Are Cities Spending Homelessness Dollars Effectively? State Auditors Will Take a Look

Billions in state and federal dollars have been allocated to California cities and counties to address the homelessness crisis.

But is that money being spent effectively?

How many people move from the streets to housing, as intended?

How long do people have to wait for help?

How much of the money is going to administrative overhead?

And how closely should L.A. be looked at?

Those are among the key questions state auditors will be looking at as they embark on a review of how local agencies have spent state and federal money meant to help with the homelessness crisis.

Legislators on the audit committee voted unanimously to order the audit late last month. It’s the first state review of its kind amid the wave of new funding in recent years.

“I think it will raise questions — bottom line questions — about where we’re putting the money,” said Gary Blasi, a UCLA law professor who closely follows homelessness and has represented unhoused people as an attorney.

“I think it will reveal that we are spending a lot more money keeping people floating through the system, than we are actually housing people,” he added.

The government’s monthly cost of putting someone in shelter or temporary housing in L.A. is more expensive than the average rent for a single-room apartment, Blasi said.

The state audit results — focused on San Jose and another yet-to-be named area — will be published in a public report expected in late 2023 or early 2024.

Unanswered questions

The 5,000-hour review by State Auditor Grant Parks’ office was ordered recently by state legislators based on a request from Sen. David Cortese (D-San Jose).

Cortese told LAist the idea for the review stemmed from visiting one of the largest encampments in his home city and finding out there had been no audits looking at the effectiveness of public dollars being spent there.

“You can’t blame taxpayers, everyday residents of the state …[for] asking those questions,” Cortese said.

“They understand that their taxpayer dollars are supposed to be going to addressing this problem. And as they drive to work every day or they drive to school every day or drive home, they see more and more tents popping up,” he added.

The audit, Cortese said, is “really [about] accountability. At the end of the day, it's accountability to our own constituents, to the taxpayers.”

Among the state and federal money that has flowed to local cities and counties are billions in Project Roomkey and Project Homekey dollars to help convert motels and hotels into shelter and housing for unhoused people.

LAist previously reported on problems at the L.A. Grand Hotel in downtown L.A., a Project Roomkey site.

At the encampment in his city, Cortese said he wasn’t able to get answers for homelessness advocates who asked why state dollars weren’t being used to address sanitation problems and help people at the encampment find shelter and housing.

“I couldn't answer the question other than to say, I'll tell you that it's very true that we have invested billions of dollars. I can vouch for that. I voted on those budget bills,” Cortese told LAist, emphasizing the need for an audit.

“I serve on the budget committee. I serve on the housing committee, but I can't specifically answer your question as to why or how [which] money ends up here or not.”

Should L.A. be looked at?

State auditors will choose the second local area the audit will look at.

A spokesperson for the State Auditor’s Office told LAist they couldn’t confirm whether a decision had been made on the second city, and that the locale won’t be revealed until the final report is released.

Cortese, who initiated the audit, said it would make a lot of sense for that city to be Los Angeles or in the L.A. area given the large numbers of unhoused people and for the audit to have more credibility among legislators from SoCal.

While state legislators defined the overall scope of what the audit will look at, they cannot influence the auditor’s work, Cortese said.

Blasi agreed that L.A. would make sense to include as the second area being looked at, including because the city and county’s homelessness agency — known as LAHSA — has strong data collection that could aid auditors.

He said auditors could also look at what’s working in L.A. — such as, in his view, the county health department’s Housing for Health program.

It’s also important for auditors to go beyond government datasets to see what’s actually happening to people at the ground level, Blasi said, adding that he’d like to see auditors follow up with people as they interact with local services.

“It’s difficult to get any actual information about how successful something is, unless you do something different than just get a lot of spreadsheets from government agencies,” he said.

Dysfunction found in previous audit

Previous audits have found problems with California’s approach to homelessness.

A 2021 state audit called it “disjointed.”

That audit noted “at least nine state agencies administer and oversee 41 different programs that fund homeless services.”

And four years after launching, the state’s council for coordinating homelessness funding still had not “set priorities or a timeline” for achieving its goals required under state law, auditors found at the time.

That audit also found issues with local coordination of homeless service funding in Riverside, Santa Barbara, Santa Clara, Fresno and Mendocino counties.

“None [of these local agencies] fully understand the homelessness needs and available services in their areas,” auditors wrote, citing a lack of proper analysis of where the gaps are.

It’s crucial to know whether dollars are being spent effectively, Cortese said — adding that voters won’t have much patience with elected leaders if spending issues aren’t promptly addressed.

“I think we would all be rightfully held accountable at the ballot box if we got four or five years further down the road only to find out that the billions and billions of dollars that were being pushed down to local governments could have been a lot more effective had somebody taken an earlier look,” Cortese told LAist.

“Shame on us if we let that happen,” he added.