Audit Reveals Los Angeles Mismanaged Billions in Homelessness Funding
An audit initiated by a federal judge revealed that a Los Angeles agency faced issues with inadequate documentation and a lack of financial accountability.
According to an independent audit published on March 6, Los Angeles City officials have lost track of billions spent on homelessness services.
The audit was commissioned by U.S. District Judge David O. Carter and carried out by Alvarez & Marsal Public Sector Services, LLC (A&M).
The findings showed that A&M struggled to accurately account for how approximately $2.3 billion intended for homeless services—like sheltering and feeding—was utilized due to the incomplete and inaccurate documentation from the city’s homelessness program.
The report provided a bleak overview of the Los Angeles homeless program overseen by the Los Angeles Homeless Services Authority (LAHSA), which was founded in 1993.
“Recurring information gaps, along with a lack of accurate and complete data and documentation, created substantial challenges for this assessment,” the report indicated.
“Inadequate financial accountability prevented tracing significant funds allocated for City Programs. Disparate data systems among LAHSA, the City, and the County, coupled with inconsistent reporting formats, complicated the verification of expenditures and the reported number of beds or units by the City and LAHSA, tracking participant outcomes, and aligning financial data with performance metrics.”
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A&M discovered that essential stakeholders did not effectively monitor homelessness programs and that LAHSA was unable to pinpoint relevant service provider contracts and expenditures. It also identified documentation shortcomings.
“Contracts between the City, LAHSA, and service providers often featured vague terms lacking precise definitions, which led to confusion regarding the scope and type of services rendered,” the report added.
The management and allocation of funds for homelessness services in Los Angeles are outsourced to LAHSA, an agency that the city and county jointly oversee.
Inconsistent data from the city, county, and LAHSA created difficulties in verifying expenses and correlating financial data with performance measures. The audit also revealed that LAHSA failed to verify whether services were delivered in relation to invoiced items.
“The lack of standardized data and continuous oversight heightened the risks of misallocating resources and restricted the evaluation of the actual effectiveness of homelessness assistance services,” according to the report.
A&M recommends that the City of Los Angeles contemplate appointing an independent financial manager to establish a strong framework for reviewing and approving service provider and LAHSA invoices or cash requests.
The auditor also suggested that the city require service providers to submit detailed, itemized invoices that clearly outline specific costs, along with supporting documentation to verify service delivery.
LAHSA has not responded to a request for comment.
Individuals experiencing homelessness were found to be 4.5 times more likely to die compared to the overall population of L.A. County, as noted in the county’s report. The primary cause of death was attributed to drug overdoses.