Santa Cruz County’s annual Point-In-Time Count, conducted in January 2025, brought a rare bit of good news to a region often defined by its struggle with homelessness. The survey, which enlists volunteers to tally the number of people living without permanent shelter, found 1,473 homeless individuals across the county—a nearly 36% drop from the 2,299 counted in 2022. Watsonville, a city within the county, saw its homeless population halved in just one year. These numbers, published on September 20, 2025, by the Santa Cruz Sentinel, suggest that recent efforts to address homelessness are making a difference. But as officials and advocates warn, this progress may be fleeting in the face of looming budget cuts at both the state and federal levels.
“It’ll be hard to be optimistic, or to expect that we can continue to have the same results, without any preservation of the resources that we’ve had in place,” said Tom Stagg, chief initiatives officer of Housing Matters, a local nonprofit that helps people find housing. Stagg’s caution rings true for many who work on the front lines of homelessness response in Santa Cruz County. Their concern is rooted in the reality that much of the recent progress has been fueled by an unprecedented influx of funding—money that is now at risk.
According to the Santa Cruz Sentinel, the drop in the county’s homeless population is part of a trend that began in 2022, and experts attribute it to increased investments at both the state and local levels. “It’s not surprising, because we saw an uptick in investments at the state level and the local level,” explained Robert Ratner, director of the county’s Housing for Health Partnership, which oversees the Point-In-Time Count. The California Department of Housing and Community Development’s Homekey Program, launched in 2020, has played a significant role by funding affordable housing projects, such as Housing Matters’ supportive housing on River Street and transitional housing for young adults outside Watsonville.
State and federal funding have also bolstered the county’s efforts. The Housing for Health Partnership receives over $4 million annually from the Department of Housing and Urban Development (HUD), which also supports housing voucher programs and affordable housing initiatives. Larry Imwalle, homeless response manager for the city of Santa Cruz, noted that this funding has enabled the expansion of shelter space, rental assistance programs, and safe sleeping initiatives in the city. The coordinated entry strategy, implemented by Housing for Health, has further streamlined the process of connecting individuals with the right services, making it easier for people to find permanent housing quickly.
While these investments have yielded measurable results, the data is not without its limitations. The Point-In-Time Count offers only a snapshot—a single day’s tally that can miss people or reflect short-term movements. For instance, the dramatic reduction in Watsonville’s homeless population may be partly due to individuals relocating across the Pajaro River into Monterey County, as pointed out by Roxanne Wilson, Monterey County’s Homeless Services director. “This particular population is considered members of both our respective communities,” Wilson explained. “To see a true reduction of homelessness in the Pajaro Valley, we must move forward together.”
Despite these caveats, the overall trend remains positive. There are fewer veterans and families with children experiencing homelessness in Santa Cruz County, thanks in part to targeted resources and well-coordinated programs. However, the 2025 count also revealed that 75% of the county’s homeless population has some form of disabling condition, as defined by HUD—a sobering statistic that underscores the need for more comprehensive support. Older adults and people with disabilities, in particular, remain underserved.
“If we could do that with all the other populations, we would see the same kind of progress we’ve been seeing in veterans,” Ratner said, referring to the success of veteran-focused programs. Achieving similar outcomes for other groups would require more housing subsidies, expanded mental health treatment, substance abuse services, and employment support to create a holistic safety net.
But just as Santa Cruz County’s homelessness response system seems to be hitting its stride, a new set of challenges is emerging. Most of the county’s homeless services are funded by state or federal sources, and both are now under threat. HUD has proposed major cuts to its housing voucher and affordable housing programs, and the California Homeless Housing, Assistance and Prevention Grant Program is set to be cut in half for the next fiscal year starting July 2025. As Wilson warned, “There simply isn’t going to be enough to keep homelessness response systems fully funded, and we are already seeing impacts with program and agency closures.”
These cuts come at a time when economic instability, inflation, and rising housing costs are already pushing more people toward homelessness. Imwalle expressed concern that the system may soon lack the capacity to help those in need. The risk is not just theoretical—without sufficient funding, the very programs credited with reducing homelessness in Santa Cruz County could be scaled back or eliminated. As a result, future Point-In-Time Counts may show stagnation or even an uptick in the number of people living without shelter.
Faced with this uncertain financial future, county officials and their partners are scrambling to find creative solutions. Stagg emphasized the need for collaboration and innovation to weather the coming storm. Ratner echoed this sentiment, suggesting that Housing for Health would need to “braid funding together” from a variety of sources to maintain essential services. “The hope is that in Santa Cruz County, there are a lot of people who are compassionate and want to make a difference,” Ratner said. “If we can work together in ways that we haven’t before and be creative and braid funding together … I think we can weather this policy storm to some degree.”
Despite the daunting challenges ahead, there’s a sense of resilience among those fighting to keep the county’s homelessness response system afloat. New affordable housing projects are in the pipeline, including Housing Matters’ Harvey West Studios and apartments at 41st and Soquel. Advocates agree that scaling up what works—more shelter space, more housing subsidies, and more affordable units—will be key to maintaining momentum. But as Stagg observed, “Homeless services, housing in general, in my observation, my opinion in doing this work, has never sufficiently met the need.”
Santa Cruz County’s recent progress in reducing homelessness stands as a testament to what’s possible when resources, coordination, and political will align. Whether that progress can be sustained in the face of shrinking budgets remains to be seen. For now, those on the ground remain committed to finding a way forward—however challenging the road ahead may be.
