Why the Assessment Was Conducted
The Santa Cruz Mid-County Groundwater Agency (MGA) is responsible for implementing California’s Sustainable Groundwater Management Act (SGMA) within the Santa Cruz Mid-County Groundwater Basin. SGMA requires ongoing groundwater monitoring, reporting, planning, and coordination to achieve long-term groundwater sustainability. While the State established these requirements in 2014, it did not provide a permanent funding source for local implementation, requiring groundwater agencies to identify long-term local funding solutions.
Since MGA was formed in 2016, SGMA compliance activities have been funded primarily through contributions from its four Member Agencies and grant funding from the California Department of Water Resources (DWR). Although grants have helped fund important planning and implementation activities, they are competitive, limited in duration, and cannot be relied upon as a long-term funding source.
Funding Options Assessment
To evaluate future funding needs, MGA retained SCI Consulting Group in 2024 to conduct a comprehensive Funding Options Assessment. During 2025 and early 2026, the assessment examined projected SGMA compliance costs, legal funding authorities, funding approaches used by more than 30 groundwater sustainability agencies across California, and considerations related to fairness, administrative efficiency, and long-term reliability. The process also included public outreach and stakeholder engagement.
The assessment found that MGA’s primary costs are associated with SGMA compliance activities such as groundwater monitoring, annual reporting, Basin modeling, data management, public outreach, and agency administration.
Key Findings
A key finding was that while the entire Basin benefits from MGA’s work, many technical costs are driven by groundwater conditions in the coastal portion of the Basin, where seawater intrusion remains the primary groundwater sustainability challenge. Monitoring, technical analysis, planning, and reporting associated with seawater intrusion account for a significant share of MGA’s long-term compliance efforts.
The assessment also noted that creating a new fee program would involve additional implementation and administrative costs. Compared with establishing a new fee program, Member Agency funding remains an efficient and practical approach that avoids significant implementation costs, minimizes administrative burden, and provides funding stability.
Adoption of the 5-Year Funding Framework
Following review of the assessment and discussions among the Member Agencies, MGA staff developed a proposed 5-year funding framework. On June 18, 2026, the MGA Board unanimously approved the Santa Cruz Mid-County Groundwater Agency 5-Year Funding Framework for the period July 1, 2026, through June 30, 2031. No new fees on private well owners or de minimis groundwater users were adopted as part of the approved framework.
The approved framework is based on two guiding principles:
- Administrative and governance costs are shared equally among the four Member Agencies, recognizing that all agencies benefit from MGA serving as the Basin’s Groundwater Sustainability Agency.
- Technical SGMA compliance costs are weighted toward areas where groundwater sustainability challenges, particularly seawater intrusion, drive the greatest need for monitoring, analysis, planning, and reporting.
The resulting contribution shares are:
- Soquel Creek Water District – 55%
- City of Santa Cruz – 25%
- County of Santa Cruz – 10%
- Central Water District – 10%
Looking Ahead
The framework also directs MGA to continue pursuing grant funding, identify opportunities to reduce long-term costs, evaluate organizational efficiencies, consider Member Agency in-kind contributions, and continue evaluating future funding needs as Basin conditions and regulatory requirements evolve.
The adopted framework provides a stable and transparent funding strategy that allows MGA to continue implementing the Groundwater Sustainability Plan and working toward groundwater sustainability in the Santa Cruz Mid-County Groundwater Basin.