California spent billions on homelessness without tracking if it worked

SACRAMENTO —  California has failed to adequately monitor the outcomes of its vast spending on homelessness programs, according to a state audit released Tuesday, raising questions about whether billions of dollars meant to thwart the crisis has been worth it as the number of people living unsheltered has soared.

A new report from the California State Auditor’s Office found that a state council created to oversee the implementation of homelessness programs has not consistently tracked spending or the outcomes of those programs.

That dearth of information means the state lacks pertinent data and that policymakers “are likely to struggle to understand homelessness programs’ ongoing costs and achieved outcomes,” the audit says.

“The state must do more to assess the cost-effectiveness of its homelessness programs,” California State Auditor Grant Parks said in a letter sent to Gov. Gavin Newsom and state lawmakers Tuesday accompanying the audit.

California has spent $20 billion over the past five years dedicated to the state’s homelessness crisis, including funneling money toward supporting shelters and subsidizing rent. Still, homelessness grew 6% in 2023 from the year prior, to more than 180,000 people, according to federal “point in time” data. Since 2013, homelessness has grown in California by 53%.

The California Interagency Council on Homelessness — created in 2016 to oversee the state’s implementation of programs dedicated to the worsening crisis — has not ensured the accuracy of the information in a state data system and has not evaluated homelessness programs’ success, according to the state auditor.

The audit recommends that the state Legislature require that the council report spending plans and outcomes of state funded homelessness programs annually and to make that information public. It recommends a type of “scorecard” to track the success of programs.

The council consists of state officials including Health and Human Services Secretary Dr. Mark Ghaly and California Department of Corrections and Rehabilitation Secretary Jeff Macomber.

The governor’s office referred questions about the audit to the California Business, Consumer Services and Housing Agency, which cited a law Newsom signed in 2021 that requires entities receiving state homeless funds to collect data. Since the law took effect last year, the California Interagency Council on Homelessness has made “significant progress,” spokesperson Russ Heimerich said in an email.

“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. 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,” he wrote on behalf of the California Interagency Council on Homelessness.

The response echoes frustrations among state and local leaders over which level of government is responsible for solving California’s homeless problem. In 2022, Newsom got tough on mayors when he rejected every local homeless action plan in the state, deeming them not ambitious enough.

Out of five state programs analyzed, auditors found that two were likely cost effective: Project Homekey — Newsom’s COVID driven project to convert hotels into housing — and the CalWORKs Housing Support Program, which offers financial assistance and other services to low income residents. The others analyzed, including a state rental assistance program, could not be reviewed because “the state has not collected sufficient data on the outcomes of these programs,” according to auditors.

“Collecting and reporting all state homelessness programs’ financial data allows for more complete and timely information about the state’s overall spending on homelessness. It also makes possible greater coordination of homelessness programs’ funding and may enable cost‑effectiveness comparisons,” the audit stated.

Based on the data available, the audit also revealed that most people involved in state programs are placed into interim housing such as shelters and do not end up in permanent housing.

A bipartisan group of lawmakers including state Sen. Dave Cortese (D-San Jose) and Assemblyman Josh Hoover (R-Folsom) requested that the Joint Legislative Audit Committee authorize a state audit of the efficacy of state homeless funding last year as California’s unhoused population — the nation’s largest — has continued to grow despite record state funding invested to combat it.

“The biggest conclusion that the auditors came back with is there’s just inadequate transparency and data and information available,” Cortese told reporters in Sacramento on Tuesday.

Cortese said the audit will act as a blueprint for the Legislature to consider stricter reporting on homelessness spending in the future and said it should not deter the state from funding homelessness responses.

“I think our constituents want us to continue to invest, and I think our constituents are going to want us to continue to audit the effectiveness of our efforts,” he said. “I don’t think it’s a time to stop.”

State Republicans chastised the Newsom administration for the lack of data and said it’s proof that Democrat-backed strategies are not working as the state grapples with a multibillion-dollar budget deficit.

“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-Roseville) said in a statement. “These audit results are a wake-up call for a shift toward solutions that prioritize self-sufficiency and cost effectiveness.”

Assemblymember Gregg Hart (D-Santa Barbara), chair of the Joint Legislative Audit Committee, said Tuesday he plans to conduct an oversight hearing to “further investigate” the audit results.

Tuesday’s audit comes just weeks after voters approved Proposition 1, Newsom’s $6.4-billion bond measure that aims to address one aspect of homelessness by building more treatment facilities for people who have problems with drug addiction or mental illness.

Another part of the audit examined spending by the cities of San José and San Diego, which have both struggled to help unhoused residents. The audit found that neither of those cities have “evaluated the effectiveness” of their programs despite millions in funding to respond to homelessness.

“San José and San Diego identified hundreds of millions of dollars in spending of federal, state, and local funding in recent years to respond to the homelessness crisis. However, neither city could definitively identify all its revenues and expenditures related to its homelessness efforts because neither has an established mechanism, such as a spending plan, to track and report its spending,” the audit states. “The absence of such a mechanism limits the transparency and accountability of the cities’ uses of funding to address homelessness.”

Cortese — whose Silicon Valley district has long been home to some of the nation’s largest homelessness encampments, a stark juxtaposition against the backdrop of stunning wealth — said the findings regarding the two major cities could be a harbinger for future data discoveries.

“If those two cities are experiencing issues or if there’s symptoms of challenges that we need to correct, that probably exists in many, many other cities in the state of California,” he said.