Local housing capacity, behavioral health services and criminal justice policies are playing a role in California’s homelessness and drug crises, according to a new report examining how policy decisions have affected outcomes across the state.
The report compiled by the Public Policy Institute of California found that counties that added more permanent housing beds per capita saw larger decreases in homelessness, while areas with larger declines in incarceration following Proposition 47 saw greater increases in homelessness.
“Places that saw larger increases in permanent housing beds per capita saw larger decreases in the homelessness rate,” researchers Magnus Lofstrom, Shannon McConville, and Sean Cremin stated in the report.
California’s homelessness rate has increased more than 60% since 2014, with unsheltered homelessness driving most of the growth. The state had the sixth-highest overall homelessness rate and the second-highest unsheltered homelessness rate among states in 2025.
Researchers found that counties with higher rents tended to have higher homelessness rates. But they did not find a statistically significant relationship between changes in homelessness and changes in local housing markets, poverty or unemployment.
The report also examined Proposition 47, the 2014 ballot measure that reclassified some drug and property offenses from felonies to misdemeanors. Researchers estimate that the law contributed to a roughly 10% increase in California’s unsheltered homelessness rate, equivalent to about 7,000 additional people experiencing unsheltered homelessness between 2015 and 2019.
The researchers also estimated that Prop. 47 was associated with a 7% to 8% increase in serious drug use, measured through overdose deaths, hospitalizations and emergency department visits. Drug treatment admissions fell by roughly 20%, largely because of fewer referrals from courts and criminal justice agencies.
“Our findings suggest that Prop 47 likely did contribute to rising rates of homelessness and drug overdoses, as well as declines in drug treatment,” the researchers stated.
The report cautions that the relationship between homelessness, drug use and criminal justice policy is complex. Researchers found no consistent evidence that California’s 2011 public safety realignment or pandemic-era reductions in incarceration affected homelessness or drug use.
They also emphasized the role of the criminal justice system in connecting vulnerable people with services.
“Jails and prisons serve as sources of shelter for people experiencing or at risk of homelessness,” the researchers stated in the report. They added that courts and criminal justice agencies can help connect people with the drug treatment they need.
California has made major investments in housing and behavioral health services in recent years. The researchers said state and local agencies should continue evaluating whether those investments are reaching people most at risk and whether newer policies, including Proposition 36, are effectively connecting people with treatment.
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