I've heard several different versions from a few of the park workers, here is a summary:

The water at Shadow Cliffs has always belonged to District 7 (Santa Clara Co?). District 7 has decided to stop supplying Shadow Cliffs in order to meet the rising demand from residential growth. The main lake will be kept as full as possible and the water from the Arroyo Pond will be pumped over if necessary. The park will do what they can to keep water in the Island Pond, although it may not be much.

The person at the kiosk gave me the contact information for the East Bay Regional Park Dist supervisor in charge of Shadow Cliffs. I'll post more info if I learn anything new or if there is anything we can do.