Mayor Daniel Lurie is poised to cut millions of dollars in nonprofit government contracts this year, potentially curtailing services the city considers vital — helping domestic violence survivors who don’t speak English find new homes, hosting street fairs for families in the Tenderloin, or offering doulas in the Bayview, where Black families suffer high infant mortality rates.

When proposed cuts to those programs appeared in the budget documents that departments offered Lurie in February, they did not specify how many nonprofit workers would lose their jobs. Instead, more clinical terms couched the bloodletting: “community-based organization grant reductions” or “CBO primary expenditure changes.” 

The true impact is more blunt: The proposed cuts would result in at least 1,050 layoffs, nonprofit leaders tell The Standard. It’s likely an undercount, as the most organized advocacy groups represent fewer than half of the city’s 700 community organizations (opens in new tab). 

Gabriel Medina, executive director of La Raza Community Resource Center (opens in new tab) on Valencia Street, said the loss of three contracts with the Mayor’s Office of Housing, worth $660,000, would lead his organization to lay off three of its 19 employees. The funding pays for programs that provide emergency financial assistance to immigrant families and help rapidly rehouse displaced tenants — including residents of the Beaux Arts apartments that burned down in December.

“It’s already tough enough to have staff retention, given the low salaries that the city provides us with,” Medina said. “But to put their jobs under threat on a regular basis in this fashion, when they’ve been doing a good job, that’s definitely tough, and that’s certainly disheartening.”

The layoff estimate may change depending on how Lurie’s budget office tweaks the proposals from roughly 55 city departments, sent in February, which detail at least $37 million in cuts to community-based organizations.

The mayor will publicly unveil his proposed budget June 1. That will kick off a negotiating process with the Board of Supervisors, resulting in a final budget by July. 

San Francisco has a $643 million budget deficit, while funding threats from President Donald Trump are prompting city leaders to sock away hundreds of millions of dollars in reserve funding. Lurie has few tools to remedy that shortfall; he can either winnow government spending or dip into reserves. He’ll be waiting to see whether voters approve Proposition D, the Overpaid CEO Tax, which could generate as much as $300 million annually for city coffers. 

Lurie is opposed to the tax and has publicly stated a desire to end “overspending” by the city. San Francisco’s spending blossomed during tech booms of the past two decades, growing from $6.6 billion in 2009 to $12.3 billion in 2019. The city’s annual budget is now roughly $16 billion. But post-COVID, the tech sector was among the most sluggish to return to the office — and taxes are usually based on how many people occupy downtown skyscrapers. 

That led to a “structural deficit” — technocrat speak for San Francisco spending more annually than it takes in through taxes. Before Lurie took office, the deficit had been buttressed through one-time solutions, a practice he began to chip away at. Without significant changes, San Francisco will see a $1 billion structural shortfall by 2029, according to city estimates.

While Lurie’s “Let’s go, San Francisco” cheerleading has led to a downtown renaissance, which has in turn led to a smaller deficit than city officials anticipated, the city controller’s office, the government’s fiscal watchdog, issued a report this month (opens in new tab) warning that property tax reassessments threaten to yank the rug out from under that progress, to the tune of tens of millions of dollars. 

Ongoing litigation and the threat to federal funding from Trump are uncertainties that may emerge at any time, the office warned.  

In a report issued last year, think tank SPUR recommended (opens in new tab) that San Francisco shrink its contract and grant spending to focus on core services.

“San Francisco is no longer in a temporary downturn — it’s undergoing a fundamental reset. The choices made over the next few years will determine whether the city can build a stable and sustainable fiscal future or continue bouncing from crisis to crisis,” SPUR staff wrote. 

Despite mounting challenges, Lurie could reject many of the departments’ proposals to slash nonprofit grant funding, particularly if any of the city’s tax revenue streams come in stronger than projected.

The mayor’s office disputed the layoff analysis from nonprofit groups. A spokesperson said the mayor’s budget is not yet done, and nonprofits are responsible for their own hiring and firing. 

“As we face federal cuts that will drive the budget deficit to $1 billion if we don’t take action, we will have to make tough decisions,” said Kate Poltrack, a spokesperson for the mayor’s office. “Mayor Lurie’s goal is to deliver a responsible budget that prioritizes core services, protects our social safety net, and ensures San Francisco continues its broad and durable economic recovery.”

San Francisco’s nonprofit spending comprises a significant chunk of its annual budget, with $1.63 billion budgeted toward community organization (opens in new tab)contracts last year across 38 city departments. In many ways, they are a de facto arm of the government. 

Nonprofit job losses aren’t tabulated by the city. But precedent shows that numbers matter: Public uproar from labor unions followed Lurie’s announcement of 127 government worker layoffs in early April. Nonprofit leaders often spend the spring months leading up to the budget knocking on City Hall doors, arguing to the Board of Supervisors why they should champion restoring their grant funding during negotiations with Lurie in June. 

The estimated layoffs from city nonprofits are based partly on self-reporting by 27 nonprofits, which confirmed they would need to let go of roughly 300 workers, according to The People’s Budget Coalition, an advocacy group representing 223 community-based organizations. The coalition used that number to estimate roughly 880 total layoffs among its members. 

Separately, the Human Services Network, an advocacy group representing about 50 nonprofits in the public health and anti-poverty space, conservatively estimated roughly 170 potential layoffs among its members. 

The programs facing cuts mostly benefit one or a combination of vulnerable groups: low-income people, immigrants, monolingual communities, seniors, people with disabilities, and queer communities.

Supervisor Connie Chan, who is the board budget chair, said she’s pushing city departments to show line-item-level cuts that would help city leaders finally understand the full extent of nonprofit layoffs.

“It’s the first time” departments will provide that level of data, Chan said. When Lurie gave his budget instructions to departments, he told them to preserve “core” services. Presenting deeper data, Chan said, will allow departments to better inform the supervisors, “in your (budget) reductions, following the mayor’s instructions, what have you actually reduced?”

Erik Greenfrost, executive director of Senior & Disability Action, bristles at the mayor’s description of some services as core, implying that the programs facing cuts are less important. Should Senior & Disability Action’s $145,000 homecare advocacy contract be eliminated, the two workers he’d need to lay off would no longer help senior tenants organize for their rights.

While those workers don’t directly represent tenants as an attorney would, Greenfrost said the education they provide has already helped tenants avoid eviction. Greenfrost fears that cuts to organizations like his may further burden San Francisco’s budget in the future because people who are not saved from homelessness eventually draw down on more direct services, like hospitals and shelters.

“For the people who don’t get these services, their need doesn’t go away,” Greenfrost said. “It’s short-sighted.”