Santa Cruz County education leaders ‘fearful’ that Medicaid cuts may hurt mental health, special education

Santa Cruz County public educators say proposed federal cuts to Medicaid could affect up to a third of local families and have devastating effects on students who receive medical and behavioral health services at area schools.

Republicans in the U.S. House of Representatives have proposed cutting an estimated $600 billion from Medicaid as part of an effort to pass President Donald Trump’s “big beautiful bill” by its July 4 deadline. The Congressional Budget Office estimates that the proposal’s new requirements could result in 7 to 10 million people across the country losing access to coverage over the next decade. California Gov. Gavin Newsom has also proposed rolling back health coverage for some immigrants under Medi-Cal, the state’s Medicaid program. 

County Superintendent of Schools Faris Sabbah said that the full impacts won’t be known for several months – after state and federal budgets are finalized in the fall. However, he called the federal proposal alarming. Not only could the 86,000 local residents on Medi-Cal lose access to services, local health centers and hospitals would also face major cuts as a result, which further impacts families. 

“When I think that one-third of our families could be impacted, and many of the institutions that support all families, I think that both the cuts and potential disruptions could have very catastrophic impacts to our families and the well-being of our community,” he said. 

Annually, schools across the country receive $4 to 6 billion in Medicaid reimbursements for a range of services like medical screenings provided by nurses, mental health support from counselors and speech therapy from speech language pathologists. Medicaid serves students who are guaranteed care under the Individuals with Disabilities Act (IDEA) and those from low-income families. IDEA guarantees students the right to free public education and special education services that meet their needs. 

Live Oak School District Superintendent Pat Sánchez said, as it is, many school districts with large populations of low-income students or students with disabilities have for years been struggling financially. He said districts are already underfunded for special education services and the proposal would only add more financial pressure.

“It’s going to cause staffing shortages, reduced services – and when you reduce [special education] services, you can’t just shut it off, because there’s a requirement by federal law to provide those student services,” he said. “So that means something else might have to get cut.”

Sánchez added that if districts do end up cutting special education services, they would be at risk of litigation because they wouldn’t be complying with IDEA. 

“You’re really caught between a rock and a hard place,” he said. “So it’s not that everything else isn’t frightening, but this is pretty frightening for kids that really need these services. I’m really fearful for the students that we serve.”

He said districts like his, which have a higher percentage of higher-needs students, will see larger impacts. In Live Oak School District, about 20% of students are in special education programs, compared to about 15% of students nationally. 

Sánchez didn’t have estimates for how much the district has received in reimbursements from Medi-Cal or how many families are billing Medi-Cal for services. 

He and Sabbah said it’s still unclear how the federal cuts will affect students and families. While the federal changes don’t propose cutting Medicaid coverage for children, Sánchez and Sabbah say their concern right now is that the funding cuts and new requirements for eligibility, including adding a work requirement, will inevitably lead to interruptions in services that schools provide to students. 

“Our concern is that there could be interruptions, even if they promise that they’re covered, that there could be interruptions as a result of these new laws and the new implementation of the laws,” said Sabbah. “So it’s not really clear to us if, in fact, students will continue to have coverage.” 

Sabbah said local school districts had recently begun ramping up billing Medi-Cal for behavioral health services, such as providing counseling services to students by licensed therapists. Depending on the district, the salary for that therapist could be paid by the district and partially by Medi-Cal reimbursements. 

He’s concerned the proposed changes to Medicaid could also affect the schools’ ability to bill for those services. 

Pacific Elementary School District Superintendent Eric Gross said his single-school district has been preparing to start billing through Medi-Cal for counseling for the first time starting in the upcoming academic year. 

Gross said the school started mental health counseling following the CZU fires, which has been paid for through federal funding for emergencies from 2021 to 2023, and by a two-year grant from Community Foundation Santa Cruz County that ended this year. The school has received enough funding for a part-time counselor who meets with students two days a week. As those funding sources have dried up this year, school officials have started preparing to bill Medi-Cal for those services for the upcoming year. 

“Hopefully that won’t be impacted,” he said. 

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