The 2025-26 Budget

Oversight of Encampment Resolution Funding

Summary

Since 2021-22, the Legislature has provided a total of $900 million (General Fund) for the Encampment Resolution Funding (ERF) program, with an additional $100 million in the Governor’s budget planned for 2025-26. ERF is a grant program intended to help local communities address homeless encampments by funding housing and other services to the people living there. To assist the Legislature in its fiscal oversight role of this large and multiyear program, this post: (1) provides data on the size of the population of people experiencing homelessness in California and recent state spending on housing and homelessness; (2) describes the ERF program’s goals, funding, and reporting requirements; (3) provides an update on ERF grantee awards, spending, and outcomes data available as of this writing; and (4) provides an assessment and makes an associated recommendation to the Legislature. Due to a lack of adequate information to date on the program’s activities and impact, and expected upcoming reports from grantees and the administration, we recommend the Legislature wait to decide on funding another ERF round until it receives compelling evidence that program goals are being met.

Homelessness in California

For a number of reasons, identifying the number of Californians experiencing homelessness is difficult. Below, we provide estimates using two common methodologies. We then summarize state funding in recent years related to housing and homelessness.

Last Year’s Point-in-Time Count Identified More Than 180,000 Californians Experiencing Homelessness. A long-standing way that California and the rest of the United States have estimated the number of people experiencing homelessness is through a point-in-time count. Since the count is only a snapshot of people experiencing homelessness on one given night in a year (typically in late January) and those conducting the count may miss individuals who are hidden from view at the time (such as people sleeping in a secluded area), the homelessness data collected is an undercount. Nevertheless, the point-in-time count can serve as a useful indicator of broad homelessness trends over time. In January 2024 (the most recently available data), 187,000 people were counted as homeless—an all-time high for the state, and 36,000 (24 percent) more than were counted in January 2019. Two-thirds of those counted were unsheltered (such as people living on the street or in a park). (The other one-third were identified as “sheltered homeless,” meaning they were spending the night in an emergency shelter or other temporary housing.) California has 12 percent of the total population in the U.S. but accounts for about one-quarter of the country’s homelessness count.

State’s Data System Suggests Number of People Experiencing Homelessness Is Even Higher. Since 2021, the state’s California Interagency Council on Homelessness (Cal ICH), an entity within the Business, Consumer Services and Housing (BCSH) Agency charged with coordinating the state’s efforts to address homelessness, has maintained a Homeless Data Integration System (HDIS). HDIS is a statewide data warehouse that aggregates and matches individual-level data collected and reported by the state’s 44 Continuums of Care [CoCs]. (A CoC is a federally required regional planning and coordination body comprising local governments, nonprofit service providers, and other member entities focused on addressing homelessness in their area.) Every quarter, each CoC sends to HDIS various data collected in its local information system on persons they provided services to (such as a shelter bed or case management). According to HDIS, California’s 44 CoCs collectively provided services to about 337,000 people (unduplicated) who were experiencing homelessness during calendar year 2023. While complete data for 2024 are not yet available as of this writing, through September 30, 2024, about 310,000 people (unduplicated) had been served. Like the point-in-time count, these annual numbers from HDIS also are undercounts, primarily because the HDIS data do not include people experiencing homelessness who did not access any services (and thus did not get recorded in a CoC data system)—or accessed services from a provider who is not part of a CoC (such as veterans experiencing homelessness who received services exclusively from the U.S. Department of Veterans Affairs).

State Has Dedicated Tens of Billions of Dollars for Housing and Homelessness in Recent Years. Housing and homelessness are closely interrelated issues. Lack of enough affordable housing for low-income households is a major reason why many people fall into homelessness. Likewise, people will stay homeless, or be at risk of homelessness, until they can find stable housing they can afford. Figure 1 shows that since 2019-20, the state has provided about $37 billion in funding for housing- and homelessness-related programs. The majority of this funding—which includes the state General Fund, special funds, voter-approved bonds, and certain federal funds—has been allocated to the Department of Housing and Community Development (HCD) and Cal ICH. Broadly, state funds have been designated to support the creation of affordable housing and to provide services to people at risk of, or experiencing, homelessness. Below, we describe ERF, one of the state’s largest homeless-related initiatives.

