Despite an investment of approximately $24 billion since 2019, California has seen an alarming rise in homelessness. Over the past five years, the homeless population has surged by about 30,000, reaching over 181,000 individuals. With an average spend of around $160,000 per person based on the 2019 figures, expectations were that homelessness rates would decline significantly. Yet, the opposite has occurred. What are the underlying issues?
Firstly, a major issue is the lack of proper oversight and inadequate data on how funds are being utilized. A state auditor’s report has criticized California for its inability to track the ongoing costs and results of its homelessness programs effectively. The report points out that the state has not aligned its actions with its statutory goals to ensure accountability and collect necessary financial information, making it difficult to ascertain whether the efforts are truly making a dent in the crisis.
Additionally, the state’s problem with outdated information technology infrastructure has contributed to inefficiencies and mismanagement of resources. For example, in 2020, outdated systems at the Employment and Development Department were blamed for about $32 billion in unemployment benefits fraud. Such systemic issues extend beyond homelessness and reflect a broader problem of governance.
Secondly, the economic structure in California exacerbates the situation. The high cost of living and the disproportion between income levels and housing costs leave many households vulnerable. Nearly half of the state’s renting households spend over 50% of their income on rent, far exceeding the recommended 30%. This ‘extremely rent burdened’ group is at high risk of homelessness. If just 1% of these households lose their housing annually, the homeless population increases significantly.
Lastly, the state’s approach to housing policy itself is problematic. The current focus is on constructing high-cost housing units which are not economically feasible for low-income individuals without substantial public assistance. For example, a new housing complex in Santa Monica costing over $1 million per unit is unaffordable for most homeless people and represents a misallocation of resources.
A more practical solution would involve building low-cost, manufactured housing outside of the high-cost coastal areas. This type of housing could provide a more affordable option for low-income families, without the need for heavy reliance on public funds. Unfortunately, recent political decisions, such as the veto of legislation that would mandate annual evaluations of homelessness spending, show a lack of commitment to implementing cost-effective, long-term solutions.
The ongoing crisis indicates a need for a shift in policy focus from expensive, high-end solutions to more realistic, financially sustainable housing options. Without such changes, California risks continuing its costly cycle of increasing homelessness despite significant expenditures.
