Governor Gavin Newsom has escalated his warnings to California municipalities about the potential withholding of state homelessness funds should they fail to effectively address street homelessness. This fiscal year, the administration and state legislature have introduced more demanding conditions tied to the disbursement of these funds, aiming to correct persistent policy shortcomings. Despite sizable recent investments, homeless encampments remain widespread across Californian cities, underscoring the urgency for policy reform.
To tap into money from the state's Homeless Housing, Assistance and Prevention program, local governments now face pressure to implement encampment regulation policies that comply with state standards—a complicated task given the diverse or nonexistent approaches to encampment governance across jurisdictions. Additionally, jurisdictions must obtain a "prohousing designation," a recognition granted by state authorities to localities proactively advancing housing construction. Only 60 of California's 541 cities and counties, representing just 15% of the state's population, have attained this status so far, illustrating the challenge ahead.
Governor Newsom, legislators, and local officials are expected to engage in intense discussions over the coming months regarding these conditions, particularly concerning the administration of $500 million earmarked for homelessness initiatives in the current budget cycle.
Until these details are finalized, the exact benchmarks that California counties and cities must meet remain undefined, as do the consequences for noncompliance. However, it is unequivocal that the state is shifting away from easily granted funding towards a system that demands demonstrable local progress.
Local officials express concerns over increased scrutiny and conditionality. Some counties report intensified examination as they apply for funds allocated in the 2024-25 budget, funds recently released after delays. Megan Van Sant, senior program manager for Mendocino County's Department of Social Services, remarked, "They’re holding the counties’ feet to the fire," underscoring the tightening oversight.
Proponents of these reforms argue local governments have historically received state funds without sufficient accountability for outcomes on the ground. Assemblymember Sharon Quirk-Silva of Orange County noted the state’s evolving stance: "The state has been moving forward, not only with the investment in dollars, but also with legislation. Now it is your time to show that if you want these dollars…you have to show us what you’re doing." Yet, critics caution that these enhanced requirements may complicate or delay the availability of vital homelessness resources.
Carolyn Coleman, executive director and CEO of the League of California Cities, pointed out, "I worry that, one, we may leave more cities out, and, two, that we may cause delays in the ability to get more people housed sooner, which I think is the goal." This highlights the tension between maintaining funding prudence and ensuring rapid service delivery for homeless populations.
The application process for funds has become more rigorous. Robert Ratner, director of Santa Cruz County's Housing for Health program, observed a palpable shift from last year: "Applying for state homelessness funds absolutely feels different now. The state is asking tougher questions." Santa Cruz County has proactively adopted an encampment ordinance and is pursuing a prohousing designation, though its funding application has been returned with extensive feedback, reflecting the state’s heightened standards.
Meanwhile, Mendocino County’s state officials appear to be withholding funds pending formal encampment regulation enactment. Van Sant expressed unease due to a disconnect between her housing role and local policy development: "We’re housing providers. We try to figure out how to provide people housing. We don’t want to weigh in on enforcement. At all." This illustrates the complexity local administrators face balancing service provision with regulatory compliance mandates.
Looking ahead, expectations are that these performance criteria will further stiffen. Presently, the state expects local governments to demonstrate plans for housing designation and encampment policy adoption. However, in future funding rounds, actual achievement of these goals may become prerequisites for assistance, escalating stakes for local policymakers.
Heightened demands underline a focus on accountability in state homelessness programs. The core funding mechanism, the Homeless Housing, Assistance and Prevention program, has evolved since Governor Newsom’s initial $650 million commitment in 2019. Although initially labeled as one-time funding, it grew to $1 billion annually distributed among counties, large cities, and federally designated Continuums of Care. Despite repeated references to the funds as temporary, a significant portion supports ongoing operational programs.
Last year marked a shift, with no new grant money allocated and the total homelessness program funding cut by 50% to $500 million for the upcoming fiscal year. This funding is now contingent upon meeting stringent accountability requirements codified in last fall’s legislation. These conditions include maintaining a state-sanctioned housing element, holding a prohousing designation, adopting an encampment policy consistent with state guidelines, providing local match funds, and demonstrating measurable progress on housing metrics.
The new standards reflect Governor Newsom’s persistent emphasis on "accountability" as central to homelessness funding strategy. The approach addresses growing public frustration with persistent encampments and looks to restrict funds in jurisdictions perceived as underperforming.
Assemblymember Quirk-Silva acknowledged these criteria are not set in stone; she anticipates further legislative detail in February and intense debate ahead of the June budget decision. The prohousing designation requirement, in particular, faces opposition for potentially penalizing service providers in jurisdictions with limited control over housing policy enactment.
Policy analyst Monica Davalos of the California Budget and Policy Center warns, "Revoking funds from areas lacking such designation could punish service providers for circumstances beyond their influence." San Jose Mayor Matt Mahan advocates for simpler, outcome-focused criteria, emphasizing metrics such as the number of individuals housed rather than symbolic designations, commenting, "We’re making this way too complicated." This feedback illustrates ongoing concerns about balancing administrative demands with results-focused accountability.