Supplemental report on the 2026-27 County budget and General Fund outlook

In plain English

The County Executive Office is presenting a companion report to the final adoption of the Fiscal Year 2026-27 budget, which totals $1.4 billion across all funds, including $861 million in the General Fund, and 2,678.3 authorized positions. The report says the budget is balanced only by using roughly $44.4 million in one-time money, including about $30.5 million from General Fund reserves, and projects a roughly $30 million shortfall for FY 2027-28 and about $285 million in cumulative shortfalls over six years if nothing changes. A yes vote would accept the report and approve specific actions: appropriating $3,497,720 in unanticipated Medi-Cal and CalFresh administrative money from the state, appropriating $29,112,142 to correct the accounting for the Regional Interoperable Next Generation Radio System, amending a $163,270 agreement with Second Harvest Food Bank Santa Cruz County for CalFresh outreach, entering a $279,000 agreement with Community Action Board of Santa Cruz County for Medi-Cal outreach through the Thriving Immigrants Initiative, adding one limited-term Benefit Representative Supervisor in Human Services, and setting aside $1.5 million in reserve for Human Services programs. It also directs the County Executive Office to come back by December 15, 2026 for direction on FY 2027-28 priorities.

The report says about one in three county residents relies on Medi-Cal and one in five receives CalFresh, and that federal changes under H.R. 1 starting in 2027 are expected to cut coverage, add paperwork, and push costs onto local emergency care, food programs, and housing stability. It also signals that closing an estimated $30 million gap next year will involve tradeoffs affecting county services, employees, and community partners.

Key facts

• Final FY 2026-27 appropriations: $1.4 billion across all funds, including $861 million in the General Fund, with an $11.3 million (1.3 percent) General Fund contingency and 2,678.3 full-time equivalent positions.
• About $21.0 million of the $30.5 million in reserves used to balance the budget supports health and human services affected by federal policy changes; departments also eliminated 61.86 vacant positions to avoid layoffs.
• Reserves are expected to end at 12 percent of appropriations — above the mandatory 10 percent but below the Board's 15 percent target; committed funds would cover less than 2.5 payroll cycles.
• State budget provides roughly $5.23 million in limited-term Medi-Cal and CalFresh administration funding through FY 2028-29; planned uses include $2.25 million in Employment and Benefit Services overtime, $900,000 for the new supervisor position, $80,000 for 70 scanners, $50,000 for lobby security, $442,270 for community contracts, and $1.5 million returned to Human Services reserves.
• Medi-Cal enrollment locally has dropped 12 percent (9,573 members) since December 2024; the MediCruz indigent care budget of about $2.5 million was preliminarily projected to grow to $8-10 million. On FEMA claims, the County has spent $157.2 million and received $112.3 million (71 percent), with $44,939,900 unpaid.