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Homelessness in California
State Government and the Los Angeles Homeless Services Authority Need to Strengthen Their Efforts to Address Homelessness

Report Number: 2017-112

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Chapter 1

The State Should Take a Stronger Role in Addressing Homelessness

Chapter Summary

California has more people experiencing homelessness than any other state in the nation, and it does a poor job of sheltering this vulnerable population. According to HUD’s 2017 homeless report, California leads the nation with both the highest number of homeless persons and the highest proportion of unsheltered homeless persons of any state. This is particularly true of unaccompanied homeless youth, 82 percent of whom live without shelter, while the rest of the nation’s average is 38 percent for this group.

Until recently, California lacked a single statewide entity for addressing homelessness and had no mechanism for coordinating the many homeless programs that the State funds. Although the State created it in 2016, the state homeless council has no permanent staff and no funding for such staff. In fact, state law dictates that any structures the state homeless council establishes to assist in its work must do so “within existing funding” and that HCD must provide staff to assist the council. However, it will be difficult for the state homeless council to develop and implement a plan that documents the State’s approach to addressing and reducing homelessness without its own permanent resources.

The need for a state homeless council equipped with resources and authority is apparent in the responses we received from a survey of California’s CoC area lead agencies about best practices for homeless services. The responses indicate that their CoC areas were not equipped organizationally or financially to fully address homelessness. Specifically, lead agencies for CoC areas mentioned challenges in implementing HUD‑recommended activities such as conducting annual counts of unsheltered homeless, raising funds from nonfederal sources, and creating strategic plans to help ensure coordination with other homeless service agencies. Rural CoC lead agencies also mentioned difficulties in implementing HUD requirements related to administering an entry system and their HMIS.

California Has the Largest Homeless Population in the Nation

Relative to other states in the nation, California is not doing a good job addressing homelessness. According to HUD’s 2017 homeless report, approximately 134,000 people in California were homeless on a single night in January 2017, which accounted for about 24 percent of the nation’s total homeless population. Furthermore, California led the nation with the highest proportion of unsheltered homeless persons of any state. As Figure 3 shows, more than two‑thirds—or 68 percent—of California’s homeless population were unsheltered, while the proportion for the remaining states was about one‑quarter, or 24 percent, in 2017. What is more, according to the 2017 homeless report, the Los Angeles CoC area by itself had the second largest homeless population in the nation. This population exceeded the homeless populations of all but one state, and accounted for half (8,758) of the entire increase in unsheltered individuals in the nation’s major metropolitan areas from 2016 to 2017.

Figure 3
California’s Large Homeless Population in January 2017 Was Unsheltered More Often Than in Other States

A map of the United States showing that California has 24 percent of the nation’s homeless population and that its homeless population was unsheltered at a higher rate than the homeless populations in other states.

Sources: California State Auditor’s analysis of HUD’s 2017 homeless report and 2017 point‑in‑time count data obtained from HUD’s website.

In addition to having a higher proportion of unsheltered homeless individuals than other states, the 2017 homeless report shows that California had the largest number of unsheltered unaccompanied youth.6 According to HUD, youth homelessness is of unique concern because young people are still developing and are especially vulnerable to criminal victimization, sexual exploitation, labor and sex trafficking, or traumatic stress. The 2017 homeless report shows that California’s CoC areas had 15,458 homeless unaccompanied youth, representing 38 percent of the national total. In 2017 more than four out of five, or 82 percent, of California’s homeless unaccompanied youth were unsheltered; in comparison, 38 percent of the rest of the nation’s total homeless unaccompanied youth were unsheltered.7

Unlike California, some areas of the nation with relatively large homeless populations had low proportions of unsheltered homeless, as we show in Table 4. For example, the 2017 homeless report shows that the New York City CoC area had the largest homeless population in the nation, with 76,501 homeless individuals, but the unsheltered proportion was 5 percent. In contrast, the Los Angeles CoC area had the second largest homeless population in the nation (55,188) and had an unsheltered proportion of 75 percent. Furthermore, some CoC areas also sheltered more of their homeless unaccompanied youth than CoC areas in California did. For example, only 4 percent of the Boston CoC area’s unaccompanied youth were unsheltered, while the proportion for the San Jose/Santa Clara City and County CoC area was 96 percent and the San Francisco CoC area’s proportion was 88 percent.

Table 4
Some Areas of the Nation With Large Populations of Homeless Adults and Unaccompanied Homeless Youth Had Lower Proportions of Unsheltered Homeless Than Areas in California in 2017

Location Number of Homeless Persons Percentage of Homeless Persons who are unsheltered Number of Unaccompanied Homeless Youth Percentage of Unaccompanied Homeless Youth who are unsheltered
California Major City CoC areas
Los Angeles City and County 55,188 75% 5,163 80%
San Diego City and County 9,160 61 1,160 76
San Jose/Santa Clara City and County 7,394 74 2,530 96
San Francisco 6,858 64 1,274 88
Other Major City CoC areas
New York City, NY 76,501 5% 2,003 13%
Seattle/King County, WA 11,643 47 1,498 76
District of Columbia 7,473 12 228 15
Las Vegas/Clark County, NV 6,490 67 2,052 93
Boston, MA 6,135 3 190 4
Philadelphia, PA 5,693 17 297 29

Sources: California State Auditor’s analysis of HUD’s 2017 homeless report and 2017 point‑in‑time count data obtained from HUD’s website.

Note: The locations listed are the 10 CoC metropolitan areas with the largest homeless populations in the nation.

Lack of Shelter Is Detrimental to Both the Homeless Population and the Surrounding Communities

According to the federal plan, homelessness is costly in its negative impact on human life, health, and productivity. Without shelter, the homeless population is more likely to miss opportunities to participate in programs and obtain services that shelters provide. For example, unaccompanied minors who go to an emergency shelter funded by the city of Los Angeles can receive access to medical, mental health, substance abuse recovery, legal, educational, and life skills services as needed as well as trauma‑informed case management, counseling, and crisis intervention services. They can also receive connections to transitional and permanent housing to work toward breaking the cycle of homelessness.

The unsheltered homeless population also has an increased risk of exposure to communicable diseases. According to Public Health, as of February 2018, California was experiencing the largest person‑to‑person hepatitis A outbreak not related to a common source or a contaminated food product in the United States since the hepatitis A vaccine became available in 1996, and four counties had declared local outbreaks of the disease.8 The homeless populations in the CoC areas for Los Angeles, San Diego, Santa Cruz, and Monterey counties, which have rates of unsheltered homelessness ranging between 60 percent and 80 percent, have been affected by these recent outbreaks. For example, according to minute orders approved by the San Diego County Board of Supervisors, from September 2017 through January 2018, San Diego County experienced a local health emergency caused by a hepatitis A outbreak in the homeless and illicit drug‑using populations. Public Health reported that as of February 2018, 580 cases, 398 hospitalizations, and 20 deaths were associated with the hepatitis A outbreak in that county.

Homelessness and lack of shelter for the homeless population can also affect the surrounding communities financially and physically. According to the federal plan, homelessness is costly to society because homeless people frequently require the most expensive publicly funded services. For example, according to the administrative officer for the city of Los Angeles in a 2015 report, although only four agencies and departments had budgetary allocations for homeless programs, at least 15 regularly engaged with homeless people, with some departments incurring large costs. For example, the report cited that the Los Angeles Police Department estimated it spent from $53.6 million to $87.3 million in one year on interactions with homeless people and the Bureau of Sanitation spent at least $547,000 in a year on cleanup of homeless encampments like the one pictured in Figure 4.

Figure 4
Homeless Camps Such as This One Can Be Costly in Terms of City Services

A photo showing a homeless encampment, including tents, bicycles, and personal belongings, on a sidewalk in Los Angeles.

Source: Grzegorz Czapski/

Conversely, housing the homeless population can help decrease some public costs. According to a 2015 Economic Roundtable report on the cost of homelessness in Silicon Valley, some public costs can decrease substantially when homeless people are housed.9 For instance, the estimated average annual cost of an unhoused homeless person in Silicon Valley who made significant use of public services like emergency rooms was just under $62,500, while the estimated cost for a housed homeless person in the same area fell to just under $20,000. Unsheltered homelessness can also have a physical impact on communities. According to the Los Angeles Fire Department, in December 2017 an illegal cooking fire in an encampment under a freeway caused the Skirball Fire, which burned more than 400 acres, destroyed six homes, and damaged 12 other homes in the Bel‑Air community in the city of Los Angeles.

