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A new audit finds that a Los Angeles homeless services agency with an $875 million annual budget has routinely paid service providers late, failed to track whether contracts were followed and, in some cases, gave taxpayer funds meant for other purposes to providers who weren’t supposed to receive the money.
The findings released Tuesday night by the L.A. County Auditor-Controller’s office highlight long-standing issues at the Los Angeles Homeless Services Authority and raise new questions about how the agency is spending large pools of public money.The auditors wrote that the agency had misused funds by taking money from one government funder “to pay for services provided under another government funder’s contract/grant.” The auditors said, “LAHSA must discontinue this practice to ensure financial resources and operations for other programs are not inappropriately impacted.”A new audit finds that a Los Angeles homeless services agency with an $875-million annual budget has routinely paid service providers late, failed to track whether contracts were followed and, in some cases, gave taxpayer funds meant for other purposes to providers who weren’t supposed to receive the money.by the L.A. County Auditor-Controller’s office highlight long-standing issues at the Los Angeles Homeless Services Authority and raise new questions about how the agency is spending large pools of public money. The auditors wrote that the agency had misused funds by taking money from one government funder “to pay for services provided under another government funder’s contract/grant.” “LAHSA must discontinue this practice to ensure financial resources and operations for other programs are not inappropriately impacted,” the audit stated. The agency is jointly overseen by the city and county of L.A. It was established in 1993, and currently administers funding from the county, the city, the state of California and the federal government.LAHSA has repeatedly found itself in the spotlight over public frustration with rising homelessness in recent years despite billions of dollars in new voter-approved funding. Va Lecia Adams Kellum, who took over as LAHSA’s CEO in March 2023, told reporters in a news conference Wednesday ahead of the audit’s release that some of the years covered by the report predate her tenure. She said LAHSA has already worked to address issues, and has rolled out new“It is critically important that we are measuring our work and doing everything that we say we're doing,” Adams Kellum said. “We want to be able to show what's working. And in any report card, you also see what's not working — what improvements are needed.”Billions of dollars in new funding has been spent in recent years to address the region’s homelessness crisis, but the number of people experiencing homelessness across L.A. County hasThe Auditor-Controller’s office undertook an in-depth financial review of LAHSA with the goal of giving taxpayers and elected leaders a closer look at how homelessness funding is being spent to get people off the streets, connected with service programs and placed into shelters and apartments.LAHSA hasn’t always paid service providers on time, even when funds were available. The auditors found that in a sampling between July 2023 and May 2024, LAHSA paid five out of 13 subcontractors late. The agency in some cases paid providers using the wrong funding source. For example, auditors found that one L.A. County subcontractor was paid 14 days before LAHSA received county funding intended to cover that cost. LAHSA confirmed to the auditors that they used another unrelated funding source. LAHSA does an inadequate job of monitoring contracts to make sure providers are complying with the terms of their funding. The auditors found that about half of LAHSA’s planned contract reviews did not include methods for monitoring a provider’s compliance with service delivery requirements. LAHSA did not establish agreements with service providers to require them to repay nearly $51 million in advances that the agency provided in 2017 using county taxpayer dollars. By July 2024, only $2.5 million of that money had been paid back. The auditors discovered an additional $15 million in outstanding cash advances to other providers — some dating back to 2016 — that still haven’t been paid back. Some providers with unpaid advances no longer contract with LAHSA. LAHSA officials were given a chance in the audit to respond to the findings. They disagreed fully or partially with most of the points above, but agreed that payments to providers were often late. For the findings they agreed with, they laid out timelines for fixing the problems.that found the city of L.A. did not spend at least $513 million in public funds that were budgeted to help with the homeless crisis during fiscal year 2024. The office said a lack of staff and old technology contributed to the spending problems.The judge has ordered officials from LAHSA, the city and the county into court Thursday morning to justify why they’re behind schedule in providing auditors with needed information.Agency leaders said during the news conference last week that LAHSA has paid about 80% of contracts on time over the past two years. LAHSA leaders added that their staffers are now checking in with providers on a monthly basis and gauging their performance through more frequent “desk audits.” Janine Trejo, LAHSA’s chief financial officer, said, “We go out and we conduct a monitoring of the service providers, their facilities, their expenses and a sampling of their documents.” As for the $51 million in advances from 2017, Rachel Johnson — LAHSA’s chief of staff — said that money was meant to buoy service providers through 2027. “This allowed the providers to really expand rapidly into the work, as was required by the funding,” Johnson said. Agency officials told auditors their agreement with the county did not require the creation of formal repayment agreements with providers for those advances.will increase sales taxes in the county by a quarter-cent for every dollar spent, with most of that money going to homelessness services overseen by LAHSA. Adams Kellum said Measure A already includes new accountability requirements — such as five-year progress reports — that follow the audit’s recommendations. “We're in alignment,” she said. “I'm encouraged that these are things we have been working on over the last year and a half.” However, the audit could increase scrutiny of LAHSA from L.A. County supervisors and city council members who’ve repeatedly said they feel like the agency is a black box. After being told last year that L.A. taxpayer funds could have been spent on motel room shelters that weren’t actually occupied, Councilmember Bob Blumenfield discussed halting city dollars to the agency due to extensive data problems. Blumenfield chairs the council’s budget committee.
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