Amid homeless surge, California spent only $2M of $316M homeless COVID relief allocation: audit

This week's Golden Horseshoe is awarded to the California Department of Housing and Community Development for failing to disburse hundreds of millions of dollars in federal COVID relief funds earmarked for the homeless in time to help the "vulnerable population for which it was intended," according to a scathing report compiled by the state's auditor.

California Gov. Gavin Newsom's state housing department received $316 million from the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) through the Emergency Solutions Grant (ESG) program, but "as of early August 2021, the federal government reported that the State had spent only $2 million of the $316 million it was allocated — less than 1 percent," according to the California state auditor's report. 

Homelessness has been surging in California in recent years, and the homeless are especially vulnerable to COVID-19, the report emphasizes.

"As of January 2020, more than 161,000 Californians were homeless, a 16 percent increase since 2007, and the COVID‑19 pandemic poses a particular set of health risks for this vulnerable population," according to the report. 

"Individuals who are homeless often face an increased risk of serious illness from COVID‑19, for reasons ranging from inadequate access to sanitation to a lack of health care resources. The homeless population also tends to be older or have underlying medical conditions, such as diabetes and hypertension, which are risk factors that complicate the effects of the virus."

The CDHCD received CARES funding for the homeless in two rounds, $44 million in April 2020 and $272 million in June 2020, but the "department did not take critical steps to ensure that the $316 in ESG-CV funds promptly benefited the vulnerable population for which it was intended," the auditor determined.

The audit found that as a result of CDHCD mismanagement, the ESG COVID relief funds (ESG-CV) were not disbursed to local Continuum of Care entities (CoCs), local organizations and individuals that deliver homeless care and prevention services.

"These CoCs cannot access the ESG‐CV funding until the department finalizes contracts with them," the report explained. The department's "failure to expedite its contracting process meant that most CoCs could not access the first round of ESG‐CV funding until December 2020 — five months after they had submitted their applications for funding," the audit found.

"Further," according to the report, "the department took four months longer to begin providing CoCs with access to the second, larger round of ESG‐CV funds, finalizing the first contract amendments that would allow such access 11 months after the U.S. Department of Housing and Urban Development (HUD) announced the allocation of these funds. As a result, the CoCs did not have access to much of the ESG‐CV funding during the height of the pandemic, the effects of which it was intended to mitigate, such as serious illness from COVID‐19 or increased homelessness."

Not only did the department fail to expend its federal homeless relief funds in time to aid its target population during the worst of the pandemic, but it risks losing its funding altogether with further delays. Under the terms of the federal grants, the CDHCD must spend at least 20% of its $316 million total, or $63 million, by Sept. 30, 2021 — or the federal government may reallocate that $63 million. The final deadline for spending the remaining 80% is Sept. 30, 2022.

The watchdog also found the state waited 14 months to hire a contractor to manage the ESG-CV program after the CDHCD realized it "lacked the capacity" to manage the program.

In addition, the auditor found the CDHCD still has yet to develop a formal plan, implement any procedures to manage the contract, or oversee disbursed funds to determine their effectiveness.

"The department is not collecting the information needed to measure the effectiveness of the state's use of these funds, and it does not have plans to evaluate the impact and value of the CoCs' projects in addressing or mitigating the homelessness crisis," the audit found.

Noting that the CDHCD "oversees more than 10 programs that have administered billions of dollars to address homelessness over the last three fiscal years," the auditor expressed doubts about the department's future role in alleviating the ongoing crisis.

"Taken as a whole, the department's delayed actions related to the ESG‑CV funds raise serious concerns about its role as a statewide leader in addressing California's homelessness crisis," the auditor concluded.