Chico/Butte County Homeless Industrial Complex and Continuum of Care

How the Homeless Industry Operates Locally.

Part 2

Why the System Fails in Butte County

Despite millions in annual funding, homelessness remains a growing issue in Butte County. Critics argue that the Homeless Industrial Complex:

• Lacks transparency and accountability – Millions are spent without clear performance metrics.

• Creates perverse incentives – Agencies and NPOs are financially dependent on homelessness continuing rather than solving the crisis.

• Over-prioritizes Housing First – Without required mental health or addiction treatment, many individuals cycle through housing and back to the streets.

• Fails to enforce laws – Decriminalization policies allow encampments to persist, reducing incentives for individuals to seek structured support.

The Homeless Industry in Butte County reflects a larger systemic problem seen across California. While significant resources exist, the lack of accountability, enforcement, and treatment-based interventions has led to an expanding crisis rather than a solution. Addressing these issues requires a shift away from ineffective funding models toward a structured, results-driven approach that prioritizes rehabilitation, accountability, and personal responsibility.

Tracking the money flow into Butte County

For years now, I have been trying to get financial and other information through our local distribution hub for grants and other funding for our Homeless Industry. Local CoCs are an important part of the Homeless Industrial Complex you have heard me talk about many times.

How much State and Federal money has been funneled into Butte County in the service of housing and homeless grants?

Public Records Requests

The simplest and most direct method for getting data is through Public Records Requests under the California Public Records Act (CPRA). The CPRA (Gov. Code § 6250 et seq.) grants the public the right to access records maintained by state and local government agencies.

The federal equivalent is the Freedom of Information Act (FOIA) (5 U.S.C. § 552). FOIA provides public access to federal agency records, subject to certain exemptions. CPRA applies to state and local agencies, while FOIA governs federal agencies only.

I requested grant and spending data under the CPRA, seeking data for how much money had come into Butte County from three agencies: The California Interagency Council on Homelessness (CICH), Housing and Community Development (HCD), and the Butte County Continuum of Care (BCCoC).

CICH initially denied my request, responding that they no longer administer homeless grants, and referred me to HCD. HCD also initially refused, but later capitulated when I pointed out the law and what precisely I wanted. Their summary report is at the end of this article.

The CoC also initially refused to respond, but after escalating to the County Administrator I got a response, though it was limited to HUD funding going directly or contracted out by CoC directly.

Meanwhile I have tried to piece together the information from a variety of sources, including NPO tax returns, CoC posted records and provided data, and the HCD source mentioned above.

Sources of Funding

Funding for homeless services and housing initiatives aimed at solving and preventing homelessness in the United States primarily comes from federal and state sources.

Federal Funding Sources:

1. McKinney-Vento Homeless Assistance Grants: Administered by the U.S. Department of Housing and Urban Development (HUD), this program is central to federal efforts to combat homelessness. It provides funding to local communities for housing and supportive services. End Homelessness

2. Continuum of Care (CoC) Program: Also managed by HUD, the CoC Program promotes community-wide commitment to ending homelessness by funding efforts such as transitional housing, permanent housing, and supportive services. They provide no direct services except implement the Homeless Information System (HIS) and conduct the Point in Time (PIT) count every two years. Butte CoC

3. Emergency Solutions Grants (ESG) Program: This HUD program offers funding to assist individuals and families in quickly regaining stability in permanent housing after experiencing a housing crisis or homelessness. HUD ESG

4. Programs by the Department of Health and Human Services (HHS): HHS provides various grants targeting homelessness, including the Family Violence Prevention and Services Grants, which support shelter and related services for victims of family violence. HHS

5. Substance Abuse and Mental Health Services Administration (SAMHSA) Grants: SAMHSA offers programs that support individuals experiencing homelessness, particularly those with substance use and mental health disorders. SAMHSA

California State Funding Sources:

1. Homeless Housing, Assistance, and Prevention (HHAP) Grant Program: Managed by the California Interagency Council on Homelessness, HHAP provides flexible funding to local jurisdictions to support regional coordination and expand or develop local capacity to address homelessness challenges. HHAP

2. Emergency Solutions Grants (ESG) Program: The California Department of Housing and Community Development administers ESG funds to engage homeless individuals and families living on the street, improve the number and quality of emergency shelters, and provide essential services to shelter residents.

3. CalWORKs Housing Support Program (HSP): Operated by the California Department of Social Services, HSP offers financial assistance and housing-related wrap-around supportive services to CalWORKs families experiencing homelessness. California Department of Social Services

4. No Place Like Home (NPLH) Program: This initiative provides funding to counties for the development of permanent supportive housing for individuals with serious mental illness who are homeless or at risk of chronic homelessness.

A comprehensive list of various programs can be found here: HCD Grants

These programs, among others, constitute the primary sources of federal and California state funding dedicated to addressing homelessness and preventing its occurrence.