Two Factors Contribute to Other States’ Lower Numbers of Unsheltered Homeless

We believe two factors contribute to other states having lower proportions of unsheltered homeless individuals than California. The first factor is the existence of a specific entity dedicated to addressing homelessness. For example, Massachusetts charged the Division of Housing Stabilization within its Department of Housing and Community Development, with preventing homelessness; sheltering those for whom homelessness is unavoidable; and rehousing homeless people in stable, permanent housing. One program the division is responsible for provides emergency housing assistance to needy families with children and pregnant women for the entire state. Similarly, New York City, whose CoC area has more than 85 percent of New York State’s homeless population, has a citywide entity that administers homeless services: the New York City Department of Homeless Services. It counts among its objectives increasing the number of households prevented from becoming homeless; reducing the number of individuals living on city streets; ensuring the availability of temporary, emergency shelters; and ensuring that those who exit shelter remain stably housed in the community. According to its website, New York City’s Department of Homeless Services has 2,000 employees and an annual operating budget of approximately $1 billion.

The other factor likely contributing to lower rates of unsheltered homeless persons is higher spending to address homelessness. New York City and Massachusetts invest significantly in administering and funding homeless services. New York City’s Department of Homeless Services budgeted nearly $17,000 per homeless person (per capita) in federal, state, city, and other funds in 2017 for homeless services. One factor that appears to contribute to New York City’s high spending on homelessness is the legal right to shelter. According to its 2017 homelessness plan, the right to shelter in New York City is legally mandated and plays a central role in shaping its response to homelessness. Where other cities provide shelter to homeless people based on capacity, New York City provides it based on need. Also, Massachusetts’ Department of Housing and Community Development budgeted more than $14,000 per capita for operation of its homeless programs. Although California does fund multiple programs for homeless services, as shown in Table 1, the State does not have a comprehensive list of the funding sources for homeless service programs, and we were unable to calculate a similar per capita rate for California. However, we note that in 2016, HUD CoC program funding for Los Angeles County plus other types of funding administered through the Authority amounted to about $5,000 per capita, or about 30 percent of New York City’s funding.10

Until Recently, California Lacked a Single Statewide Entity to Coordinate Its Efforts to Address Homelessness

California’s position regarding its homeless population, relative to states like New York and Massachusetts, points to the need for a single entity to provide the statewide leadership necessary to better address the effects of homelessness. Recognizing that the federal government had a clear responsibility and a capacity to fulfill a more effective and responsible role in meeting basic human needs and engendering respect for the dignity of homeless people, Congress established the federal homelessness council in 1987 to coordinate the federal response to homelessness and to create national partnerships to reduce and end homelessness. The federal homelessness council is composed of leaders from 19 federal organizations, is staffed by about 20 full‑time employees who are led by an executive director, and has an annual budget of approximately $3.5 million. Furthermore, in 2010 the federal homelessness council released a federal strategic plan to prevent and end homelessness and updated it in 2015.11 The federal strategic plan reflects agreement by the federal homelessness council’s participating agencies on a set of priorities and strategies, and it includes criteria and benchmarks to help guide communities as they take action to end homelessness for veterans, families, youth, and people with disabilities.

Local California governments also demonstrated leadership when they came together to collaborate to identify solutions to end homelessness. Recognizing that no single California city or county has the resources to solve homelessness on its own, the League of California Cities (League) and the California State Association of Counties (Association) partnered in fall 2016 to create a Joint Homelessness Task Force (joint task force) to identify tools, resources, and examples of best practices for local governments. The joint task force consisted of elected officials and staff from cities and counties around the State as well as representatives from the League and the Association. According to the joint task force, because the burden of addressing homelessness often falls on local governments, it intended to examine strategies local governments can implement to overcome challenges, foster best practices, and share ideas to address homelessness. The joint task force also noted that many smaller cities and counties that previously had little experience with homelessness were now wrestling with how to address a problem frequently called a humanitarian crisis. Since its inception, the task force has held three meetings and published a report in February 2018 that highlighted the recent increase in and changing demographics of homelessness, and offered tools for cities and counties to use in addressing homelessness in their communities.

In addition, although at least one state agency recognized the need for a single entity to coordinate services to homeless people in California in 1989, it was not until recently that California named an entity to lead that effort. In a June 1989 report, the Commission on State Government Organization and Economy recommended that the diverse state programs dealing with homelessness should be unified under a single state agency and that the State should take an aggressive leadership role in coordinating services. However, California continues to have a number of state entities administering separate programs to address specific aspects of homelessness. As indicated in Table 1, at least six state entities administer at least 11 different programs that provide assistance to homeless persons. These state programs provide funding for several purposes, including the acquisition and construction of new housing for homeless people, relocation assistance, and financial assistance.

The enactment of Chapter 847, Statutes of 2016, created the state homeless council. The law requires the state homeless council to pursue 13 goals related to homeless services, including creating partnerships among state agencies and departments, local government agencies, participants in HUD’s CoC program, and other entities; arriving at specific strategies to end homelessness; as well as coordinating existing funding and applications for competitive funding. The law states that the state homeless council can include up to 17 members: eight members from state entities;12 two members from local entities participating in HUD’s CoC program; one member each from two different stakeholder groups; a formerly homeless person who lives in California; and up to four members who are state advocates, members of the public, or members of state agencies. State law requires agencies and departments that administer existing programs to collaborate with the state homeless council to adopt or revise guidelines and regulations to incorporate core components of Housing First, such as offering housing assistance without preconditions or service participation requirements, by July 1, 2019.

However, the state homeless council may face critical challenges in coordinating California’s response to homelessness and meeting its statutory goals. First, unlike its federal counterpart, it has no permanent staff of its own and no budget for such staff. State law requires that any structures the state homeless council establishes to assist in its work must do so “within existing funding” and requires HCD to provide staff to the state homeless council. Currently, HCD redirects existing staff to perform the state homeless council’s work. According to HCD’s deputy director of housing and policy development (deputy director), HCD has one lead staff member and several supporting staff members who work on state homeless council matters in addition to their other assignments. The lead staff member spends roughly 25 percent of her time on state homeless council‑related assignments. In addition, the deputy director stated that HCD has received commitments of staff from several other departments represented in the state homeless council.

Regardless of who provides the resources, it is critical that the state homeless council focus on developing and implementing a statewide strategic plan that documents the State’s approach to addressing homelessness in California. The federal homelessness council stated that its strategic plan serves as a blueprint for individual agencies to follow in defining and implementing activities and in setting policy priorities to address homelessness. Similar to the federal strategic plan, a statewide strategic plan could align and strengthen the efforts by the eight state entities serving on the state homeless council to address homelessness, and it could integrate existing and future revenue streams to best serve a vulnerable California population.

A component of the statewide strategic plan could be, for instance, an outline of the steps for integrating funding from previously untapped sources. One such source could be the Control, Regulate and Tax Adult Use of Marijuana Act, enacted under Proposition 64 in 2016. As of January 1, 2018, this law imposes a 15‑percent excise tax on retail sales of cannabis and cannabis products, and a per‑ounce cultivation tax on all harvested cannabis that enters the commercial market. The Legislative Analyst’s Office estimates that the net additional state and local tax revenue from the proposition could eventually range from the high hundreds of millions of dollars to over $1 billion annually. State law requires that 60 percent of that revenue—after certain specified expenses—be deposited into the Youth Education, Prevention, Early Intervention, and Treatment Account to support programs designed to educate youth about and to prevent substance use disorders and harm from substance abuse. Among other things, these programs may include grants to programs for outreach, education, and treatment for homeless youth and out‑of‑school youth with substance use disorders.

However, the law establishing the state homeless council currently does not require it to develop a statewide strategic plan. Instead, the state homeless council’s legally mandated goals include making policy and procedural recommendations to legislators and other government entities and to serve as a statewide facilitator, coordinator, and policy development resource on ending homelessness in California. According to the deputy director, individual state departments are still the program authorities on homeless services. He also stated that the state homeless council has not discussed creating a statewide strategic plan; however, creating one would be within its purview. He stated that in order to adequately develop a plan, the state homeless council would need dedicated staff; however, the number of staff needed would depend on the breadth and scope of what the plan would need to encompass.

State Homeless Council’s Goals
to Be Achieved by June 2019

Source: Draft minutes of the state homeless council’s
January 2018 meeting obtained from HCD’s website, and confirmed as generally accurate by HCD’s deputy director.

Although authorized by legislation effective January 1, 2017, the state homeless council has taken limited action thus far. As of January 2018, it had met twice: in October 2017 and January 2018. The first two meetings focused on developing a process to align state programs with Housing First principles and establishing its governance structure. At its second meeting in January 2018, the state homeless council also agreed to eight goals to achieve by June 2019, which we describe in the text box. Finally, it identified other matters for consideration at a future meeting, including establishing a work group to address issues such as those affecting homeless or formerly homeless youth.

