population. Reductions encompass multiple social services programs, including $804,950 for the CalFresh Employment and Training program and $596,743 for CalWORKS substance abuse services. The Social Services division continues work on the Master Plan for Aging, Family First Prevention and Services Act, and CalAIM (California Advancing and Innovating Medi-Cal) implementation.

Staffing changes include the transfer of 3.0 FTE Personnel Technicians from the HSD budget to Personnel, the 2024-25 mid-year reclassification of 1.0 FTE Administrative Services Manager to 1.0 Assistant Chief of Fiscal Services, and a request to extend 1.0 FTE limited-term Departmental Administrative Analyst position through June 30, 2027.

Entitlements

The Proposed Budget recommends total appropriations of $48,721,311, funded by revenues of $31,657,732 and a General Fund contribution of $17,088,682. The Entitlements budget contains negotiated wage increases of $580,000 for In Home Supportive Services providers and an increase of $470,000 in General Assistance payments. The division does not contain employees.

Housing for Health

The Proposed Budget recommends status quo staffing of 20.0 FTE positions, including negotiated salary and benefit increases and a request to extend 1.0 FTE Social Worker II and 2.0 FTE Program Coordinators limited term positions through June 30, 2027. Appropriations total $18,903,695, funded by revenues of $13,535,554, a General Fund contribution of $3,368,411, and a District Sales Tax contribution of $2,000,000.

The Housing for Health budget includes the reduction of $4 million for Bringing Families Home, Home Safe, and Housing and Disability Advocacy Program Targeted Strategic Investments (HDAP TSI), which is offset by a $1.5 million increase in Housing and Homeless Assistance Program funds. Housing for Health will manage $1.5 million of Collective of Results and Evidence-based (CORE) Investments for Fiscal Years 2025-26 through 2027-28 to support three navigation centers and homelessness prevention services in the southern area of the County.

A District Sales Tax contribution of $2,000,000, comprised of $1,000,000 from Measure G and $1,000,000 from Measure K, continues to fund 24-hour, service-enriched shelters and transitional housing located in unincorporated areas of the County and staffing and operational support for other housing and homelessness programs, services, and accessible housing for residents struggling with housing stability and homelessness. The Housing for Health division leverages these funds to provide homelessness programs, services and accessible housing for the most vulnerable populations.

Workforce Innovation Opportunities Act/Veteran’s Services/Public Guardian

The Proposed Budget recommends status quo staffing of 16.0 FTE positions, including negotiated salary and benefit increases. Appropriations total $5,986,307, funded by revenues of $5,245,908 and a General Fund contribution of $740,399.

The Workforce Innovation Opportunities Act budget includes a $474,337 decrease in funding from the National Dislocated Workers Grant and Regional Equity and Recovery Partnership Grant, which expired and ended the employment training program provided by Goodwill. Expenditures decreased by $453,000 corresponding with the loss of the grant funding and employment training program.

No significant budget changes are proposed Veteran’s Services and Public Guardian.

Federal Impacts: Santa Cruz County faces multiple emerging threats from proposed federal changes to public assistance programs. These proposals could reduce funding, limit access, and impose new work requirements, significantly increasing the administrative workload for Human Services without corresponding resources. For Medi-Cal alone, an estimated 30,000 individuals—over 33% of current enrollees—are at risk of losing coverage. Human Services notes that for every $1 in General Fund, the department leverages $6 in federal and State funding. Up to $140 million in these leveraged funds may be reduced if program eligibility is tightened or existing grants are canceled. These changes may create fear and confusion, particularly among undocumented and LGBTQ+ residents, deterring them from accessing essential services.

In addition, challenges in affordable and supportive housing are intensifying. Santa Cruz County has the highest rental costs in the U.S., and reductions in federal housing investments threaten the completion of critical projects. Over $13 million in grant funding awarded to the County to build and preserve housing is at risk. The lack of long-term rental assistance disproportionately affects seniors, people with disabilities, and low-income workers, worsening overall housing insecurity.

Congress is also considering reauthorization of the Workforce Innovation and Opportunity Act (WIOA), which could result in reduced local funding and diminished program flexibility. More than $4.6 million in funding is at risk due to potential eligibility changes and restrictions on activities that promote diversity, equity, and inclusion. If new limitations on spending are enacted, local workforce programs may struggle to maintain current service levels and staffing.

State Impacts: At the State level, major behavioral health reforms, including the expansion of LPS conservatorship criteria under Senate Bill (SB) 43, the CARE (Community Assistance, Recovery and Empowerment) Act, and Proposition 36, will increase the number of individuals subject to court-mandated treatment. However, no new State funding has been provided to support this expanded mandate. As a result, individuals who meet the criteria for conservatorship or court-ordered care may remain untreated due to limited local resources, posing increased public health risks.

Housing and homelessness programs also face uncertainty, as state investments rely heavily on one-time grants expected to decrease by $6–7 million next year. This funding instability undermines programs such as rapid rehousing for families, older adults, and people with disabilities, making long-term planning difficult.

CalAIM implementation continues to introduce significant changes to Medi-Cal, such as pre-release enrollment for justice-involved individuals and expanded enhanced care management. These initiatives require strong collaboration across agencies and substantial infrastructure investment. However, long-term funding for CalAIM remains uncertain, creating additional pressure on the County’s capacity to fully implement these reforms.

Program Impacts: Locally, several programmatic pressures are emerging. By 2030, one in three Santa Cruz County residents will be over the age of 60, signaling an urgent need to expand and coordinate aging services. Without strategic planning across County departments and community partners, the current system will be unable to meet the increasing demand for services that support older adults.

Within the child welfare system, the child abuse hotline continues to experience high call volumes. Many of these reports, however, could be more appropriately addressed through community-based support services rather than formal investigations. Without public education on when and how to report concerns, the hotline risks becoming overused, delaying response for children in urgent need.

Family and Children’s Services is advancing its prevention efforts through a State-approved plan under the Family First Prevention and Services Act. Despite this progress, implementation is challenged by the lack of a closed-loop referral system and limitations on interagency data sharing. Additionally, funding for this work is set to expire in 2025, and without alternative revenue, the County may struggle to sustain these prevention activities.

Lastly, the County is using a $4.8 million CalAIM investment to develop the BRIDGE Project—a cross-departmental data-sharing system aimed at improving service coordination. While this system has the potential to strengthen collaboration and outcomes, the ongoing maintenance and staffing costs are expected to be substantial, requiring long-term funding commitments to ensure sustainability.