In California, several state agencies are responsible for issuing Notices of Funding Opportunities (NFOs) and administering grants related to homeless services and housing programs:

California Department of Housing and Community Development (HCD): HCD oversees various programs that provide grants and loans to create rental and homeownership opportunities, including initiatives targeting homelessness. They manage the Homeless Housing, Assistance and Prevention (HHAP) Grant Program, which allocates funds to local entities to prevent and address homelessness. California Housing Department

California Department of Social Services (CDSS): The Housing and Homelessness Division within CDSS develops and oversees statewide housing programs, offering technical assistance to social service agencies across California. Programs include the CalWORKs Housing Support Program (HSP) and the Bringing Families Home (BFH) program, both aimed at assisting families experiencing homelessness. California Department of Social Services

California Department of Community Services and Development (CSD): CSD administers the Community Services Block Grant (CSBG), a federally funded program designed to reduce poverty by supporting local agencies that provide services to low-income individuals and families. csd.ca.gov

These agencies collaborate to issue funding opportunities and administer grants aimed at addressing homelessness and housing challenges throughout California.

California has established the California Interagency Council on Homelessness (Cal ICH) to coordinate efforts among various state agencies addressing homelessness. Cal ICH oversees the implementation of Housing First guidelines and regulations, identifying resources, benefits, and services to prevent and end homelessness in the state. Bureau of Consumer Services and Housing

In 2021, the California Legislature passed Assembly Bill 140, tasking Cal ICH with assessing the current landscape of programs funded, implemented, and administered by state entities. This assessment aims to provide a holistic understanding of California's homelessness response system, guiding policy decisions to effectively prevent and end homelessness. BCSH

Cal ICH's Statewide Action Plan outlines strategies to make homelessness in California rare, brief, and non-recurring. The plan emphasizes purposeful, action-oriented coordination and alignment among state departments, focusing on Housing First approaches and measurable outcomes.

To support data-driven decision-making, Cal ICH manages the Homeless Data Integration System (HDIS), which consolidates data from all state Continuums of Care. This system enables the state to measure progress toward preventing and ending homelessness, playing a pivotal role in California's comprehensive strategy to provide stable housing and supportive services to those in need.

Through these coordinated efforts, Cal ICH aims to streamline the state's response to homelessness, ensuring that resources are effectively utilized, and policies are consistently applied across various agencies and programs.

Continuums of Care (CoCs)

Continuums of Care (CoCs) are regional or local planning bodies that coordinate housing and services funding for homeless individuals and families, as mandated by the U.S. Department of Housing and Urban Development (HUD). The CoC system was formally established by the Homeless Emergency Assistance and Rapid Transition to Housing (HEARTH) Act of 2009, which reauthorized and amended the McKinney-Vento Homeless Assistance Act.

Key Functions of CoCs:

Coordination of Homeless Services:

CoCs bring together local stakeholders, including nonprofit service providers, government agencies, housing authorities, and other community organizations.

They create a coordinated entry system to assess and prioritize individuals for housing and services. This is the Homeless Management Information System (HMIS), funded by Housing and Urban Development, that also funds the Point in Time survey every two years. The CoC grants the HMIS money to the Community Action Agency of Chico to run and maintain the HMIS. All efforts to get aggregated data from this system have consistently been denied, saying the information is private and protected by the Health Insurance Portability Accountability Act (HIPAA). However, such data is routinely analyzed using masking techniques, so this is false. I haven’t bothered to sue to get it.

Funding and Grant Distribution:

CoCs coordinate Notices of Funding Opportunities (NOFAs) from federal and state sources with their voting membership, which happen to be all the various recipients of this grant money.

They are also utilized as the coordinating recipient of state funding through various grant programs administered by California Interagency Council on Homelessness (Cal ICH) and the Department of Housing and Community Development (HCD).

This website will give you a feel for the various grant programs available through HCD : https://www.hcd.ca.gov/grants-and-funding/reporting-and-compliance-grant-programs

Data Collection and Reporting:

CoCs are required to operate a Homeless Management Information System (HMIS) to track data on homeless individuals and evaluate program effectiveness. The CoC’s have refused to make any of this information, even on a statistical or aggregated/masked basis. Again, this is funded by HUD, a federal Agency.

They also are required to conduct an annual Point-in-Time (PIT) Count, used for estimating the number of homeless people in their jurisdiction. Ironically, these numbers are also used to decide how to allocate money nationally and locally. There is another perverse incentive built into this process, as there is a motive to make sure assumptions lead to bigger, not smaller numbers, since that tracks with funding levels available based on the PIT counts.

It is the data from this very flawed process that is used to determine the funding levels for which Butte County is eligible. Therefore, a “moral hazard” exists where having larger numbers means larger shares of available grants. From personal experience with the PIT process, I have anecdotal evidence of the many ways these numbers are compiled in such a way as to give CoCs the benefit of errors and flaws in the process.

