$1 billion in grants to fight homelessness across California included in budget deal

Funding for municipalities to combat homelessness will continue in the budget agreement between California Gov. Gavin Newsom and legislators, money that cities and counties had hoped would be part of a final deal — and that had been a sticking point between the governor and lawmakers as they worked to address California’s estimated $45 billion budget deficit.

Newsom’s revised budget proposed trimming $260 million in extra money from the current round of Homeless Housing, Assistance and Prevention program, or HHAP, which provides flexible grant dollars to cities, counties and for care across the state. The governor’s revised budget in May had not set $1 billion aside for a sixth round of funding, while the budget approved by the Legislature did.

In the final deal announced Saturday morning between Newsom, Senate President pro Tempore Mike McGuire and Assembly Speaker Robert Rivas, another round of $1 billion in grants will continue in 2024-25 but will be tied to increased accountability measures. The supplemental $260 million from the current fifth round of funding will be cut.

In a statement on the overall nearly $300 billion budget deal, Newsom said: “This agreement sets the state on a path for long-term fiscal stability – addressing the current shortfall and strengthening budget resilience down the road.”

“We’re making sure to preserve programs that serve millions of Californians, including key funding for education, health care, expanded behavioral health services, and combating homelessness. I’m grateful for the partnership of our legislative leaders in meeting this challenge with balanced solutions that continue to make progress on California’s priorities,” the governor added.

Local leaders relieved

Potential cuts to HHAP had worried local leaders who said they came to rely on the funding to bolster their efforts to combat homelessness by expanding shelter beds and other services.

As budget deliberations continued following Newsom’s proposed May revisions, cities and counties appealed to lawmakers and the governor to continue all of the grant funding, calling it a lifesaver.

“Cities like mine depend on the state homelessness dollars that had previously been considered for elimination and the fact that they have been restored – and at their current level – will allow us to continue to tackle the biggest issue in the state, which is homelessness,” San Diego Mayor Todd Gloria, chair of the California Big City Mayors coalition, said Saturday.

The San Diego City Council and Gloria reached an agreement last week in which he proposed adding another 1,000 shelter beds to bring the total number of beds in the Southern California city to about 3,000. Continued state funds will help reach that goal, the mayor said.

“More than half of our shelter beds are funded by HHAP and it would have been catastrophic to lose this funding,” Gloria said. “So, it isn’t just about holding the line on additional beds but in a city like mine it is allowing us to reach more people and I think that’s why this agreement has been reached because (lawmakers and the governor) understand that the money is being used.”

Sacramento Mayor Darrell Steinberg said that the city depends on the state dollars to operate nearly all of the emergency shelter beds. Thanks largely to tens of millions in HHAP funds since 2019, the number of shelter beds in Sacramento have climbed to 1,350 now from less than 100.

“With this year’s Point in Time Count showing a 41 percent drop in unsheltered homelessness, now is not the time to let up,” Steinberg said in a statement on Saturday. “We are grateful that the governor and Legislature agreed on a responsible budget that allows us to continue pushing on the biggest problem we face.”

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 during a press conference in May. “And they can make a determination if they want to continue to appropriate levels that we have seen in the past.”

Report showed money making a dent

A recent state report found 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 to be making a difference.

“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, from the California Interagency Council on Homelessness, 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 report also found that 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.

More accountability

The Newsom administration has said recipients need to spend all of their HHAP money faster. And, 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 the big city mayors have embraced.

Gloria said the mayors welcome any “accountability and transparency measures that the state wants. Whatever is asked of us, we will do. We have no fear of showing our books on where we spend their dollars.”

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.

“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 last month. “The state has set timelines for these dollars to get out the door and the clock is ticking.”

Newsom has also been pushing on another front on homelessness and mental health, focusing 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 say HHAP and Prop. 1 are complementary and funding from both is needed to combat the state’s homelessness crisis.