California lawmakers want $1 billion to fight homelessness. But Gov. Newsom has a new focus

As California lawmakers and Gov. Gavin Newsom wrangle over what to cut and what to keep to address the state’s estimated $45 billion budget deficit, funding for another round of $1 billion to combat homelessness is in the crosshairs.

Newsom’s revised budget proposed trimming $260 million in extra money from the Homeless Housing, Assistance and Prevention program, or HHAP, which provides flexible grant dollars to cities, counties and for care across the state. A current fifth round of funding in the 2023-24 budget is still doling out $1 billion.

Even though the joint legislative budget plan released last week provides $1 billion to local governments to continue to combat homelessness, the governor’s revised budget does not set the money aside for a sixth round of funding. Newsom has been pushing on another front on homelessness and mental health, zeroing in on a narrower set of homeless people.

Potential cuts to HHAP have worried local leaders who have come to rely on the funding, even as several use their own municipal and federal funds to pay for shelters and other services. Municipalities have appealed to lawmakers and the governor to continue the $1 billion annual grant, calling it a lifesaver.

“We cannot abandon this progress now ... Without HHAP the progress that we were making will vanish,” San Diego Mayor Todd Gloria, chair of the California Big City Mayors coalition, said during a recent news conference, citing multiple negative consequences that would follow such as shuttering of shelters and many homeless returning to the streets.

“In short, it will be a disaster,” Gloria said.

With the new fiscal year starting July 1, the Legislature must approve a budget by June 15. Once the budget bill is sent to the governor, he then has 12 days to act on the legislation.

Newsom previously punted to lawmakers on the question of whether HHAP funding should continue in the future. “The Legislature in their wisdom will make that determination on the basis of what they believe should be prioritized in this budget,” he said. “And they can make a determination if they want to continue to appropriate levels that we have seen in the past.”

A Newsom spokesperson said Friday that the administration is reviewing the Legislature’s proposal.

“The administration will continue to work with the Legislature and stakeholders to deliver a balanced budget in June that cuts spending, makes government leaner, and preserves the state’s ongoing fiscal integrity to protect core services that hardworking Californians rely on,” the spokesperson said in a statement.

A funding snapshot

A recent state report finds that recipients of the annual grant to combat homelessness are spending a majority of the dollars they received from the first two rounds and the money appears tohave positive results.

The California Interagency Council on Homelessness report provides a snapshot of the first four rounds of HHAP funding. Among other areas, it covers how the money is being used by local governments.

“In terms of spending, the state is seeing HHAP grantees spend the bulk of their funding on getting Californians experiencing homelessness into temporary and permanent housing solutions,” the report notes.

Using six performance measures to assess homelessness investments from local, state and federal funding sources for years 21-22 and 22-23, including HHAP, initial data shows that:

• Although more people are being housed in the state year-over-year — 63,237 in 2022 and 72,298 in 2023 — more people are newly becoming homeless — 162,684 in 2022 and 184,334 in 2023.

• The number of Californians accessing services while homeless and getting into permanent housing has increased from 298,739 to 349,519 for the same period.

“The increase in the number of Californians accessing services indicates that investments in solutions such as those funded by HHAP have created more opportunities to expand programs, reach more people year over year, and achieve deeper penetration of services throughout communities,” the report states.

The Newsom administration faults recipients for not spending all of their HHAP funding faster.

“The report makes it clear that a large portion of recent funding rounds has not yet been obligated, much less spent, meaning locals have the money and are just holding it,” a spokesperson for the governor’s office said. “The state has set timelines for these dollars to get out the door and the clock is ticking,”

Data through December 2023 show the majority of the money from rounds one and two was spent. More than $727 million has been spent; more than $175 million remains unspent. Recipients still have time to meet obligation deadlines for rounds three and four and HHAP staff will work directly with those who have outstanding balances to encourage them to move faster.

Newsom’s focus

While the fate of the $1 billion for the next round of HHAP funding is still to be decided, the governor has focused on money from Prop. 1, a bond measure that he championed and which was approved by voters in March by a razor-thin margin. Prop 1 taps nearly $6.4 billion to target those who are in crisis, experiencing chronic homelessness or who have mental health or substance abuse problems, as well as for veteran housing.

Last month, Newsom announced he would speed up the release of $3 billion to build or refurbish mental health treatment centers from the voter-approved Prop. 1 funds.

Prop. 1 reconfigures the California Mental Health Services Act to redirect the majority of its funding from the counties to the state for building the facilities and housing for the chronically homeless.

The mayors of California’s biggest cities have said HHAP and Prop. 1 are complementary and funding from both is needed to combat the state’s homelessness crisis.

The governor has also pushed the CARE Act, a statewide system of county mental health courts meant to compel treatment for those with severe mental illnesses, exhorting counties to move with urgency on homelessness reforms and initiatives. The money from Prop. 1 will provide housing that would allow CARE Court to work.

‘More work must be done’

As the state’s homelessness crisis has grown, the governor has increasingly called for accountability from those receiving money to combat homelessness, a call which big city mayors say they embrace. A reimagined accountability unit will monitor the HHAP plans cities and counties submit and will ensure cooperation between various groups

More than 181,000 Californians experienced homelessness on a given night in 2023, according to the U.S. Department of Housing and Urban Development.

By itself, the California Interagency Council on Homelessness report continues, HHAP provides services to up to 130,000 Californians experiencing homelessness every year.

“Were the number of people experiencing homelessness static, California would be more than two-thirds of the way towards housing the 181,000 Californians experiencing unsheltered homelessness on any given night,” the state report notes.

The rate at which the homeless are being placed into some sheltered living arrangement aligns with data across the nation and “is impressive for a state with a tight housing supply like California,” the report states.

The administration said that the report’s results point to progress being made, “but more work must be done.”

The Big City Mayors coalition has implored lawmakers and the governor to keep the money from HHAP flowing, saying not doing so would turn back progress on fighting homelessness across the state.

“And I will conclude with this from our state’s own Interagency Council on Homelessness. They released a report today on the efficiency and effectiveness of HHAP,” Mayor Gloria said before reading an excerpt from the state report during the recent news conference.

Gloria added: “That’s the state’s own folks that are mentioning and acknowledging how effective this is, that’s why we must maintain this funding, and that’s why we’re here together today.”