Catalyst Biweekly Policy Briefing Issue XVII: Cuts in Context

Hello again.

As we begin to understand the impact of the federal budget, news is emerging about cutbacks to public support in other areas. Access to knowledge and information is being curtailed with the loss of $1 billion in public media support; student loan programs are being cut, making education less accessible; and a judge approved further layoffs in the federal workforce. Here’s a look at what happened this week.

Catch up on our previous installments here.

THE FACTS 

NONPROFITS & FEDERAL PROGRAMS

• On July 16th, the House Committee on Homeland Security held a hearing to investigate allegations that nongovernmental organizations (NGOs) are encouraging illegal immigration by providing services and support to migrants. The contentious hearing did not invite the NGOs accused to testify.
• In a major policy reversal, the IRS announced last week that it will now allow churches to endorse political candidates for office. This reverses the longstanding Johnson Amendment, which previously barred churches and nonprofits from engaging in political campaigns. The IRS said it would treat political endorsements at church as “family discussions.”
• The U.S. Supreme Court ruled last Tuesday that the administration may move forward with plans to cut tens of thousands of federal workers. Lower courts had previously blocked 21 federal agencies from following instructions from the president to carry out mass layoffs.
• The administration also released two new notices that could restrict nutrition assistance. The first removes protections in child nutrition programs that prevented discrimination based on sexual orientation and gender identity. The second reminds states that they may deny other nutrition benefits to “non-qualified” immigrants.

FEDERAL & LOCAL BUDGETS

• Analysis continues of the 1,000-page reconciliation bill Congress passed in a tie-breaker vote in the Senate for a July 4 signing. Here are some insights into what the legislation will affect.
  • Immigration provisions:
    • San Diego has historically welcomed 350 to 600 new refugees each month and has long been the largest resettlement county in California. Today, 1 in 40 San Diegans is a refugee.
    • Under the new bill, many taxpaying, lawfully present immigrants will lose eligibility for Medicaid, Medicare, Affordable Care Act subsidies, and the Supplemental Nutrition Assistance Program (SNAP). This includes refugees, asylees, victims of human trafficking, and individuals granted Temporary Protected Status.
    • A 1% tax will be imposed on all cash and money orders sent abroad, commonly referred to as remittances. In 2022, more than $79 billion was sent from the United States in remittances, largely by immigrants supporting family members in their countries of origin. In many cases, these funds are a household’s primary source of income.
    • Border enforcement received approximately $80 billion to complete construction of the border wall and expand the armed border patrol presence. It also provides $45 billion for new detention centers, including reopening a private prison that is expected to be the largest immigration and detention center in the state, located two hours north of Los Angeles.
    • Additionally, the legislation imposes new minimum fees on immigration-related applications, making the legal immigration process more expensive and less accessible.
  • Nutrition assistance cost-sharing provisions:
    • In San Diego County, approximately 400,000 residents currently receive SNAP benefits, known in California as CalFresh.
    • Beginning in 2026, the federal government will reduce what it pays to support SNAP administrative costs from 50% to 25%, significantly increasing the financial burden on states. In California, county governments are responsible for administering SNAP, placing even more pressure on already stretched local budgets.
    • Starting in 2027, states will also have to pay a portion of the food benefits themselves, a cost previously covered entirely by the federal government. In California, the new cost-sharing formula would result in the highest possible share at 15%.  ​​​​​
      • Twenty-three governors, including Gov. Gavin Newsom, signed a letter to the administration warning of the devastating impact these policies will have on their states. If states are unable to cover the additional costs, they may be forced to reduce SNAP eligibility or withdraw from the program altogether.
  • Student loan changes
    • The bill eliminates several income-driven repayment plans and caps the total amount individuals can borrow to well below the cost of many graduate programs, particularly medical school.
    • These changes will raise monthly payments for current borrowers and make higher education even less affordable for future students.
    • California could be hit especially hard. The University of California system is the state’s largest producer of doctors, and its students rely heavily on student loans to finance medical education. Under the new caps, students may no longer be able to borrow enough to complete their degrees. Many may have to turn to private loans with less favorable terms, forgo medical school altogether, or change specialties to ensure they can repay their debt, leading to a shortage of qualified physicians in some of the lower paid specialties like family medicine and pediatrics.
• Rescissions for public broadcasting and foreign aid
  • Congress has passed a bill that “claws back” or rescinds $9 billion of congressionally approved funding. This is the first time a presidentially proposed rescission package has passed both chambers of Congress since fiscal year 1999.
  • The Senate narrowly passed the clawback bill late Wednesday night in a 51-48 vote, with two Republicans joining all Democrats in opposition. The House passed the bill early Thursday morning by a vote of 216-213, with two Republicans joining every Democrat in voting against the it.
  • The bill strips $1.1 billion from public broadcasting, including NPR, PBS, and its member stations. Larger stations may survive by seeking alternative funding, laying off staff, or downsizing. But in many rural areas, public broadcasting is the sole source of local news and emergency alerts. These communities will be hit especially hard.
    • As part of the “Protect My Public Media” campaign, KPBS had urged residents to contact legislators in defense of rural, Tribal, and other public media funding.
  • The bill also slashes roughly $8 billion in foreign aid. While language was added with vows to preserve funding for food aid, maternal health, malaria, and tuberculosis, many lawmakers are concerned the executive branch will have sole discretion over which programs get cut – undermining Congress’s traditional power of the purse.
  • Office of Management and Budget Director Russ Voight told the press that he expects more rescissions packages to follow.
• On Thursday, the administration’s shutdown of a vital service for LGBTQ+ youth took effect. The program, part of the 988 National Suicide and Crisis Lifeline, was discontinued as part of a broader rollback of Diversity, Equity, and Inclusion programs.
  • The Trevor Project, which answers more than half of the calls to 988, said in a statement: “The program was created with overwhelming bipartisan support because, despite our political differences, we should all agree that every young person’s life is worth saving.”

