California's $20 Billion Effort to Combat Homelessness Fails to Curb Rising Unhoused Population

That’s despite an unprecedented nearly $24 billion in state spending on homelessness over the same period (PDF), in addition to local and federal investments, according to the audit.

“California is facing a concerning paradox: despite an exorbitant amount of dollars spent, the state’s homeless population is not slowing down,” Sen. Roger Niello (R-Fair Oaks), vice chair of the Senate Budget Committee, said in a statement. “These audit results are a wake-up call for a shift toward solutions that prioritize self-sufficiency and cost-effectiveness.”

At the state level, the auditor’s office focused on the California Interagency Council on Homelessness (Cal ICH) and reviewed five state-funded homelessness programs to assess cost-effectiveness. The review found the state lacks information in three of the five programs about how much they cost and whether or not they’re working — and doesn’t even have a consistent system for collecting this information for individual programs.

The auditor’s office found the Department of Housing and Community Development’s Homekey program and the California Department of Social Services’ CalWORKs Housing Support Program is cost‑effective but couldn’t determine whether the other three programs it studied — the State Rental Assistance Program, the Encampment Resolution Funding Program, and the Homeless Housing, Assistance and Prevention Grant Program — were because the state hasn’t collected enough data on outcomes.

“In the absence of this information, the State cannot determine whether these programs represent the best use of its funds,” the report states.

At the local level, neither city studied could account for all of its homelessness-related funding and spending despite receiving hundreds of millions of dollars, according to the report. The auditor blames a failure to establish a system for tracking and reporting spending.

“The absence of such a mechanism limits the transparency and accountability of the cities’ uses of funding to address homelessness,” State Auditor Grant Parks wrote in a letter to the governor and legislators.

The cities weren’t tracking how effective their contracts with service providers were or holding them to clear performance measures, the audit found.

And, despite clear evidence that placing people in permanent housing leads to better outcomes, both cities have invested heavily in developing temporary shelters and still lack the capacity to house their homeless residents at those sites. While both cities are developing permanent housing, neither “has a clear, long‑term plan to ensure that they have the housing necessary,” according to the report.

Susannah Parsons, director of policy and legislation for All Home, a Bay Area-based nonprofit, said that without ongoing funding to build housing at scale for people exiting homelessness, cities will continue to fall short. She was heartened, she said, by a proposed $10-$20 billion regional affordable housing bond for the Bay Area that could appear on the November ballot.

“Without the ability to really fund more permanent housing solutions, folks will be stuck waiting outside for that permanent housing solution, or they will be moving inside to interim solutions, but without anywhere to go,” she said.

Some other report findings included:

• The state agency in charge of coordinating and tracking the effectiveness of its programs — the California Interagency Council on Homelessness (Cal ICH) — has not tracked or reported on the state’s funding for homelessness programs since 2023, when it issued a report covering fiscal years 2018 through 2021. Currently, it has no plans to perform a similar assessment in the future, according to the report.
• Cal ICH’s actions are not aligned with goals mandated by the Legislature. The report notes that without this alignment, the agency “lacks assurance that the actions it takes will effectively enable it to reach those goals.”
• Cal ICH has no consistent method for gathering information on homelessness programs’ costs and outcomes. “As a result,” the report noted, “the state lacks information that would allow it to make data‑driven policy decisions and identify gaps in services.”
• Cal ICH doesn’t know whether the data it gathers is accurate, nor has it used that data to evaluate whether programs to address homelessness are working.
• The report found that 86% of people placed in housing statewide moved into interim housing rather than permanent housing.
• When people left interim housing, only 13% moved into permanent housing. By contrast, 44% of the people who left interim housing returned to homelessness.
• When people were placed in permanent housing, they returned to homelessness 4% of the time.

As street homelessness becomes increasingly visible, public skepticism of the state’s response has grown.

A demonstration of that skepticism came during the March election, when voters approved Gov. Gavin Newsom’s latest effort to tackle the homelessness crisis by the thinnest margins.

Newsom raised more than $13 million promoting Proposition 1, which will compel county behavioral health departments to spend some of their funding on housing and drug treatment programs.

Californians continue to name homelessness as one of their top concerns in polls, and officials are increasingly responding to the pressure with calls for greater accountability over spending. Newsom has paired new funding with demands for greater oversight, while a federal judge in Los Angeles is seeking an audit of homelessness programs in the city, and auditors in San Francisco and Sonoma County recently investigated homeless services providers.

A scathing 2021 audit found California’s management of homelessness was disjointed and lacked a centralized way to track spending or determine where efforts are duplicative. The report recommended California follow the example of other states in assigning oversight to a single entity tasked with developing a statewide strategic plan.

In San José, where more than 6,000 people are unhoused, Mayor Matt Mahan and his predecessor Sam Liccardo have pushed for the city to invest in interim housing as a way to quickly move unhoused residents off the streets.

Homelessness increased in San José between 2015 to 2022, from just over 4,000 to 6,650. The population dipped slightly in 2023 to 6,340 — an accomplishment Mahan attributes to the city’s investment in interim housing.

In his budget proposal last month, Mahan proposed an increase in funding for temporary housing and shelter, a shift that could result in fewer investments in building affordable housing.

A similar effort from the mayor was met with some resistance from the council last year, but Mahan argued that a new mandate from regional water officials to clear encampments from the city’s river beds added urgency to his focus on short-term housing.

“More than anything, it seems like the audit calls for us to do more,” said Ray Bramson, chief operating officer for Destination Home, a research and advocacy organization that helps implement Santa Clara County’s plan to end homelessness. “That costs money, and at a time where we’re seeing the funds that we’re getting be reduced or cut.”

While local taxes and bonds have raised money in recent years, Bramson pointed out that federal housing and homelessness funding has been stagnant.

“This has been decades and decades of disinvestment in our poorest residents at both the state and the federal levels,” he said, reiterating a common refrain calling for ongoing — as opposed to one-time — state funding. “While there’s been more investments recently, we really need some permanent, reliable sources if we’re going to implement these big system changes.”

The audit report recommended the Legislature amend state law to require Cal ICH, by March 2025, to mandate reporting by state agencies on the costs and outcomes of its programs related to homelessness. To do that, Cal ICH has to establish guidelines for the agency to follow when it collects that information.