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Fact Sheet

Protecting Progress: State Housing and Homelessness Funding Must Continue

December 2024 | By Monica Davalos

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Every Californian deserves the dignity of a safe, affordable home — an attainable reality in a state as prosperous and resourceful as California. Yet state homelessness and affordable housing investments are approaching critical funding cliffs, with deeper cuts expected in 2025 if one-time allocations are discontinued and federal dollars face cuts under the Trump administration. Ensuring vital housing efforts continue will require sustained funding and new revenue to protect and uplift Californians and communities statewide.  

Noteable state investments in California’s homelessness response and affordable housing production began in 2019. Over the past six years, the combination of flexible federal dollars during the COVID-19 pandemic, strong state revenues, and a growing urgency to address housing costs led to unprecedented state investments in affordable housing and other homelessness solutions — however, continuing this progress hinges on ongoing funding.

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Core State Investments to Solve Homelessness Are Temporary

California homelessness-related spending reached a high of $6.8 billion in 2022-23, fueled by the surge in state revenue during the pandemic and flexible federal dollars. However, 2024-25 spending dropped to $2.5 billion, nearly half of which is not guaranteed in the next budget cycle. Although these investments have not fully met the scale needed to end homelessness, they have helped more Californians experiencing homelessness to access stable housing than ever before. These dollars, while designed as temporary, are also now core to California’s homelessness response systems statewide, making the potential loss of funding a significant threat to ongoing progress.

State Affordable Housing Investments Remain Low

Meaningful investments in affordable housing, particularly for individuals and families with the lowest incomes, can help solve the ongoing struggle of more Californians falling into homelessness and facing housing insecurity faster than they can be stably housed. Yet, despite the critical need, the 2024 Budget Act cut over $1 billion for various housing programs, while continuing some modest one-time augmentations. 

Despite the state's unprecedented recent investments in affordable housing, state General Fund dollars comprised less than 20% of funding that supported affordable housing and homeownership attainment between 2019 and 2023. The majority of non-General Fund dollars for affordable housing primarily reflects federal funds and private bonds that are likely threatened with the incoming Trump administration. Potential cuts to federal funding for affordable housing underscore the need for state leaders to amplify and continue efforts, particularly given that all of these investments are still a small share of the sustained funding needed to solve California’s housing shortage.

As California faces projected budget shortfalls and potential federal funding cuts to vital housing and safety net programs under the Trump administration, it’s more urgent than ever to sustain the programs that are building affordable housing and keeping Californians housed. Without robust new revenue streams and continuous funding, these successful efforts face dire cuts that will have devastating consequences for Californians who rely on them and communities across the state.

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Access to affordable child care remains a challenge for families with low incomes in California. Despite decades of effort, a large gap between supply and demand persists. In 2015, 85% of eligible children lacked access to subsidized child care, a figure that grew to 89% in 2017 and remained the same in 2022. This means that in 2022, only 1 in 9 children eligible for subsidized child care programs received services.

These statewide trends are mirrored at a more local level. County-level trends reflect the same disparity, as shown in the map below, which highlights the unmet need for child care across California.1The following counties are grouped together due to small sample sizes when calculating the number of eligible children: 1) Alpine, Amador, Calaveras, Inyo, Mariposa, Mono, Tuolumne; 2) Del Norte, Lassen, Modoc, Plumas, Siskiyou;  3) Colusa, Glenn, Tehama, Trinity; 4) Sierra, Nevada, Butte; 5) Lake, Mendocino; 6) San Benito, Monterey; 7) Sutter, Yuba. This analysis focuses on programs administered by the Department of Social Services for children 0 to 12 and excludes programs overseen by the California Department of Education — the California State Preschool Program and Transitional Kindergarten — due to changes in program structure and eligibility.

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Unmet Need for Child Care Across California Counties

Statewide Policy Implications

While the supply of subsidized child care has increased since the dramatic cuts made during the Great Recession over a decade ago, California is still a long way away from meeting families’ child care needs. In the current context, state leaders must continue to prioritize increasing capacity in subsidized care. This includes following through on the promise of 200,000 additional child care spaces by 2027 and ensuring resources are available to work toward ensuring that every eligible child has access, particularly in regions where unmet need is higher. The state can also help address challenges counties face with utilizing available slots by streamlining paperwork, improving outreach to families, adjusting rigid eligibility requirements, and improving facilities.  Additionally, state leaders need to make robust investments in the child care workforce. This includes strengthening pathways into the child care field as well as ensuring providers are paid a fair wage so that the overall system thrives and is able to meet families’ child care needs. To achieve these goals, a comprehensive, sustained commitment from state leaders is essential to build a stronger, more equitable child care infrastructure for all California families.

