San Diego city officials spent hundreds of millions of dollars over three years to fight a growing homelessness problem but failed to fully report its revenue and spending or evaluate the effectiveness of many programs, according to a state audit released April 9.

During the three fiscal years between July 2020 and June 2023, San Diego spent more than $218 million from federal, state and local sources on myriad programs.

But San Diego officials did not clearly define performance measures related to much of that spending or make sure that service providers properly monitored outcomes for the work they were paid to perform, according to a report by the California State Auditor.

“For example, in a $1.6 million agreement for interim housing and supportive services, the Housing Commission did not specify how many people the provider should serve or set a target for occupancy,” the report stated.

“Housing Commission staff explained that attaching goals to certain metrics can create unintended adverse behaviors from service providers to meet those goals,” the report added.

The auditor’s report examined homelessness spending in San Diego and San Jose and said it found similar deficiencies in spending and reporting practices in San Jose, which spent more than $300 million over the same three-year period.

“Both cities use interim housing as a way to provide shelter for people experiencing homelessness, but they both need to develop additional permanent housing,” state auditor Grant Parks wrote. “Data consistently show that placements into permanent housing results in significantly better outcomes than placements into interim housing.”

The audit says neither city “has a clear long-term plan for meeting its need for permanent supportive housing.”

Auditors also wrote that “to inform decision-makers and provide transparency, the cities should track and report in a single location all funding they receive and use to reduce homelessness.”

The report gives credit to both cities for adopting specific plans to address the rising homelessness in their jurisdictions. But it says each city could improve how it reports its objectives and outcomes.

“Neither San Jose nor San Diego has measured the effectiveness of all of its programs to address the risks of unsheltered homelessness,” according to the report.

In response, San Diego officials said they generally agree with the report’s recommendations and indicated they would take steps to implement them where feasible, though Chief Operating Officer Eric Dargan said the city already complies with much of what the audit recommends.

“The city already has existing spending plans in place, but will publicly report them in a single location,” Dargan said. “The city already requires performance measures, and an overall review and assessment of the effectiveness of service providers is in progress.”

Dargan recently told The San Diego Union-Tribune that he aims to eliminate the city’s homeless services department and rely more heavily on private philanthropy to address homelessness.

The San Diego Housing Commission, a separate agency that operates under the city housing authority made up of the nine City Council members, issued a response that was more critical of the audit’s conclusions.

Commission President Lisa Jones said the agency already has launched a series of programs with high impact and regularly exercises and upgrades its various monitoring tools.

“It is unfortunate that the audit report’s discussion of SDHC and its efforts was too narrowly focused, did not reflect understanding of the breadth of SDHC’s extensive efforts and lacked the context necessary for a comprehensive assessment of the homeless shelters and services system,” Jones said.

The auditor’s response said the office stands by the report.

The audit examining San Diego and San Jose was released in conjunction with another report evaluating efforts to fight homelessness across the state.

That report says more than 180,000 people in California experienced homelessness in 2023 — up 53 percent from a decade earlier. Nine state agencies invested billions of dollars over the past five years without consistently tracking or evaluating the spending, the report says.

The number of unhoused people has climbed in San Diego in recent years, auditors said, but not as steeply as statewide.

Between 2015 and 2023, the audit says, the number of people experiencing homelessness in San Diego rose from 5,538 to 6,500, based on the city’s Point in Time counts — an increase of about 17 percent. Over the same period, the number of unhoused people in San Jose jumped by 56 percent.

The findings may be especially significant because both San Diego and San Jose have huge chunks of homelessness funding they have yet to spend.

According to the state review, San Diego was sitting on more than $52 million in unspent state and federal funds. Most of that came from $21 million in state Homeless Housing Assistance and Prevention grants and $22 million earmarked under a permanent housing program.

San Jose was holding more than $86 million in unallocated money designated for homelessness programs, the audit states.

Specifically, auditors reviewed 14 separate programs run by each of the two cities.

San Jose failed to set clearly defined goals in any of the 14, auditors said. San Diego enacted specific performance measures in eight of the 14 projects reviewed, but the others had undefined goals or no goals at all, according to the report.

“Although both cities asserted that they monitored or reviewed the performance of their service providers, their staff did not always document overall conclusions about the effectiveness of the service providers’ efforts,” auditors wrote. “One reason for this gap is that the cities’ procedures do not require staff to formally document such assessments.”

The audit was released five days after San Diego Mayor Todd Gloria introduced a new shelter plan for the Middletown neighborhood just north of Little Italy. That plan, which lacks details and has yet to be approved by the City Council, would add 1,000 or more shelter beds. ◆