LAO report digs into details of Newsom’s homelessness proposals

A recent report from the Legislative Analyst’s Office (LAO) finds that instead of relying on one-time funding solutions to address homelessness, California would benefit from a clear, long-term strategy. The report dives into the proposals related to homelessness in Gov. Newsom’s recent budget proposal and poses key questions that legislators should ask as they consider the funding requests.



Newsom’s 2021-22 budget proposal includes $1.75 billion in one-time General Fund spending for three primary proposals related to homelessness:


Image: Legislative Analyst’s Office


In all three cases, the funding is a one-time investment. LAO’s report states:

“While the Governor’s budget reflects his commitment to curbing homelessness by once again proposing significant state resources toward these issues, the Governor’s response continues to focus on one-time solutions. As we have said previously, a clear, long-term strategy would make it more likely that the state’s investments would have a meaningful, ongoing impact on its housing and homelessness challenges.”

These funding sources would primarily go toward acquiring and rehabilitating properties, states the report, but ongoing funding for supportive services and maintenance are left to local governments and other entities.

“In some cases,” adds the report, “addressing homelessness might not be the principal benefit of some proposals.”

The LAO report reviews the three major proposals – increased funding for the Homekey Program, support for residential facilities, and support for behavioral health infrastructure — and raises issues for the legislature to consider as they weigh these different funding options.


Increased Funding for Homekey Program:

Newsom’s 2020-21 budget and other actions allotted $800 million in one-time funding to the newly established Homekey Program. Homekey funding is used to acquire hotels, motels, and other housing to be converted to permanent housing for those impacted by both homelessness and by COVID-19.

The 2020-21 funding has been distributed through 94 awards, which the administration indicates will create over 6,000 units for families and individuals.

Newsom’s new budget proposal allocates $750 million in General Funds to continue the Homekey Program, and the governor has requested that $250 million be approved quickly by the legislature.

When considering this request, LAO recommends that legislators ask if the $250 million is truly time sensitive, and to ask how the California Department of Housing and Community Development would evaluate grant applications.

The LAO also asks how local governments would fund the ongoing costs not included in the governor’s proposal.

“Local entities would be responsible for funding the ongoing costs associated with maintaining the acquired properties and providing any associated services to occupants. Local entities’ capacity to fund such new ongoing costs is unclear and calls into question the state’s ability to preserve these units in the long term.”

The report also notes that the program’s successes and challenges associated with its initial funding have not been evaluated. Understanding the parts of the program that have faced obstacles “will be important if it becomes a cornerstone of the state’s approach on homelessness.”


Support for Residential Facilities Serving Vulnerable Adults & Seniors:

Newsom’s budget proposes $250 million in General Funds for acquisition and rehabilitation of Adult Residential Facilities (ARFs) and Residential Care Facilities for the Elderly (RCFEs). Recent reports indicate that financial challenges have forced some of these facilities to close, though there is limited data collection on this issue. The $250 million would go to grants aimed at preserving and expanding housing options for low-income seniors who are at risk of homelessness.

The administration has stated that there is no plan to propose legislation to implement the proposal. The LAO notes that without trailer bill language, it is unclear how the program will be implemented to support legislative goals. It would also be difficult for the legislature to oversee the program and hold it accountable.

Related to this proposal, the LAO report notes that there is limited data gathering on why these types of facilities close, if there are certain characteristic of the facilities that close, and what happens to residents when they close.

Without this information, its difficult to assess the effectiveness of offering one-time funds.

“Understanding why facilities are closing should inform the potential solutions. For example, if facilities are closing because they are unable to sustain their operations due to the level of the SSI/SSP grant, the solution may be to reconsider the level of the SSI/SSP grant for all recipients—an ongoing policy intervention. If, however, the issue is one-time infrastructure rehabilitation needs, then one-time funds to make capital improvements could be effective.”

Additionally, the report states that questions remain about the connection between facility closures and homelessness and what level of accountability there would be on facilities that receive funding.


Support for Behavioral Health Infrastructure:

Newsom is proposing $750 million to provide grants to counties to use for properties to expand behavioral health treatment resources. Counties would need to provide matching funds in order to receive the grant award, and the administration estimates the program would create at least 5,000 beds to treat individuals with behavioral health disorders.

The report asks how the funding for this program would target homeless individuals. It also notes that after one-time funding from the state, local governments would be responsible for funding ongoing costs related to maintenance and providing services. It’s not clear how counties would be able to maintain these facilities.

Lastly, the report asks if having a local match requirement would impact counties’ willingness to participate?

These questions, reasons the report, should be on lawmakers mind as they continue to iron out the details of the state budget.