Nearly 500 Texas Care Workers Face Holiday Layoffs as Major Facilities Announce Permanent Closures

Two prominent Texas care facilities are shutting down within weeks, triggering mass layoffs amid widespread industry financial pressures and federal policy uncertainties

Two major Texas care facilities have announced plans to permanently close their doors, forcing nearly 500 employees into unemployment just weeks before the holiday season begins, according to Worker Adjustment and Retraining Notification (WARN) Act notices filed with the Texas Workforce Commission.

Sunny Glen Children’s Home in San Benito will lay off approximately 424 workers on November 17, while Cottonwood Creek Healthcare Community in Richardson will terminate all 70 employees on December 1. Both facilities cited significant operational challenges, though detailed financial reasons for the closures remain undisclosed.

Faith-Based Children’s Home Faces Federal Funding Crisis

Sunny Glen Children’s Home, a faith-based nonprofit organization that has served vulnerable children and foster youth in the Rio Grande Valley since 1936, has been operating under mounting financial pressures for years. The organization previously received substantial federal funding, including more than $87 million in taxpayer-funded grants from the Department of Health and Human Services to house unaccompanied migrant children.

According to Type Investigations’ 2020 report, the organization had been operating a 380-bed shelter for unaccompanied child migrants at its Raymondville facility, which was expected to create as many as 600 jobs and pump millions of dollars into the local economy. However, the facility has faced ongoing regulatory challenges, with the Texas Department of Family and Protective Services citing 140 deficiencies since 2016, including 17 after receiving federal grants.

“We are committed to complying with all applicable regulations and ensuring that our employees have the resources they need during this transition,” said Chase Palmer, CEO of Sunny Glen Children’s Home, in the WARN notice.

The closure announcement comes amid broader federal funding uncertainties affecting child welfare institutions across Texas. President Trump’s administration has ordered halts to most federal spending on social services, prompting legal challenges from child welfare advocates nationwide.

Richardson Nursing Home Joins Closure Wave

Cottonwood Creek Healthcare Community, located at 1111 W. Shore Drive in Richardson, provided skilled nursing care, post-acute rehabilitation, and memory care services to elderly and medically fragile patients. The facility, operated by Dynasty Healthcare Group, will permanently close on December 1, resulting in the layoff of all 70 employees in a single round of separations.

Scott Kane, director of Human Resources at Cottonwood Creek, stated in the WARN notice that there will be no phased layoffs, bumping rights, or union employee protections. The company pledged to cooperate fully with the Texas Workforce Commission’s Rapid Response Unit to provide assistance to workers with retraining and job placement services.

Recent reviews of the facility on care rating websites revealed mixed patient experiences, with some families citing safety concerns, staffing shortages, and inadequate care supervision. One family member wrote in a March 2025 review: “This place is truly atrocious on so many different levels. The safety aspect for it to be considered a secure memory care facility is a complete joke”.

Texas Leads Nation in Nursing Home Closures

The closures reflect broader challenges facing Texas’s long-term care industry. Texas ranked first nationally for nursing home closures in 2022, with 13 facilities permanently shutting their doors. According to the Texas Health Care Association, the state’s nursing homes face an “existential threat” due to chronic underfunding and workforce shortages.

Travis Clardy, president and CEO of the Texas Health Care Association, warned in a recent op-ed that federal staffing mandates would cost Texas nursing homes an additional $725 million per year and require hiring more than 12,000 extra nurses and nurse aides. “With no additional government funding, coupled with a nationwide caregiver shortage, it will be impossible for nursing homes to meet the requirement,” Clardy stated.

The federal staffing mandate, which would have required 24/7 registered nurse coverage and a minimum number of direct care hours, was struck down by U.S. District Judge Matthew Kacsmaryk of the Northern District of Texas in April 2025. The judge ruled that the mandate exceeded federal authority and failed to consider industry realities.

Statewide Healthcare Workforce Crisis

Texas faces severe healthcare staffing shortages that have intensified post-pandemic pressures on care facilities. The state has approximately seven nurses per 1,000 people, which is well below the national average of nine nurses per 1,000 people. This shortage particularly affects rural and urban areas with high Medicaid populations, where facilities struggle with inadequate reimbursement rates.

A Brown University study commissioned by Senate Democrats identified 66 Texas nursing homes at elevated risk of closure due to high Medicaid dependency, low occupancy rates, and poor quality ratings. Most facilities nationwide receive only 82 cents for every dollar spent on Medicaid patients, creating unsustainable financial pressures.

“Most nursing homes nationwide are already paid less than the cost of caring for patients on Medicaid, with a 2024 study putting the average reimbursement rate at 82 cents on the dollar,” according to McKnight’s Long-Term Care News analysis.

Impact on Vulnerable Populations

The facility closures disproportionately affect Texas’s most vulnerable populations. Sunny Glen’s closure eliminates critical residential care, foster placement services, and family support for at-risk children in the Rio Grande Valley. The organization has served as a “refuge for abused, neglected, and forgotten children” for nearly nine decades.

Similarly, the closure of Cottonwood Creek reduces access to skilled nursing care in Richardson. In this Dallas suburb, elderly residents depend on such facilities for post-acute rehabilitation and long-term care services. The facility offered various care levels from assisted living to memory care, serving patients with complex medical needs.

Federal Policy Uncertainties Compound Crisis

Both closures occur amid significant shifts in federal policy affecting healthcare and child welfare funding. The Trump administration’s freeze on federal social services spending has created uncertainty for organizations like Sunny Glen that depend on federal contracts. Child welfare advocates have filed lawsuits challenging these funding restrictions.

Texas lawmakers recently allocated an additional $100 million for child care scholarships, acknowledging that the state lost 75,000 child care seats in 2024 alone. However, this funding primarily targets traditional child care rather than residential treatment facilities like Sunny Glen.

Workers Face Holiday Season Unemployment

The timing of both closures presents particular hardships for affected workers, with layoffs occurring just before the traditional holiday hiring season. Under federal WARN Act requirements, both facilities provided the mandated 60-day advance notice to employees and state workforce agencies.

The Texas Workforce Commission has deployed Rapid Response services to assist displaced workers with unemployment benefits, job search resources, and retraining opportunities. However, similar healthcare positions remain scarce due to industry-wide consolidation and closure trends.

These closures underscore the intersection of federal policy changes, state funding challenges, and workforce shortages that continue to destabilize Texas’s care infrastructure, leaving vulnerable populations with fewer options and hundreds of workers facing uncertain futures during the upcoming holiday season.