State finds San Jose lacks accountability with homeless spending

San Jose has until September to formulate a succinct plan on how it will address homelessness and begin publicly reporting spending data, according to an audit requested by a local legislator.

The California State Auditor has published its findings and recommendations after an audit of the city’s spending and coordination of its homeless support services. Auditors found the city could not identify all of its expenditures on homeless support, nor does it adequately measure the effectiveness of its systems.

State Sen. Dave Cortese, who requested the audit in 2022, said its findings will likely inspire legislation setting standards of transparency and data collection for when the state disperses money to cities and counties.

“We can’t go five more years without knowing the effectiveness of the dollars invested,” Cortese said at a Tuesday meeting to discuss the audit’s findings. “Likewise, I think much clearer expectations need to be set with all of the cities and counties in California.”

The audit also examined homelessness spending and support systems in San Diego, with similar results and recommendations. Because the two cities are experiencing similar problems, Cortese said it’s likely other cities across the state are dealing with these same data collection and transparency issues.

San Jose has about 6,340 unhoused residents, according to last year’s point-in-time count, though county officials and advocates said the tally is often an undercount. The city has also received an unprecedented amount of funding to expand its temporary housing projects since the beginning of the COVID-19 pandemic, yet the audit described the accounting of its housing and supportive services as incomplete.

The audit looked at the city’s finances across three fiscal years, from 2020 to 2023, during which the city spent more than $302 million on homeless supportive services, about $120 million of which came from the state and federal governments. That money went toward numerous temporary housing projects and support services, such as $50 million from the state to build 204 private temporary prefabricated homes and $125.5 million from the state through Project Homekey on temporary and permanent housing.

The audit also found the city lacks enough interim or permanent housing to keep up with the demand, and recommends city officials immediately collect data on temporary housing — which the audit found missing.

“When we attempted to evaluate the use of the city’s interim housing beds, we found that San Jose does not regularly monitor this information,” the audit report reads. “Consequently, it lacks complete and accurate information to assess whether the usage of its existing interim housing units and beds is efficient and whether more beds and units are needed.”

Another major gap identified by the audit is that the city doesn’t consistently measure the effectiveness of its support service providers, with poorly defined performance metrics. It also found that most of the city service providers have not yet received a performance report, despite costing the city millions of dollars in contracts.

Mayor Matt Mahan said he has pushed to measure program-level outcomes and is glad the auditor agrees, but pointed out other discrepancies about how the city is being judged. He said the audit ignores innovative approaches the city has taken to ending unsheltered homelessness and that it faults the city for not having a public health department, which falls on county governments — not cities.

“I sincerely hope this audit spurs the state to create a comprehensive, statewide framework and funding strategy for ensuring every county and city does its part to provide shelter, treatment and affordable housing for every person on our streets,” Mahan told San José Spotlight.

City Manager Jennifer Maguire penned a response to the audit to provide more context and feedback to its recommendations. She disagreed with some of the audit’s findings, including the notion that the city lacks a long-term plan to develop more permanent housing — she pointed to the Community Plan to End Homelessness 2020-2025, approved by the San Jose City Council earlier this year. Activists have questioned the plan’s plausibility for years.

Maguire also said the city is in the process of addressing the auditors’ recommendations, including concerns around measuring service provider effectiveness. She said the city’s housing department has begun assessing contracts, which should help monitor outcomes.

“We are pleased to see that the state is in general agreement with San Jose’s actions to end homelessness, and on several recommendations such as developing annual goals that were in the works prior to the audit,” city spokesperson Carolina Camarena told San José Spotlight.

The audit’s findings are unsurprising to Todd Langton, executive director of homelessness nonprofit Agape Silicon Valley and founder of the Coalition for the Unhoused of Silicon Valley. Langton said he’s worried the city’s approach is more focused on making San Jose look cleaner and that supporting homeless residents is just a byproduct.

“If you want to clean up the city, then solve homelessness. Don’t clean up the city and hope homelessness will be solved as a result,” Langton told San José Spotlight.

To Langton, state intervention is needed to inspire change in how Silicon Valley addresses homelessness, but added that he felt no sense of urgency from city leaders. He said the region’s segmented approach to supporting unhoused residents is inefficient, as the county, cities and handfuls of nonprofits are working separate from each other.

“Dysfunctional silos is what we’ve got, that we keep throwing millions of dollars into and expecting them to behave functionally and with transparency,” Langton told San José Spotlight. “If San Jose really wants to get it done by September, if it’s a big issue … they’ll get it done. If they don’t get it done, then perhaps it’s just not that important to them.”

Contact B. Sakura Cannestra at [email protected] or @SakuCannestra on X, formerly known as Twitter.