New hurdles for California counties receiving homeless funds

from Marissa Kendall and Ben ChristopherCalMatters

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Gov. Gavin Newsom has threatened numerous times to cut off state homeless funds from cities and counties that aren’t doing enough to get people off the streets.

This year, those threats seem more real than ever.

The Newsom administration and the Legislature are adding new strings to that money, which they hope will help address one of the state’s most glaring policy failures: Despite California’s big recent investments in homelessness, encampments are still widespread on city streets. But cities and counties are already wary of tightening the requirements, which they worry will make it harder to access critical state funds without directly improving street conditions.

To gain access to state money for homeless housing, assistance and prevention, cities and counties are under pressure to enact policies regulating homeless encampments that passes a state examination – a potential challenge in a state where local jurisdictions define camps vary considerablyand many settlements have no politics at all. The state also wants localities to receive a “residential designation” — a special status awarded to places that go above and beyond housing. The difference is that only 60 of California’s 541 cities and counties (home to only 15% of the state’s population) have achieved so far.

Newsom, the Legislature, local governments and other stakeholders are likely to spend the next few months fighting over those terms and hammering out the terms for $500 million in homelessness funding proposed in this year’s budget.

Until those details are worked out, exactly what standards cities and counties will comply with — and what will happen to those that don’t — is unclear. But one thing is clear: The state is ready to give out cash freely.

Some counties are already feeling the heat. They report increased scrutiny as they apply for the homelessness funds already approved in the 2024-25 budget (which, thanks to long bureaucratic delays, have only just been delivered).

“They’re holding the counties’ feet to the fire,” said Megan Van Sant, senior program manager for the Mendocino County Department of Social Services.

The Newsom administration and lawmakers supporting the new accountability measures say cities and counties have for too long raked in state funds without proving they are using them wisely. The new message to locals is clear, they said Assembly Member Sharon Quirk-SilvaDemocrat from La Palma in Orange County: “The state is moving forward not only with investment dollars, but with legislation. Now is your time to show that if you want those dollars … you have to show us what you’re doing.”

But the new requirements could make accessing critical homeless funds more onerous.

“I’m concerned that, first, we could leave more cities out,” said Carolyn Coleman, executive director and CEO of the League of California Cities, “and second, we could cause a delay in being able to house more people sooner, which I think is the goal.”

More difficult application process

Applying for state homelessness funds “absolutely” feels different now than it did last year, and the state is asking tougher questions, said Robert Ratner, director of Santa Cruz County’s Housing for Health program.

Fortunately, the county just approved a camping policy in September and began working on getting a residential designation, he said. But the state still returned the application to the county with many notes.

“Sometimes it felt like the door kept moving a little bit,” Ratner said.

The county’s application has not yet been approved, but it appears to be getting closer, Ratner said.

In Mendocino County, the state appears to be holding funds hostage until the county can explain its plans to pass a camping ordinance, Van Sant said. The County Board of Supervisors is working on such an ordinance, but it has not yet been voted on.

But the state’s requirement puts Van Sant and her team in an awkward position. As housing administrators, they have no say in the rules the county makes that regulate or prohibit encampments on local streets.

“I wanted to stay out,” Van Sant said. “I still want to stay out of it. We’re housing providers. We’re trying to figure out how to get people housing. We don’t want to weigh in on law enforcement. At all.”

This year, the requirements may become even stricter. Under current rules, the state appears to be satisfied as long as a city or county can show how it plans to obtain a residency designation or adopt a camping policy. In the next round of funding, local leaders worry the state will withhold funds unless cities and counties actually meet those benchmarks.

It’s all about responsibility

At issue is the state’s Homeless Housing, Assistance and Prevention Program, which provides the main source of state money that cities and counties use to fight homelessness.

Although Newsom pitched the first round of funding, $650 million, as a “one-time” infusion of money for local governments in 2019, it has become a recurring feature of his administration’s strategy to reduce homelessness over the next five years.

For four consecutive years, the state has allocated $1 billion annually to be distributed among counties, major cities and federally recognized regional homelessness funding groups known as Continuums of Care. Each round of funding was described as a “one-off”. However, at least a quarter of the money went to day-to-day operational programs, according to data collected by the state.