Strategic Planning:

Originally CoCs were required to produce a plan to eliminate homelessness. For years on their website was a document called “The Ten Year Plan to End Homelessness.” After the 10 years had elapsed and homelessness was little improved or worse, they simply took down the plan. There was no admission, statement, or accountability for failure to produce the outcome they were required to produce.

Under current policy, they now must develop a housing-first strategy, prioritizing permanent housing over temporary solutions. They are responsible for a plan detailing how the region will reduce homelessness, improve service coordination, and comply with HUD regulations.

However, there is little if any measurement of outcomes that demonstrate the effectiveness of any of these programs. The measure of success is the successful delivery or availability of program services, and nothing requires a specific outcome from homeless individuals or the NPO itself. By the time the lack of results from a previous grant become obvious, the industry is already on to the next round of grant programs.

In the insurance and other industries, this is called a “Moral Hazard.” A moral hazard arises for an insurance company when the holder of a policy is incentivized to destroy the insured property in order to collect the monetary reimbursement available under the policy. It is the risk that an individual or organization will behave recklessly or immorally when protected from the consequences, because a party is insulated from risk, and so may behave differently from the way it would behave if it were fully exposed to the risk.

Intuitively, we understand the homeless industry benefits from these perverse incentives, where the road to the future is paved with homelessness, and if that problem were solved they would not be needed and funding sources would dry up. The best we get are anecdotal reports for the NPO directors who paint their organization’s efforts in the most positive light they can, but the numbers belie their rosy reports.

Structure and Governance:

Board Leadership: CoCs must have a governing board that includes representatives from relevant organizations and at least one person with “lived experience of homelessness.” This board is currently made up of the various directors of NPOs, government employees, department heads, and elected officials who receive or administer the funding and activities. They have proven to be resistant to inquiries about results, outcomes, expenditures, or success. We are expected to simply take their word for what they say “works.” In truth what works is more funding.

Geographic Scope: CoCs vary in size, covering single cities, counties, or multiple regions. The local Chico/Butte County CoC covers the entire county of Butte, but most of the money flows into Chico, which claims the vast majority of the “unhoused” population.

Collaboration with ESG Programs: Emergency Solutions Grant (ESG) programs operate alongside CoCs to fund emergency shelters and other immediate needs. The array of sources of grants and their purported purposes are vast and indecipherable. The member NPOs and their supporting government agencies, including the local Butte County Housing Authority, define their competence as familiarity with where the next rounds of funding come from, not so much running and measuring outcomes of programs that have already received funding.

Criticisms & Challenges:

Housing First vs. Treatment-Based Models.

HUD mandates a Housing First approach, which prioritizes rapid placement into housing without requiring sobriety or participation in treatment. Critics argue this fails to address underlying causes like mental illness or addiction. The state agencies also subscribe to Housing First policy frameworks owing to the “trickle down” effect of federal funding, so most publicly funded shelters and services must be “low barrier.” Sobriety nor rehab nor participation in any program can be required as a condition of shelter.

Lack of Accountability:

Some CoCs are criticized for failing to ensure that participants engage in rehabilitative services. In fact, almost nothing is ever required of the individuals to qualify for the services coordinated through CoC. Information about their operations, funding, or level of success or failure are carefully guarded behind a false and loosely interpreted “right of privacy” argument. However, every government agency reports on relevant statistics without violating personal privacy or HIPPA restrictions, and the CoC and its member NPOs could do the same if they were motivated to justify their existence based on outcomes. Sadly, that is not the case.

Bureaucratic Inefficiencies:

The grant application and compliance process can be complex, limiting participation from smaller service providers. In fact the ecological niches that are filled by the current NPOs are penetration proof, which is why smaller and less endowed NPOs lobby the city and other sources for grants and programs. However, even there, (e.g. the local Pallet Shelter contract was secured by one of the largest Homeless Services NPOs in the county) startups have the same trouble penetrating this close ecology as new automakers have trying to compete with Detroit or Japan.

Also inherent in this system is the inefficiency of the collection and redistribution of tax dollars. Though the numbers are difficult to quantify, we know the IRS and Franchise Board must have a team to collect the taxes, then elected government officials and their agencies must push those same dollars out into recipient NPOs and other programs.

They must be “monitored” for fraud and underperformance (though the news is full of stories of massive fraud of taxpayer funds). Then the NPOs themselves must hire people to deliver the services, prepare the various reports back to granting agencies, and pay rent and other expenses to keep the doors open. Most Directors of local NPOs earn six-figure salaries. So for the 1 dollar you contribute in taxes, mere pennies are delivered to homeless recipients. This is contrary to organizations like the Salvation Army, who collects private donations only, and that money is mostly expended on direct services that impact program participant.

It is estimated that $42,000 is spent on each homeless person in California. How much of that money is delivered directly to each person, either in terms of actual money benefits or services actually utilized? It is FAR less than what is delivered to individual homeless people.