Santa Cruz County Braces for Homelessness Funding Cliff, Tightens Cash Aid

Santa Cruz County's homelessness system is heading toward a funding cliff as federal and state grants expire. On Oct. 6, 2026, supervisors voted 5-0 to pool housing subsidies and require an update in six months. In a second vote, split 4-1, they added a three-month time limit to the county's General Assistance cash program, the most generous in California.

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• Housing for Health plan approved 5-0 as grants expire and about $7.8M in federal funds is at risk
• General Assistance overhaul passes 4-1, adding a three-month limit and a $50 cut starting July 1, 2027
• Mountain residents demand road and culvert money, calling the routes their wildfire escape paths. A roads report is due in November.
• Permit streamlining holds at 73% on-time reviews, but ADU permits still take about 200 days
• Conflict indigent defense RFP released 5-0 after a debate over 15-minute time tracking

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Homelessness Plan Advances as Grants Run Dry

Why it matters: The county's homelessness programs depend on grants that are about to end. Supervisors now face hard choices between permanent housing and shelter beds.

“We are going to be facing a financial cliff when these grants are about to expire,” said Randy Morris, Director, Human Services Department.

Where things stand: Morris and Dr. Robert Ratner of the Housing for Health Division walked through point-in-time count trends from 2022 to 2026, including a data correction in the 2026 count. They also flagged a rising inflow of people who are newly homeless. Half of those counted were homeless for the first time, and 71% reported a health issue that makes it hard to get back into housing. Ratner said “around $7.8 million, potentially at risk” in federal funding.

Staff pointed to six new or expanded sites:
- Live Oak Landing
- Freedom House
- Pacific Station North
- Bridge House
- Hope Village
- Harvey West Studios

Together they add about 350 slots.

The centerpiece is a flexible housing subsidy pool, which combines several funding streams into one rent-assistance fund. Front Street would operate the pool. About $1M in behavioral health funds would also shift to Housing for Health. Dr. Sandoval, speaking for behavioral health, explained the reason: those dollars cannot pay rent directly.

The policy fight: Supervisor, District 5, Board Chair Monica Martinez questioned the federal retreat from Housing First, the approach of placing people in permanent housing without preconditions.

“And now I'm seeing the policy changes from the top down to focus on transitional housing again,” said Martinez.

Ratner responded that “the facts on the ground haven't really changed.” Supervisor, District 1, Vice Chair Manu Koenig credited the county's response with a drop of more than 20% in homelessness over two years.

The other side: Supervisor, District 4, Felipe Hernandez asked whether the county is doing extra work to prepare unsheltered people for predicted storms. Morris answered bluntly.

“We don't have a budget to expand a severe weather shelter system, and we need it, but where's it coming from?” said Morris.

Providers asked the board to sustain what has already been built.

“It takes a village to sustain a village and keep the doors open,” said Marilena de la Garza, CEO, Community Action Board of Santa Cruz County. She noted that Hope Village residents are long-term locals, many of them over 50.

A homeless services provider employee identified as Julian made two points. He said tiny homes are temporary shelter, so comparing their cost with permanent housing is misleading. He also urged supervisors to press the state over Medi-Cal cuts.

Decisions and stakeholder impacts: The motion by Supervisor, District 2, Kimberly De Serpa passed 5-0.
- For: De Serpa, Koenig, Hernandez, Cummings, Martinez
- Against: 0
- Absent: 0

Supervisor, District 3, Justin Cummings added a friendly amendment requiring an update in six months, citing H.R. 1 cuts. Nonprofit shelter operators and people in subsidized units have the most at stake if funding lapses.

What's next: Cummings said he and De Serpa will bring winter shelter recommendations at the next meeting.

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Cash Aid Gets a Clock

Why it matters: General Assistance (GA) is a state-mandated cash program under Welfare and Institutions Code 17000, and the county pays 100% of it from its general fund. Costs have outpaced the budget.

“The cost has more than tripled in the past 7 years,” said Irma Marquez, Director, Employment and Benefits Services Division, Human Services Department.

Where things stand: About 300 people receive GA. The county's $809 maximum grant is the highest in the state. Staff said 43 of California's 58 counties already use three-month limits.

The approved package does five things:
- Limits employable recipients to three months of benefits per 12-month period
- Exempts people with disabilities from the limit
- Cuts the grant by $50
- Streamlines intake
- Keeps an unable-to-work track with no time limit

People on the unable-to-work track will get help applying for SSI through Senior Legal Services.

Morris framed the change as a consequence of the program's success.

“We have been so effective helping predominantly the unsheltered population get on this program called General Assistance that we do not have the budget to sustain it,” said Morris.

Without the changes, he said he would be back at budget hearings in May or June asking for $500,000 more.

The other side: Opposition came from both directions.

De Serpa worried about recipients losing benefits and raised concerns about crime. “Where are these people supposed to get fed?” she asked.

Koenig pushed for deeper cuts. His substitute motion would have aligned the grant with the Bay Area–Central Coast average of $397 per month, but it failed. A second substitute would have offered shelter in place of part of the cash benefit and required employable recipients to join a county-created work program. Martinez declined to second it. “I don't think we're in a place to do that today,” she said.

Decisions and stakeholder impacts: Hernandez moved the staff recommendation, and Cummings seconded. It passed 4-1.
- For: De Serpa, Hernandez, Cummings, Martinez
- Against: Koenig
- Absent: 0

“I'm just not comfortable being the highest cash grant in the state of California given where we're at financially in this county,” said Koenig.

