California fails to track its homelessness spending or results, audit says

Exactly how much is California spending to combat homelessness—and is it working?

It turns out, no one knows. That’s the result of a much-anticipated statewide audit released Tuesday, which calls into question the state’s ability to track and analyze its spending on homelessness services.

The state doesn’t have current information on the ongoing costs and results of its homelessness programs because the agency tasked with gathering that data—the California Interagency Council on Homelessness—has analyzed no spending past 2021, according to the report by State Auditor Grant Parks. Three of the five state programs the audit analyzed—including the state’s main homelessness funding source—didn’t even produce enough data for Parks to determine whether they were effective. 

The audit also analyzed homelessness services in San Jose and San Diego, finding both cities failed to thoroughly account for their spending or measure the success of many of their programs.

“The lack of transparency in our current approach to homelessness is pretty frightening,” said Assemblymember Josh Hoover, a Republican from Folsom who co-authored the request for the audit.

That means state policymakers have little data to go on when they make funding decisions related to what has become one of California’s most dire challenges. 

“The State Auditor’s findings highlight the significant progress made in recent years to address homelessness at the state level, including the completion of a statewide assessment of homelessness programs,” the Interagency Council on Homelessness wrote in an emailed statement. “But it also underscores a need to continue to hold local governments accountable, who are primarily responsible for implementing these programs and collecting data on outcomes that the state can use to evaluate program effectiveness.”

As the homelessness crisis has intensified, California under Gov. Gavin Newsom’s leadership allocated an unprecedented $24 billion to address homelessness and housing during the last five fiscal years, according to the Legislative Analyst’s Office.

Nine state agencies administered more than 30 programs aimed at preventing or reducing homelessness. Some of those programs did such a poor job tracking their outcomes that it’s impossible to tell if they’ve been successful, according to the audit, which marks the first such large-scale accounting of the state’s homelessness spending.

The report evaluated five state homelessness programs and found two “likely” are cost-effective. Newsom’s signature Homekey program helps cities and counties turn hotels and other buildings into homeless housing at an average cost of $144,000 per unit (in the program’s first round), compared with the $380,000-$570,000 it would cost for new construction. The CalWORKS Housing Support Program, which gives financial help to families who are homeless or at risk of becoming homeless, also saves the state money because it’s much cheaper to help someone stay housed than it is to help them find housing once they become homeless.

The auditor found the CalWORKS program spent an average of $12,000-$22,000 per household, while a single chronically homeless person can cost taxpayers as much as $50,000 per year. 

But for three other programs, the state hasn’t collected enough data for the auditor to make an assessment: the State Rental Assistance Program (which helped people pay rent and other expenses during the Covid pandemic), the Encampment Resolution Fund (a program Newsom launched to help cities clean up specific encampments) and the Homeless Housing, Assistance and Prevention program (the state’s main source of general homeless funding, also known as HHAP).

“Fundamentally, the audit depicts a bit of a data desert,” Sen. Dave Cortese, a Democrat from Santa Clara County who joined Hoover in asking for the audit, said during a media call.

For example, nearly one-third of people who left placements funded by the Homeless Housing, Assistance and Prevention program left for “unknown” destinations, according to the auditor’s analysis of round-one funding in Los Angeles, San Diego, Santa Clara and San Francisco counties. That ambiguous data makes it impossible to tell if the program has been successful, the auditor wrote. Even so, the state authorized billions of dollars for four additional rounds of funding.

The auditor laid some of the blame on the Interagency Council on Homelessness. Legislators instructed the council in 2021 to collect funding data on all state homelessness programs. The council did so once, reviewing data from 2018 through 2021, but has taken no action since, according to the report. 

In a written response to the audit, the council said it doesn’t have the funds to continue collecting that data.

There also were a number of errors in the statewide system that collects data on homeless individuals and shelter capacity in each county. More than 100 records had clients with names such as Mickey Mouse, Super Woman or even Test Participant. One shelter reported nearly 1,100 people enrolled in a facility with fewer than 300 beds. 

Hoover hopes he and his colleagues in the Legislature will draft several bills this year aimed at improving transparency in state homelessness spending. 

“We should freeze any new investments and additional investments until we can figure that out,” he said.

Cortese disagrees.

“I don’t think it’s a time to stop,” he said during the media briefing. “I would be disappointed personally, professionally as a state senator, if the governor or Legislature negotiated away this year’s investment in homelessness.”

