Presentation to Sunnyvale City Council
September 9, 2025
Impact of Federal Budget Cuts
and the County’s Response
County of Santa Clara 1 of 19
H.R. 1 Overview
What it is: H.R. 1, or the “One Big Beautiful Bill Act,” is the federal budget reconciliation bill that was signed into law by President Trump on July 4, 2025.
What it does: Enacts the largest cuts in our nation’s history to Medicaid (known as Medi-Cal in CA) and food assistance (CalFresh in CA) to help fund tax cuts primarily benefitting the wealthiest Americans.
$1 trillion in cuts to Medicaid
$186 billion in cuts to Supplemental Nutrition Assistance Program (SNAP) What is happening: Extraordinary cuts to the County’s federal funding puts healthcare access at risk for all residents and threatens other critical County services.
Who is impacted: Our most vulnerable residents, who rely on Medi- Cal for access to healthcare and CalFresh benefits to put food on the table, and all residents who may depend on our County hospitals for trauma, emergency care, or other critical services. 2 2 of 19
Immediate and Near-term Impacts of H.R. 1
Immediate
•Freezes and
reduces Medicaid
provider taxes,
negating Proposition
35 •Freezes and
reduces Medicaid
Directed Payments
•Expands work
reporting
requirements for
CalFresh
End of 2025
•Tax credits end for
low- and moderate-
income families
receiving insurance
through the
Affordable Care Act
(ACA) Marketplace
FY26-27
•Work reporting
requirements and
more frequent
eligibility
determinations begin
for Medi-Cal
enrollees
•Increased
administrative cost
share for CalFresh
goes into effect
FY27-28
•State matching fund
requirement for
CalFresh goes into
effect for the first
time ever
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Projected Impact to County Revenues (Summary)
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Community Impacts of H.R. 1
H.R. 1 puts access to healthcare and food assistance at risk for thousands of families in Santa Clara County.
1 in 4 Santa Clara County residents (465,000) rely on Medi-Cal. 133,000 Santa Clara County residents rely on CalFresh for food assistance. Counties in California have a legal obligation to provide care to the poor (Welfare and Institutions Code, Section 17000) and all hospitals are legally obligated to provide emergency care to patients regardless of the patient's ability to pay. With a much larger uninsured population and dramatically fewer resources with which to provide care, H.R. 1 puts the County's hospitals and health services at risk, threatening access to care for all residents.
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Community Impact: Sunnyvale
25,000 residents rely on Medi-Cal.
5,300 residents rely on CalFresh for food assistance. 43% of Sunnyvale trauma cases transported by ambulance are taken to a County hospital.
More than 23,000 residents receive care from Santa Clara Valley Healthcare Nearly 73,000 outpatient visits
More than 7,000 Emergency Room visits
8,400 hospital days
Valley Health Center Sunnyvale provides nearly 50,000 clinic visits per year, and offers a wide variety of services, including adult and internal medicine, OB/GYN, pediatrics, lab, radiology/diagnostic imaging, and on-site pharmacy. 6 6 of 19
County Fiscal Crisis: $1 Billion Shortfall
H.R. 1 creates an urgent and unprecedented fiscal crisis for the County of Santa Clara. Medicaid is the single largest source of federal funding for the County, totaling $2.3 billion in FY25-26.
Medi-Cal funding accounts for more than half of all revenue for Santa Clara Valley Healthcare (SCVH), the County's healthcare delivery system. The County expects $1.3B in lost revenue, representing a significant portion of the $4.6B total annual budget for Santa Clara Valley Healthcare
This is a devastating and destabilizing level of cuts that can only result in extraordinarily harmful service reductions if not addressed. 7 7 of 19
County Budget Has Very Limited Flexibility to
Mitigate Cuts
Vast majority of the County's Budget is non-
discretionary funding, required to be spent on
specific services (e.g., social service programs,
health inspections, fire service, roads, parks,
libraries, etc.)
Meanwhile, "discretionary" revenue is used to
provide many services the County is legally
mandated to provide.
The overwhelming majority of discretionary
funding the County receives is dedicated to health
and public safety services (e.g., hospital care,
Sheriff’s Office and jails, mental health care, etc.)
These are the services at greatest risk from
the dramatic reduction in County funding from
H.R. 1.
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Santa Clara Valley Healthcare operates 4 hospitals and 15 major health centers in Santa Clara County and is the largest provider of many critical healthcare services to all residents:
Provides care for nearly 1 in 4 Santa Clara County residents. Operates 2 of only 3 trauma centers in Santa Clara County and handles 80% of all trauma cases originating within the county. Every 11 minutes a 911 call in Santa Clara County results in a patient being transported to a County hospital.
Largest provider of both Medi-Cal and Medicare hospital services to Santa Clara County residents.
Top ranked Rehabilitation Center on the entire West Coast. Only Burn Center in Santa Clara County and 1 of only 3 regional centers of its kind between Los Angeles and the Oregon border.
At Major Risk
Healthcare and Hospital Access
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Santa Clara Valley Healthcare: Locations and Services
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Santa Clara Valley Healthcare Fills Critical Gaps
Teaching Hospitals: Trains 25% of region's physicians Homeless outreach and services: Served 10,000+ patients with unstable housing last year with more than 65,000 visits, including through its backpack medicine program and Valley Homeless Healthcare Program and clinics.