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  • 1
    The following counties are grouped together due to small sample sizes when calculating the number of eligible children: 1) Alpine, Amador, Calaveras, Inyo, Mariposa, Mono, Tuolumne; 2) Del Norte, Lassen, Modoc, Plumas, Siskiyou;  3) Colusa, Glenn, Tehama, Trinity; 4) Sierra, Nevada, Butte; 5) Lake, Mendocino; 6) San Benito, Monterey; 7) Sutter, Yuba.

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Federal dollars support a wide array of public services and systems that touch the lives of all Californians — from health care and food assistance to child care and public schools. Under the incoming Trump administration and a Republican-controlled Congress, many of these services are expected to face significant reductions — in large part to pay for tax cuts for corporations and the wealthy. Federal funding cuts would devastate vital services that help the most vulnerable Californians, including immigrant communities, Californians with disabilities, low-income families with young children, older adults living on fixed incomes, and many more.

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How Federal Funds Support California’s State Budget and Programs

A significant share of federal funding for California flows through the state budget. The enacted state budget for 2024-25 — the fiscal year that began on July 1, 2024 — includes $153 billion in federal funds. This is more than one-third (33.9%) of the total state budget.

More than 3 in 4 federal dollars that are estimated to flow through the state budget in 2024-25 — $115.7 billion — support vital health and human services (HHS) for millions of Californians, including children, seniors, and families with low incomes.

  • The largest share of federal funding for HHS programs — $98.5 billion — is budgeted through the Department of Health Care Services for Medi-Cal (California’s Medicaid program). Medi-Cal provides health care services to more than 14 million Californians with low incomes, including children, older adults, and people with disabilities. More than half of Californians enrolled in Medi-Cal are Latinx.
  • The second-largest share of federal funding for HHS programs — $12.1 billion — goes to the Department of Social Services. These funds support child welfare services, foster care, the CalWORKs program, and other critical services that assist low-income and vulnerable Californians.

The remaining federal funds that are projected to flow through the state budget in 2024-25 — $37.3 billion — support a broad range of public services and systems. This includes:

  • $8.5 billion for labor and workforce development programs, primarily for unemployment insurance benefits for jobless Californians;
  • $7.9 billion for K-12 education;
  • $7.4 billion for higher education (the California Community Colleges, the California State University, and the University of California);
  • $6.8 billion for transportation, primarily to improve state and local transportation infrastructure; and
  • $6.8 billion for additional public services and systems, including environmental protection, the state court system, and state corrections.

Potential Federal Cuts Threaten California: Health Care, Safety Net, Education At Risk

The outcome of the November 2024 national election portends major cuts to federal funding for key public services. Such cuts would have devastating consequences for Californians. Federal funding for Medi-Cal alone comprises almost two-thirds (64.4%) of all federal funding that flows through the state budget. Republicans have made clear their intention to curtail this spending.

Certain Republican-championed cuts would be particularly harmful to Medi-Cal, like the proposal to fund Medicaid through a block grant. This change would cap federal funding well below California’s actual Medi-Cal costs, forcing state policymakers to find alternative funding in an already tight budget and/or consider cuts to Medi-Cal eligibility, services, or provider rates. This block grant proposal, and others like it, would jeopardize access to Medi-Cal for the one-third of Californians — more than 14 million — who rely on it.

Other services are also at risk, including some that are funded with federal dollars that flow directly to Californians outside of the state budget — such as federal food assistance provided through the state’s CalFresh program and federal Supplemental Security Income (SSI) payments for low-income seniors and people with disabilities. 

The incoming Trump administration and congressional Republicans have proposed to decrease federal support in several other policy areas — including for K-12 education — while simultaneously reducing federal revenues by extending tax cuts for corporations and the wealthy.

The resulting ebb in federal funding would trickle down to the state level and cause harm across the country. This would leave state policymakers with difficult decisions about how to fill — as much as possible — the resulting funding gaps in order to prevent the erosion of public services and systems that promote economic security and opportunity for millions of Californians.

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key takeaway

California’s undocumented residents contribute nearly $8.5 billion in taxes, playing a crucial role in supporting public services while remaining excluded from essential programs.

All Californians should be able to live thriving lives and participate in their communities, regardless of their race, ethnicity, age, gender identity, sexual orientation, ability, or immigration status.

California is home to a sizable population of immigrants — with and without legal status — who are students, teachers, artists, chefs, business owners, religious leaders, colleagues, neighbors, family members, and more. Undocumented Californians pay billions of dollars in taxes and play a vital role in stimulating California’s economy. They help keep businesses running, put food on tables, care for children and loved ones, enrich communities through art and music, and much more.

