DHCD Faulted by State Auditor for Management of Federal COVID-19 Funds for Homeless Residents

On Tuesday, State Auditor Elaine Howle issued a report, “California Department of Housing and Community Development: It Failed to Expedite Access to Federal Funding to Address the Impact of the COVID-19 Pandemic on California’s Homeless Population.” The auditor’s report comes as part of her office’s classification of the state’s management of certain federal funds related to the COVID-19 pandemic as a high-risk issue.

Specifically, Auditor Howle assessed the Department of Housing and Community Development’s (DHCD) Emergency Solutions Grant (ESG) program which received $316 million in federal funding to prevent, prepare for, and respond to the COVID-19 pandemic (ESG-CV) for individuals who are at risk of or experiencing homelessness. The State Auditor found that DHCD did not take critical steps to ensure funds promptly benefited the intended population, including by taking an extended period of time to finalize contracts with local Continuum of Care (CoC) entities and hiring a contractor to manage the program 14 months after the passage of the funding by Congress. Further, Howle indicates DHCD is not collecting information needed to measure the effectiveness of the state’s use of the funds and it does not have plans to evaluate the impact and value of CoC projects in addressing or mitigating homelessness.

As a result of delays in allocating federal funds, Auditor Howle expresses concern that many CoC entities may struggle to spend their full allocations within the federally mandated timeframes. The state must spend at least 20 percent of its total $316 million award, or $63 million, by September 30, 2021. If California does not spend that amount, the federal government may reallocate up to $63 million of those funds elsewhere.

The State Auditor sets forth a variety of recommendations for DHCD which include:

  • To ensure that CoC entities are able to use ESG-CV fund allocations effectively to address the impact of the pandemic before upcoming federal deadlines, DHCD should:
    • Work with its contractor to assist CoCs that are at risk of not spending their funds by the federal deadline; DHCD should also establish a contingency plan to reallocate funds among CoCs to ensure the state maximizes the intended benefit of the funding.
    • Develop a formal plan and procedures for how it will monitor the contractor’s progress in completing contract tasks
  • To ensure it has the data necessary to measure the effectiveness of the ESG-CV program in addressing homelessness, DHCD should immediately develop and implement a plan to collect outcome information either independently or through the Homeless Information Management System (HMIS). DHCD is also recommended by March 2022 to begin reporting annually the outcome information it collects to demonstrate the effectiveness of the program and so that policymakers can use the reported data to inform budget and policy decisions.

DHCD “strongly disagrees” with the State Auditor’s findings, though it plans to implement the above recommendations. The full State Auditor report is available here.