California Spent $20 Billion on Homelessness But Didn’t Track the Results

California has about a third of all of the homeless people in the United States, 181,000 at last count. As a result, the state also spends a tremendous amount of money trying to deal with the problem. The total spent over the past six years is more than $20 billion.

Given the state’s major investment in various programs, you might imagine they would keep a close watch on how the money is spent and whether or not it is effective. But according to an audit released today, that’s not the case.

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…

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.

There are five major programs to combat homelessness which the state has been funding. The audit concluded that two of them were likely cost effective:

The report evaluated five state homelessness programs and found two “likely” are cost-effective. Newsom’s signature Homekey program helps cities and counties turn hotels and other buildings into homeless housing at an average cost of $144,000 per unit (in the program’s first round), compared to the $380,000-$570,000 it would cost for new construction. The CalWORKS Housing Support Program, which gives financial help to families who are homeless or at risk of becoming homeless, also saves the state money because it’s much cheaper to help someone stay housed than it is to help them find housing once they become homeless…

But for three other programs, the state hasn’t collected enough data for the auditor to make an assessment: the State Rental Assistance Program (which helped people pay rent and other expenses during the COVID-19 pandemic), the Encampment Resolution Fund (a program Newsom launched to help cities clean up specific encampments) and the Homeless Housing, Assistance and Prevention program (the state’s main source of general homeless funding, also known as HHAP).

The same audit also looked at two cities in the state and similarly found they were not keeping track of their spending on homelessness.

San Jose and San Diego each have spent hundreds of millions of dollars on homelessness in recent years. But neither could provide an exact accounting of how much was spent and where it went, according to the audit. 

And both cities failed to consistently evaluate whether the homeless services nonprofits they contract with are effectively spending city funds…

In San Jose, the city extended an $8 million homelessness prevention contract based on vastly inflated performance data, according to the audit.

I’d be willing to bet that other major cities in California can’t account for all of the money they’ve spent on this problem. Just last month a judge ordered an audit of homelessness spending by the city of LA.

The ruling by U.S. District Judge David O. Carter set a broad scope for the audit, going beyond the parameters he had initially indicated he wanted.

The audit, which city officials agreed to in principle earlier this month, is part of a settlement with the LA Alliance for Human Rights, a group of business owners and residents that had sued the city and county, alleging they had failed in their duty to address homelessness…

The agreement lists 31 subjects the audit should cover. Among them are how effective city funds are in reducing homelessness, how service providers demonstrate success, and how the city and the Los Angeles Homeless Services Authority avoid double-counting people who receive housing and services.

The results of that audit should be interesting. And earlier this month an audit of a San Francisco non-profit found it was spending money it didn’t have on big raises.

The office released an audit Tuesday that described gross mismanagement and wasteful spending at the organization, which operates nearly one-third of city-funded supportive housing units for formerly homeless people…

According to the report, which was prepared by outside auditors, Sjoberg Evashenk Consulting Inc., HomeRise’s questionable practices wound up diverting funds that might have otherwise gone towards tenant services or facility improvements.

Among other issues, the nonprofit reportedly granted large pay raises—as much as 20% or more in some cases—to some employees, despite insufficient cash flow.

So, yes, my guess is that the closer you look at the homeless-industrial complex, the more waste, fraud and abuse you’ll find, making it imperative that cities and the state carefully track where the money is going and whether or not the programs work.