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Wave Wire Services
LOS ANGELES — Homelessness programs are hampered by poor oversight resulting in an inability to track substantial funds allocated to the city’s assistance services, according to the draft of a court-ordered audit issued March 6.
Auditors with the firm Alvarez & Marsal identified $2.3 billion of funding, including appropriations, commitments or spending related to city programs, according to the assessment released by U.S. District Judge David Carter.
“Due to the manner in which the city recorded expenditures for homelessness assistance services, A&M was unable to completely quantify the total amount spent by the city for each component of the city programs using the data provided,” the preliminary assessment stated. “Multiple funding sources and allocations across various city departments resulted in fragmented accounting records.”
Further, auditors said, the city and the Los Angeles Homeless Services Authority “did not initially provide all requested financial data, prompting [auditors] to make multiple efforts to identify, trace and reconcile relevant data as it was produced.
The auditing firm said it relied on the financial data produced by the city and the homeless services authority, because it did not have direct access to the financial information systems used by the city. As a result, because the city and the authority were unable to identify and calculate relevant expenses for all city programs, auditors were unable to quantify the total amount of money spent to establish beds and provide associated homeless supportive services, the report stated.
In addition, limited financial oversight and performance monitoring of homeless programs resulted in oversight that frequently missed verifying the quality, legitimacy or reasonableness of expenses, the audit determined.
Carter set a hearing for March 27 in Los Angeles federal court to discuss the assessment.
“The invoicing process between the city and LAHSA, or the ‘cash request’ process, was a time-consuming, manual process at risk of human error, exposing the city and LAHSA to potential accounting inaccuracies and complicating precise reconciliation of contract expenditures,” the report said.
Also, contracts between the city, LAHSA and service providers “frequently contained broad terms without clear definitions, which created ambiguity about the scope and type of service delivered,” the audit found.
Los Angeles Mayor Karen Bass issued a statement saying, ÆThe broken system the audit identifies is what I’ve been fighting against since I took office. This audit validates our work to change what’s festered for decades. We still have work to do, but changes we’ve made helped turn around years of increases in homelessness to a decrease by 10% — the first one in years.
“The city, the county and LAHSA are working together to change and improve the system and we are committed to continuing to do that.”
Bass was mayor for less than half the time covered by the audit — June 1, 2020 through June 30, 2024. Bass was sworn on Dec. 12, 2022, in to succeed Eric Garcetti, who was barred from running for reelection because of term limits.
Los Angeles City Councilwoman Nithya Raman, chair of the City Council’s Housing and Homelessness Committee, said the preliminary report underlined her own findings that more oversight of the city’s homelessness assistance programs was needed.
“The findings of this audit reinforce the need for real oversight and performance management of our city’s homelessness response,” she said. “This is exactly what I have proposed in my motion to create a division in the Los Angeles Housing Department to centralize performance management and oversight of the city’s spending on homelessness programs.
“This work must happen now: This is about more than just metrics — this is about saving people’s lives by bringing them indoors into safety.”
Raman has introduced a motion calling for more oversight of the city’s homelessness response.
Raman’s office pointed out that despite the city spending over $1 billion annually into its regional homelessness response, “there is currently no staff or department within the city government tasked with monitoring the outcomes of this investment, and very little data to hold the system accountable.”
The homelessness assistance programs to be scrutinized by the audit include, but are not limited to, programs used by Bass in her 2024-25 draft budget summary, which includes a $1.3 billion commitment to end homelessness, court papers show.
The audit was to look at three specific areas, Carter said, including Bass’ Inside Safe program, designed to move unhoused residents from street encampments indoors, and two other agreements.
A statement from Bass’ office said “Inside Safe is tracked and reported on through monthly public presentations to increase accountability and transparency for progress to save lives and move people inside. In that way, it is more transparent than almost any other program in LA city.”
Carter’s decision to hire Alvarez & Marsal to conduct the audit came about as part of a lawsuit brought in March 2020 by the L.A. Alliance for Human Rights, a group of downtown business owners who sued the city and county of Los Angeles to compel elected officials to rapidly address the homelessness crisis, especially in light of the COVID-19 pandemic.
The plaintiffs demanded the immediate creation of shelter and housing to get people off the streets, services and treatment to keep the unhoused in shelter, and regulation of public spaces to make streets, sidewalks and parks safe and clean.
Carter has expressed frustration regarding the accounting of public funds to battle the homelessness crisis, and has repeatedly mentioned from the bench that $600 million was distributed to city programs in years past without proper accounting.
Paul Webster, executive director of the L.A. Alliance, said the report confirmed what the lawsuit’s plaintiffs have been alleging for years.
“We knew this was a fractured, ineffective system, (rife with) financial mismanagement,” he said. “We just didn’t know how deep it went, and how difficult it was for A&M to get basic accountability information.
“A&M used words like ‘difficult’ and ‘complex’ and ‘challenging’ — not referring to getting people off the streets — but to emphasize how difficult it was for them to get basic information [from the city about expenditures].”
Webster said that because the systems used by the city, county and LAHSA are so “fractured and ineffective,” there is little consistency in terms of data tracking and accountability.
“Our conclusion is this audit really validates what we’ve been saying, and it calls for a complete overhaul of the homelessness [response] system,” he said.