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Tax Contributions by Undocumented Californians

One contribution that is often overlooked or underestimated is the amount of taxes that individuals who are undocumented are paying into publicly-funded systems to support public services, even as they are excluded from benefiting from many of those same services.

Undocumented Californians paid nearly $8.5 billion in state and local taxes in 2022, according to estimates from the Institute on Taxation and Economic Policy (ITEP). This includes the sales and excise taxes paid on purchases, the property taxes paid on homes or indirectly through rents, individual and business income taxes, unemployment taxes, and other types of taxes.

These tax contributions support the public services and infrastructure that benefit all Californians, such as education, roads and transit, emergency response, and the social safety net. However, despite recent progress in making some public supports more inclusive of Californians regardless of their immigration status, many programs continue to unjustly exclude undocumented individuals and families who pay into these systems and seek support in times of need.

California has taken steps in recent years that recognize the importance of supporting everyone regardless of status, including:

  • Expanding full-scope Medi-Cal health coverage to all eligible Californians regardless of immigration status. We are already seeing signs of benefits from making Medi-Cal more inclusive: After full-scope Medi-Cal was expanded to undocumented children, the share of non-citizen children reporting excellent health status increased by 10 percentage points while no changes were seen for citizen children not impacted by the expansion.
  • Ending the exclusion of tax filers with Individual Taxpayer Identification Numbers (ITINs) from the benefits of the state’s refundable tax credits — the CalEITC and the Young Child Tax Credit.
  • Taking the first steps to provide access to nutrition benefits through the California Food Assistance Program (CFAP) for undocumented adults age 55 and older, who are excluded from receiving federally funded Supplemental Nutrition Assistance Program (CalFresh in California) benefits. However, the 2024-25 state budget delayed the implementation of this expansion until 2027.

Despite this progress, Californians without documentation remain excluded from many critical supports, jeopardizing their health and economic security. While many of these exclusions stem from federal law, state leaders can further support these Californians by using state resources to end the exclusions. State policymakers should:

  • Ensure undocumented workers have access to unemployment support when they lose a job by funding cash assistance for workers excluded from traditional unemployment insurance benefits. The Legislature recently passed a bill to require the Employment Development Department to develop a plan to establish an Excluded Workers Program, but the governor vetoed the bill citing concerns about the cost and the deadline set in the bill.
  • Address food insecurity in undocumented communities by expanding CFAP nutrition benefits to undocumented Californians of all ages.
  • Build on the success of ending Medi-Cal exclusions by expanding access to health coverage through Covered California to undocumented families whose income make them ineligible for Medi-Cal.
  • Expand the Cash Assistance Program for Immigrants (CAPI) to undocumented older adults and people with disabilities whose immigration status disqualifies them from receiving Supplemental Security Income/State Supplementary Payment (SSI/SSP). 
  • Increase funding for free tax preparation services to enable more undocumented Californians to apply for and renew ITINs and file income returns — allowing them to pay the taxes they owe and receive the tax credits they are eligible for.

Exclusions from these vital services are one contributor to the higher rate of poverty among undocumented Californians. This results in unnecessary human suffering and additional strains on community services that people use as a last resort, such as emergency rooms.

Federal action is also needed, including ending unjust exclusions from federal safety net and financial assistance programs and providing an accessible path to citizenship for those who have been living, working, and contributing to their communities. Granting legal status to these individuals would provide them with greater economic security and stability, and allow them to make even more meaningful contributions to the state.

Furthermore, by allowing all workers to pursue legal employment, granting legal status could increase the state and local tax contributions of Californians currently lacking documentation from $8.5 billion to $10.3 billion, according to ITEP estimates. This would deepen their already significant contributions to California’s economy and public support programs.

Regardless of the prospects for federal action, California leaders have the tools to continue making the state’s services inclusive of all its residents and ensuring that no one is left out of critical safety net programs.

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key takeaway

California’s expansion of Medi-Cal to include all eligible residents, regardless of immigration status, has improved health outcomes for non-citizen children. However, gaps remain for undocumented adults who lack coverage, highlighting the need for continued efforts to promote health equity and economic stability for all Californians.

Immigrants are an integral part of California’s communities and the state’s social fabric. Over the years, California has set itself apart from other states by advancing inclusive policies that support immigrants while fostering economic growth. A key example is the state’s efforts to make coverage through Medi-Cal, California’s state Medicaid program, more accessible for immigrants. This year, California became the first state in the nation to expand comprehensive Medi-Cal coverage to all eligible Californians, regardless of immigration status. The timeline below shows the steps that state leaders have taken to end the unjust exclusions in Medi-Cal.

