Over the past three years, San Jose has failed to consistently track the more than $300 million spent to fight homelessness and cannot adequately ensure that the money is helping to alleviate the crisis, according to a much-anticipated state audit.
The financial audit, released this week by the California State Auditor, also found that San Jose lacks clear goals for its homelessness programs and has no cohesive plan for building the affordable housing needed for its estimated 6,340 homeless residents.
“The biggest conclusion that the auditors came back with is that there’s just inadequate transparency, data and information available,” said State Sen. Dave Cortese, a Democrat representing San Jose, who requested the audit in 2022 after touring a large city encampment.
The 115-page report, which comes as public frustration continues to mount over city officials’ struggle to manage the crisis, also examined San Diego’s homelessness efforts and highlighted similar findings. It was accompanied by a broader statewide audit finding California’s lead homelessness agency hasn’t tracked most of its $24 billion in spending since 2018.
Auditors detailed a laundry list of recommendations for San Jose to complete by September, including publicly reporting its homelessness spending, drafting a homelessness response plan with specific goals, including placement rates for moving people into permanent housing, and monitoring the performance of its nonprofit service providers, which receive millions in city funding. The recommendations aren’t technically mandatory, but the auditors will issue regular reports on the city’s progress.
The city disputed some of the findings and described “flaws” in the audit, including an expectation that it should evaluate public health outcomes at encampments, contending that’s the responsibility of Santa Clara County.
Still, city officials said they’ve already begun working to satisfy many of the audit’s recommendations.
“At a high level, this idea that we need to set goals, measure results and be accountable for outcomes is absolutely right,” Mayor Matt Mahan said.
From July 2020 through June 2023, the audit found San Jose spent at least $302 million in taxpayer dollars on a range of homelessness programs, from building supportive housing and tiny home shelters to street outreach programs and clearing encampments.
About $181 million of the total was local funds, while $89 million came from the state, and the remaining $32 million from the federal government.
Auditors said they “worked extensively” with the city to identify those expenditures, concluding that San Jose lacks “the information necessary to easily assess the effectiveness” of its homelessness spending.
Adrian Covert, a homelessness policy expert with the Bay Area Council, a pro-business group, said difficulty tracking the numerous sources of homelessness expenditures across public agencies is hardly unique to San Jose.
“Building a centralized data portal is a worthwhile endeavor and a challenge facing every city in the United States,” said Covert, who’s working with Mahan on a statewide homeless-shelter bill.
In fact, Covert said San Jose is actually ahead of the curve when it comes to keeping similar data. That’s because the city works with the county on regionwide homelessness planning, which includes reporting the number of homeless people officials help into housing along with other benchmarks.
“Homelessness is a community crisis, and it takes all of us working together to end it,” said Ray Bramson, chief operating officer at Destination: Home, a local nonprofit that helps with the plan.
In addition to developing city-specific goals, auditors have asked San Jose to more closely scrutinize specific performance metrics for its nonprofit providers, which operate homeless housing and shelters and do most street outreach.
As an example of the lack of oversight, auditors cited findings that Destination: Home vastly overreported the number of households that received financial assistance through an $8 million homelessness prevention agreement. Auditors said San Jose officials blamed Destination: Home for the error, but Bramson said the nonprofit reported its numbers accurately to the city.
For Todd Langton, executive director of the volunteer-run homeless advocacy group Agape Silicon Valley, the audit findings are evidence that the city’s largest nonprofit services providers — including HomeFirst, PATH, LifeMoves and Destination: Home — aren’t following through on their commitments.
“It just confirmed what a lot of us suspected and really knew, that they continue to throw millions and millions of dollars at the problem without any accountability and poor results,” Langton said.
The audit also took aim at one of Mahan’s top priorities: rapidly adding new tiny homes and other shelters with private rooms to help the city’s unsheltered residents.
While the report acknowledged more shelters are needed, it found most homeless people who move through them don’t find permanent housing. It faulted the city for lacking a plan to add the affordable housing necessary to pull most people out of homelessness.
Mariena Acosta said she stayed at a tiny home shelter in East San Jose before returning to a tent at Columbus Park near San Jose Mineta International Airport. Acosta, 39, appreciated the reprieve from the dangers of the street but said the shelter operator was ultimately unable to help her find housing before her tiny home time ended.
“Some people could stay maybe like six months as the maximum, and other people are still there,” she said. “I was there for six months and had to leave.”
The audit found that for all shelter types in San Jose, including county-operated group shelters, just 16% of the 8,041 people who left the facilities between July 2019 and March 2023 moved to lasting homes. It did note, however, that the city reported that half of the 984 people who moved out of its private-room shelters found housing.
Mahan pushed back on the audit’s characterization of his shelter strategy, contending the city needs faster and more inexpensive solutions in addition to affordable housing, which takes years to build and can cost nearly $1 million a unit. He said the effort to move people into “safe and dignified” spaces is working, pointing to the 10% decline in the city’s unsheltered population last year.
While state auditors might want the city to prioritize moving its unhoused residents into lasting homes, Mahan said his constituents’ main concern is helping people out of encampments and off the street. “The community is who we’re accountable to,” he said.