Disaster Response: Helped lead the region's response to COVID-19, launching perhaps the most extensive County-operated community testing and vaccination program in the nation, which delivered nearly 1.6 million vaccine doses in 2021 during the height of the pandemic to any resident regardless of their healthcare provider or insurance coverage.
Behavioral Health: Operates the only 24/7 locked psychiatric emergency room for adults (EPS), a 7-day per week mental health urgent care clinic, two inpatient units at Valley Medical Center, and has nearly completed construction of a new Child, Adolescent, and Adult Behavioral Health Services Center that will help address urgent community needs.
The County's Behavioral Health Services Department (BHSD) also provides critical mental health and substance us treatment services through clinics and programs across the county.
BHSD services are also heavily reliant on Medi-Cal funding and thus at significant risk from recent federal cuts.
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Why Does the County Operate Four Hospitals?
All 3 of the hospitals the County has acquired in recent years were purchased to prevent hospital closure or to
reverse the termination of critical lines of service
In 2019, the County was the only bidder when O'Connor and St. Louise went through bankruptcy.
In 2025, the County purchased Regional Medical Center (RMC) after the former operator terminated trauma, STEMI, and other critical services in August 2024.
For every dollar the County spends on healthcare, 88 cents comes from healthcare system revenue.
The share from local tax revenue has been declining in the past 2 years due to efficiency and cost control efforts. It is only due to the unprecedented cuts from the federal government that the sustainability of these hospitals has been put at serious risk.
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County Hospitals Are Busy
Santa Clara Valley Healthcare Hospital Utilization, July 2025 Hospital Average Daily
Patient Census
Average Daily
ER Visits
Total Surgeries
in July 2025
SCVMC 426 239 912
O'Connor 171 179 699
St. Louise 41 115 160
Regional
Medical Ctr.
167 213 222
Total: 805 746 1,993
*Since SCVH took over Regional Medical Center on April 1, 2025, the hospital census has surged from ≈ 90 in late March to now peaking over 180 on many days. 1 of 19 13 of 19
County’s Response to H.R. 1
To address the extraordinary fiscal emergency caused by H.R. 1, the County is taking swift, proactive steps in several areas. 14 Reducing Costs and Increasing Revenue
Seeking State Support
Asking Our Local Community for Help
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County’s Response
Actions to Reduce Costs and Increase Revenue
The County has launched a multitude of initiatives in recent fiscal years to address an already declining economy and slowing property tax growth:
Operational and organizational efficiencies
Restructuring programs and service delivery models
Reviewing fees and charges to ensure full-cost recovery Hiring freezes and staff reductions, including eliminating close to 800 positions over the past three fiscal years
Despite these actions, the funding gap from H.R. 1 is unprecedented.
County Administration will continue to recommend:
Streamlining operations and consolidating services
Optimizing Medi-Cal managed care strategies
Exploring all possible revenue and cost-saving opportunities 15 15 of 19
County’s Response
State and Local Actions
The State will play a critical role in determining how federal cuts under H.R. 1 are absorbed.
Medi-Cal and CalFresh are jointly funded by the federal and state government. County Administration will work closely with the State to protect public hospitals Public hospitals make up only 6% of California’s hospitals but operate more than 50% of trauma and burn centers and train over 50% of California’s doctors.
The County must look locally to avoid devastating service cuts. State support is uncertain and not fully under the County’s control. The Board of Supervisors unanimously placed a five-eights of a cent general sales tax on the November 4, 2025 ballot.
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On August 7, 2025, the Board of Supervisors unanimously voted to place an emergency, temporary general sales tax measure of 5/8 of a cent on the ballot. If approved, the tax would be in place for five years and generate $330 million in revenue each year.
The County has very limited options for raising local revenue for services. Counties in CA can only enact taxes that have been affirmatively authorized by the State. SB 335 grants the County temporary authority to provide voters the option to raise local sales taxes by 5/8 of a cent for County services.
This sales tax measure does not affect the ability of any city or other local jurisdiction in Santa Clara County to propose a sales tax measure to their voters. The County currently only receives a local sales tax of 1/8 of a cent. Among Bay Area and adjacent counties, this is a low rate in terms of funding dedicated to county services. Most common expenses paid (e.g. rent, groceries, utilities, childcare, etc.) are exempt from sales taxes.
17 County’s Response
Measure A
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Summary
Our community is facing a true healthcare emergency caused by the federal government. The crisis will hit us soon and worsen in the next few years. The County's hospital and health clinics will be hit hardest, but other critical County services – such as mental health care and public safety – are also threatened. Everyone's care is at risk, as closure of trauma centers or emergency departments increase wait times and affect patient care regardless of what insurance you have. Even if the temporary sales tax passes, the County will have to make hundreds of millions of dollars in service cuts to address a $1 billion+ shortfall. Without revenue solutions, there is no way to avoid devastating local service cuts. Over the next several years, we need to come together as a community to chart a path forward that ensures the health and well-being of our residents, especially those most in need.
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Thank You
Visit scc.info/federalfunding for more information
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