California Spent $24 Billion on Homelessness: Did It Work?

California homelessness spending totaled roughly $24 billion over the five fiscal years from 2018–19 through 2022–23, funneled through at least 30 programs run by nine state agencies.¹ The homeless population grew anyway, reaching more than 187,000 people by January 2024, and the state’s own auditor concluded that California cannot reliably say what all that money bought.

What the $24 Billion Audit Found

The figure comes from a California State Auditor report released in April 2024. It covers state-funded spending across all major homelessness programs from fiscal year 2018–19 through 2022–23, including one-time emergency allocations and ongoing programmatic support.¹ Before 2018, annual homelessness spending was a fraction of what it became once the state began treating the crisis as a budget priority.

The audit’s most damaging finding was not about the amount but about what the state knew afterward. The California Interagency Council on Homelessness had not consistently tracked or reported spending data across programs, and the auditor’s office found it could not fully assess the cost-effectiveness of several major programs because of data limitations.¹ Local data systems contained deleted records, fictitious clients, and shelters reporting enrollments that exceeded their bed capacity. In some cases, nearly a third of participants in HHAP Round 1 across four large metros left funded services for unknown destinations, meaning the state could not determine whether they ended up housed or back on the street.

Where the Money Went

California’s homelessness spending falls into several broad categories:

Permanent supportive housing: long-term residential units paired with on-site medical and social services, primarily for people with chronic disabilities. This absorbs the largest share of capital spending.
Interim housing: emergency shelters, navigation centers, and modular units providing temporary beds and hygiene facilities.
Homelessness prevention: legal aid for people facing eviction, one-time rental assistance, and financial counseling.
Behavioral health services: mental health treatment and substance use disorder programs, including mobile crisis teams and residential treatment beds.²
Street outreach: teams that engage people in encampments, provide basic necessities, and connect them with shelter or housing.

The mix between these categories drives outcomes. The State Auditor found that 86% of housing placements statewide moved people into interim housing rather than permanent housing. Only 13% of people who exited interim housing moved into permanent housing, while 44% returned to homelessness. By contrast, 84% of people who exited permanent housing placements moved into other permanent housing, with just 4% returning to homelessness.¹ Permanent housing produces far more durable results than temporary shelter, even though shelter beds are cheaper upfront.

The Major Programs Behind the Numbers

Project Homekey

Project Homekey is the state’s flagship rapid-housing program. It gives local agencies money to buy and convert existing properties, including former hotels, motels, apartments, and commercial buildings, into permanent or interim housing.³ Since launching in 2020, the program has awarded $3.6 billion across 259 projects, creating roughly 15,850 housing units.⁴

The economics explain the state’s heavy investment. The auditor reviewed eight Homekey Round 1 projects and found an average cost of about $144,000 per unit, with the cheapest project in Fresno at roughly $90,000 per unit and the most expensive in San Francisco at about $200,000. Newly constructed affordable housing in California averaged $380,000 to $570,000 per unit in 2019, and a single unit in the Bay Area can reportedly cost up to $1 million.¹ Converting existing buildings is faster and cheaper than building from scratch.

Homeless Housing, Assistance and Prevention Grants

HHAP is the main vehicle for sending flexible block grant funding directly to cities, counties, and Continuums of Care. Round 6 alone received a $1 billion appropriation, distributed 30% to Continuums of Care, 42% to large cities with populations over 300,000, and 28% to counties, all allocated proportionally based on each jurisdiction’s share of the homeless population.⁵ Round 7 is already authorized at $500 million for the 2026–27 fiscal year, with $8 million released early so the Department of Housing and Community Development could begin preparing to administer it.⁶

Starting with Round 4, the state began requiring grantees to report on seven system performance measures: counts of unsheltered people, the number accessing services, how many are newly homeless, successful placements from outreach into shelter or housing, average time engaged with services, exits into permanent housing, and the rate of return to homelessness after placement. All measures must be broken down by race, ethnicity, and other demographic groups.⁷ Round 5 added a requirement that applicants submit regional homelessness action plans, and Round 6 established reducing unsheltered homelessness as an explicit program priority.

