Board restores several behavioral-health programs, orders three-month radiology extension for county clinics

The Santa Cruz County Board of Supervisors approved the Health Services Agency(HSA) proposed 2025-26 budget and the county executiveofficerestoration package on June 10, restoring several community behavioral-health services and directing a short-term extension of clinic radiology while a transition plan is developed.

Supporters and county staff said the restorations aim to preserve critical mental-health and harm-reduction services while HSA works to adapt to declining federal and state grant revenues. The board voted to approve the restorations and funding plan and added direction to extend in-house radiology for three months to allow time for staff to finalize transition options.

HSA staff told the board that the agency faces major revenue losses and operational pressures: proposed FY 2025-26 materials showed about $6.64 million in lost HSA revenue and a net reduction of roughly $4.52 million after proposed changes, with an overall cut of about 74.4 FTE positions across behavioral health and public health programs. To minimize immediate service disruptions, the CEOand HSA proposed a package of restorations costing roughly $1.4 million.

Major restorations and changes approved or described to the board included: - MHCan (a drop-in mental-health resource): staff recommended restoring the MHCan contract at roughly $478,000 after the City of Santa Cruz agreed to shift $100,000 toward MHCan as the city reallocates funding because of its new mobile crisis program. The restoration will be supported by a mix of City of Santa Cruz funding, Medi-Cal administrative activity (MAA) revenue and county general fund contribution. - Gemma House: HSA staff are recommending transitioning Gemma House operations from New Life Community Services to Janice of Santa Cruz (an organization already contracted under Prop 47 funds) on a cost-neutral basis to the general fund. One-time support of up to $150,000 in AB109 treatment and intervention funds was approved by the Community Corrections Partnership and may be used for deferred maintenance or startup costs. - Syringe-litter cleanup in South County: recommendation to restore a contract for $40,000 to provide syringe clean-up services in South County. - Integrated behavioral health at the Freedom Campus Health Center: restoration of 1.0 FTE senior mental-health client specialist and 0.75 FTE in locum-tenens psychiatry time; HSA said Medi-Cal reimbursement revenue is expected to cover the ongoing cost of those positions if recruitment succeeds.

On clinical support services, HSA recommended closing in-house laboratory and radiology services in the longer term because of low clinic revenue and the countyclinicsFederally Qualified Health Center (FQHC) payment model, which bundles payments for visits. To avoid an abrupt discontinuity of patient care, the board directed a three-month extension of radiology operations through Sept. 30, 2025, to allow HSA and partners time to establish a streamlined referral plan and explore alternatives. HSA estimated a three-month radiology extension would cost about $129,896.

Public commenters and clinician staff urged the board to preserve radiology and lab services because of impacts on timely diagnosis and downstream costs. An orthopedic surgeon, Dr. Neil Richmond, recommended reducing radiology hours rather than full elimination; other clinicians asked that revenue-generating clinical positions be recruited and filled to offset service costs.

The board also discussed sudden provider closures: Encompass notified the county in early May that it would close Telos, a residential crisis bed provider, but HSA staff said they avoided a similar closure at Casa Pacifica after negotiating terms that will keep that facility operating for the coming fiscal year.

The board voted to approve HSAbudget restorations and the CEOrecommended funding plan; they also approved the additional direction to extend radiology services through Sept. 30 and to report back with alternative transition proposals prior to that date.

What happens next: HSA will implement the restored contracts and staffing contingent on recruitment and contract negotiations, complete the radiology transition planning during the three-month extension, and incorporate the boarddirection into the adopted FY 2025-26 budget.

Speakers quoted in this article came from meeting remarks and the HSA presentation and include HSA leaders, the county CEOoffice and public commenters who represented nonprofit and clinical programs.