Employable adults, many of them unsheltered, face the time limit. Recipients must receive notice 90 days before the changes take effect.

What's next: The changes take effect July 1, 2027. Under Cummings' accepted amendment, staff will report during budget sessions on the cost of adding a Senior Legal Services position for SSI applications and appeals.

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Mountain Residents Want Roads Fixed Before Fire Season

Why it matters: Several residents of the Santa Cruz and Soquel mountains, including Firewise leaders, used general public comment to make the same case. Crumbling roads are their only way out in a wildfire or flood.

Where things stand: Sue Gatch, a Santa Cruz Gardens Firewise leader and public commenter, said about 500 culverts are at risk.

“In this budget, none of property taxes collected were allocated to roads,” said Gatch.

Mariana Mejia, a North Rodeo Gulch resident and public commenter, warned that the county could be liable if residents are trapped.

“North Rodeo Gulch is the only access out for hundreds of families,” said Mejia.

Becky Steinbrunner, a public commenter, recalled Measure G and Measure K.

“The county promised in 2018 with Measure G that sales tax money would go to fund road repair,” said Steinbrunner.

Other commenters made related requests:
- Teresa Ribeiro asked for a permanent funding fix instead of annual pleas.
- An online caller urged a countywide policy: “Open all roads fully before improving any.”
- Susan Tatsumi Darcy, a Firewise group leader, asked what is keeping the Sheriff's Office from joining evacuation drills.

What's next: Cummings asked when a roads report would come forward, and staff targeted November. Staff said about $2M of general fund money goes to road maintenance. Nearly $1M goes to disaster bond debt.

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Permits Move Faster, But Not Fast Enough

Why it matters: Permitting speed shapes housing supply and fire recovery in the CZU burn area.

Where things stand: Matt Machado, Director of Community Development and Infrastructure and Deputy County Executive Officer, said “the majority of our projects are complete, which is great news.”

Key updates from the report:
- On hold: The customer service project (Project 9) is paused for lack of resources for a countywide effort.
- Code update: Consultant BKF will lead a rewrite of zoning, environmental protection, land use procedures and sewage disposal codes.
- Septic permits: These stay with Environmental Health, which is adopting a new data platform. Vendor issues will likely require a contract amendment.
- Inspections: Mobile inspection scheduling launched as a pilot on Sept. 8.

Machado called 73% on-time reviews “probably the stable best number.”

The other side: Supervisors noted that permit activity has dropped, so some of the gains may reflect lower volume.

“It still takes 200 days to approve an ADU permit, which is a long time,” said Koenig.

Koenig also urged staff to communicate directly with project owners. Martinez praised CZU rebuild outreach and cited a local caseload in which 57.5% of 40 clients reported being underinsured.

Decisions and stakeholder impacts: The board accepted the report 5-0 on a motion by Hernandez, seconded by Koenig.

What's next: Staff return no later than April 2027.

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Indigent Defense Contract Clears After Time-Tracking Fight

Why it matters: Conflict attorneys represent low-income defendants when the public defender cannot. The new contract terms shape how they work.

Where things stand: Cummings pulled this item from the consent agenda and raised a conflict-of-interest question.

“If county staff are applying and then county staff are reviewing, then wouldn't that create a conflict?” asked Cummings.

County Executive Officer Nicole Coburn answered that “this is solely for firms to apply.” Three to six subject matter experts from the legal and indigent defense community will rate the proposals.

The other side: Defense attorney Mitchell Page, a public commenter, objected to requiring attorneys to account for their time in 15-minute increments. He said overworked lawyers gain nothing from reconstructing their day.

Coburn said the time data supports auditable MAH billing but is “not a requirement under the law today.”

Decisions and stakeholder impacts: Cummings first proposed making the reporting requirement flexible. He withdrew that motion after staff said bidders simply answer yes or no and terms are negotiable later. He then moved the original recommendation, Hernandez seconded, and it passed 5-0.

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Minor Items

• Sexually violent predator placement opposed: The consent vote approved a letter opposing Michael Cheek's proposed placement on Terrace Grove in Los Gatos. Koenig said it is the county's fifth proposed placement. “This placement roulette is alarming to the community and a ridiculous waste of public resources,” said Koenig. Comments are due Oct. 8, and the hearing is Oct. 30.
• Consent agenda passed 5-0: It included a study of housing on county property. De Serpa questioned an expensive 10-month delay behind the juvenile hall contract increase.
• Measure Q grants and Cleanup Day: All but 3 of 18 Measure Q grant agreements are executed. Cleanup Day moves to the first Saturday in May to avoid Mother's Day.
• No Kings Day proclamation: A proclamation naming Koenig as proclaiming Oct. 17, 2026, as No Kings Day was read during public comment. Public commenter Barbara Lee opposed it.
• Volunteer honored: Community Action Board honored Amy Locks for 40 years of volunteer service.

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Looking Ahead

• Oct. 8: Comments due on the Cheek placement
• Oct. 30: Placement hearing
• Next meeting: Winter shelter recommendations from Cummings and De Serpa
• November: Roads funding report
• Six months: Homelessness update to the board
• April 2027: Streamline progress report
• July 1, 2027: General Assistance changes take effect