California counties seeking state homelessness funds now face a new set of accountability requirements — including a state-approved encampment policy and a coveted “prohousing designation” held by fewer than 12% of the state’s jurisdictions — to access a pool cut by half, to $500 million, for the coming fiscal year. Gov. Gavin Newsom’s administration and the Legislature attached the conditions to the Homeless Housing, Assistance and Prevention program, the main source of state money counties and cities have used to fight homelessness since 2019.
The policy shift marks the end of what state officials acknowledge was years of unconditional grant-making that failed to clear encampments from California streets, but local administrators warn the new hoops could slow or shrink access to money that is still urgently needed.
California counties seeking a share of the state’s main homelessness grant program now face a five-part checklist of accountability conditions — including a rarely-held “prohousing designation” and a state-approved encampment policy — to access a funding pool that the Legislature slashed by half, to $500 million, for the coming fiscal year.
Gov. Gavin Newsom’s administration and the Legislature attached the requirements to the Homeless Housing, Assistance and Prevention program after years of distributing roughly $1 billion a year to local governments with few strings attached. Despite that spending, homeless encampments have remained visible on California streets, prompting state officials to demand measurable results before releasing new money.
“The state has been moving forward, not only with the investment in dollars, but also with legislation,” said Assemblymember Sharon Quirk-Silva, a Democrat from La Palma in Orange County. “Now it is your time to show that if you want these dollars…you have to show us what you’re doing.”
What counties must now show
A follow-up budget bill signed into law last fall spells out the conditions localities must meet:
- A state-approved housing plan, known as a housing element
- A “Prohousing Designation” from state housing regulators
- A local encampment policy “consistent with administration guidance”
- Local matching funds to supplement the state contribution
- Demonstrated “progress” and “results” on housing and homelessness metrics
The prohousing designation has emerged as a particular sticking point. Only 60 of California’s 541 cities and counties — home to just 15% of the state’s population — have achieved the status, which is awarded to jurisdictions that go above and beyond on housing production.
Revoking funds from areas without such a designation would be “penalizing service providers for something that is outside of their control,” said Monica Davalos, a policy analyst with the California Budget and Policy Center, a left-leaning think tank.
Counties already feeling the pressure
Some counties report that scrutiny has intensified even before the new requirements are finalized, as they apply for funds approved in the 2024-25 budget that only recently became available after lengthy bureaucratic delays.
In Santa Cruz County, the county passed an encampment policy in September and has begun working toward a prohousing designation — yet the state returned its application with extensive notes. “It has felt, at times, like the goal post keeps moving a little bit,” said Robert Ratner, director of Santa Cruz County’s Housing for Health program. The application had not yet been approved as of the report’s publication, though Ratner said it appeared to be getting close.
In Mendocino County, the state appears to be withholding funds until the county can explain its plans to pass an encampment ordinance. The county board of supervisors is working on such an ordinance but had not yet brought it to a vote.
“They’re holding the counties’ feet to the fire,” said Megan Van Sant, senior program manager with the Mendocino County Department of Social Services.
Van Sant said the requirement places her team in a difficult position. Housing administrators have no direct authority over local enforcement decisions about street encampments. “I wanted to stay out of it. I still want to stay out of it. We’re housing providers. We try to figure out how to provide people housing. We don’t want to weigh in on enforcement. At all.”
Concerns about access and speed
Carolyn Coleman, executive director and CEO of the League of California Cities, said the new conditions risk both shrinking the pool of eligible localities and slowing delivery of services. “I worry that, one, we may leave more cities out, and, two, that we may cause delays in the ability to get more people housed sooner, which I think is the goal.”
San Jose Mayor Matt Mahan said the state should focus on more concrete measures, such as the number of people housed using state dollars, rather than administrative certifications. “We’re making this way too complicated,” he said.
From one-time infusion to recurring program — and now a cut
The HHAP program began as what Newsom described in 2019 as a “one-time” $650 million cash infusion for local governments. It became a recurring feature of his administration’s strategy, with the state awarding $1 billion a year for four consecutive rounds — each also described as one-time. At least a quarter of that money went to day-to-day operating programs rather than new housing, according to state data.
Last year, no new money was added to the program. The Legislature then committed $500 million for the coming fiscal year, conditioned on the accountability requirements now being negotiated. The exact compliance standards — and the consequences for localities that fall short — remain to be determined.
Newsom has invoked accountability language for years. In 2023 he said of homelessness spending: “People have just had it. We want to see these encampments cleaned up.”
Quirk-Silva said additional legislative language is expected in February, with the full package up for negotiation through the June budget deadline. She anticipated particularly fierce pushback over any hard prohousing-designation requirement.