Many believe that California is in the midst of a homelessness crisis. Since 2015 multiple local government entities and the California State Legislature have declared crises or emergencies related to homelessness or sheltering homeless people. From October 2015 through September 2017 several local entities—including the Santa Clara County Housing Task Force, the San Diego City Council, the Santa Rosa City Council, and the Anaheim City Council—declared homelessness‑related crises or emergencies. Furthermore, two counties called for the Governor to issue a statewide declaration of emergency. In June 2016, the Board of Supervisors of the County of Los Angeles wrote to members of the California State Legislature requesting that they pass a resolution urging the Governor to declare a state of emergency with respect to homelessness. Later that month the California State Assembly passed such a resolution, acknowledging that the challenge of confronting homelessness requires the active engagement and leadership of all arms of government. Similarly, in August 2016, the City and County of San Francisco Board of Supervisors informed the Governor of a resolution it passed in which it requested that he issue a statewide declaration of emergency to help coordinate the response and resources for homeless individuals and families. Furthermore, state law enacted in 2016 also acknowledges that homelessness is a crisis in California.

It is time for the State to do more to address this crisis. Local government entities have expressed the need for statewide coordination. For instance, the City and County of San Francisco Board of Supervisors stated that homelessness knows no city or county boundaries but is a regional and statewide issue, and that only a coordinated response will alleviate this crisis. It also stated that only through a statewide effort will it truly be able to respond effectively to this crisis. In addition, the Anaheim City Council resolved that the challenge of confronting homelessness requires the active engagement, collaboration, and leadership of all levels of government. Furthermore, the Santa Rosa City Council declared that the scope of the local homeless crisis is beyond the resources of the city alone and will require the combined forces of adjacent jurisdictions and state agencies. We believe that one of California’s most vulnerable populations deserves to have strong leadership from a single state entity, like the state homeless council, to coordinate efforts and ensure an effective and efficient statewide system for addressing homelessness in the State.

Concerns Raised by CoC Areas Highlight Opportunities for California’s New State Homeless Council

It is not only the size of California’s homeless population that points to the need for leadership by a single state entity; concerns expressed by lead agencies for California’s CoC areas also highlight this need. To obtain a statewide perspective on best practices related to planning and funding homeless services, we surveyed the lead agencies for California’s 43 CoC areas.13 The survey results indicate that many of them believe that their CoC areas are not equipped organizationally or financially to fully address homelessness. Respondents collectively reported several challenges they faced, including the need for additional resources to implement HUD‑recommended activities and problems in implementing HUD requirements. A single state entity could help CoC lead agencies to resolve these issues.

Many CoC Lead Agencies Report Challenges in Implementing HUD‑Recommended Activities

Responses to our survey indicate that many CoC lead agencies face challenges in implementing certain HUD‑recommended activities. These activities include conducting annual point‑in‑time counts of the CoC areas’ unsheltered homeless populations, obtaining funds from nonfederal sources, and coordinating with other agencies to provide homeless services. To begin with, according to HUD, it is not possible to address homelessness in a community without understanding how many people need assistance. HUD’s regulations require CoC lead agencies to plan and conduct a point‑in‑time count of the sheltered and unsheltered homeless population within their geographic area at least biennially in the last 10 days of January. Although it has a two‑year regulatory requirement, information from its website states that HUD requires CoCs to count every year those homeless people sheltered in emergency shelters, transitional housing, and “safe havens”; additionally, HUD has historically required CoC areas to conduct annual counts to receive the maximum number of points in the annual CoC program competition for funding, thus increasing the value of annual counts.

According to the Authority, it conducts annual unsheltered counts to better understand and assess the situation of homelessness in the Los Angeles CoC area for grant and service planning. Annual unsheltered counts have allowed it to more closely monitor trends in homelessness and better understand needs for housing and services. The Authority noted that about 75 percent of persons experiencing homelessness in the Los Angeles CoC area are unsheltered, which makes a regular unsheltered count critical to understanding the current needs for housing and services.

Because HUD’s data show that California has the highest rate of unsheltered homelessness of any state in the nation, annually determining the size of the unsheltered homeless population is particularly important for the State’s CoC areas. Furthermore, according to HUD, current and accurate data on the number and characteristics of homeless persons in the community are useful for policy and planning decisions and allow CoC areas to adjust the types of services available according to need, resulting in more efficient use of limited resources. Homeless population sizes can also change quickly; for example, in its survey response the lead agency for the Tuolumne, Amador, Calaveras, Mariposa Counties CoC area reported that Tuolumne County identified three times more homeless people in a summer 2017 count than it did in its January 2017 count.

However, 18 of the 40 CoC lead agencies responding to our survey stated that they did not perform an annual unsheltered count for several reasons: 14 stated that it was because they lacked funding, eight because they lacked volunteers, and 14 because HUD does not require an annual count (respondents could provide more than one answer). For example, the lead agencies for both the Sacramento City and County CoC area and the San Luis Obispo County CoC area stated in their survey responses that they lacked funding and internal capacity to conduct an annual unsheltered count. Similarly, the lead agency for the Santa Ana, Anaheim/Orange County CoC area stated that expense and manpower needs are too great to conduct an annual unsheltered count. Annual point‑in‑time counts can be expensive; the average cost per CoC area in California, based on information reported by 34 lead agencies, was nearly $89,500.14 Even with the Los Angeles CoC area’s $1.5 million reported cost excluded, the average reported cost was about $46,700. Lead agencies reported that they used city, county, HUD planning, private, and other nonstate funding to cover the costs of their point‑in‑time counts of unsheltered homeless. Thirteen CoC lead agencies also said that more funding would enable them to conduct annual unsheltered counts. For instance, the lead agency for the El Dorado County CoC responded that if it had funding to support the annual count, as well as to support general CoC administration, HMIS administration, entry system administration, and the basic essentials for administering a CoC, there would likely be value in conducting an annual count, but it could not justify conducting an annual unsheltered count now because its resources are limited and they are needed for CoC administration.

Another activity that HUD recommends is raising funds from sources other than the federal government. It acknowledges that significant resources are needed to address the various housing and supportive service needs of homeless persons or those at risk of becoming homeless, and that it is becoming increasingly difficult for homeless programs to rely on CoC funding alone to address a community’s homelessness needs. Therefore, it is critical that CoC areas seek out other resources to ensure that they can provide adequate housing and support services. Our survey asked CoC lead agencies to identify the grant‑seeking or fundraising activities they engage in. Three CoC lead agencies indicated they were not able to conduct these activities because they had insufficient or no staffing. For example, the lead agency for the Colusa, Glenn, Trinity Counties CoC area stated that its fund‑seeking activities were minimal because it had no staff to conduct grant research or grant writing in addition to supporting CoC administration.

Furthermore, some CoC lead agencies reported that they did not have strategic plans in place to help ensure coordination with other agencies that provide services to the homeless population. HUD recommends that communities attempting to address the complex and interrelated problems associated with homelessness marshal resources from a variety of partners, including community and economic development agencies, social service providers, local businesses, the philanthropic community, law enforcement, health care providers, and housing and homeless organizations. HUD further states that a communitywide planning approach under the CoC program encourages communities to move toward more broad‑based planning and coordinated program development than would occur without that approach and that the effort to form and maintain a broad‑based coalition requires a significant amount of time and resources from its participants.

In our survey, we asked CoC lead agencies if they have a strategic plan that integrates other publicly funded programs that provide services to the homeless population. The lead agencies for 12 CoC areas said that they lacked a strategic plan and, although seven of these were developing a plan, the others indicated that the lack of funding, staffing, and leadership as well as limited community involvement were challenges to having an integrated strategic plan. For example, the Tehama County CoC lead agency reported that in the past, limited funding as well as limited participation in CoC activities by community providers were obstacles to the development of its strategic plan. This lead agency also reported that recent opportunities, including private community grants, have provided necessary resources and have motivated participation in the CoC area’s development of a strategic plan.

Rural CoC Lead Agencies Identified Challenges in Implementing HUD Requirements

Thirty‑three of California’s 58 counties fall within 17 CoC areas that we identified as rural.15 Responses to our survey show that some of these rural CoC lead agencies reported having difficulties implementing HUD requirements. For example, according to the lead agency for the Mendocino County CoC area, it is extremely difficult for small communities to sustain HUD‑required activities without dedicated funding. Two such requirements are the entry system and HMIS, which we describe in the Introduction. In particular, three lead agencies serving 11 rural counties indicated that administering the entry system is difficult to do, in some cases over large geographic areas. One CoC lead agency also mentioned funding challenges in implementing the entry system. The lead agency for another CoC area noted that the CoC’s area covers seven counties (Shasta, Siskiyou, Lassen, Plumas, Del Norte, Modoc, and Sierra) and that trying to serve more than 1,100 homeless individuals on extremely limited funding, including attempting to get a compliant entry system in place with three providers across those seven counties, is a huge task. The Authority’s experience in the Los Angeles CoC area demonstrates that implementing and operating entry systems can be expensive. According to its associate director of operations, it took approximately $26 million to establish its entry system’s components, and it takes approximately $65 million annually to operate the entry system. We describe the required entry systems in a text box in the Introduction.

