By Nick Gerda for LAist
Originally published March 6, 2025
L.A. city officials have made it impossible to accurately track homelessness spending, in large part by outsourcing to an agency that has failed to collect accurate data on its vendors and hold them accountable, according to findings from an independent audit commissioned by a federal judge.
The problems heighten the risk of tax dollars being misspent, auditors found after reviewing $2.4 billion in city funding.
The draft audit report, released Thursday by U.S. District Judge David O. Carter, comes as city leaders weigh an overhaul of homelessness spending. The report paints a blistering picture of a lack of accountability for taxpayer dollars.
“Insufficient financial accountability led to an inability to trace substantial funds allocated to the City Programs,” the report states. “The lack of uniform data standards and realtime oversight increased the risk of resource misallocation and limited the ability to assess the true impact of homelessness assistance services.”
There was “a high level of noncompliance” among the small number of service provider contracts that were reviewed, auditors added. And a lack of oversight, they wrote, has “made it challenging” to determine how program funds were used and “whether they achieved the intended outcomes.”
Many of the problems auditors identified were at the Los Angeles Homeless Services Authority, known as LAHSA. It’s the government agency, overseen by the city and county, that for decades L.A. mayors and council members have outsourced management of much of the city’s homelessness dollars for sheltering, feeding and serving people.
Auditors said the document trail provided by the agency was so poor that it made tracking the spending nearly impossible. The agency “failed to verify whether the services invoiced were provided,” auditors also found.
“These finding are not just troubling — they are deadly,” Elizabeth Mitchell, an attorney for the L.A. Alliance for Human Rights whose lawsuit prompted Carter to initiate the audit, said a statement. “The failure of financial integrity, programmatic oversight, and total dysfunction of the system has resulted in devastation on the streets, impacting both housed and unhoused. Billions have been squandered on ineffective bureaucracy while lives are lost daily. This is not just mismanagement; it is a moral failure.”
The audit was conducted by the firm Alvarez and Marsal, under Carter’s supervision.
Carter has scheduled a public court hearing to discuss the audit on March 27, where he has invited city officials to comment. He’s asked L.A. Mayor Karen Bass, Council President Marqueece Harris-Dawson, City Controller Kenneth Mejia, county Board of Supervisors Chair Kathryn Barger and the auditors to attend.
The audit report comes as county and city leaders are considering whether to yank hundreds of millions in annual funding out of LAHSA and instead have the city and county each directly manage it on their own.
LAHSA CEO Va Lecia Adams Kellum and the agency’s spokesperson have not responded to a request for comment about the audit report.
Reaction to the audit from elected officials
While much of the management of homelessness spending has been outsourced to LAHSA, ultimate responsibility for the city’s tax dollars rests with elected officials: Bass and the City Council.
LAist has reached out for comment from Bass and all five members of the council’s housing and homelessness committee.
Councilmember Bob Blumenfield said the audit documents “the same frustrations that I have had with the complexity and opaqueness into how the city funds homeless services.”
Homelessness FAQ
How did we get here? Who’s in charge of what? And where can people get help? Read answers to common questions around homelessness in the L.A. region.
“The fragmentation of the system makes it difficult for the City to follow the money and the lack of direct control over the homeless contracts and data exacerbates the problem,” he added.
He’s the only official to provide comment so far. LAist will update this story if others respond.
The other council members on the homelessness committee are Nithya Raman, Ysabel Jurado, Curren Price and Adrin Nazarian.
The city is projected to send $306 million in taxpayer dollars this fiscal year to LAHSA.
This is a developing story. Check back later for updates.
This report is reprinted with permission from Southern California Public Radio. © 2024 Southern California Public Radio. All rights reserved.
