key takeaway
California homelessness spending has declined sharply, leaving HHAP to backfill core homelessness services and housing operations just as federal actions threaten to reverse recent progress.
California has both the resources and the responsibility to ensure every resident has a stable, dignified place to call home. In 2024, homeless service providers served over 350,000 Californians experiencing homelessness — demonstrating both the scale of need and the increased capacity of the state’s response systems. This progress was driven largely by prior one-time state investments that fund critical homelessness prevention and resolution services.
These investments have produced real, measurable results: early homelessness point-in-time count data show a 9% reduction in unsheltered homelessness in 2025, youth homelessness has dropped 24% since 2019, and over 90,000 Californians have been moved into permanent housing since 2023. But this progress hinges on sustained state funding to continue upholding the solutions that have achieved these results. State dollars are especially critical now as the Trump administration is defunding evidence-based homelessness solutions and a Republican-led Congress is failing to adequately fund housing assistance programs that allow many Californians to afford their rent.
This brief discusses how California has scaled back homelessness investments, shifted funding away from long-term solutions, and come to rely on the Homeless Housing, Assistance and Prevention Grant Program (HHAP) as a core funding source — all while looming federal actions and harmful regulations threaten to undo recent progress.
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California Homelessness Investments Have Dropped Sharply in Recent Years
Even as more Californians move off the streets into housing, state homelessness investments have sharply declined over the last three years. Homelessness-related spending peaked at $6.8 billion in 2022–23, driven largely by one-time COVID-19 pandemic-era revenues and flexible federal funding. Since then, funding declined to $2.5 billion in 2024–25 and further to $1.5 billion in 2025–26 — as the most recent HHAP dollars were promised, but not actually allocated, in the 2025–26 budget. HHAP is critical because it’s the only significant source of state funding that allows communities across California to fund homelessness solutions tailored to their local needs.
The governor’s proposed 2026–27 budget appropriates $500 million for HHAP Round 7, but these funds will not materialize until the state budget is enacted in June, if current budget negotiations keep this amount intact.
A closer look at what is being categorized as homelessness investments also raises concerns. State investments have increasingly shifted away from permanent housing solutions toward temporary housing and institutionalization responses. Institutionalization-related spending has remained relatively stable or grown, even as HHAP and other homelessness programs have seen one-time funds reduced or not reappropriated. This includes investments in the Incompetent to Stand Trial program, which serves many people experiencing homelessness, but does not resolve homelessness and instead reflects the justice system’s lack of appropriate alternatives.
HHAP Remains Core to Addressing Homelessness Across the State
Statewide HHAP spending underscores how the program has become central to California’s homelessness response. Over 93% of HHAP Rounds 1-5 dollars the state has awarded have been obligated by recipients as of November 30, 2025, meaning these funds have already been contracted for specific uses, even if they have not been fully expended. Of this, nearly 70% has already been spent.
Even so, it’s clear local governments and service providers have largely directed and obligated HHAP dollars for operating costs and interim housing or sheltering.1Because HHAP eligible activities and reporting categories have shifted across HHAP Rounds 1-5, and jurisdictions have flexibility in how they classify obligated funds, some overlap across categories is inherent and reflects changes in reporting structures rather than double-counting as seen in the chart. Operating funds are essential for keeping the doors open and the lights on for permanent affordable and supportive housing, as well as short-term housing options such as shelters and bridge housing. It includes day-to-day expenses such as staffing, utilities, and other ongoing costs.
Interim housing or sheltering covers a range of expenses such as services to people in interim housing, motel or hotel vouchers, or the acquisition or improvement of buildings for interim housing to name a few. New navigation centers and emergency shelters are a form of interim housing, but are shown separately in the chart to reflect their distinct categorization in earlier HHAP rounds. These categories have been prioritized alongside investments in permanent housing and innovative solutions (such as hotel or motel conversions), and rapid rehousing, which can cover rental subsidies, landlord incentives, and move-in expenses.
The prominence of operating costs — for both permanent and interim housing — makes clear that HHAP now funds core system functions, even though it was originally designed as a temporary funding source. Without HHAP funding, there is no clear or adequate replacement for these dollars to continue the operation of existing permanent housing placements and interim housing, including supportive housing and shelters.
However, under the governor’s 2026–27 proposed budget, the only major state homelessness investment is the $500 million in HHAP funding promised last year — a 50% cut from prior funding levels. There are also no state General Fund dollars for affordable housing. As the final round of HHAP dollars is spent, and if no new funding is made available, communities across the state will face immediate consequences. Service providers will be forced to scale back or eliminate programs, reduce staffing and capacity, and, in some cases, push people back into homelessness as early as next year as the dollars dry up.
While the governor points to the Behavioral Health Services Act as ongoing dollars to address homelessness, these funds flow to county behavioral health departments and can only assist unhoused Californians with behavioral health conditions. County behavioral health departments have flagged that these funds will not significantly expand their ability to serve more people due to other costs they must absorb, such as ongoing operating costs for behavioral health or supportive housing projects recently built with one-time state or bond dollars.
Federal Funding Threats to Homelessness Services and Housing Assistance
These state funding gaps are compounded by escalating federal threats. The proposed 2026–27 budget includes no resources to backfill potential federal cuts, including health care, food assistance, and other core programs that help Californians remain stably housed. As of January 20, 2026, the proposed Transportation, Housing and Urban Development federal appropriations bill largely maintains current levels of housing assistance programs, but even then this falls short of meeting the full needs of people experiencing homelessness and Californians eligible for housing assistance.
Plus, Congress could still reverse course, fail to renew funding at adequate levels next year, or the Trump administration could further delay or disrupt funding, as has already happened. These risks are compounded by other harmful actions being advanced by the Trump administration that criminalize homelessness, defund Housing First approaches, and target LGBTQ+ and mixed-status families in federally assisted housing.
Federal harms also extend beyond housing. Recent CalFresh (SNAP) changes under H.R. 1 impose new work requirements and time limits on unhoused adults without dependents — at least 1 in 4 who are at high risk of losing food assistance this year. Taken together, these federal actions will disproportionately harm people of color, mixed-status families, older adults, people with disabilities, LGBTQ+ Californians, and others already struggling to remain housed.
Without common-sense efforts to raise new revenue and sustain state housing investments, policymakers risk reversing hard-won progress and worsening California’s homelessness crisis. Long-term revenue solutions are especially urgent as large, wealthy corporations are poised to receive massive tax breaks under the Republican federal megabill, H.R. 1.
