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The Cost Of Homelessness In Silicon Valley

May 26, 2015 / By Daniel Flaming, Halil Toros and Patrick Burns
Underwriter: Destination: Home


This report identifies the characteristics of the most vulnerable, distressed and costly homeless residents of Santa Clara County to guide strategies for stabilizing their lives through housing and supportive services, improving their wellbeing and reducing public costs for their care.

The Study

This report analyzes 25 million records for the entire population of residents who experienced homelessness in Santa Clara County at any point from 2007 to 2012 – a total of 104,206 individuals.  This information includes the demographic and medical attributes of each person, justice system history, services received, and the cost of those services.

Records for this population were linked across all justice system, health care, social service, nonprofit, and housing agencies.  With information about over one hundred thousand people over six years, including detailed records from each service provider, this is the largest and most comprehensive body of information that has been assembled in the United States to understand the public costs of homelessness.

The Cost of Homelessness

The Santa Clara County community spent $520 million a year providing services for homeless residents over the six years covered by this study.  Health care costs accounted for 53 percent of expenditures for homeless persons.  Social welfare agencies including nonprofit service providers and county Social Services accounted for 13 percent of expenditures.  Justice system agencies accounted for 34 percent of expenditures, most of it for jail costs.

Homeless costs are heavily skewed toward a comparatively small number of frequent users of public and medical services.  For example, for all county residents experiencing homelessness in 2012, the average annual cost per person was $5,148.  However, individuals with costs in the top 5% accounted for 47 percent of all costs and had average costs of over $100,000 per year.

The highest cumulative public costs across all services are associated with individuals experiencing persistent homelessness.  The share of persistently homeless residents in the combined ninth and tenth cost deciles is twice as large as the share of short-term homeless residents. In a given year, there are approximately 2,800 persistently homeless residents of the county with average public costs of $83,000 per year.

However, persistent homelessness by itself is not associated with sufficiently high public costs to offset the cost of housing.  The typical persistently homeless individual has costs averaging $13,661 a year.  By prioritizing housing opportunities for the group of 2,800 persistently homeless individuals with the highest costs, it is possible to obtain savings that more than offset the cost of housing.

A crucial issue is differentiating individuals whose high costs are the result of a one-time cost spike versus individuals with ongoing high costs.  Roughly 70 percent of individuals in the top 5% have ongoing high costs and 30 percent have high costs that result from a one-time spike.  Those with ongoing high costs are likely to have the greatest cost savings or cost avoidance when they are stabilized with permanently affordable housing and supportive services.  An estimated 2,800 Santa Clara County residents are in the top 5% with continuing high costs.



Duration of Homelessness

The homeless population is dynamic, with many individuals making lasting exits after short episodes of homelessness, a smaller number of individuals cycling into and out of homelessness, and a very small number of individuals experiencing continuous, unremitting homelessness.  From 2007 through 2012, 13 percent of the total county population of 104,206 people who experienced homelessness were persistently homeless during part or all of the six-years.

Public Services

Outpatient health care is the most frequently used service supporting over half of homeless residents.  Over a quarter used the emergency room; 17 percent used mental health services; 14 percent were hospital inpatients; 13 percent used drug and alcohol rehabilitation services; and 6 percent used emergency psychiatric services.

A third of the study population had criminal justice system involvement over the six years of available data.  Among this group, a third were charged with felonies, half with misdemeanors and a fifth with infractions.  A third of the charges were for drug offenses.

Risk Factors for High Public Costs

Mental illness, substance abuse, incarceration history, and persistent homelessness all have a strong impact on public costs.

Some medical diagnoses are widely prevalent among homeless residents and also have a high cost profile.  Mental health disorders are foremost among these, with 26 percent of homeless individuals diagnosed and 40 percent with the diagnosis having overall public costs in the top two deciles.   Diseases of the circulatory system, which include heart disease, chronic hypertension, and rheumatic fever, are diagnosed in 11 percent of Santa Clara County homeless residents, 41 percent of whom have overall public costs in the 9th and 10th deciles.

The highest public costs for homeless residents are in the health care and jail systems.  If a homeless individual experienced any of the following over a two-year period, they were more likely than not in the top 5%:

  • 7 or more hospital inpatient days,
  • 11 or more emergency room visits,
  • 4 or more emergency psychiatric service visits.

Comparable benchmarks for jail stays over a two-year period include:

  • 7 or more days in cell block 8A, the jail mental health facility,
  • 10 or more days in cell block 2B or 2C, jail medical facilities,

Substance abuse and mental illness double the likelihood of being and staying in the top 5%, with odds two and a half times greater than average for people with both of these attributes.

Four-fifths of youth who age out of foster care and experience homelessness have diagnosed mental disorders and 65 percent are involved with the justice system.  Youth with both attributes are at high risk of having public costs in the top 5%.  More effective support is needed to help foster youth achieve a successful transition into adulthood.

Males have above average and females below average prospects of ongoing presence in the top 5%.  However, gender breakouts for the county show equal numbers of males and females experiencing homelessness and more females experiencing persistent homelessness.  This is very different from national data, which show two or three times as many males homeless as females.  This high rate of female homelessness should be investigated further.

Housed Individuals

The Housing 1000 Permanent Supportive Housing initiative was established by Destination: Home in 2011, in partnership with Santa Clara County, the City of San Jose and the Santa Clara County Continuum of Care, to provide supportive housing to homeless residents.  This study captures public expenditure data on 469 individuals who were housed under this program.  Half of homeless residents who were housed through this program were in the top fifth of the cost distribution for homeless persons, but only a fifth were in the top 5%.


Three quarters of the individuals housed by Housing 1000 remained housed, while one quarter exited housing.  By strengthening post-housing supportive services, there is the potential that retention rates can be further improved.

For the 103 homeless residents in the tenth cost decile who were housed through Housing 1000 program, the estimated average annual pre-housing public cost was $62,473.  The estimated average post-housing cost was $19,767, a reduction of $42,706 annually.

Next Step

The purpose of this study is to develop a statistically validated portrait of the highest cost homeless residents of Santa Clara County.  The descriptive factors that identify the highest continuing cost homeless persons can enable public institutions to provide housing and social services that will stabilize the neediest individuals and significantly reduce public costs.   The next deliverable for this project is an operational screening tool for identifying homeless residents who have the highest public costs.

Conclusions and Recommendations

  1. Give priority access to permanent supportive housing for persistently homeless residents with high public costs.
  2. Strengthen post-housing supportive services to increase housing retention.
  3. Enlist all public agencies that serve homeless residents in document homelessness.
  4. Enhanced support for foster youth with mental disorders and justice system involvement
  5. Provide scaled support for lower-cost, persistently homeless residents
    1. Housing subsidies without supportive services
    2. Expert help in qualifying for Supplemental Security Insurance
    3. Continue linking records of homeless residents to understand needs and plan services.


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Area of Work: People
Tags: Barriers, Behavioral Health, Cost Avoidance, Data Linkage, Disabilities, Economic Impacts, Employment, Health, Homelessness, Hospitals, Housing, Jails, Permanent Supportive Housing, Planning, Poverty, Prevention, Public Assistance, Public Costs, Risk, Santa Clara County, Screening, Silicon Valley, Social Outcomes, Social Safety Net, Social Services, Social Sustainability, Strategy, Welfare