Survey responses also demonstrate that some CoC areas face challenges in administering HMIS. As we discuss in the Introduction, each CoC area needs to have an HMIS lead. Furthermore, HUD requires CoC program funding recipients to submit an annual performance report prepared using data from HMIS. Although federal regulations allow HMIS leads to use CoC program funds for implementing and complying with HMIS requirements, the lead agency for the El Dorado County CoC area (El Dorado) stated that it uses nearly all $10,000 of its annual HUD grant to fund its HMIS software licenses. Additionally, El Dorado said that for small counties with little resources, few systems have been developed to help address homelessness, and that visible homelessness will continue to increase for some years to come. It reported that it simply did not have the capital to invest in this system, and that it takes time to develop data, demonstrate need, express cost savings, and grow support from partners when none of the administrative infrastructure has been developed. El Dorado noted that it would be helpful if rural counties were able to apply for grant funds that would be strictly dedicated to CoC administration.

Opportunities Exist for the State Homeless Council to Help CoC Lead Agencies Better Address Homelessness

Opportunities exist through which the state homeless council can help California’s CoC lead agencies better address homelessness in their areas. As discussed earlier, the state homeless council agreed to several goals to be achieved between now and July 2019. Included among these goals is an analysis to provide it with data on needs throughout the State. If the results of this analysis also identify best practices, and perhaps even promising or emerging practices, for administering homeless programs and services, the state homeless council may be able to identify opportunities to increase the use of these practices in more CoC areas. This could increase California CoC areas’ competitiveness in HUD’s national competition for funding: HUD considers information about the CoC’s planning body, governance structure, overall performance, and strategic planning process to determine the order in which CoC areas across the nation are funded.

Additionally, because the state homeless council included actions related to the entry system and HMIS on its list of prioritized goals and actions to be achieved by June 2019, it has an opportunity to help rural CoC lead agencies better implement these HUD requirements. In its January 2018 meeting, the state homeless council included among its prioritized goals and actions acting as a policy development resource on ending homelessness in California by setting basic expectations for all California entry systems and goals for how state programs could interact with these entry systems. The prioritized goals and actions also included authorizing an interagency working group to develop a scope of work and implementation plan for building a statewide warehouse for data from local information systems. Through the accomplishment of these goals and actions, the state homeless council could identify additional assistance for CoC lead agencies to better support their entry systems and HMIS.

Furthermore, the state homeless council could address the absence of strong state leadership, which currently creates challenges for rural CoC areas. At the moment, lead agencies for each CoC area are responsible for planning and administering homeless services within their geographic area. In contrast to this structure, more than 30 states have a balance‑of‑state CoC area, which can consist of multiple rural counties, and thus can maximize the funding potential and take advantage of economies of scale for large geographic areas. For instance, Nevada has a balance‑of‑state CoC area for those parts of the state outside of the Las Vegas/Clark County and Reno/Sparks/Washoe County CoC areas. For 2016 HUD awarded the Nevada balance‑of‑state CoC area about $575,000, or $2,861 per homeless person in its area. In contrast, 13 of California’s 17 rural CoC areas received HUD awards amounting to less than $1,000 per homeless person, and two of these received no HUD CoC awards.16 For the other 11 California rural CoC areas the average HUD award per homeless person was about $533. As noted earlier, HUD considers information about the CoC’s planning body, governance structure, overall performance, and strategic planning process to determine the order in which CoC areas across the nation are funded. Helping rural CoC areas improve these factors could increase their competitiveness in HUD’s CoC grant program competition for funding.

One benefit of a balance‑of‑state CoC structure is that the lead agency (which can be a state agency) can be responsible for administrative duties that can overwhelm lead agencies for rural CoC areas, including coordinating the annual homeless counts and submitting the area’s applications for CoC program funding. HUD acknowledges that operating a CoC area can impose administrative burdens. In fact, HUD strongly encourages CoC areas to merge with one or more other CoC areas if they have struggled in the CoC funding competition and if managing their homelessness system is overwhelming. Merging CoC areas means creating a single governance structure from existing, separate structures, and the decision to merge is made by the CoC areas involved. HUD acknowledges that mergers can be complicated and require lots of planning and coordination. As of February 2018, HUD plans to provide resources to CoCs to address concerns and show how CoC areas have successfully overcome them. HUD also reported that in the most recent CoC program competition it provided bonus points to CoC areas that had merged. Further, HUD stated that it is committed to helping CoCs successfully merge and intends to continue to find ways to incentivize those mergers. According to HUD, such mergers can result in improved coordination of services, effective HMIS implementation, more efficient resource allocation and planning, and improved competitiveness for new resources. If the state homeless council facilitated discussions with existing CoC lead agencies about creating a balance‑of‑state CoC area, it could create opportunities to remove the administrative burden from local entities, thus giving them more resources to implement HUD‑recommended activities and improve their services for California’s homeless population.


To better serve the needs of homeless Californians, and to provide statewide leadership to agencies at all levels for better coordination of efforts to address homelessness, the Legislature should enact legislation and include funding within the Budget Act of 2018 that will allow for the following actions:

Furthermore, the Legislature should require the state homeless council to take the following actions:

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Chapter 2

Despite a Reasonable Process for Considering Funding Applications, the Authority Can Do More to Address Funding Variations Across Los Angeles County

Chapter Summary

The Authority employs a reasonable process for evaluating and approving applications for funding for new projects. Multiple staff from several departments review portions of each application and assign a score to their portion. Following the evaluation, one unit consolidates the scores and ranks each application according to criteria approved by the Authority’s commission. We reviewed a selection of applications for funding for new projects and found that the Authority consistently followed its evaluation process. Moreover, the Authority revised its application process in 2017 to address issues it identified as inefficient and as impeding the success of some applicants. Specifically, the Authority now requires that applicants prequalify before applying for funding through a competitive grant. This allows the Authority to provide feedback and assistance to applicants to improve their chances of success. However, despite its reasonableness, we identified certain deficiencies associated with the Authority’s evaluation process, including outdated written procedures, staffs’ poor use of its computer network, and a flawed documentation process. Although the Authority has begun to address some of these issues, it needs to fully implement improvements to ensure that the evaluation process is more efficient, effective, and transparent. Additionally, the Authority was unable to provide a complete list of its renewal projects or sole‑source projects funded through the city of Los Angeles or Los Angeles County because it does not track which procurement method it uses to award funds. However, it could identify its renewal projects funded through HUD, and we found that the Authority employed a prudent process for prioritizing, scoring, and ranking those projects.

Although its application evaluation process is reasonable and consistent, we found that the Authority awarded the smallest amount of funding for new projects to providers in service areas outside the city of Los Angeles. This variation exists primarily for two reasons. First, some fund sources restrict the geographic areas where the Authority can allocate their funds, and second, fewer homeless service providers apply for funding in some service areas. In fact, the providers in those service areas that were awarded the least amount of funding also generally submitted the fewest applications. However, the Authority has taken some actions that could somewhat rebalance funding distributions. For example, it employs a reallocation strategy for HUD‑funded projects that provides new funding opportunities for service providers that apply for new projects without regard to service area, which satisfies HUD priorities. It has also recruited service providers to fill services gaps in certain service areas. But the Authority lacks the ability to adequately analyze its funding decisions based on geographic area and does not have an adequate database to track the results of its application evaluation process. Although the Authority is providing technical assistance in an attempt to increase its service provider base, it is hindered in doing so without analyzing why providers do not qualify for funding during the evaluation process. Because it lacks these data, the Authority is missing an opportunity to address at least some of the causes of its funding variations.

The Authority Consistently Uses a Reasonable Process to Evaluate Applications for Funding, Although Some Areas Need Improvement

The Authority’s multiple‑reviewer evaluation process mitigates the possibility of preference in its funding recommendations. During fiscal years 2014–15 through 2016–17, the Authority evaluated whether applicants met the minimum requirements to manage public funds in a portion of the competitive process called the threshold review. Additionally, the Authority measured the ability of applicants to carry out the specific project during a second phase, quality review. During both of these phases, multiple staff from different units within the Authority evaluated portions of the application based on their expertise. Recently, the Authority made a change to its application process to address inefficiencies and other issues that it believed were impeding the success of some applicants. However, we still found certain deficiencies in the evaluation process. Additionally, although the Authority also employed a prudent process for prioritizing, scoring, and ranking renewal projects funded through HUD, it was unable to provide a complete list of either renewal projects or sole‑source projects funded through the city of Los Angeles or Los Angeles County because it does not track its contracts by the procurement method.

