Biweekly Policy Briefing Issue XXIX: Start the Year Informed

Welcome back!

We’re glad to reconnect as the new year gets underway. As always, we’re here to share timely insights, practical updates, and opportunities to support your work and the communities you serve. Together, we can navigate the year ahead with clarity and purpose.

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Here’s a look at what happened this week. (Catch up on our previous installments of this briefing here.)

THE FACTS

Budgets

• The Jan. 30 deadline to avert another potential government shutdown is approaching, with health care still at the center of the debate. ACA subsidies lapsed at the start of the year, and enrollment has declined. While the House passed a bill to restore the subsidies for three years — with 17 Republicans joining Democrats — the measure is unlikely to advance in the Senate, which has rejected a similar proposal. The deadline for Americans to enroll in an ACA plan was Thursday.
  • On Thursday, the president released a health care framework aimed at reducing premiums without extending ACA subsidies. In San Diego, nearly 150,000 people rely on ACA tax credits, and more than 125,000 are already facing untenable premium increases.
  • Budget negotiations are also entangled with tax and deficit talks that could reshape Medicaid, SNAP, and other safety-net programs, creating uncertainty for nonprofits and local governments.
  • The Senate did clear a three-bill spending package Thursday before recess, but still must agree on appropriations covering roughly 75% of discretionary spending. Negotiations are expected to be more difficult for departments such as Homeland Security amid ongoing clashes between the public and ICE in Minnesota and other major cities.
• Gov. Gavin Newsom has released a preliminary draft of the 2026–27 state budget. An initial analysis from the California Budget & Policy Center shows a projected $3 billion deficit — smaller than expected — that largely preserves prior-year investments. However, it does not account for potential federal funding cuts to safety-net programs, and advocates have raised concerns about insufficient funding to address homelessness.

Implications for funders: The lapse of ACA subsidies and uncertainty around federal budget negotiations increase the risk of higher health care costs and reduced access to coverage, particularly for low-income communities. Community members will begin to see their healthcare costs rise dramatically, further putting pressure on community safety-net providers. This, combined with unresolved federal funding cuts not addressed in the proposed state budget, may heighten demand for philanthropic support and strain nonprofit capacity in the months ahead.

Nonprofits & Safety Net

• Amid mounting fiscal and federal pressures, California launched the Future of Medi-Cal Commission, funded by major health and policy foundations including the California Health Care Foundation, The California Endowment, the California Wellness Foundation, The SCAN Foundation, and the Sierra Health Foundation.
  • The independent, 29-member body — co-chaired by former California Health and Human Services Secretary Dr. Mark Ghaly and former Gov. Gavin Newsom Chief of Staff Ann O’Leary — is charged with developing a 10-year vision and actionable roadmap to modernize and protect Medi-Cal, which serves nearly 15 million Californians.
• The state’s oversight agency, the Little Hoover Commission, issued 12 policy recommendations to reform California’s grantmaking and contracting processes. The recommendations call for timely payments, reimbursement of indirect costs, longer grant terms, streamlined renewals during emergencies, reduced reporting burdens, standardized terms and templates, a uniform reporting portal, and the creation of a dedicated liaison office.
• At the federal level, a bipartisan group of senators met Thursday to begin reshaping FEMA, seeking to strengthen congressional oversight amid concerns that the administration may cut disaster aid to states. The effort follows attempts by Homeland Security Secretary Kristi Noem and Defense Secretary Pete Hegseth to reduce federal disaster assistance and proposals to condition aid on cooperation with ICE.
• On Tuesday, the Trump administration abruptly terminated grants for hundreds of mental health and substance use programs nationwide, with initial estimates placing the cuts at roughly $2 billion. Family Health Centers of San Diego reported the loss of two five-year grants—supporting an HIV program and a homeless outreach program—jeopardizing an expected $2.5 million in funding, before the administration said Wednesday it would roll back the cuts.
• Sens. Alex Padilla and Adam Schiff, joined by Sen. Chris Murphy and Rep. Jason Crow, introduced the No Political Enemies (NOPE) Act on Thursday. The bill would protect individuals and organizations, including nonprofits, from politically motivated harassment and prosecution by the federal government. It responds to a wave of investigations and attacks targeting groups that oppose the administration’s agenda.

Implications for funders: The volatility of federal and state funding—illustrated by sudden grant terminations, delayed payments, and rapid reversals—undermines nonprofits’ ability to plan and sustain services, even when funding is contractually guaranteed. Funders can play a stabilizing role by offering flexible, rapid-response support to cover gaps when public dollars are disrupted, particularly in Medi-Cal–funded and behavioral health programs, where even short interruptions can destabilize care and drive higher costs across emergency rooms, jails, and homeless services.