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A look at reported health status shows promising signs that Medi-Cal expansion to undocumented Californians is positively impacting health.1Our analysis focuses on the Medi-Cal expansion to undocumented children. Data for the most recent Medi-Cal expansion are not yet available for analysis. Analysis for the 2020 expansion to young adults is excluded due to potential confounding effects stemming from the COVID-19 pandemic. Data show that the proportion of non-citizen children who reported being in excellent health after the expansion increased by 10 percentage points from 20% to 30%. In contrast, citizen children, who were not affected, did not experience any change in their reported health status. At a high level, this analysis suggests there is a link between access and improved health status.

While California has led the nation in closing health coverage gaps, access is still limited for undocumented Californians who do not qualify for Medi-Cal or lack employer-based health insurance. The percentage of uninsured Californians hit a record low in 2022 at 6.5%, but the gains are not distributed equally. Research suggests that over one in four undocumented immigrants under 64 will remain uninsured due to their exclusion from Covered California.

Ensuring that everyone has access to health care benefits all Californians, as health coverage is critical for preventing poverty and fostering economic stability. People without coverage are more likely to face high health care costs or medical debt and are less likely to receive preventive care or treatment for chronic health conditions.

Policymakers can continue to advance health equity by ending unjust exclusions in Covered California, our state’s health insurance marketplace. By building on the historic Medi-Cal expansions and investing in other equitable health policies, policymakers can ensure all Californians can be healthy and thrive.

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  • 1
    Our analysis focuses on the Medi-Cal expansion to undocumented children. Data for the most recent Medi-Cal expansion are not yet available for analysis. Analysis for the 2020 expansion to young adults is excluded due to potential confounding effects stemming from the COVID-19 pandemic.

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key takeaway

The wage gap for Latinas in California remains alarmingly wide. Systemic barriers in education, employment, and caregiving responsibilities contribute to persistent inequality.

When women thrive, their families and communities prosper. Despite decades of progress in job opportunities and earnings, working families still struggle to afford basic needs. This challenge is significantly worse for women, and specifically, Latinas. Systemic racism and gender inequities have contributed to California being the state in the nation with the worst wage gap between Latinas and white men.

In California, Latinas make 44 cents to every dollar that a white man earns. This wage gap is pervasive and persistent, with Latinas being paid less than white men in every state. If the current California wage gap trend continues, Latinas will not reach the same wages as white men within the lifetime of the state’s youngest children. While California has made progress toward creating the conditions for removing the structural barriers resulting in this wage gap, state leaders can do far more to ensure that Latinas no longer face this staggering inequity.

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How Long Will it Take for Latinas to Close the Wage Gap — A Staggering 130 Years?

The data show that the wage gap will persist for generations to come, specifically:

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Why Does this Inequality Continue to Persist for Latinas?

The wage gap for Latinas is influenced by many factors stemming from racial and gender discrimination. Key points include:

What Can Policymakers Do to Address the Wage Gap for California’s Latinas?

In recent years, California’s policymakers have passed legislation that helps to identify and address the disparities in wages between Latinas and white men. This legislation includes:

  • California Equal Pay Act. Passed in 2016, this policy requires equal pay for employees who perform similar work.
  • California Pay Data Reporting Law. Passed in 2020, this policy requires private employers to submit annual reports of employees’ gender, race, ethnicity, pay, and hours worked to the California Civil Rights Department.
  • California Pay Transparency Act. Passed in 2022, this policy expands pay data reporting requirements to better identify gender and race-based pay disparities.

While these policies have promoted fairer conditions for pay equity, they have not been enough to meaningfully close the wage gap in California between Latinas and white men. The reasons behind this wage gap in California stem from a variety of structural barriers related to access to well-paying jobs, access to education, and racial and gender discrimination. Pay transparency and reporting requirements alone will not meaningfully address this issue. Policymakers must therefore take a multifaceted approach to addressing systemic barriers by fighting against persistent inequities in pay and benefits and strengthening supports such as:

  • Continuing to raise wages in occupations where Latinas are disproportionately represented;
  • Creating a more comprehensive and accessible safety net, including enhanced unemployment insurance, paid family leave, CalWORKs (cash assistance), and CalFresh (food assistance);
  • Widening access to flexible and affordable child care to aid in alleviating poverty;
  • Increasing workers’ collective bargaining power;
  • Investing in community-based programs supporting Latinas; and
  • Promoting programs that improve the leadership pipeline for Latinas.

Focused efforts to address the wage gap can reverse current trends to ensure that Latinas reach pay equity well within a lifetime and have the resources they need to thrive in California.