The Authority’s Process for Evaluating Applications Is Reasonable

According to the Authority’s policy, during fiscal years 2014–15 through 2016–17 it could use one of three procurement methods for selecting service providers and determining or renewing award amounts for contracts to provide homeless services within the Los Angeles CoC area. For projects that had not been previously funded, either it could use a competitive process by issuing an RFP (new projects) or it could issue noncompetitive sole‑source contracts (sole‑source projects). For previously funded projects that had reached the end of their contract and were eligible for renewal (renewal projects), the Authority evaluated the existing provider to determine if it should continue to fund the project. Depending on the procurement type, the Authority used a different review process when it considered whether to contract with service providers. We summarize the process the Authority used to evaluate applications for new projects using a competitive bidding process that Figure 5 shows. For sole‑source projects, the Authority’s procurement policy required that it use criteria set forth in federal regulations when choosing a service provider because it is the only one able to provide a desired service; because the matter is exigent, emergent, or urgent and does not permit the time to use a competitive process; or because after solicitation of a number of service providers, competition is determined to be inadequate. For renewal projects, the Authority first determined whether funds were available and subsequently evaluated whether the service provider was in good standing.

Figure 5
The Authority Used a Reasonable Process to Evaluate Applications for Funding for New Projects for Homeless Services

A flow chart of The Authority’s process for evaluating applications for funding for new projects for homeless services.

Sources: California State Auditor’s analysis of the Authority’s policies and interviews with staff.

* The commission approved all recommendations the procurement unit presented to it during our testing period.

Documents the Authority Uses to
Measure a Service Provider’s Ability to Manage Public Grants and to Assess Application Completeness

Source: Core documents list obtained from the Authority.

We found that the Authority consistently used the same process to evaluate competitive applications for funding for new projects without regard to the service area. To evaluate applications it received during fiscal years 2014–15 through 2016–17, staff used a two‑phase process modeled after HUD’s two‑tiered application evaluation method. As shown in Figure 5, multiple departments and one external reviewer evaluated different portions of the application, and both the Authority’s Programs and Evaluations Committee or its commission approved the Authority’s recommendations for both phases of the process. We confirmed that during the first phase—threshold review—the Authority verified that service provider applicants met basic requirements relevant to successfully managing a public grant. During the second phase—quality review—we found that the Authority assessed the applicant’s ability to provide the services outlined in the funding opportunity. Detailed information on applications for funding for new projects received by the Authority during fiscal years 2014–15 through 2016–17 and their evaluation results are shown in Appendix A.

Although applicants usually failed threshold review for common, easily correctable reasons, they had the option to appeal the Authority’s recommendation if the Authority did not follow its process. As Table 5 shows, the most common reason for failure at this phase was a lack of completeness. Specifically, applicants did not submit required documents, as described in the text box, or did not complete some portion of the application.

We found that once an applicant passed the first phase, the Authority evaluated the merits of the proposed project and whether the applicant had the capacity to carry it out. During this second phase of the evaluation, the Procurement and Performance Department, the Data Management Department, and the Finance Department all evaluated different portions of the application. Given the number of departments and individuals who evaluated some portion of each project proposal, it would be difficult for any one individual to significantly influence the evaluation process.

Table 5
Between Fiscal Years 2014–15 and 2016–17 Applicants
Usually Failed Threshold Review for Reasons That Might 
Have Been Remedied Through Technical Assistance

Reason for Failing Number of Applications
Completeness 22
Financial stability 5
Ineligible component or entity 5
Organizational capacity 3
Total Threshold Failures 35

Source: California State Auditor’s analysis of application results
for fiscal years 2014–15 through 2016–17 obtained from the Authority.

Note: During fiscal years 2014–15 through 2016–17,
six of the 25 applicants that applied failed threshold review multiple times.

The Authority Has Started Making Changes to Improve Its Application Process for New Projects

In August 2017, the Authority implemented a review process that eliminated the need for threshold review. The Authority began evaluating applications for basic requirements before, rather than during, the competitive process to increase efficiency for the Authority as well as the service providers. As we depict in Figure 5, in the Authority’s new RFSQ process, providers must be certified as qualified bidders before applying for a competitive funding opportunity. The Authority evaluates providers’ qualifications using a process and criteria similar to threshold review. Once a provider qualifies, it does not need to requalify every time it responds to an RFP. This saves the provider time and resources because it only needs to update some information each time it submits an application in response to an RFP. The Authority issued its first RFP requiring the RFSQ process in August 2017. The Authority reported that prequalifying providers speeds up the RFP timeline by four to six weeks. Additionally, because the RFSQ evaluation occurs before the competitive process, Authority staff can provide feedback and assistance to help providers prequalify to apply. For example, during our fieldwork we observed procurement unit staff working with service providers to ensure that they submitted the correct and current documents to increase the likelihood they would be approved for certification as a qualified bidder. As a result, more providers are likely to qualify to compete for funding since the Authority implemented its RFSQ process. According to the Authority’s year‑to‑date report of RFSQ application results to its commission in January 2018, the Authority certified 11 new providers.

The Authority Should Still Make Certain Improvements to Its Application Review Process

Although the Authority consistently followed its process for evaluating applications for publicly funded new projects and has made some improvements to its process, others are still needed. First, to protect institutional knowledge, the Authority should update its written policies and procedures. Next, to improve transparency and accountability, the Authority should better document its application review process. Additionally, to manage tasks effectively and efficiently, the Authority should improve its staffs’ use of its computer network. Finally, to identify barriers to applying for funding, the Authority should survey those who attend the mandatory bidders conference but do not apply.

The Authority has not updated its policies and procedures since 2010, and thus it does not have current written procedures for much of its application evaluation process. For example, although the Authority implemented an electronic application system in 2014, the written procedures still require applicants to submit multiple copies of their proposal to front desk personnel, who then create a paper receipt and time‑stamp the documents. Furthermore, in 2016 the procurement unit implemented a new process in which it creates the review instructions and evaluation tools while drafting the RFP. This helps ensure that reviewers score proposals based on the criteria included in the specific published RFP. To determine the transparency of the evaluation criteria, we reviewed three RFPs—one issued before the new process was implemented and two issued after it. We did so by comparing the criteria in the RFP information posted on the Authority’s website to the instructions and evaluation tools the Authority developed. For the 2015 Crisis Housing for Individuals RFP, issued before the new process, we found that the criteria for six of 17 points of evaluation in the tools reviewers used did not match the published criteria. On the other hand, all points of evaluation agreed for the RFPs we reviewed for fiscal years 2015–16 and 2016–17. However, because the Authority has not updated its policies and procedures to include changes like these, it risks having staff use outdated processes that could reduce transparency. The Authority recognized the need for updated policies and procedures and hired a contractor in 2016 to create them. The contract term runs through December 2018.

We also found that the Authority did not indicate in the evaluation tool whether the applicant passed. Specifically, to determine whether the Authority used its evaluation process consistently, we selected 34 applications that the Authority evaluated during fiscal years 2014–15 through 2016–17, and we noted that after fiscal year 2014–15, staff did not always indicate in the evaluation tool whether the applicant passed or failed. In fact, staff did not include this determination on tools for 21 of the 26 applications we reviewed for fiscal years 2015–16 through 2016–17. Although the formulas in the tools calculate the score for financial stability, which is an important indicator of whether an applicant would be a good steward of public funds, staff still should have completed the remainder of the tools used to evaluate applicants’ success. Alternatively, the Authority should build tools that reflect its actual process. According to the Authority’s associate director of monitoring and compliance, the Authority tracked passing and failing on separate tracking lists, not on the individual tools. However, these tracking lists do not show how the Authority calculated the score, the reason for the pass or fail, or staff notes.

Additionally, we found that the Authority did not fully document the supervisory review of its evaluation process. Although training documents we obtained from the Authority’s director of finance show that both staff and management reviewed the evaluation tools, we were unable to confirm that these reviews took place by observing the tools themselves because the review process happens via email between staff members, management, and the director of finance. After we brought our concerns to the attention of the Authority’s management, it began documenting meetings in which it discusses funding decisions. However, the Authority still needs to formalize this practice when it updates its policy and procedures.

