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iAUDIT! - One of the most common criticisms of the concentration of the nation’s wealth into the hands of a few uber-wealthy people is that there never seems to be enough to satisfy their needs. How many mega-yachts does Jeff Bezos need? How many mansions will satisfy Elon Musk? The question is not new. In the 1879, Robert Luis Stevenson imagined the geography of San Francisco as a system for transferring wealth from working people to the millionaire’s atop Nob Hill: “From Nob Hill, looking down upon the business wards of the city, we can decry a building with a little belfry, and that is the stock exchange, the heart of San Francisco; a great pump we might call it, continually pumping up the savings of the lower quarters into the pockets of the millionaires upon the hill”. Like the cardinal sins of bigotry, envy and gluttony, it seems avarice is forever hungry, and looking for news ways to feed its insatiable appetite.
One area we may not think about when considering an insatiable need for money is homelessness. Most government and advocacy officials insist the only thing standing between homelessness programs and success is a lack of funding. At the presentation of this year’s PIT count, City, County, and LAHSA officials said the miniscule reduction in homelessness (if indeed there was one) was due in part to the continuing—and increasing--flow of money into their programs, including at least $255 million for Inside Safe. The amount of money being poured into homelessness programs is mind-boggling, both in volume and the number of sources. The County’s Measure H sales tax revenues bring in about $400 million per year for housing and supportive services. The state Mental Health Services Act (MHSA) provides between $1.4 and $1.9 billion per year for the County’s mental health programs, including those for the unhoused. The City’s new Measure ULA may bring in as much as $500 million per year for homelessness services, and Measure HHH provided $1.2 billion in bond money for low-income and supportive housing. The City also benefits from state Homeless Housing Assistance and Prevention (HHAP) grants for interim housing and support services. The total the City and County spend on homelessness is around $4 billion per year.
And yet we’re being told $4 billion is not enough. A coalition of nonprofits, labor groups, and developers recently qualified Measure A, known as the “L.A. County Affordable Housing, Homelessness Solutions, and Prevention Now” initiative for November’s ballot. The Measure would replace Measure H’s quarter-cent sales tax, which is due to expire in 2027, with a permanent half-cent sales tax. The Measure’s PR material says the anticipated revenue will fund more affordable homes, increase mental health services, and include strict accountability. Let’s look at who’s sponsoring this measure where we are with some of the issues the measure is supposed to address.
The coalition sponsoring the measure is a Who’s Who of advocacy groups, labor unions, and developers. One of the leading sponsors is HOPICS, a nonprofit that contracts with LAHSA to manage a subsidized rent program for formerly homeless people. According to a story in LAist, HOPICS mismanaged a $140 million subsidy program so badly, hundreds of residents are threatened with eviction. Another sponsor is St. Joseph Center, a nonprofit that performs outreach and shelter management, with 2023 reported revenues of more than $49 million and whose CEO makes more than $365,000 per year. Its co-sponsor and partner nonprofit, PATH, has revenues dwarfing St. Jospeh Center at more than $159 million, and its CEO makes about $379,000 per year. Other sponsors include trade unions and construction interests that would financially benefit from a new revenue stream for housing construction. One such organization is California YIMBY, a nonprofit that ostensibly promotes affordable housing, but has been accused by other housing advocates as being little more than a front for tech-funded developments aimed at building housing for well-paid employees.
The measure’s sponsors assure us these and other organizations will be held accountable for the new revenue, with “strict independent oversight and audits.” If past is precedent, such oversight means little. The City’s housing measure, Proposition HHH, has a citizens oversight committee, yet the City Controller has issued at least three audits of HHH, most recently in 2022, citing stratospheric construction costs and bureaucratic delays that have resulted in a reduction in the number of units to be built. Likewise, the City has an in-house Homeless Strategy Committee, which seems to do little other than routinely cancel its meetings.
The County’s need for more funding is certainly questionable. According to a 2023 report from the L.A. Alliance for Human Rights (a report I helped create), the County habitually underspends its current revenues. From fiscal years 2018-19 through 2022-23, the County only spent about 78 percent of its Measure H revenues (page 6). The report states, “Measure H budget category D7-- “Provide Services and Rental Subsidies for Permanent Supportive Housing” directs resources to people in need of mental and/or substance use issues in county-provided homelessness housing. Each department attempts to use Measure H funds to combine treatment services with housing”. In other words, expenses in this category fund supportive services critical to keeping people housed. Yet so much is spent on housing, there is little left for services, as the report notes, “Therefore, the burden of providing supportive services and treatment falls to the Department of Mental Health, which was budgeted 10 percent of D7 funding and accounted for only four percent of actual expenditures. The department with the smallest allocated budget is responsible for critical health and behavioral treatments”. (pp 7-8). If the County is currently spending only four percent of critical funding on support services, perhaps the problem isn’t one of insufficient revenue. Rather, it may be misplaced spending priorities.
The new measure’s sponsors also claim funding will go towards “Expanding access to mental health care, addiction treatment, and other critical services to immediately support people in crisis”. Again, the question of how current funding is being used comes up. For mental health services, the County already has a dedicated revenue stream, the Mental Health Services Act (MHSA), generated by taxes on personal income over $1 million. Citing County budget documents, the L.A. Alliance report shows that in the five fiscal years between 2019-20 and 2023024, the County received about $7.65 billion in MHSA revenues, (page 13). Over those five years, it budgeted only 64 percent of its revenue for programming, and spent only 71 percent of that, meaning it was spending less than half its MHSA revenues on services. A 2020 report from the California State Auditor revealed the County was holding funds equivalent to 175 percent of its operating budget. The County disputed that calculation but never offered an alternative amount for its unspent funds.
Of course, we already know local government has little to show for its current expenditures. An April 2024 State Auditor’s report showed there was no discernable progress on homelessness after state expenditures of more than $24 billion over five years. Counties, including Los Angeles, were unable to show substantial progress in reducing homelessness despite steadily increasing budgets. Clients in shelters and housing programs routinely fall back into homeless at far rates than they stay housed.
Perhaps adding more money to a dysfunctional system isn’t the best path forward. A car with a misfiring engine doesn’t benefit by filling up the fuel tank. Giving more money to organizations already awash in taxpayer funds, or to government agencies that are unable to spend the money they already have, is not the answer to the County’s homelessness crisis. Before we agree to yet another tax, we need to demand our local government effectively uses the resources it already has.
(Tim Campbell is a resident of Westchester who spent a career in the public service and managed a municipal performance audit program. He focuses on outcomes instead of process.)
