California state auditor shows governments can’t do the job

Milton Friedman once observed that with almost no exceptions, government programs fail to achieve their initial announced objectives and instead accomplish the opposite. That is a general observation; a newly released report by the California State Auditor on the state government’s efforts to reduce homelessness describes a specific example. To address California’s homelessness crisis, the auditor reports, “nine state agencies have collectively spent billions of dollars in state funding over the past five years administering at least 30 programs dedicated to preventing and ending homelessness.” In total, US$24 billion was allocated to these programs from 2018 to 2023, but even so the state’s homeless population of 181,000 is up 56.7 per from 2015.

What is most interesting about the auditor’s report is not homelessness in California in particular, but how the ineffectiveness and inefficiency of the state’s efforts seem so typical of all that government does. One schematic in the report illustrates the “many layers to homelessness funding and services.” The federal Department of Housing and Urban Development (HUD) transfers funds to: state governments, counties, cities, and various entities that are part of the “Continuum of Care” system established by HUD in 1993, including non-profits and public housing agencies.

The money that state governments receive from HUD, they then transfer to counties, cities, and entities in the Continuum of Care. Counties and cities receive money both from HUD and the state and then either directly administer services to the homeless (or those at risk of homelessness), or transfer funding to non-profit providers. Non-profit providers may themselves then deliver services directly or use subcontractors.

So many programs, so many government agencies and so many layers of procedure mean huge numbers of public employees are taking their cut of the funds for bureaucracy and administration. How much of the money is skimmed off the $24 billion before it reaches the homeless is an open question. As with onions, peeling the many layers of government programs will bring tears to taxpayers’ eyes.

The California auditor’s report concludes that the California Interagency Council on Homelessness (Cal ICH), which is responsible for co-ordinating the efforts of the nine agencies administering the homelessness programs, “has not consistently tracked and evaluated the State’s efforts to end homelessness.” As well, Cal ICH “has not aligned its action plan with its statutory goals. Consequently, it lacks assurance that the actions it takes will effectively enable it to reach those goals.” Moreover, it “has not established a consistent method for gathering information on homelessness programs’ costs and outcomes.” Finally, it “has neither ensured the accuracy of the information in the state data system, nor has it used this information to evaluate homelessness programs’ success.” In other words, the government is blowing through billions of dollars with no idea, and not even much of an attempt to get an idea, whether its programs are cost-effective or doing any good.

If this all sounds familiar, it’s because that is the standard experience everywhere with government: exorbitant costs to taxpayers, the public sector growing fat, and a complete failure to achieve the noble-sounding stated objectives of those programs. The same bureaucratic mess that defeats California’s attempts to reduce homelessness and dilutes government accountability, the Trudeau government is intent on expanding across Canada, including to dentistry, pharmacare and child care.

As they have done for decades in health care, the federal and provincial governments now point the finger at each other when confronted by the disastrous child care outcomes created by the national $10-per-day program.

This has been accompanied by significant bureaucratic expansion, evidenced by municipal governments hiring consultants to access grant money from higher levels of government, and a recent major announcement by the federal and Nova Scotia governments that allocated over $390 million to subsidizing existing child care spaces and workers, $52 million to creating child care spaces, more than $30 million to diversity and inclusion strategies, and $23 million to administration. In other words, more money for diversity and administration (over $53 million) than for new spaces ($52 million).

In Canada, in just about every area possible — child care, medical care, public schools, economic productivity, post-secondary education, affordability and standards of living — the government is expanding its reach through increased spending and regulation, and outcomes, not surprisingly, are deteriorating. Returning again to Friedman’s wisdom, his 1993 essay, Why Government is the Problem, is an evergreen document.