Moreover, the Authority’s staff do not use the network hard drive, which can reduce the effectiveness and efficiency of its feedback process. As we described earlier, different departments review different sections of funding applications. According to the Authority’s policy, staff must save all evaluation documents in one location on its network hard drive. When a service provider requests information about how it fared during the application evaluation process, the procurement unit is responsible for providing a scoring debrief that details all the scores and comments. However, we found that in multiple instances, staff failed to save documents in the specified location, potentially impeding the procurement unit’s ability to effectively debrief service providers. We also found evidence at the specified location of broken links, empty folders, and multiple versions of documents on the network hard drive, which increases the risk of inadvertently withholding information that should be easily accessible. To increase efficiency and transparency, the Authority is in the process of implementing a document management and storage system. This system will label and organize documents and maintain a history of document versions to support interdepartmental and cross‑team work. According to the chief operating officer, the Authority is attempting to implement the new system by June 2018.

The Authority has also missed an opportunity to identify barriers to potential service providers by not reaching out to attendees of the mandatory bidders conference who did not subsequently apply for funding to determine why they did not apply. For example, in the 2015 Crisis Housing and Services RFP, we found that no providers from service area 1 (Antelope Valley) submitted an application for funding. However, two representatives from the city of Lancaster attended the mandatory bidders conference. When we asked the Authority why representatives from service area 1 attended the conference but no service providers applied, the associate director of operations speculated that the reason might be that the RFP consisted of over $9 million in city of Los Angeles funding and only about $400,000 in Los Angeles County funding, and providers in service area 1 are ineligible to receive city of Los Angeles funding. However, without following up with attendees, the Authority does not know why they did not apply. The Authority should obtain and track the reasons attendees of the bidders conference do not apply for funding to determine whether barriers exist that deter service providers from applying and, if so, develop solutions to address them.

Although Its Data Lacked Service Area Identifiers, the Authority’s Process for Evaluating HUD Renewal Projects Is Sound

The Authority does not track projects by type—such as new, renewal, or sole‑source—as its policy requires and could not provide us with a list of renewal projects or sole‑source projects. Thus, we could not determine whether it followed its process for vetting those providers and awarding funds for those projects.

However, the Authority and HUD work together to produce a grant inventory worksheet for all HUD projects up for renewal each year. This worksheet allowed us to select HUD renewal projects for review. Even though we were able to identify HUD projects up for renewal and test the HUD renewal process, we were not able to determine the amount of funding that HUD awarded by service area because the Authority’s data system lacked an identifier to tie these projects to a specific service area. Although we recognize that some projects operate across multiple service areas, we cannot determine what proportion of HUD projects operate this way, because the Authority does not track this information. However, during our testing of new projects over three years, only 19 of 297, or about 6 percent, applied to serve more than one service area.

Although the Authority uses the same evaluation process for all new projects regardless of funding source, new projects competing for HUD funds must be incorporated into the consolidated application with the renewal projects for that year. This also means that HUD makes the final decisions as to which projects to fund and for how much. The Authority is responsible for evaluating and ranking the projects and for submitting one consolidated application to HUD on behalf of the entire Los Angeles CoC area.

The Authority’s Reallocation Criteria for the 2016 HUD CoC Program Competition

The Authority reallocated funding from projects for which the service provider:

Sources: California State Auditor’s analysis of the Authority’s reallocation policy for the 2016 CoC Program Notice of Funding Available.

The Authority’s goal is to submit the strongest application to HUD for the Los Angeles CoC area as a whole, given the criteria HUD disseminates in each notice of funding. If a renewal project meets the criteria for reallocation set forth in the CoC board‑approved policy, as described in the text box, the Authority can elect not to include the project in the consolidated application. The Authority then includes that amount in its solicitation for applications for funding for new projects within the CoC area that align with HUD priorities. We described the evaluation process for applications for new projects earlier in this chapter and in Figure 5. We selected 20 renewal projects in the 2016 HUD application and found that the Authority ranked all of them according to its approved policies. We also looked at all five projects that had part or all of their funds reallocated by the Authority during fiscal year 2016–17 and found that the Authority followed its reallocation policy in each instance.

Even Though the Authority Has Made Efforts to Address Funding Variations Across Service Areas, It Has Not Adequately Used Data to Analyze These Efforts

The Authority has taken steps to address the causes of funding variation, including reallocating funds to increase amounts of new funding opportunities, reserving funds for underserved service areas, and providing technical assistance to increase the pool of qualified service providers. However, it lacks the ability to adequately analyze the effects of its funding decisions based on service area, and it does not adequately track data regarding its application evaluation process. Because it does not track or use its application process data effectively, the Authority is missing an opportunity to better address funding variances across service areas within its CoC area. Furthermore, the Authority is the only entity that has access to information regarding HUD CoC program awards as well as new or ongoing projects with city of Los Angeles or Los Angeles County funding within the Los Angeles CoC area. Being able to track and report that information, as well as to track project awards and outcomes by service area, is imperative if it is to fulfill its responsibilities as the lead agency for the CoC area.

The Authority Has Taken Some Steps to Address Restrictions and Difficulties That Cause Funding Variations

The Authority does not have final control over which service areas it awards public funding to. First, the city of Los Angeles and Los Angeles County impose rules on the funds they provide. For instance, the city and county agreed that city funds must be used to fund services within the city. Thus, providers proposing projects in areas outside these boundaries—service areas 1, 3, 7, and certain portions of service areas 2, 5, and 8—are not eligible to receive city of Los Angeles funds. Furthermore, although the Authority is required to consider the needs identified in the urban county areas when evaluating a project funded by Los Angeles County funds, it sometimes gives priority consideration to projects located in service areas outside the city limits. Additionally, Los Angeles County cannot unilaterally reduce the amount of its funding to providers in service areas within the city boundaries. For example, when Los Angeles County voters passed Measure H in March 2017, which will provide $355 million a year for 10 years to address homelessness, the county required that, to the extent feasible, Measure H funds were to be allocated based on geographic need as set forth in the Authority’s point‑in‑time count. Second, as mentioned earlier, HUD makes the final decisions as to which projects it will fund and does so without regard to service area. In Appendix B, we discuss the details of the amounts the Authority awarded for new projects per capita for fiscal years 2014–15 through 2016–17, displayed by service area and the source of the funding.

In addition to restrictions or requirements placed on certain funding streams, the lack of service providers applying for funding in certain service areas can cause variation in the funding the Authority awards each service area. As we discuss in Appendix B, during fiscal years 2014–15 through 2016–17, providers in service areas 1, 3, and 7 generally received less funding per capita. We also found that providers applying for funding to provide services in these areas submitted fewer applications than those applying to provide services within the city, as shown in Table 6.

Table 6
Fewer Providers Applied for Funding in Service Areas Outside 
the City of Los Angeles Boundaries During
Fiscal Years 2014–15 Through 2016–17

Reason for Failing Number of Applications
Ineligible for city funds   
1–Antelope Valley 4
3–San Gabriel Valley 7
7–East LA 6
Partially eligible for city funds   
2–San Fernando Valley 11
5–West LA 10
8–South Bay/Harbor 10
Mostly eligible for city funds
4–Metro 23
6–South LA 27

Sources: California State Auditor’s analysis of application data, map of service areas
within Los Angeles County and the city of Los Angeles, and the joint exercise of powers
agreement between Los Angeles County and the city of Los Angeles.

However, as discussed previously, the Authority reallocates some HUD funding, which could help offset some of the funding variation across service areas. Specifically, when the Authority reallocates HUD funding, it creates opportunities for providers in any service area to apply for funding for new projects and at the same time preserves those HUD funds for the Los Angeles CoC area. For example, if service providers in underserved areas submit strong applications that include projects that address HUD priorities, this strategy could result in HUD awarding more money to those areas. However, although the Authority scores and ranks new project applications according to HUD’s priorities, HUD makes the final funding decisions. Thus, a reallocation strategy may help, but it will not guarantee that providers in underserved areas receive awards.

The Authority also took steps to ensure that it provided program funding to serve the homeless population in all service areas, even when no service providers applied. For example, no providers from service area 5 applied for funding under the February 2017 RFP for the Independent Living Program (ILP). This program provides transitional housing for former foster youth. Because no service provider applied to run this program in service area 5, the Authority set aside about $101,000 for that area. According to the performance management supervisor, the Authority then took several steps to secure a qualified service provider. For instance, according to the supervisor, the Authority contacted a service provider operating in service area 5 about expanding the services it provided to include ILP, it contacted a service provider operating outside service area 5 about expanding its services to include ILP services in service area 5, and it met with a service provider with whom the Authority had not previously contracted to provide ILP services in service area 5. However, the supervisor stated that as of January 2018, the Authority had been unable to contract with a provider to run an ILP project in service area 5. According to the Authority’s performance management supervisor, the high rents in service area 5, coupled with the low amount of funding per bed provided in that RFP, made locating and securing a provider difficult. In fact, she stated that one potential provider had said that it did not see how it could run an effective program with the low amount of funding per bed, given the scope of required services. Thus, as of January 2018, these funds remained on hold, and the 325 homeless youth in service area 5 who might be eligible remained without ILP services.

