California agency bungled COVID-19 funds for homeless: audit

SACRAMENTO, Calif. - A California agency didn’t properly distribute federal relief funds meant to help homeless residents during the coronavirus pandemic, and the mismanagement was so prolonged that local organizations may lose the money because of missed deadlines, auditors said Tuesday.

After receiving $316 million under the federal CARES Act to reduce the impact of COVID-19 on unhoused people, the California Department of Housing and Community Development "did not take critical steps to ensure those funds promptly benefited that population," the state auditor’s office said in a report.

The department was in charge of distributing the funds to local groups that collaborate on homeless services and prevention under the so-called continuum of care. It took so long to finalize contracts that the local entities did not have access to much of the funding during the height of the pandemic, auditors found.

"Recognizing it lacked the capacity to manage this emergency funding, the department hired a contractor to manage the program although it did not do so until 14 months after the CARES Act passed" in March 2020, the report said.

Because the local organizations did not have access to the money in a prompt manner, they may struggle to spend the full allocations within federally mandated time frames and may lose the funding, auditors concluded.

"In the weeks and months following the passage of the CARES Act, we expected the department to have taken every step possible to ensure that timely access and it did not," the report said.

In addition, the department hasn’t collected vital information needed to measure the effectiveness of the state’s use of federal funds to address homelessness, according to the report.

Gov. Gavin Newsom’s office sharply took issue with the report.

"Gov. Newsom acted quickly and comprehensively to protect people experiencing homelessness during the pandemic, which is why California’s approach has become the national model," said a statement from Erin Mellon, the governor’s spokeswoman.

"Unprecedented resources, deployed at a quick clip, has resulted in safely housing 42,000 individuals (and) the construction of permanent shelter for 8,000 more individuals," the statement said. "To suggest anything else is to fundamentally misunderstand how impactful our response was at protecting unsheltered people’s lives from the worst ravages of COVID."

The auditor’s office said that while the housing and community development department strongly disagrees with the findings, it plans to implement the report’s recommendations, which includes developing a strategy to operate more efficiently during emergencies.

The report also recommends that the department work closely with local organizations to establish a contingency plan to reallocate unspent money to "ensure that the state maximizes the intended benefit of this funding."