ERF Program Purpose, Structure, and Requirements

Encampment Resolution Entails Closing the Encampment and Bringing the Inhabitants Inside. Encampment resolution is a strategy to address unsheltered homelessness among groups of people sleeping outside (often in tents or other temporary structures) in the same location. The purpose of encampment resolution is to provide outreach and other help to the people living in an encampment and to transition them to housing—either directly to permanent housing or to a short-term housing arrangement (such as an emergency shelter) while permanent housing is secured for them. Encampment resolution is intended to be a “win/win” both for people living in the encampment (in that they are brought inside with supports they need) and for the general public (which sees the encampment area returned to its original intended purpose, such as a park for recreation). Encampment resolution thus is distinct from encampment “sweeps,” in which people are moved from an encampment (sometimes losing their personal possessions in the process) and remain homeless—and still outside—in a different neighborhood or area.

State Administers ERF Competitive Grants for Local Jurisdictions. In 2021-22, the Legislature created the ERF program and charged Cal ICH with administering it. The purpose of ERF is to provide competitive grants to cities, counties, and CoCs to address “critical encampment concerns” in their communities and transition individuals to “safe and stable housing,” with a focus on permanent housing. Applicants for an ERF grant must identify the specific encampment or encampments they wish to resolve and provide plans on how they will use requested grant funds and other funding (including local funds) to connect the people in the specified encampment with services and housing. Staff reviews the applications, scores them, and makes the awards. (Cal ICH staff administered the program through 2023-24. The state transferred program administration to HCD—also under the BCSH Agency umbrella—beginning in 2024-25.)

Program Currently Is in Its Fourth Year of Funding… Figure 2 shows that, after an initial General Fund appropriation of $50 million in 2021-22, the Legislature has provided one-time amounts for ERF each year since. Through 2024-25 (that is, through four rounds of funding), the Legislature has provided a total of $900 million in General Fund support for the program. Allowable uses of the funds include outreach to people living in the identified encampments; housing navigators and other case managers to connect people with housing, health care, and other services they may need; improvements to and expansion of emergency shelters and other short-term housing; and delivery of permanent housing. Since the focus of the state’s program is on providing housing, grantees generally are limited to using non-ERF funds (such as local funds) for site restoration/clean-up activities. Beginning in 2023-24, budget bill provisional language has set aside ERF monies for local partnerships with the California Department of Transportation (Caltrans) to address encampments fully or partially in a state right-of-way (such as state property adjacent to a freeway). (Separately, the Legislature has provided Caltrans with funding for encampment clean-up purposes and to improve coordination with local jurisdictions.)

…With an Agreement Last Year to Provide Funding for a Fifth Round in 2025-26. As part of June 2024 negotiations over the final 2024-25 Budget Act, the Legislature and Governor agreed to provide an additional $100 million for ERF as part of the 2025 budget. The Governor includes this $100 million in his January budget, which would bring total funding for the program to $1 billion over five rounds of funding.

Statute Gives Grantees Several Years to Spend ERF Funds. Figure 3 summarizes the timing of when grantees must spend their funds. Per current law, the spending “clock” for grantees is based on when the date the Legislature appropriates the funds. Statute specifies that applications which met minimum requirements but were not funded due to insufficient funding in a given round are to be giving priority in a subsequent funded round. This is known as “lookback” grant funding. Any remaining funds after these lookback grants are to be awarded on a rolling basis throughout the year.

Program Has Various Reporting Requirements. Beginning with Round 1 of ERF funding (in 2021-22), statute has required grantees to enter data into their local information system on persons served with ERF funds. Grantees must send this data to the statewide HDIS (via a secure file transfer system) on a quarterly basis. The 2021-22 through 2023-24 budgets each included trailer bill legislation requiring Cal ICH to analyze this grantee data. Specifically, statute required Cal ICH to use this data to “assess efficacy” of grantees’ projects and report to the Legislature on “the outcomes, learnings, and best practice models” of the ERF program overall. In none of these years, however, did statute specify a date by which Cal ICH had to complete these legislative reports. As part of last year’s agreement to provide two more years of funding for ERF, the 2024-25 budget package included trailer bill language with new reporting requirements for all grantees receiving program funding—this time with a stated deadline. Specifically, all award recipients must provide an annual progress report to HCD with information such as their spending during the previous calendar year, program outcomes and accomplishments, and the status of remaining funds. These annual reports are due to HCD beginning on April 1, 2025. Award recipients whose grant ended the prior calendar year must provide a final report to HCD by April 1. Figure 4 details the information grantees must include in their final report. After receiving grantees’ April 1 progress and final reports, HCD has 30 days to post them on its website and notify the Legislature. In addition to these annual reports, grantees are required each quarter to submit to HCD fiscal reports on how they spent their funds.