Moreover, the Authority has worked with government entities to prevent service disruption in service area 1. For example, in Lancaster, a service provider operated a shelter in a building it leased from the Lancaster Redevelopment Agency at a cost of $1 per year, and the Lancaster Redevelopment Agency covered the cost of the building maintenance.17 However, according to the Authority’s director of programs, the service provider’s board of directors closed the shelter because resources were lacking. According to the city of Lancaster’s director of housing and neighborhood revitalization (housing director), the city decided not to have a different provider operate the shelter because the building was old and unsuitable, among other reasons. The housing director also indicated that the city of Lancaster has shifted its strategy for homeless services: it recently committed resources, such as land and funding, to develop permanent supportive housing for the homeless population by December 2018. To mitigate the immediate effects of the shelter’s closure, the Authority contacted officials from the Board of Supervisors of the County of Los Angeles about identifying another site for the shelter. The Authority subsequently contracted with a provider to operate a winter shelter program in the Lancaster Armory. Additionally, the Authority took other steps to relocate homeless individuals to other shelters.

The Authority Lacks Data to Effectively Target Assistance to Service Providers and to Communicate Areas of Need to Funders

The Authority’s limited data hinder its ability to identify and address funding variations and unmet demand for services across its service areas. Although the Authority has taken some steps to address funding variations across service areas while making funding decisions, it has not adequately used data to analyze the effects of its efforts. To begin with, the Authority could not determine how much money it distributed to each service area for our audit period because its accounting system lacked a field to record the service area. Although the accounting system could identify funding distribution by contract, we found that the Authority’s contract database contained errors that made it impossible to accurately tie contract distributions to service areas. Furthermore, as we discussed previously, because the Authority does not track contracts by procurement method, we could not identify contracts for renewal projects funded by the city of Los Angeles and Los Angeles County, or any sole‑source contracts.

Additionally, the Authority lacks organized application evaluation data because it does not have a database that can track these processes or their results. The Authority was initially unable to provide us a complete or accurate list of RFPs and applications for funding for fiscal years 2014–15 through 2016–17 because instead of a data system, the Authority stores application information for each RFP in multiple spreadsheets. For the 11 RFPs the Authority issued from fiscal years 2014–15 through 2016–17, we requested a list of applications with key data fields. The Authority provided us with information for each RFP from multiple spreadsheets. However, even after it provided multiple iterations of the list at our request to clarify missing, incomplete, and inconsistent information, the list still contained inaccurate or inconsistent information in numerous fields, including applicant name, service area, program, funding source, and amount awarded. We found that the Authority inconsistently shortened titles, which resulted in several versions of the same document and files being mislabeled and caused many of the errors we identified. The Authority could have avoided these errors by using a data system to track RFP results and application evaluation results in the aggregate. According to the director of procurement and performance management, using spreadsheets was sufficient when the Authority received less funding and issued fewer RFPs. For example, the Authority issued only two RFPs in fiscal year 2014–15 compared with three and six in the subsequent years. However, given the increase in the number of RFPs it will issue because of Measure H revenues, the Authority should implement a tracking system. Such a system should enable the Authority to track its process and workflow so that it can report the results of its application review process as well as track funding amounts by service area and homeless subpopulation. Because the Authority does not track the results of its application evaluation process or funding amounts by service area, it cannot effectively track its results or effectively plan its homeless services.

Although the Authority recently made changes to both its accounting system and its contract database, it needs to do more to address its data issues. The Authority added new fields to its accounting system that could address its inability to determine how much funding it distributes to each service area. However, according to the associate director of finance, service area designation is only an option for these fields and the Authority has not decided on the exact usage of those fields. Furthermore, in 2016 the Authority began implementing a new contract lifecycle management system. This system allows the Authority to search and report on key data fields such as procurement type, award amount, total bed capacity, and service area. According to the grants and contracts supervisor, as of March 2018, the Authority was in the process of implementing this system for contracts. Finally, the new system also has the capability to track the application evaluation process and store application information for providers. However, according to the Authority’s director of procurement and performance management, the Authority has not decided if it will use this capability or if it will seek another technology solution that would better meet this need, and it is evaluating alternate products for this purpose. To limit errors in its information, measure funding across its CoC area, report to stakeholders, and effectively plan for homeless services across its service areas, the Authority should promptly either implement a new data system or adjust its contract database to track the results of its application evaluation process.

The Authority has technical assistance programs to help increase the administrative capacity of its service providers; however, if the Authority could analyze its application evaluation data, it could better identify providers’ needs. Specifically, if it had these data, the Authority could track trends in the number of providers that apply in each service area over time, determine the most common reasons applicants fail, and target technical assistance to address those deficiencies. For example, during our analysis of the Authority’s application evaluation data, we found that during fiscal years 2014–15 through 2016–17, providers from service area 6 submitted 74 applications; 20 failed the threshold review, and another 11 providers failed quality review. Additionally, eight providers from service area 4 failed quality review. As we mentioned previously, many of these providers failed to submit the proper core documents, which was the most common reason for failing threshold review. With adequate information, the Authority could have identified common problems and provided technical assistance by holding workshops or publishing additional information to address common weaknesses. According to the Authority’s capacity building manager, she used application evaluation results from one funding opportunity to target technical assistance to those providers. Additionally, she confirmed that it would be helpful to have aggregate application evaluation data for all funding opportunities to further target technical assistance.

Finally, if the Authority had better data, it could more effectively communicate its CoC area’s needs to potential funding sources. For example, after we analyzed the Authority’s application evaluation results, we found that the RFPs often do not have sufficient funding for all qualified projects. During our audit period, 16 applications for projects that qualified for funding requested a total of $8.5 million but did not receive any of it because higher‑ranked applicants exhausted the available resources or the applicant was not eligible for those funds that were available. Although the Authority identifies needs in its community by periodically analyzing housing gaps, it should identify service provider needs in its application evaluation process and communicate these to potential funding sources. For the Authority to have a complete picture of the state of homeless services in the Los Angeles CoC, it should have accurate and reliable data at each point of the funding process, including the number of eligible providers, why providers do not apply for certain RFPs, which providers win funds and why, where they are located, and how programs are affecting the homeless population. The Authority is the only entity that has access to all of this information and how it intersects. This information is especially important given the expected influx of Measure H funds we mentioned previously.


To ensure the consistency and transparency of its processes, the Authority should do the following:

To ensure that its funding recommendations are effective, consistent, and transparent, by July 2018 the Authority should do the following:

To expand the number of service providers through targeted technical assistance, the Authority should do the following:

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Appendix A

Although Providers From Some Service Areas Failed to Qualify More Often Than Others, the Authority’s Reasons for Its Funding Decisions Were Justified

From fiscal years 2014–15 through 2016–17, the Authority evaluated 297 applications in response to 11 RFPs. In general, the number of applications it receives fluctuates depending on the amount of funding available. For instance, in fiscal year 2015–16, Los Angeles County funds increased after the county Board of Supervisors approved $51.1 million to be used to combat homelessness. Additionally, in 2015 the Authority completely reallocated 58 and partially reallocated another 42 HUD grants that were up for renewal and at risk of losing funding; this caused over $14 million in funds to be available for new projects and resulted in an increase in applications for new projects in fiscal year 2015–16. The smaller number of applications in fiscal year 2016–17 resulted from the Authority reallocating only five HUD grants in that year.

Although provider applicants from certain service areas failed to qualify at either threshold review or quality review more often than those in other service areas, the Authority’s review process is reasonable. In addition, the reasons for failure at both threshold and quality review were justified. In general, fewer than 10 percent of applicants failed either review for most service areas. However, as noted in Table A, applicants from service areas 4 and 6 experienced higher failure rates, as did those that proposed to serve multiple service areas.

In addition, some applicants failed for the same reasons year after year. For example, one applicant in service area 6 applied for HUD funds four times during all three years of our audit period, and each time it failed threshold review for issues related to completeness or not being an eligible entity. In addition, some applicants were able to rectify one error but later failed for another reason. For example, one applicant in service area 6 failed multiple times in a single year: first because of financial stability and then for completeness issues only four months later. This type of iterative failure also caused the failure rate in certain service areas to appear higher than it would otherwise.

