California spends billions on homelessness. Report casts doubt on cost-effectiveness

California lawmakers have allocated billions of dollars to address homelessness in the state in recent years, but a new audit finds that the state is not doing enough to evaluate how that money is being spent.

The report comes a little over a year after the California Legislature’s Joint Legislative Audit Committee asked the State Auditor’s Office to look into how state funding for homelessness is being spent.

In a letter to Gov. Gavin Newsom and the leaders of the State Senate and Assembly, State Auditor Grant Parks wrote that “in general, this report concludes that the state must do more to assess the cost-effectiveness of its homelessness programs.”

The audit, which was requested by a bipartisan group of lawmakers, was critical of how the state, through the California Interagency Council on Homelessness (Cal ICH) has handled state dollars.

“The state lacks current information on the ongoing costs and outcomes of its homelessness programs, because Cal ICH has not consistently tracked and evaluated the State’s efforts to prevent and end homelessness,” Parks write in the introduction of the report.

The audit noted that although Cal ICH reported last year financial information covering fiscal years 2018-19 through 2020-21, “it has not continued to track and report this data since that time, despite the significant amount of additional funding the state awarded to these efforts in the past two years.”

Parks noted that the audit looked at five state-funded plans to tackle homelessness, but only two of them had enough data for the auditor to determine that they were cost-effective: the Homekey program by the Department of Housing and Community Development, and the CalWORKS Housing Support Program by the Department of Social Services.

The remaining three programs — the State Rental Assistance Program (SRAP); the Homeless Housing, Assistance and Prevention Program (HHAP); and the Encampment Resolution Funding Program (ERF) — lacked sufficient data for the auditor to determine their cost-effectiveness.

SRAP was established in 2021, at the height of the COVID-19 pandemic, to provide financial assistance to renters facing eviction. The Department of Housing and Community Development “did not collect clear eviction outcome data,” according to the audit.

HHAP was established in 2019, to provide funding for homeless services, including providing interim housing.

“Although Cal ICH collects some data when a person exits an HHAP‑funded service, those data are insufficient for evaluating the program’s cost‑effectiveness,” the audit noted.

As for ERF, that’s the program established in 2021 that was intended to get people out of encampments and into stable housing.

“Cal ICH has not collected complete outcome data for this program, and the expenditure data it has collected may be unreliable,” the audit said.

The audit made a number of recommendations, to both the Legislature and Cal ICH.

The report urged state lawmakers to amend state law to require Cal ICH, but no later than March 2025, to mandate reporting by state agencies of costs and outcomes of state homelessness programs.

The report adds that Cal ICH should develop and publish online a scorecard on the homelessness programs under its umbrella “that would enable the Legislature and other policymakers to better understand each program’s specific costs and outcomes.”

In response to the report, Cal ICH Executive Officer Meghan Marshall wrote that Cal ICH “generally agrees” with the recommendation to publish a report but that “limited existing resources and authorities limit its ability to implement this recommendation.”

Marshall referred to a 2021 law that required Cal ICH to conduct a one-time assessment of homeless funding and outcomes, for which it received $5.6 million to complete the task.

“Additional resources would be needed to conduct and update the same or similar analysis on an ongoing basis,” Marshall wrote.

California Republican lawmakers said the report highlights the state’s failure to deal with a worsening homelessness crisis.

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

On the Democratic side, Sen. Dave Cortese, D-San Jose, another lawmaker who requested the audit, released a statement praising the audit, which he said “highlights the need for improved data and greater transparency at both the state and local levels.”

“Unfortunately, there is a balkanized approach to data collection and outcomes, with no centralized system for tracking our investments. This data desert leaves the Legislature and the public without a system of checks and balances to answer basic questions about the effectiveness of our programs,” Cortese said.