LOS ANGELES – 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 Thursday.
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 A&M to make multiple efforts to identify, trace and reconcile relevant data as it was produced to A&M.”
A&M said it relied on the financial data produced by the city and LAHSA, as A&M did not have direct access to the financial information systems used by the city. As a result, since the city and LAHSA 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, A&M 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,” A&M found.
The homelessness assistance programs to be scrutinized include, but are not limited to, programs used by L.A. Mayor Karen Bass in her 2024-2025 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.
Carter’s decision to hire A&M 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 — before Bass was elected mayor in 2022 — without proper accounting.