In the midst of a major deficit, Newsom’s proposed budget for the upcoming fiscal year didn’t cut funding already allocated to the homelessness crisis, but it didn’t propose any new funds, either. For three years in a row, Newsom had granted $1 billion for local homelessness programs—but now the future of that funding remains up in the air. A group of supporters gathered at the state capitol earlier this month to urge the governor and legislators to authorize ongoing funding. Activists have been pushing for years for a permanent source of funding to fight homelessness, but so far, Newsom’s administration has resisted, instead parceling out one-time grants each year. 

The estimated number of unhoused Californians has increased from about 151,000 in 2019 to more than 181,000 last year. More than two-thirds of those people are living on the street or in places unfit for human habitation—not in shelters.

Cortese began pushing for the audit after visiting a massive homeless encampment on vacant land near San Jose’s airport, where hundreds of people lived among rodents, massive piles of trash and broken-down cars and RVs. When he started asking whether state funding was going to that encampment, he couldn’t get a clear answer. 

And despite the Newsom administration pouring billions into the homelessness crisis and launching several new programs aimed at moving people indoors, encampments still are rampant up and down California. The perceived lack of progress led lawmakers to ask: Where is all that money going? 

The state’s legislative audit committee unanimously approved the audit request in March 2023, and it initially was expected to be finished by October.

San Jose and San Diego each have spent hundreds of millions of dollars on homelessness in recent years. But neither could provide an exact accounting of how much was spent and where it went, according to the audit. 

And both cities failed to consistently evaluate whether the homeless services nonprofits they contract with are effectively spending city funds. In San Diego, for example, a $1.6 million shelter contract didn’t specify how many people should be served, making it impossible to tell if that program has been successful. Even when the cities required performance metrics from their contractors, they sometimes failed to collect them. 

Other times, the cities failed to act upon the data collected. A shelter provider San Diego contracted with had a goal of getting 26% of the people who left the shelter into permanent housing. Instead, about 6% went into permanent housing. Even though the provider fell far short of its goal, the auditor found no evidence the city took steps to analyze the contract’s effectiveness.

In San Jose, the city extended an $8 million homelessness prevention contract based on vastly inflated performance data, according to the audit.

“I completely agree with the notion in the audit that we need to set goals, measure performance and improve transparency and accountability,” San Jose Mayor Matt Mahan said in an interview. He recently helped launch a public dashboard that tracks his city’s homelessness spending and outcomes.

But the state needs to help, he said. The city gets funding from several different state programs, and it’s often not clear across each program what types of performance metrics they should be using, Mahan said. 

San Jose and San Diego have similar estimated homeless populations—6,340 and 6,500 respectively. But San Diego has 4,000 emergency shelter and temporary housing beds, while San Jose has just 2,500, according to the report. 

And both cities lack enough permanent housing for their homeless residents—as well as any comprehensive plan to fund and build the housing they need. San Jose hasn’t even calculated how many new homes it needs, according to the audit. 

In San Jose and San Diego, more than 85% of the placements made for homeless residents are into temporary—not permanent—housing. As a result, around 40% of the people who leave those placements return to the street. 

Both cities are taking steps to reduce the health and safety risks associated with homeless encampments by providing trash pickup, toilets, showers, medicine and other services. In San Jose, the budget for those services increased from $12.7 million in the 2020-21 fiscal year to $19 million last year. In San Diego, it grew from $32 million to $43 million. But neither city is doing a good job of evaluating the outcomes of those efforts, according to the audit. 

San Diego Mayor Todd Gloria defended his city’s approach to homelessness in an emailed statement. The city served more than 11,400 people last year, he said.

“All of us can use this audit as a tool to understand how much more needs to be done in order to continue meaningfully addressing homelessness,” he said, “and we hope to impress on state leaders the need for adequate and ongoing funding for California’s biggest crisis.”

The auditor recommended San Jose and San Diego should, by September, report all of their homelessness-related spending in one central location and improve the way they evaluate the effectiveness of their homelessness programs. 

In a written response to the audit, San Jose said it already is taking steps to better document its homeless services budget and more thoroughly assess the effectiveness of its programs. San Diego said it recently hired new staff dedicated to performance monitoring.

Todd Langton does outreach in homeless encampments throughout Silicon Valley in his role as founder of the Coalition for the Unhoused of Silicon Valley and executive director of homeless services nonprofit Agape Silicon Valley. Based on what he’s seen on the ground, he’s “not surprised at all” by the results of the audit.

Langton said he often finds small nonprofits, such as his own, are more successful at getting people housed than the larger nonprofits that eat up state and city funding. 

“As advocates,” he said, “we just shake our heads and say, ‘They’re spending so much money on this. What’s going on?’”