Support for this piece was provided by the California Commission on the Status of Women and Girls.
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key takeaway

Closing California state prisons is a key underutilized tool that can provide the funds needed to offset cuts to vital safety net and health programs.

The governor’s 2024-25 May Revision includes deep cuts to critical programs and services that support California’s most vulnerable populations. The solutions the administration proposes for closing the May Revision’s projected $27.6 billion shortfall fail to utilize the full set of tools in the state’s toolbelt.

As a result, the governor proposes to dramatically cut safety net and health programs such as the CalWORKs family stabilization program, the Family Urgent Response System, the Indian Health Grant Program, in-home supportive services for undocumented Californians, among others. For CalWORKs alone, cuts amount to nearly three-quarters of a billion dollars — most of which are ongoing and completely eliminate essential programs designed to support families navigating domestic violence, mental health challenges, substance abuse, and other crises.

The proposed cuts, which disproportionately target foster youth, Californians with disabilities, immigrant communities, students, and families with young children, may further push many Californians into poverty, ultimately impacting their lifetime earnings, health outcomes, and more.  

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Closing California state prisons is a key underutilized tool that can provide the funds needed to offset these cuts. Specifically, the Legislative Analyst’s Office (LAO) estimates that California can safely close up to five prisons, given the enormous number of empty beds in the system (nearly 15,000). Closing five prisons equates to $1 billion in ongoing annual savings. This ongoing $1 billion may fund up to 13 safety net and health programs that the May Revision proposes to cut indefinitely.

While these prison closures would be rolled out across several years (up to 2028, as estimated by the LAO), creating a prison closure plan now would be a first step in imagining alternative solutions to the current cuts to critical programs. For example, state leaders could use the state’s rainy day fund to temporarily support these programs as the annual savings from closing five prisons grows to $1 billion over the next few years.

If the California budget truly reflects the state’s values and priorities, programs that support the health and well-being of Californians should be prioritized over empty prison beds. 

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key takeaway

California was the first state to offer paid family leave, but workers cannot apply for benefits until after they have already started their leave, causing financial hardship.

California was the first state in the country to offer paid family leave for its workers, acknowledging the importance of giving workers paid time off to care for their loved ones or bond with a new child. Since then, 12 other states and Washington, D.C. have followed California’s lead. Despite California being the first to pass paid family leave, workers in the state cannot apply for benefits until after they have already started their leave. This may put workers in a distressing financial situation while navigating care for their loved ones. By allowing workers to apply for paid family leave before their leave has begun, policymakers can better serve Californians.

How does paid family leave in California work?

Under California’s paid family leave and state disability insurance programs, workers receive partial wage replacement when they are unable to work for various reasons. Paid family leave is available to workers who are caring for a seriously ill or injured family member, bonding with a new child, or addressing a military exigency. State disability insurance is available to individuals who are unable to work due to an injury or illness. Both benefits are fully worker-funded through a payroll tax. However, a worker cannot apply for their benefits until they have first started unpaid leave and their qualifying life event has already occurred. In other words, a worker has to stop working without confirmation of if they will receive pay and benefits, and without confirmation of how much money they will get.

For example, a worker who qualifies for paid family leave because they have welcomed a new child or who qualifies for state disability insurance to recover from their own serious health condition, including pregnancy, must first take unpaid leave from their job before they can apply for paid family leave or state disability insurance. They will not know if they will get approved, they will not receive pay, and they will need to apply for benefits while at the same time welcoming their new child. This leaves workers in a precarious situation where they must go days and sometimes weeks without pay at a time when they need it most.

This is especially harmful for workers with low incomes, who are disproportionately women and people of color, who face the impossible decision of going days or weeks without pay or taking time off to care for an ill loved one or a new child. For many workers, taking time off of their job without confirmation of benefits is not an option, as workers face expenses that they cannot cover without regular income. This makes workers less likely to take leave, which can have serious consequences to their health.

What are other states doing?

Some states are leading the way in this area and have addressed this gap in policy to ensure that all workers have equal access to paid family and medical leave and no one has to face these impossible choices. Out of the 14 states and D.C. that offer paid family and medical leave, eight allow workers to apply for benefits before their qualifying event happens, meaning they are not forced to take unpaid leave without confirmation of knowing if they will receive any benefits at all. This allows workers to mitigate their risk and reduce their stress during already demanding situations.

What can state leaders do to better support workers in California?

While California was a trailblazer in 2002 when it enacted the first paid family leave law in the country, it has now fallen behind. Workers should not have to take unpaid time off when they pay into and are eligible for benefits. It is time for California to catch up and give workers the security they deserve by letting them apply early for their benefits.

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