This story was originally published in The Rimfire Report. ChicoSol is expanding its commentary and analysis section by featuring guest authors on Mondays.
NEWS ANALYSIS
SACRAMENTO — California has spent an unprecedented sum fighting homelessness under Gov. Gavin Newsom. Seven years and tens of billions of dollars later, the state’s own watchdogs still cannot answer the question any taxpayer would ask first: Did any of it work?
They cannot answer it because Newsom’s administration never built the machinery to find out. And when the Legislature tried to build it for him, he said no.
The Legislative Analyst’s Office found California allocated $24 billion to homelessness and housing programs during Newsom’s tenure across five recent fiscal years, according to CalMatters coverage of a 2024 state audit. Other tallies run higher. A separate accounting from the Hoover Institution put total state spending on the crisis at $37 billion since Newsom took office in January 2019 — the same month he told Californians in his inaugural address that he would “lift up the fight against homelessness from a local matter to a state-wide mission.”
By any measure, the money has not bought the result. The number of people counted as homeless in California climbed from 151,278 in 2019, Newsom’s first year, to 187,084 in the U.S. Department of Housing and Urban Development’s January 2024 count — a roughly 24% increase on his watch, according to federal data compiled in a California Senate Office of Research fact sheet.
California now accounts for 28% of the nation’s entire homeless population, according to the fact sheet. It also carries the highest unsheltered rate of any state: 66% of homeless Californians have no shelter of any kind, left in tents and encampments spread across the state’s big cities, midsize towns and rural crossroads alike.
None of this means people experiencing homelessness control their own fate. It does mean California is absorbing a disproportionate share of the nation’s crisis — and spending disproportionately to do it, so far with little to show.
The causes are complex. The bookkeeping wasn’t supposed to be
Homelessness resists easy fixes, and the reasons Californians end up on the street are tangled.
Loss of income tops the list. In survey after survey, people who lost housing point to money — not addiction, not mental illness — as the reason, and experts pin most of the blame on California’s punishing housing costs.
Mental illness plays a smaller role than the stereotype suggests. Only about a third of homeless people have been diagnosed with a serious mental illness, and it often develops during their time on the street rather than before it.
The population is also aging and sick. Nearly half of California’s single homeless adults are 50 or older, and 41% of older homeless adults lost housing for the first time after 50, many arriving on the street with chronic illness and disabling conditions that demand ongoing care.
Structural failures run underneath all of it: underfunded affordable housing, exclusionary zoning, wages that don’t cover rent, income inequality and a foster system that discharges young people with almost nothing — 31% to 46% of former foster youth experience homelessness by age 26.
Substance use is real but frequently misunderstood. In the 2023 California Statewide Study of People Experiencing Homelessness, which surveyed 3,200 homeless adults across eight regions, an estimated 37% reported using an illicit substance regularly — at least three times a week — in the previous six months, methamphetamine (33%) most often.
About 10% reported regular opioid use and just 3% cocaine, according to the University of California, San Francisco, which led the study. The relationship runs both directions: 42% of regular users started before losing housing, 23% after. And 21% of regular users wanted treatment they couldn’t get — a treatment gap the state’s billions were supposed to close.
One caveat cuts against even those numbers: they are self-reported. Studies that ask people to disclose their own vices almost always undercount them, so the substance-use figures are best read as a floor, not a ceiling.
The tangle is the point. Precisely because the causes are this varied, knowing which programs actually move people off the street should be the state’s most basic obligation. It is exactly the thing California failed to do.
Auditors say the state can’t find the money
The accountability gap is, by the state’s own admission, worse than the outcome gap. An April 2024 audit by state Auditor Grant Parks found that California’s Interagency Council on Homelessness — the coordinating body Newsom renamed and restructured in 2021 after inheriting it from the Brown administration — had not consistently tracked or evaluated whether the state’s homelessness spending accomplished anything, CalMatters reported. Auditors concluded it was often impossible to tell whether the state’s largest programs were reducing homelessness at all.
The Legislature tried to fix that. Assembly Bill 2903, carried by Assemblymember Josh Hoover, R-Folsom, would have required every state agency running a homelessness program to report cost and outcome data to the interagency council for public release. It passed without a single no vote.
Newsom vetoed it on Sept. 25, 2024, telling lawmakers similar reporting requirements were already in place — the same reporting the auditor had just finished calling inadequate.
“Doubling down on his failed response to homelessness” – Assemblymember Josh Hoover, R-Folsom, on Newsom’s veto
It was a familiar posture from a governor whose brand has long carried an asterisk on accountability — the same official who urged Californians to avoid gatherings during the pandemic, then joined a maskless birthday dinner at the French Laundry, the Napa Valley shrine to fine dining. Transparency, once again, was something to be required of everyone else.
Newsom did sign a narrower measure, Assembly Bill 799, the same month. It hands the interagency council authority to collect fiscal and outcome data from state agencies — but not until Feb. 1, 2027, with a public dashboard not required until June 1, 2027, according to the state auditor’s own tracking of its recommendation. Newsom’s final term ends in January 2027. The accounting he vetoed a faster version of will not exist until he is safely out of office.
