Fri, Apr

Elections and Homelessness: Where is Our Money Going?


iAUDIT! - In March, voters will be asked to approve Proposition One, a proposal to issue about $6.4 billion in state bonds to fund construction of mental health facilities and realign some Mental Health Services Act (MHSA) revenue to build affordable housing.  In addition, an organization called the Our Future L.A. County Coalition is gathering signatures to qualify a November measure to add another quarter-cent sales tax on top of the current quarter-cent voters approved in 2017 under Measure H. Both proposals promise solutions to L.A.’s homelessness crisis, just as previous measures like Measures H, HHH, and ULA have. Like the earlier measures, the new ones will put billions of taxpayer dollars in play for homelessness programs. 

Before we are asked to vote on new funding for homelessness and housing, we should consider what is being done with current revenues.  A few months ago, the L.A. Alliance for Human Rights asked me to prepare a report on how L.A. County uses Measure H and MHSA funding. The report, titled “Untreated and Unhoused: A Review Of Los Angeles County Programs for People Experiencing Homelessness -Budget And Performance” describes in detail how the County, despite access to billions of dollars in dedicated funding, has left hundreds of millions unspent and sitting in their respective fund balances, (unencumbered in finance parlance). Nor can the County show much proof of progress with the money it has used. The report is shocking and quite depressing. Although presented in the rather dry language of an audit, the report demonstrates how badly the County has failed thousands of people on the street. 

In 2017, voters approved Measure H to provide housing, rental subsidies, and support services for people experiencing homelessness. The measure was promoted as a compliment to the City of Los Angeles’ effort to support the creation of permanent supportive housing, as provided by Measure HHH. Budget documents show that between fiscal years 2018-19 and 2021-22, the County collected about $1.67 billion in Measure H revenue and spent about $1.46 billion. In terms of budget expenditures, between FY 2018-19 and 2022-23, the County budgeted $2.53 billion, with actual expenditures of $1.98 billion, or 78 percent of what was budgeted. However, where the money was spent varied widely. Most of the expenditures went to housing support.  The budget for the Department of Mental Health’s Support Services was only about 10 percent of the expenditures dedicated to providing permanent supportive housing and services; of that 10 percent, DMH underspent its budget by an average of 65 percent between fiscal years 2018-19 and 2021-22, amounting to only four percent of all PSH support expenditures, (p.7).  In those five fiscal years, DMH was budgeted $28.64 million for services and spent only $9.91 million. 

California’s Mental Health Services Act (MHSA) places a one percent tax on people making $1 million or more per year. The purpose is to provide funding for a variety of public mental health services, including and especially for homeless individuals and people in danger of becoming homeless. Between fiscal years 2018-19 and 2023-24, L.A. County will have collected more than $7.6 billion and spent about 46 percent of those revenues.  In a 2020 report, the California State Auditor calculated the unencumbered MHSA fund balance at more than $900 million in 2019, which equated to 175 percent of the County’s MHSA operating budget. The County contested that calculation but did not offer a different amount. 

As the Alliance report states, “A recent Los Angeles Times article illustrates the inconsistencies between the County’s actual spending and program achievements, versus how the County leadership portrays its efforts. Responding to State legislation that will require counties to allocate more MHSA money to housing [Prop 1], the County’s legislative advocate said she “expects the shifts in how the money can be spent — including the 30% for housing — would mean 71% less for the County to spend on mental health outpatient services, crisis and urgent care services, outreach services, and some homeless services, including its HOME team. .’We do not have $163 million in unallocated funds to replace the MHSA share in order to continue to receive this significant Medicaid match’,” Dr Lisa Wong, Director of L.A. County Mental Health, told the Times, “I’ve looked at the numbers every way I can, and I can’t figure out a way this can still work to fund our services at the level we’re at, let alone enhance them to where I think they should be. I think it’s going in the opposite direction if we want to make an investment.”   

Yet, according to its own budget reports, the County has left more than 30 percent or hundreds of millions of dollars of its MHSA funding unspent over the past four fiscal years…Both narratives cannot be true: that the County is underspending, and it needs more resources”.  In terms of lost service opportunities, if the County made better use of its MHSA funding, it could serve almost 19,000 more people with serious mental health problems, (page 18). 

The report goes on to detail the consequences of the County’s poor use of its current funding.  For example, Section V on substance abuse services (pp. 33-42) describes how, even as fentanyl overdoses have skyrocketed among the homeless, County substance abuse programs have failed to respond, remaining stagnant or even decreasing.  Full Service Partnerships, the gold standard for wrap-around services, are underfunded and understaffed. 