Proposition 1 and the CARE Act

Proposition 1, approved by voters in March 2024, authorized $6.38 billion in bonds for behavioral health infrastructure and housing. Roughly $4.4 billion goes toward building or renovating treatment and residential care facilities, with the remaining $2 billion reserved for permanent supportive housing for veterans and others with serious mental health conditions or substance use disorders.⁸ The bond works alongside the Community Assistance, Recovery, and Empowerment Act, which created a civil court process allowing families, first responders, and behavioral health professionals to petition for court-ordered treatment plans for people with untreated schizophrenia and related conditions.

In March 2026, Governor Newsom announced $291 million in new funding to strengthen CARE Court enforcement and expand supportive housing and behavioral health services statewide.⁹ The combination of bond-funded infrastructure and court-ordered treatment marks a shift from earlier rounds that emphasized voluntary engagement and Housing First principles. Whether the coercive approach produces better outcomes at scale remains an open question. The program is still ramping up.

How Funds Reach Local Communities

The California Interagency Council on Homelessness coordinates statewide policy and oversees implementation of Housing First guidelines.¹⁰ Distribution to cities and counties runs through the Department of Housing and Community Development. Funds are released after a local jurisdiction’s standard agreement has been fully executed and any conditions preceding disbursement have been met.¹¹

At the local level, Continuums of Care serve as regional planning bodies that coordinate housing and services. HHAP funding is distributed through a formula based on each jurisdiction’s share of the statewide homeless population, drawn from point-in-time count data.⁵ Formula distribution means Los Angeles, San Francisco, San Jose, and San Diego receive the largest shares. Local officials have wide flexibility in how they spend the money within program guidelines.

Did the Spending Work?

The homeless population reached more than 187,000 in January 2024, up roughly 53% since 2013, even as the state was pouring in record sums. In 2022, about 316,000 individuals accessed housing and services through the state’s 44 Continuums of Care. But the overwhelming majority moved into interim rather than permanent placements, and nearly half of people who exited interim placements returned to homelessness.¹

The auditor recommended that the Legislature require standardized cost and outcome reporting across all state-funded programs, with public reporting beginning in 2025. Recent HHAP rounds have tightened accountability, adding the seven performance measures and requiring regional action plans. Whether those reforms produce meaningful transparency depends on execution. The state has had accountability frameworks on paper before without consistently following through.

What’s Been Added Since

The spending has not slowed. For 2025–26, the Legislature appropriated $100 million in one-time General Fund money for Round 5 of the Encampment Resolution Funding initiative, on top of the $500 million already authorized for HHAP Round 7 in 2026–27.⁶ Adding the Proposition 1 bond and continuing annual appropriations to the audited $24 billion baseline puts California’s total commitment well over $30 billion since 2018.

Federal contributions face significant uncertainty. A 2025 court order temporarily blocked the U.S. Department of Housing and Urban Development from obligating new Continuum of Care awards, and proposed federal budget cuts could shrink the money available for permanent housing nationwide from $3.3 billion to roughly $1.1 billion. California also draws federal Medicaid dollars through its CalAIM waiver, which covers housing-related services such as transition navigation, housing deposits, tenancy-sustaining support, and short-term post-hospitalization housing for Medi-Cal enrollees who are homeless or at risk of homelessness.¹²

Most state homelessness dollars come from the General Fund, which is fueled primarily by personal income and sales taxes. That reliance makes funding volatile: when the economy booms, the state has surpluses to throw at the problem; when revenues dip, programs face cuts. Bond measures like Proposition 1 sit outside that annual cycle, raising money through debt repaid over decades.

1
California State Auditor. Homelessness in California The State Must Do More to Assess the Cost-Effectiveness of Its Homelessness Programs
2
California Legislative Information. California Code Health and Safety Code 1374.724 – Behavioral Health Crisis Services
3
California Legislative Information. California Code Health and Safety Code 50675.1.3 – Homekey Program
4
California Department of Housing and Community Development. California Awards Nine Homekey Projects to Create 533 New Permanent Supportive Homes
5
California Department of Housing and Community Development. HHAP Round 6 Notice of Funding Availability
6
Legislative Analyst’s Office. Housing, Homelessness and Local Government
7
Legislative Analyst’s Office. Overview of Homeless Housing, Assistance, and Prevention Program Funding and Accountability
8
Legislative Analyst’s Office. Proposition 1
9
Governor of California. Governor Newsom Announces New CARE Court Accountability Measures
10
California Interagency Council on Homelessness. California Interagency Council on Homelessness
11
California Department of Housing and Community Development. Monitoring Forms and Disbursement
12
Department of Health Care Services. CalAIM Homelessness and Housing Instability