Report: California Should Pause Funding for One of Newsom’s Key Programs to Clear Encampments

Lawmakers should hit the brakes on one of Gov. Gavin Newsom’s signature programs for cleaning up homeless encampments, according to a report out Wednesday from the Legislative Analyst’s Office (LAO).

The LAO found lawmakers lack the basic information needed to assess how well the effort — called Encampment Resolution Funding Program — is working and should hold off on further investment until it’s given “compelling evidence that program goals are being met.”

Newsom and legislators rolled out the competitive grant in 2021 to help local governments address “specific, persistent encampments” with the aim of moving people into permanent housing or temporary shelter until long-term housing becomes available.

The state invested $900 million in the program since its launch, according to the report.

“In some communities, this is a really important tool,” said Susannah Parsons, director of policy and legislation for the nonprofit, All Home, “and certainly a means by which local jurisdictions can respond to intense political pressure.”

Newsom last year ordered state agencies to clear encampments and urged local governments to do the same. The order seized on an opening from the Supreme Court, which issued a ruling that gave cities greater leeway to fine and jail people for camping illegally, even when no alternative shelter is available.

Parsons agrees that better data on outcomes is essential, but she said holding back new funding could hamper efforts to address homelessness.

“The prospect of losing access to that funding … is a big deal,” she said, noting that the uniquely flexible dollars are used for everything from medical care to emergency rental subsidies. “And it’s in the context of a funding landscape that is really uncertain, and that is making it really difficult for us to see the kind of progress that we need.”

The analyst’s recommendation, part of its 2025–26 budget assessment, echoes a report from the state auditor last year that found California has little idea how effective the billions it’s spent addressing homelessness have been.

Newsom and legislators have since put an emphasis on accountability, but when it comes to this program, those efforts have yet to come to fruition. His office did not return requests for comment.

Lawmakers haven’t received data on how many people have been housed using the money or even how many encampments have been addressed, according to the LAO, which provides nonpartisan policy advice to the Legislature.

Without that data, the analyst points out, the Legislature can’t determine whether the funding is resulting in an encampment “resolution” or encampment sweeps, which simply move people from one corner to the next.

According to the report, 70% of grant funds have yet to be spent. Of the $258 million that has been, about a third was used on temporary shelter, with the remainder spent on street outreach, services and permanent housing, among other uses.

“We know what’s most effective — it’s helping people back into housing and providing services to support that transition, instead of measures that just move them around,” Alex Visotzky, Senior California Policy Fellow with the National Alliance to End Homelessness, said. “Voters and folks experiencing homelessness want to see public dollars spent on what works.”

Legislators added new reporting requirements for the program last year, but those progress reports aren’t due until next month. Until lawmakers have those in hand, the LAO suggests they use spring budget hearings to press the administration for any available data.