ERF Grantee Awards, Spending, and Outcomes to Date

Programs typically can be described and measured by inputs, outputs, and outcomes. Inputs often consist of funding and spending, whereas outputs may include activities such as services provided. Outcomes describe the impact of the program—whether the funding and services resulted in an improved condition, for example. To assist the Legislature in its oversight role of ERF, below, we provide an update on program awards, spending, and other pertinent information available as of this writing.

All Grant Funds Have Been Awarded. Figure 5 shows grant awards for each of the four funded rounds. As the figure shows, a total of 123 grants have been awarded, totaling $856 million. This represents all of the funds designated for grants in each of the years and rounds. (The remaining $44 million was initially provided to Cal ICH as a set aside to administer Rounds 1 through 3, though $34 million was eventually identified as savings and reverted as part of the 2024-25 budget.) Cities have been awarded about half of total grant funds, with counties receiving 43 percent. (CoCs are the recipients of the remaining grant funds.) The largest single award is $45 million to the City of Los Angeles to resolve encampments along the I-10 freeway (announced recently as part of Round 4). The average grant amount is nearly $7 million.

About 30 Percent of Grant Funds Spent. Figure 5 also shows grantee spending by round through December 31, 2024. (These data were released publicly in late February 2025 and they are the most recent data available as of this writing.) As the figure shows, nearly all the funds appropriated in 2021-22 were spent. (Round 1 grantees had until June 30, 2024 to spend their award, with any unspent funds available for reallocation.) Round 2 grantees still have about $100 million (35 percent of their total award) to spend. In total, the 123 ERF grantees have spent $258 million, leaving $598 million (about 70 percent of grant funds) still to be spent.

Grantees Have Used Funds for Various Activities. Figure 6 shows how grantees have spent their funds, based on categories developed by HCD. The figure indicates that about one-third of funds have been spent on interim sheltering. Other uses of funds include “direct services and housing options” and delivery of permanent housing.

Little Data Provided to Date on Program Outputs and Outcomes… According to HCD, the more than 100 grantees funded through Round 3 (2023-24) collectively set a goal to transition more than 20,000 people out of homelessness using their ERF awards. Despite the various reporting requirements described in the previous section, though, as of this writing, no data have been provided to the Legislature on how many people living in an encampment have received permanent housing (or any other type of housing). The Legislature lacks other key outcomes data such as the number of encampments that have been resolved. In addition, although some partial information on outputs was shared with the Legislature in prior years, updated and more complete data have not been provided. As a result, the Legislature does not have basic information on program outputs such as how many people in encampments have been provided with case management services (such as housing search assistance) and the number of housing units brought on line with grant funds.

…Though HCD Is Working on a New Dashboard. HCD indicates that it is piloting with Cal ICH a “persons served” dashboard that will provide public-facing data on ERF. This dashboard will use data from HDIS (which grantees have been required to report into quarterly) to provide information such as how many persons were served in an ERF-funded encampment and which services (such as housing) they received. According to HCD staff, this dashboard is intended to assist in fulfilling the original—but never completed—legislative reporting requirement placed on Cal ICH beginning in 2021-22. As of this writing, HCD has not announced an expected release date for the dashboard, though the department’s ERF webpage indicates the dashboard is “coming soon.” In addition, HCD staff indicate they intend to post grantees’ April 1 reports by early May (as required by statute). The April 2025 reports will serve as the final report for Round 1 grantees (whose award period expired last summer) and a progress report for Round 2 and Round 3 grantees. (Round 4 grantees—who were just recently selected—have until April 2026 to provide their first progress report.)

Assessment and Recommendation

Lack of Key Data Inhibits Program Evaluation. Though the administration recently provided some basic spending data, as of this writing, very little has been reported about the results to date and impact of the program. Consequently, the Legislature is not able at this time to assess the benefits of ERF. Specifically, the Legislature is not yet able to determine whether—and where—the funds are achieving their intended goal of encampment resolution (as opposed to encampment sweeps or other actions inconsistent with the program’s statutory intent). In addition, without data such as the number of people transitioned from an encampment to permanent housing, the Legislature is unable to assess the cost-effectiveness of the program. (The State Auditor reached a similar conclusion in its April 2024 report, which attempted to evaluate ERF’s cost-effectiveness based on Round 1 grants.)

Recommend Legislature Wait for Receipt of More Program Data Before Deciding on Round 5 Funding. Accordingly, we recommend the Legislature wait to decide on funding another ERF round until it receives compelling evidence that program goals are being met. By early May, the Legislature will have grantees’ annual reports. In the meantime, the Legislature could use spring budget hearings to get updates from the administration on plans for an outcomes-based dashboard and other data that may be available to share.