With San Diego set to spend tens of millions of dollars more on homelessness this year than last, the city needs a more comprehensive spending plan so the public can better monitor its success, budget experts said in a new report.
In the meantime, San Diego’s independent budget analyst says the city faces “notable fiscal risks,” declining state support and uncertainty concerning the region’s shelter system.
The annual review, released Tuesday, estimates that San Diego plans to spend more than $230.7 million on the crisis this fiscal year, up nearly 13 percent from the one before.
That estimate offers a rare overview of local spending across multiple agencies. It comes as the City Council prepares to meet next month about the loss of hundreds of shelter beds as well as the mayor’s controversial proposal to lease an empty warehouse and turn it into one of the nation’s largest shelters.
“There are several notable fiscal risks in the City’s homelessness budget that warrant close monitoring,” analyst Amy Li wrote in the report. “Additionally, growth in expenditures for existing shelter programs and unknown costs to identify replacement sites in FY 2025 add to the City’s uncertainties.”
One risk repeatedly flagged by the three-page review is the city’s move to plug holes in its homelessness budget by moving $8 million from an affordable housing fund within the San Diego Housing Commission, often known as SDHC.
In addition, Mayor Todd Gloria’s proposed warehouse shelter could annually cost tens of millions of dollars — as much as $30.7 million, according to the report — and there is not yet a clear funding source.
“Having a clear, comprehensive, and publicly available homelessness spending plan reflecting City and SDHC resources is critical for monitoring program expenses over time, and for providing public transparency,” analysts wrote.
The report covers both the city’s Homelessness Strategies and Solutions Department and the San Diego Housing Commission, the main agencies addressing the problem.
But the city’s true spending on homelessness is unquestionably higher, since budget experts didn’t include some related expenses, such as sweeps of encampments and salaries for the officers who patrol them.
Analysts did zero in on San Diego’s longtime reliance on state grants, especially California’s Homeless Housing, Assistance and Prevention Program.
Many local initiatives have been “funded with one-time grant resources, which created a structural deficit,” Tuesday’s report noted. For example, in fiscal 2023, money from the state accounted for nearly a quarter of the city’s homelessness budget. That aid is expected to drop.
San Diego has since become comparatively less reliant on outside support. California housing program funds now make up only about a tenth of the city’s homelessness spending.
A spokesperson for Mayor Todd Gloria said city money spent on new programs, especially shelters that are often full, was more than worth it.
“Budgets are reflections of priorities, and Mayor Gloria’s spending plans have consistently reflected what he understands to be important to San Diegans,” Rachel Laing said in an emailed statement. “That’s why he has aggressively tackled homelessness, spending at a level that reflects the urgency and magnitude of the crisis.”
More than 45 percent of projected spending this fiscal year — the largest share by far — is going to permanent housing. In other words, close to half the money is used just to keep people from becoming homeless, largely through nearly $100 million in federal vouchers that help cover rent.
Shelters are the next largest recipient, accounting for around 18 percent of the projected total. Everything else makes up 5 percent or less, including outreach and city-designated parking lots and tent sites.
San Diego will likely lose access to more than 700 shelter beds by January. Some facilities are on land slated for new development, while others are about to see their permits expire.
The mayor hopes to create up to 1,000 spots inside a Middletown building, near Kettner Boulevard and Vine Street — although budget analysts, the city attorney and many council members have expressed deep reservations about the project and the terms of the proposed lease.
Tuesday’s review again noted that the shelter “cannot be supported within existing City resources without significant tradeoffs.”
Homelessness has grown countywide for 28 straight months.
In July, more than 1,350 people lost housing for the first time, according to the Regional Task Force on Homelessness. That total eclipsed the 1,005 homeless individuals connected to housing during the same period.