Border & Immigration

• Tensions have escalated in Minnesota following the fatal shooting of Renee Good by Immigration and Customs Enforcement. On Wednesday night, ICE also shot a Venezuelan immigrant in Minneapolis.
  • Since the Good shooting, Minnesota officials and the Trump administration have clashed over the investigation, with state leaders saying they have been shut out. At least six federal prosecutors have walked out of the U.S. attorney’s office in Minnesota over concerns about the investigation’s direction, and several others have resigned in Washington, D.C., citing similar issues.
  • Protests have intensified in Minneapolis as ICE has increased its presence and escalated enforcement tactics over the past week, with reports of people being pulled from homes and vehicles. Minnesota and the Twin Cities filed a lawsuit Monday against the Trump administration, calling the immigration operations a “federal invasion.” Illinois has filed a similar suit.
  • On Thursday morning, the president threatened to invoke the Insurrection Act to deploy the military to Minneapolis.
• In our region, the city of San Diego sued the federal government, alleging trespass and environmental damage from the construction of razor-wire fencing near the Otay Valley Wilderness.
• At the federal level, a bipartisan group of lawmakers introduced a resolution Thursday affirming Greenland’s sovereignty and warning that any U.S. military action involving the territory would require congressional approval. The U.S. is facing international scrutiny over its recent military intervention in Venezuela, and allies have raised concerns that this action — combined with rhetoric about potentially seizing Greenland — could strain NATO. Congress rejected a resolution this week that would have required approval for further military action in Venezuela.
• Separately, the Trump administration announced it will indefinitely suspend immigrant visa processing from 75 countries, including Somalia, beginning January 21. The State Department said the decision was partly based on assessments that immigrants from those countries are more likely to become a “public charge.” The move follows the administration’s revocation of Temporary Protected Status for Somali immigrants. San Diego is home to the nation’s second-largest Somali population, behind Minnesota.
• Privacy concerns were also raised this week about a regional database operated by SANDAG that allows immigration enforcement agencies access to data from every law enforcement agency in San Diego County, including traffic citations, arrest records, interviews, and some driver’s license information. While the database is not authorized for immigration enforcement, it lacks formal oversight or independent audit requirements.

Implications for funders: Immigration enforcement is escalating in many cities around the country, and funders can prepare by learning from what’s happening in other cities and ensuring grantees and their own staff know their rights and have rapid response plans in place. The ICE enforcement escalation in Minnesota has been primarily targeted to the Somali community. With another large Somali population, San Diego could see similar efforts. Expect spikes in demand for immigration legal aid, language access, and basic needs support as families avoid systems they previously relied on.

Local News

• Mayor Todd Gloria delivered his State of the City address Thursday, highlighting progress on housing, homelessness, and public safety while warning of a looming budget crisis. He also reaffirmed his commitment to redeveloping the Civic Center, expanding the convention center, and advancing the Midway Rising project.
• Governor Newsom gave his State of the State address last week, highlighting efforts to reduce homelessness and positioning California as a leader in resisting the Trump administration’s policies.
• Earlier this month, the city of San Diego introduced paid parking in and around Balboa Park. The fees were intended to replace budgeted funds for park maintenance and renovations, freeing that money for other city priorities. A clunky rollout prompted Councilmembers Sean Elo-Rivera and Kent Lee to call for a temporary suspension to fix kiosk issues and give residents time to register for discounted passes.
  • A coalition of mayors from other San Diego County cities held a press conference Wednesday urging the city council to permanently end the new parking fees, arguing that county residents should not be treated as “tourists.” They also raised the possibility of a voter referendum if the council does not act.

• The San Diego Board of Supervisors elected Supervisor Terra Lawson-Remer as chair for 2026, with Supervisor Monica Montgomery Steppe as vice-chair and Supervisor Paloma Aguirre as chair pro tem. Councilmember Joe LaCava will continue as San Diego City Council president.

Implications for funders: In addition to supporting national advocacy, funding local engagement is critical to the region’s well-being. Community organizations can use resources to educate and organize residents, alongside providing direct services. While outcomes may be harder to measure, empowering residents to shape local policies and decisions can produce lasting benefits.

The Courts

• The Supreme Court will hear oral arguments January 21 in Trump v. Cook, a case involving the firing of Lisa Cook from the Federal Reserve Board of Governors. The decision could have broader implications for presidential authority over independent federal agencies.
• On Wednesday, a federal court upheld California’s new congressional maps, approved by voters as Proposition 50. The court ruled that redrawing districts based on party affiliation is legal and found no evidence of illegal racial gerrymandering, as alleged in the suit. The California Republican Party has said it plans to appeal and may ask the Supreme Court to hear the case.

TAKEAWAYS & RESOURCES

• Join the Catalyst Data Hub launch: The Hub goes live Feb. 5 at 11 a.m., offering funders and nonprofits a first-of-its-kind view of how funding flows in San Diego and Imperial Counties. Users can identify partners, benchmark performance, and explore the full landscape of giving through a tool designed to be both powerful and user-friendly.
• Attend the CA Policy Forum webinar: Register for the first 2026 webinar on Jan. 20, The Redistricting Revolution: Navigating California’s New Political Landscape Post-Prop 50.
• Learn how funders are sustaining local news: Join Smart Growth California on Jan. 29 at 10 a.m. to learn how funders are sustaining local news that strengthens civic engagement, fosters belonging, and ensures all community voices shape the future.
• Encourage participation in Fair Pay for California Nonprofits Survey: Encourage nonprofits to participate in the 2026 Compensation and Benefits Survey, open through February 13. Data collected will benchmark pay, evaluate benefits, and contribute to CalNonprofits’ Causes Count report, highlighting the sector’s economic impact.
• Indicate your interest in Sacramento Day: Interested in attending April 7–8? Fill out the interest form to join this annual educational visit, which offers lawmakers’ briefings and on-site support for meetings with legislators.
• Stay informed about rapid response and funder collaboration related to immigration enforcement by reaching out to us.

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Talk to you soon,

Megan Thomas
President & CEO
Catalyst of San Diego & Imperial Counties