A case study in the state’s own words
The Encampment Resolution Funding program shows how the pattern repeats program by program. Created in 2021-22 to help cities and counties clear encampments and move residents indoors, it had roughly 70% of its money still unspent as of March 2025, according to the Folsom Times, citing the Legislative Analyst’s Office. The LAO urged lawmakers to pause a proposed fifth round of funding — another $100 million in Newsom’s 2025-26 budget — until the state could show the roughly $900 million already committed was accomplishing anything.
Homekey: audited by journalists, not the state
No initiative better captures the distance between Newsom’s rhetoric and the record than Project Homekey, the pandemic-era program he has called a “phenomenal success.” Launched in the summer of 2020, Homekey has awarded more than $3.8 billion to local governments to convert motels, hotels and other buildings into homeless housing, according to a CalMatters investigation published in May 2026. That roughly two-year investigation, built on more than 100 public records requests, exists only because no state agency has done the audit itself — and because lawmakers killed a bill this year that would have ordered one.
However, the program has real wins. Nearly 13,500 people now live at Homekey sites statewide, according to the state Housing Department. Rural Glenn County credits it with funding its first homeless housing ever, while officials in Mendocino and Ventura counties say added services helped them keep residents stable for the long term rather than just moving them indoors.
The lone state audit of Homekey, in 2024, sampled eight projects and judged the program likely cost-effective, averaging about $144,000 per unit — far below the $380,000 to $570,000 that new affordable-housing construction ran in California over the same stretch, according to the state Department of Housing and Community Development.
But CalMatters found that projects covering about 3,000 homes — roughly one in five the program promised — remained unfinished at publication, while another 2,000 units housed people only temporarily, not permanently as designed. At least 10 more grants, covering some 500 units, were announced and then quietly canceled or withdrawn after officials or developers backed out.
The investigation also documented outright fraud. Shangri-La Industries, a Los Angeles contractor, took close to $115 million in Homekey money to build 500 homes for homeless residents. Federal prosecutors have since indicted its former chief financial officer, Cody Holmes, alleging he handed state housing officials falsified bank records and funneled money into a Beverly Hills mansion lease, a leased Ferrari and hundreds of thousands of dollars in luxury goods while the homes sat empty behind chain-link fences.
State officials never checked those bank records with the banks before releasing the money, and never confirmed afterward that the paperwork restricting the buildings to affordable housing had even been filed, CalMatters found. Holmes has pleaded not guilty.
Other flagship projects ran wildly over budget and behind schedule. A 47-unit Vallejo complex opened two and a half years late and 70% over budget. A Santa Cruz County project to convert vacation cabins into housing for homeless veterans, funded with more than $6 million, will be at least four years late by the time it opens. An Oakland project to turn a century-old building into housing for people leaving incarceration collapsed after inspectors found its problems “morally untenable,” and the city handed back its $14 million grant.
Assemblymember Leticia Castillo, R-Corona, introduced Assembly Bill 505 this year to force a public accounting of how many Homekey units stay occupied after a year and whether their cost per unit beats new construction. It never got a hearing. It died in January, according to CalMatters.
The stakes are climbing, not easing. A successor program, Homekey+, is already tapping up to $2 billion from the voter-approved Proposition 1 mental health bond, and oversight shifted July 1 to a brand-new California Housing and Homelessness Agency — replacing the very agency that ran Homekey from the start. No comprehensive audit of the original program’s roughly 250 projects was ordered before the handoff.
The money is already drying up
Even as the accountability questions pile up, the money that built California’s homelessness response is draining away. Facing a multibillion-dollar deficit, Newsom’s May 2024 budget revision cut $260 million in bonus payments the state had promised cities and counties over the next two years, according to CalMatters.
A year later, the June 2025 budget framework he negotiated with the Legislature proposed zeroing out the Homeless Housing, Assistance and Prevention program — the main state funding source for local homelessness response since 2019, credited by advocates with helping house more than 57,000 Californians since 2023, CalMatters reported.
The sequence is its own indictment: spend at record scale, decline to measure the return, then cut the programs before the measuring can start.
Newsom’s rebuttal
The governor’s office rejects the story of failure. It points to preliminary 2025 point-in-time data from some of the state’s largest communities showing local declines, and to 2024 HUD figures showing California’s homeless population grew just 3% that year against 18% nationally, according to a gubernatorial press release.
That comparison is not merely spin: the nonpartisan Public Policy Institute of California reached the same figures independently from the same HUD count. The administration also touts a record 71,000 shelter beds added during Newsom’s tenure — nearly double the number created in the five years before he took office — according to the state Department of Housing and Community Development.
Whether that slower growth marks the turnaround Newsom describes, or just a state spending record sums to keep a record crisis from worsening faster, is a question voters — in California and, perhaps soon, well beyond it — will have to weigh. The dashboard that could answer it isn’t due until five months after he leaves.
For a governor widely expected to run for president in 2028, the timing is convenient. The record will be his to campaign on before it is ever fully audited.
This was the first installment of a nine-part series assessing Gov. Gavin Newsom’s record against the spending and promises behind it. Read part 3 of the series, “Newsom promised 3.5 million new homes by 2025. They did not arrive.”