Morgan Hill, Santa Clara County, nonprofits brace for federal cuts

Local government and nonprofit leaders in Santa Clara County are bracing for the impact of proposed federal budget cuts that could dramatically reshape public services, potentially leaving thousands of vulnerable residents without critical healthcare, social services and support programs.

“Cutting Medicaid funding would be a direct attack on families here in Santa Clara County and across the country,” said Santa Clara County Executive James Williams in a statement. “Medicaid is a critical social safety net program that ensures that nearly 1 in 5 Americans has the healthcare access that they need, making it possible for millions of children, parents, pregnant women, people with disabilities and seniors to get healthy and stay healthy.  

“Approximately half children in the United States receive their health coverage through Medicaid.”

The potential funding freeze is creating a climate of uncertainty that touches multiple sectors, from city infrastructure to nonprofit social services.

Christina Turner, City Manager of Morgan Hill, acknowledged the broad potential impact. 

“We haven’t been directly impacted at this point by any attempts to freeze funding, but we’re keeping a close eye on our federal grants,” she said. “If we think about it from the city’s perspective, it is a lot of infrastructure type things. Smaller-scale, but still super important—we get grants for our police department, related to traffic and other stuff that helps supplement the costs of public safety.”

Among the most significant threats is a proposal to cut federal healthcare services. Medicaid represents about $1.9 billion in federal revenue for Santa Clara County this year, according to the statement—funding that supports three public hospitals and 14 health clinics serving hundreds of thousands of people. That includes Saint Louise Regional Hospital in Gilroy, as well as clinics in Morgan Hill and Gilroy. 

“Cutting Medicaid funding would jeopardize the primary funding source for behavioral health services,” Williams said. “All of our residents, regardless of insurance status, rely on these county-operated facilities.”

Lisa de Silva is the Chief Development Officer at Community Solutions, a prominent local nonprofit group that offers a variety of critical services to people facing times of crisis throughout the South Valley. She described the complex funding landscape and the potential ripple effects of federal budget cuts.

“Here is why it is complicated,” she explained. “We have some direct federal funding, then we have our state grants that we have mostly for our gender-based violence programs that are funded through the California State Office of Emergency Services, but federal funding is braided into that. Then, the majority of the funding that we get from the county is because we are a Medi-Cal provider.”

While Community Solutions has not yet seen any of their funding sources stop, they are preparing for potential challenges, and have already begun seeing opportunities for new funding sources disappearing.

“We had a pending proposal that we submitted to the Office of Violence Against Women, and another proposal that we were in the process of writing, and on Feb. 5 we were notified that they were withdrawing all funding opportunities,” de Silva said. “That was just two weeks after the inauguration.”

The proposed changes are also affecting support for vulnerable populations. Federal assistance for refugees, asylum seekers and human trafficking survivors has been dramatically reduced from 10 months of support to just four months.

“These are folks that are going through legal processes that are here and benefiting from support and resources that our government has said that they are entitled to and will provide,” de Silva said. “They don’t have a work permit, so there needs to be a bridge of support while they are going through these processes before they can legally work.”

The uncertainty is also impacting charitable giving. De Silva noted that donations are decreasing nationwide as people feel economically uncertain.

“What we saw during COVID, and what we’re seeing now, is that when crises deepen, nonprofit organizations become most critical—yet funding often goes down just as demand increases,” she said.

Despite the potential challenges, local leaders remain committed to serving their communities. 

“If the federal government chooses to abdicate its responsibility to take care of those most in need, Santa Clara County will rise to meet this moment—with resilience, compassion and a deep commitment to supporting the health and well-being of every resident,” Williams said.

As the Trump administration’s funding freeze makes its way through the courts in fits and starts, local officials and nonprofit leaders are preparing for multiple scenarios. The coming months will be critical in determining the extent of potential federal funding cuts and their impact on local services in Santa Clara County.

“We haven’t received any final notifications about changes,” de Silva said, “But we’re bracing ourselves for what might come.”

-PAID ADVERTISEMENT-

Featured Local Savings