Quick Take
A day after news broke that Santa Cruz County's largest department, the Health Services Agency, would propose layoffs and cuts to services and staffing positions, the agency's director, Mónica Morales, abruptly announced her resignation.
In a rapid turn of events, Santa Cruz County announced Friday that Mónica Morales, director of the county government’s Health Services Agency, is resigning, effective June 3.
The sudden departure of one of the county’s top executives comes one day after Lookout reported that, as part of the upcoming budget negotiations, the Morales-led HSA planned to propose laying off 12 employees, cutting services and reducing its staffing force by more than 74 positions, setting off what is expected to be a major fight between local government and Service Employees International Union (SEIU) Local 521, the local labor union.
The county’s announcement about Morales’ resignation came just before 3 p.m. Friday, but made no mention of the financial challenges plaguing her department, or the timing. The announcement makes no mention of whether Morales has a job lined up — as these announcements often do — offering only that she was “leaving … to pursue opportunities elsewhere.”
Lookout has reached out to Morales for additional comment.
Morales, a Watsonville native, took over the department in January 2022, after a nearly seven-year stint with the California Department of Public Health.
The county’s chief executive, Carlos Palacios, called her a “powerful health care advocate” who helped improve the county’s system of care.
“We will miss her greatly,” Palacios said in a statement.
The HSA, whose umbrella covers county services from behavioral health to water resources, is by far the largest single department in Santa Cruz County’s government. In 2024-25, the department had a $313.1 million budget and more than 730 staff positions.
Lookout reported earlier that Morales had sent an email to staff throughout the department on Tuesday warning them of the turbulence ahead, shaped by what she said was “reduced state and federal revenues, grants coming to an end and increased costs across our operations.”
“Unfortunately, as it stands, we do not have enough funding to cover the same level of programming next fiscal year,” Morales wrote. She later clarified that “if our proposed budget is approved by the [county board of supervisors], we anticipate that this will lead to layoffs and the displacement of staff across the agency.”
The displacement of staff includes more than 74 full-time-equivalent positions. About 12 of those are filled and the remaining 62 currently sit vacant. Morales also said the HSA would end its own laboratory and radiology services and transition them to “community partners,” and to reduce its Behavioral Health Division’s programming to “focus on mandated, reimbursable, or grant funded activities.”
The following day, Max Olkowski-Laetz, president of SEIU 521, the labor union that represents more than 1,800 county employees, urged union members via email to organize and fight against the proposed layoffs.
“When coupled with eliminating the entire clinics [sic] laboratory department, the cuts will devastate our community and union members,” Olkowski-Laetz wrote. “… Eliminating frontline staff should not be the solution! Workers are already crunched between high workloads and additional staffing issues.”
The board of supervisors will get its first public view of the proposed budget during its meeting on Tuesday.
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