City staff on Tuesday told the Neighborhood Services & Education Committee they have built a much larger temporary shelter system and are shifting to performance management, but staff cautioned that data gaps and intergovernmental coordination will determine whether the city can sustain services and reach its goal of “functional zero.”

Assistant City Manager Lee Wilcox summarized the strategy as a logic‑model roadmap meant to balance short‑term urgency with building long‑term infrastructure. “Our long term goal is to move towards functional 0, which means actively managing an entire system, from prevention to a permanent solution,” Wilcox said.

Housing Director Eric Sullivan said the city’s shelter system has expanded rapidly and will top just over 2,150 beds across 22 sites once the Cerrone site opens early next year. That capacity, he said, creates opportunities to optimize operations across property management, food, security and case management and to build operational ‘‘elasticity’’ to respond to emergencies.

Sullivan said staff are pursuing several cost‑reduction measures tied to a council direction to target a 20% reduction in shelter operating costs. He said an RFP for standardized security operations identified approximately $1.3 million in savings and that a recently closed food RFP could reduce about $1 million from current food spending (staff estimate current annual food expenditures across sites at roughly $5.4 million). Those items, together with property‑maintenance and RFP actions, are part of a plan staff said could reach the council’s target as contracts and implementation proceed.

A major near‑term funding strategy is CalAIM, the state’s Medi‑Cal initiative. Sullivan said the city has received partial technical assistance and is building an operational hub to capture CalAIM‑eligible reimbursements — a complex effort that requires new city and county workflows and additional staff capacity. “We’re stepping into health‑care administration light to capture that revenue stream,” he said, noting the work will take longer than initially expected.

PRNS Director John Ciccarelli described enforcement and outreach around no‑encampment zones and said the city has established “over 26 miles” of such zones. Ciccarelli said staff tracked 125 re‑encampments in the first three months after a zone went into effect and found roughly two‑thirds of those occurred in the first 30 days as people tested enforcement and outreach messages.

Council members pressed staff on prevention and how to protect families from first‑time homelessness as federal funding declines. Council Member Campos asked when McKinney‑Vento family‑homelessness data directed by the council on Sept. 30 will appear in regular reporting; Sullivan said additional points of collection are being inserted into site contracts and that staff aim to begin reporting those data by the end of Q3 next year after an initial data‑cleaning effort.

Multiple members asked for more precision on the 20% cost‑reduction target. Sullivan and Wilcox said staff have begun identifying savings—security standardization ($1.3M) and food ($~1M) among them—but that full realization depends on completing contracting, aligning site operations and the sequencing of openings such as Cerone and Cherry.

Staff emphasized the county partnership as central to matching shelter placements with services. Sullivan said a recent agreement with the county targets about 180 permanent‑supportive‑housing placements per year for people in the city’s shelter system, and staff said aligning HMIS, the Here For You hotline, and other county and city systems is essential to shorten placement timelines.

What’s next: staff said they will continue RFP and contracting work, finalize HMIS data‑sharing steps with the county, and report back through upcoming budget processes. The committee accepted the staff report unanimously.