ACTIONS IN CALIFORNIA

• A federal judge in California issued a temporary restraining order blocking detention actions based solely on race, ethnicity, Spanish language use, the type of work a person does, or presence at a particular location— like bus stops, car washes, tow yards, day laborer sites, or agricultural sites.
  • A second ruling mandates that those detained must be given access to legal counsel and noted the deplorable conditions that many detainees are being subjected to.
• Last week, the California Department of Education and California Interscholastic Federation refused to sign a pledge requested by the U.S. Department of Education’s Office for Civil Rights that would ban transgender athletes from participating in school sports.

​​​​​OTHER

• Last Thursday, a federal judge issued a new nationwide block to the executive order attempting to end birthright citizenship. Because of a recent Supreme Court decision making such nationwide orders harder to enforce, the judge issued the ruling as a class action on behalf of “those deprived of citizenship.”

THE TAKEAWAYS: What Philanthropy Can (and Is!) Doing

In times of uncertainty, there is strength in connection and power in coming together with a shared purpose. Across the Catalyst network, funders are meeting the moment — responding to uncertainty with clarity, compassion, and collaboration. You can join them by taking the following steps:

• Contribute to the Sustained Support Fund, a joint effort by local funders that provides short-term cash access to organizations so they can continue their work uninterrupted while they wait for committed funds to arrive.
• Join the Coordinated Regional Response Collaborative. This group of funders shares strategies, learns from one another about navigating uncertainty in the current landscape, and works together to maximize impact across the region.
• Learn about what philanthropy is doing and what is still needed to support the disastrous flooding in Texas and Mexico. United Philanthropy Forum has collected a list of funder resources and suggestions for what philanthropy can do, including giving immediate response funding and long-term recovery support.

RESOURCES

• Read stories about how leaders are mobilizing to protect and strengthen the nonprofit sector on The Chronicle of Philanthropy.
• Voter registration laws change frequently. As we get closer to another electoral season, make sure you know the new rules for voter registration in your region.
• Tune in on July 22 for a 1:1 conversation with Mark Suzman, CEO of the Gates Foundation, about the foundation’s plans to accelerate their giving and why that’s so important in the current climate.
• The recent IRS decisions to allow churches to endorse candidates has brought conversation about the Johnson Amendment to the forefront. Join Cal Nonprofits for a deep dive into the amendment and the future of nonprofit nonpartisanism.
• 2030 is not far away, and the census has deep implications for democracy. Join Philanthropy CA, League of California Community Foundations, and the California Office of Community Partnerships & Strategic Communications on July 29 to review lessons learned from 2020 and projections and opportunities as we move toward 2030.

Talk to you soon,

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