Table A
The Authority Approved the Majority of Applications It Evaluated for Most Service Areas

  Number of Applications
Service Planning Area Reviewed Failed Threshold Review Failed Quality Review Approved
Fiscal Year 2014–15
1- Antelope Valley 2 0 1 1
2-San Fernando Valley 9 0 2 7
3-San Gabriel Valley 2 0 0 2
4-Metro 26 3 2 21
5-West LA 5 0 0 5
6-South LA 12 2 3 7
7-East LA 4 1 0 3
8-South Bay/Harbor 2 0 0 2
Subtotals 62 6 8 48
Multiple areas 4 2 0 2
Totals 66 8 8 50
Fiscal Year 2015–16
1- Antelope Valley 10 0 0 10
2-San Fernando Valley 18 2 0 16
3-San Gabriel Valley 13 0 2 11
4-Metro 21 1 4 16
5-West LA 17 0 0 17
6-South LA 30 3 1 26
7-East LA 8 0 0 8
8-South Bay/Harbor 14* 0 0 14
Subtotals 131 6 7 118
Multiple areas 9 0 2 7
Totals 140* 6 9 125
Fiscal Year 2016–17
1- Antelope Valley 4 0 0 4
2-San Fernando Valley 6 1 0 5
3-San Gabriel Valley 9 1 0 8
4-Metro 14 1 2 11
5-West LA 6 0 0 6
6-South LA 32 15 7 10
7-East LA 4 0 0 4
8-South Bay/Harbor 9 1 2 6
Subtotals 84 19 11 54
Multiple areas 6 2 0 4
Totals 90 21 11 58
Service Planning Area Reviewed   Failed Threshold Review   Failed Quality Review   Approved
Number Percentage Number Percentage Number Percentage
Fiscal Years 2014–15 through 2016–17 Combined Percentages
1–Antelope Valley 16   0 0%   1 6%   15 94%
2–San Fernando Valley 33 3 9 2 6 28 85
3–San Gabriel Valley 24 1 4 2 8 21 88
4–Metro  61 5 8 8 13 48 79
5–West LA 28 0 0 0 0 28 100
6–South LA 74 20 27 11 15 43 58
7–East LA 16 1 6 0 0 15 94
8–South Bay/Harbor 25* 1 4 2 8 22 88
Multiple areas 21 11 68 21 2 13 68
Totals 296* 35 12% 28 9%   233 79%

Source: California State Auditor’s analysis of application information obtained from the Authority.

* In fiscal year 2015–16, one applicant withdrew its application after the Authority completed it threshold review, but before it completed its quality review. We omitted this applicant from this table.

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Appendix B

Funding for New Projects Varies Across Los Angeles County Because of Funding Restrictions and Lack of Provider Applicants

Service areas with providers that submit more applications generally receive more funding per capita. Although the Authority does not yet track its funding by service area or procurement type, we were able to analyze funding for new projects across service areas. As Table B shows, service areas 1, 3, and 7 had no funding awards from the city of Los Angeles for new projects for fiscal years 2014–15 through 2016–17. These service areas are located outside the city of Los Angeles and therefore are not eligible for city funds. The table also shows an increase in county‑funded awards for new projects starting in fiscal year 2015–16 and less variation in awards for funding across service areas in fiscal year 2016–17 than in fiscal year 2015–16. This is because in fiscal year 2016–17 programs for two RFPs required that services be provided in all service areas and that the funding amount be based on the point‑in‑time count. The Authority also awarded a minimal amount of state funding for new projects, all of which were associated with State Emergency Services Grants and limited to nonentitlement areas.

Table B
For New Projects Awarded During Fiscal Years 2014–15 Through 2016–17, the City of Los Angeles Funded More Per Homeless Person, but Los Angeles County Funded More Per Homeless Person for the Service Areas Outside the City Boundaries

  Amount Awarded per Homeless Individual by Fiscal Year
Funding Source by Service Area 2014–15 2015–16 2016–17
Service Area 1 Antelope Valley* 
City funded      
County funded   $497 $562
State funded   270  
HUD funded $46 43  
Service Area 2 San Fernando Valley
City funded $200 $465 $64
County funded   124 776
State funded      
HUD funded 193 554  
TOTALS FOR SERVICE AREA 2 $393 $1,143 $840
Service Area 3 San Gabriel Valley*
City funded      
County funded   $686 $1,025
State funded      
HUD funded   331 227
TOTALS FOR SERVICE AREA 3   $1,017 $1,252
Service Area 4 Metro
City funded $379 $474 $153
County funded   61 394
State funded      
HUD funded   20  
TOTALS FOR SERVICE AREA 4 $379 $555 $547
Service Area 5 West LA
City funded   $853 $77
County funded $33 111 581
State funded      
HUD funded 122 540 58
TOTALS FOR SERVICE AREA 5 $155 $1,504 $716
Service Area 6 South LA
City funded $472 $1,157 $106
County funded   167 624
State funded      
HUD funded 193 480  
TOTALS FOR SERVICE AREA 6 $665 $1,804 $730
Service Area 7 East LA*
City funded      
County funded $38 $553 $476
State funded   139  
HUD funded 136    
TOTALS FOR SERVICE AREA 7 $174 $692 $476
Service Area 8 South Bay/Harbor
City funded   $579 $99
County funded $23 215 827
State funded       
Hud funded 145 211  
TOTALS FOR SERVICE AREA 8 $168 $1,005 $926
Total of All Service Areas Combined
City funded† $351 $831 $137
County funded 8 214 617
State funded   30  
HUD funded 162 348 48
CONSOLIDATED TOTALS $521 $1,423 $802

Sources: California State Auditor’s analysis of the Authority’s application evaluation results for new project awards, including funding from the city of Los Angeles, Los Angeles County, and HUD CoC program, from July 1, 2014, through June 30, 2017, and the point-in-time homeless counts for 2015, 2016, and 2017.

Note: Some applicants applied to operate projects to serve the homeless populations in multiple service areas. We omitted these applications from this table.

* Service areas 1, 3, and 7 are located outside the city of Los Angeles and therefore are not eligible for city funds.

For the combined total of the city of Los Angeles funded applicants, we used the point-in-time count of homeless population within the city of Los Angeles boundaries only, not the count of the homeless within the entire Los Angeles CoC. The Authority cannot award city of Los Angeles funds to serve the homeless individuals outside city boundaries.



6 HUD defines homeless unaccompanied youth as homeless individuals under the age of 25 who are not accompanied by a parent or a guardian and are not themselves a parent staying in the same place as his or her child or children.
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7 We provide additional information regarding homelessness in California on our website. An interactive map shows conditions across the State, including the number of people who lack shelter and the amount of annual HUD funding awarded to various areas. Using HUD data, the map also shows changes in the size of the homeless population from 2007 to 2016.
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8 According to the World Health Organization (WHO), hepatitis A is a viral liver disease that can cause mild to severe illness. WHO states that the virus is primarily spread when an uninfected and unvaccinated person ingests food or water that is contaminated with the feces of an infected person and that the disease is closely associated with unsafe water or food, inadequate sanitation, and poor personal hygiene. Go back to text

9 According to its website, the Economic Roundtable is a nonprofit urban research organization whose mission is to conduct research and implement programs that contribute to the sustainability of individuals and communities.
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10 We included the 2016 HUD CoC program awards for the Los Angeles, Glendale, Pasadena, and Long Beach CoC areas and the Authority’s budgeted non‑HUD funding amounts to calculate Los Angeles County’s homeless funding per capita.
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11The federal homelessness council intends to issue a new update in 2018.
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12 The state entities providing members to the state homeless council include HCD, the Department of Health Care Services, CDSS, and the California Department of Veterans Affairs, among others.
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13 We received complete responses from 40 of the 43 CoC lead agencies. Lead agencies for the Oakland, Berkeley/Alameda County CoC area and the Daly City/San Mateo County CoC area did not respond to our survey. Additionally, the lead agency for the Imperial County CoC area submitted only a partial response. We provide the CoC lead agencies’ survey responses on our website.
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14 Six of the 40 CoC lead agencies that fully responded to our survey did not report their costs for performing their point‑in‑time counts.
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15 We identified California’s rural counties by calculating the percentage of each county’s population living in rural areas based on data from the 2010 federal census. We included three urban counties (Fresno, Placer, and Sutter) among the 33 counties in this group because their CoC areas also included rural counties we identified.
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16 HUD awarded no CoC funding for 2016 to the Colusa, Glenn, Trinity Counties CoC and the Lake County CoC.
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17 In 2011 the Legislature enacted a law to abolish redevelopment agencies. The city of Lancaster is the successor agency to the former Lancaster Redevelopment Agency.
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