LA Lost Track of Billions in Homelessness Funding: Audit

Los Angeles City officials have lost track of billions in spending on homelessness services, according to an independent audit released on March 6.

The audit was commissioned by federal U.S. District Judge David O. Carter and completed by Alvarez & Marsal Public Sector Services, LLC. (A&M).

The report noted that A&M found it challenging to completely quantify how Los Angeles officials spent approximately $2.3 billion in funding meant to shelter, feed, and serve homeless people due to the incomplete and inaccurate manner the city’s homelessness program recorded and collected data.

The report painted a grim picture of Los Angeles’ homeless program managed by Los Angeles Homeless Services Authority (LAHSA), which was established in 1993.

“Repetitive information gaps, coupled with a lack of accurate and complete data and documentation, posed significant obstacles to this assessment,” the report states.

“Insufficient financial accountability led to an inability to trace substantial funds allocated to the City Programs. Fragmented data systems across LAHSA, the City, and the County and inconsistent reporting formats made it challenging to verify spending and the number of beds or units reported by the City and LAHSA, track participant outcomes, and align financial data with performance metrics.”

The report also cites a paucity of uniform data standards and real-time oversight, which limited the ability of the auditor to fully assess the true impact of homeless programs and raised concerns of resource misallocation.

A&M found that key stakeholders failed to monitor homelessness programs, and that LAHSA was unable to identify relevant service provider contracts and expenses. It also found gaps in documentation.

“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 report reads.

The county and city of Los Angeles outsources the management and allocation of funds to the LAHSA, an agency that the city and county are responsible for overseeing.

Fragmented data across the city, county, and LAHSA posed challenges to verifying spending and aligning financial data with performance metrics. The audit also found that the LAHSA failed to corroborate whether services were provided for invoiced items.

“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,” according to the report.

A&M said it is now recommending the City of Los Angeles consider approving and appointing an independent financial manager to create a robust framework for reviewing and approving service provider invoices and LAHSA invoices or cash requests.

The auditor also recommended the city mandate that service providers produce detailed, itemized invoices outlining specific costs, along with clear supporting documentation for the verification of service delivery.

Homelessness has reached historic levels in Los Angeles, according to the report. In 2023, seven homeless individuals died per day in Los Angeles, according to a separate report released on March 6 by the L.A. County Department of Public Health.

People experiencing homelessness were 4.5 times more likely to die than the L.A. County population as a whole, according to the county’s report. The leading cause of death was a drug overdose.