THE PROGRESS SAN JOSE and Santa Clara County have made to reduce homelessness could be halted as the state cuts crucial funding for housing and homeless services.
The California Legislature on June 13 passed a $325 billion preliminary budget for the 2025-26 fiscal year, and the state’s main source of homelessness funding — the Homelessness Housing, Assistance and Prevention Program — has been zeroed out. The funding can be used toward homelessness prevention, rental assistance, temporary and permanent housing, outreach, services and shelter improvements. Last-minute budget details are being hashed out before the fiscal year starts on July 1, but the potential axing of the program could have a devastating effect in Santa Clara County and San Jose in coming years.
San Jose will lose about 550 beds and spaces in temporary homeless housing if it doesn’t find other sources of funding, Housing Director Erik Soliván said. Because of the timing of when state dollars are distributed, the impact on the city won’t be felt until fiscal year 2026-27, resulting in a loss of about $30 million.
“What happens to the people who are in (those units)? The impact will be big,” Soliván told San Jose Spotlight. “Those funds are vital to not only the continuation of shelter operations, but also the work we do around outreach and engagement and providing services to encampments.”
The state established its program six years ago to give one-time grants to reduce homelessness. With the funding, California’s 13 largest cities have created 17,000 shelter beds and served more than 150,000 people. This fiscal year, the state set aside $1 billion for the program, and $760 million is left to be allocated.
Since the start of the program, San Jose has received nearly $120 million in grants in five rounds of funding. San Jose applied for $25.3 million this fiscal year, and awards will be announced and distributed next fiscal year. The city has allocated the largest chunk toward interim housing at $39 million and put $23 million toward new emergency shelters and navigation centers. San Jose has also has invested $14 million in street outreach.
“If we walk away from that now, we are not just walking away from progress. We are walking away from people,” San Jose Mayor Matt Mahan said in a statement. “Because if (the state program) disappears, our ability to respond to this humanitarian crisis goes with it.”
Most funding goes to temporary housing
Santa Clara County has received a total of $114 million from the program, with the largest amounts of money being allocated toward funding operations at temporary housing sites, at nearly $50 million, and homelessness prevention at more than $20 million.
Nearly 10,000 homeless residents live in Santa Clara County, according to a 2023 count. Results for this year’s count have yet to be released. San Jose has 6,340 homeless residents — the fourth highest population of homeless people per capita in the nation.
While San Jose waits to see if its recent bid for funding is successful, the city will continue construction of its planned temporary housing sites, including Cherry Avenue tiny home site, the expansion of the Rue Ferrari tiny home and the Cerone safe parking site — all slated to open in the fall. The city also has five hotel conversions into temporary housing in its pipeline. San Jose aims to add more than 1,000 shelter beds and spaces this year.
“… The impact will be big. Those funds are vital to not only the continuation of shelter operations, but also the work we do around outreach and engagement and providing services to encampments.” Erik Soliván, San Jose housing director
Soliván said the housing department is making contingency plans for future state funding cuts. The preliminary budget outlines $500 million in state program funding to be restored for the 2026-27 fiscal year, half of what was distributed in the 2024-25 fiscal year.
Officials are already preparing for a challenging year ahead with the county anticipating $70 million in proposed cuts from the federal budget, which would slash funding for Medi-Cal all the way to housing vouchers.
“It’s absolutely the worst time to see continued reduction in funding and services for our most vulnerable residents,” Ray Bramson, chief operating officer at Destination: Home and San José Spotlight columnist, told San José Spotlight. “My hope would be that we find a path forward to make it a permanent funding source, because we’re going to need this investment for a while to truly make a difference.”
Contact Joyce Chu at joyce@sanjosespotlight.com or @joyce_speaks on X.
This story originally appeared in San Jose Spotlight.