Overarching all of these failures to provide services is a near-universal lack of consistent performance measures and statistics.  Most measures are, at best, merely workload indicators, such as the number of shelter beds occupied, or the number of unhoused people contacted.  One particularly perplexing measure is the number of people served by DMH’s mobile mental health teams.  In 2021, the teams served 2,100 people (a small fraction of those needing services) and devoted 19,000 “client days” to their patients. I could find no reference to what a “client day” is outside DMH’s website, nor did it offer a definition.  Whatever a client day is, dividing 19,000 days by 2,100 clients comes out to a little more than nine days per client, hardly the intensive services required for seriously mentally ill people. Outside agencies like the California State Auditor and the consultant Public Sector Analytics were critical of the measures the County uses, questioning their reliability and value.  

If you choose to believe the rhetoric about “game changing” initiatives financed by Proposition One and The County Coalition, consider this.  The County’s response to the State Auditor’s recommendations to improve program accountability made it clear the County is unlikely to adopt any measures it is not required to submit, “Los Angeles’s response indicates that it will only adopt our [State Auditor] recommendation to the extent that resources become available and the Legislature acts on our associated recommendations. Given the importance of linking individuals to mental health services, Los Angeles could take steps now to improve how it identifies individuals who need services and link those individuals to services”. In other words, the County has no intention of making changes unless it is forced to. 

To illustrate just how poor a job the County does with the resources at hand, read this LA Times story about a woman trying to get CARE Court coverage for her husband.  For two months, the woman has been trying to get care of her schizophrenic husband—the type of care the County is supposed to provide with MHSA funding, and the reason why DMH exists.  Instead of the needed services, all she has experienced is delays and a lack of communication while she, her husband, and her family suffer the consequences of his untreated mental illness.  Bear in mind, per the Alliance’s report, DMH claims it has provided funding to support the CARE court since at least 2022.  But, as the article details, it is so obsessed with process over results that all it’s done is try to find ways to deny her husband therapeutic support. Can we really expect anything better if we pour more money into current programs without a demand for major reforms?

Perhaps one can better understand the motivations behind these ballot initiatives if one considers the dollar amounts involved.  Current Measure H and MHSA revenues are in the hundreds of millions of dollars per year. They come with almost no requirements for real progress.  The Coalition proposing increasing the Measure H sales tax includes the CFO of Crew, inc. and the Executive Director of a nonprofit called HOPICS. Crew, inc. is a grading and concrete company; it will certainly benefit from a Measure intended to prevent homelessness by increasing housing construction.  HOPICS is a nonprofit that contracts with LAHSA to provide rent subsides to landlords, and many of its clients are recently homeless individuals.  According to a December 12, 2023 LAist article, HOPICS received about $140 million in government revenue, but has done such a poor job of paying rent, hundreds of its clients have been evicted or are facing eviction. And yet LAHSA continues to contract with the organization. The expiration of Measure H in 2027 is an existential threat to their income.  Instead of taking steps to show the public how responsibly they have used funding in the past, interest groups are doubling down by asking for even more funding with the same no-strings-attached provisions they have now.  

Since 2018, the County has budgeted $7.6 billion in MHSA revenues and yet untreated mental illness and substance abuse continue to be major problems among the unhoused population. Drug treatment programs have remained largely flat despite a huge increase in fentanyl use and overdose deaths.  Harm Reduction programs do little more than enable substance abuse, offering little or no information about access to recovery services.  The voluntary nature of Housing First’s support programs virtually guarantees people who are trying to recover are housed with active abusers. 

The alphabet soup of funding measures is matched by the list of agencies receiving money from them.  Measures H, HHH, ULA, MHSA and the prospective measure from the LA County Coalition pour billions of dollars into agencies like LAHSA, HI, DMH, DPH, DHS, HACLA and more, and unsheltered homelessness keeps increasing. Each new infusion of funding comes with a promise of “bold action” or “game changing programs”, and each year the number of lost souls on our streets increases.  In 2022, five people a night were dying on our streets; now its six. 

The problem isn’t funding; voters have been generous in approving multiple measures to alleviate homelessness.  The City of Los Angeles now devotes more than 10 percent of its budget to helping one percent of its population.  The problem is how local government spends its funding.  Organizations like LAHSA and County HI have grown exponentially, pumping hundreds of millions of dollars to nonprofit “partners” that are held to virtually no performance standards.  Millions more have been spent on construction projects that have been roundly criticized for being far too expensive.  Calls for reform have come from California’s State Auditor, L.A. County’s Auditor, Los Angeles’ City Controller, the City Council, and the public itself.  And yet almost nothing has changed. 

I urge all readers to thoroughly read and understand these new ballot measures.  Do they really propose “game changing” efforts, or will they just give more money to failed programs?  Do we need more funding, or should we demand changes made in the way current funding is spent?  Only individual voters can answer those questions for themselves, but each of us should ask ourselves if we are satisfied with the status quo and think the answer is more of the same. 

(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.)