(Editor’s note: This March 28 story “LAHSA’s 18-Year Record of Audit Failures on Homeless Spending Laid Bare in Federal Court,” first appeared in the Westside Current and is printed with permission.)
Homeless continue to die on the street. City, County and LAHSA don’t know where the money to house them has gone.
By JAMIE PAIGE
A federal judge sharply criticized the city and county of Los Angeles on Thursday over the management of homelessness spending, expressing “grave doubts” about oversight efforts and warning that years of audits have failed to result in meaningful change.
U.S. District Judge David O. Carter said from the bench that he “distrusts” the financial figures the city receives from homeless service providers and cited a long history of “stonewalling” and unaccountability in the region’s homelessness programs.
“There was a lot of stonewalling going on,” Judge David O. Carter said during the hours long hearing in the L.A. Alliance for Human Rights lawsuit against the City and County of Los Angeles. “If you don’t have the documentation, just say so.”
The hearing was called to review the findings of a court-ordered audit conducted by Alvarez & Marsal (A&M), which spent more than a year attempting to track $2.3 billion in funding tied to three major city programs, including Mayor Karen Bass’s Inside Safe initiative. The report, which cost $2.8 million and was released earlier this month, painted a picture of a disjointed system with fragmented oversight and missing or unreliable financial data.
“The city doesn’t know how much it is paying, and for what,” the auditors wrote. “There is nearly zero financial oversight or accountability by the city and county, of LAHSA, or by LAHSA of the service providers with whom it contracts.”
Carter, who has overseen the case since 2020, called the findings deeply troubling but not new.
“No accountability. This is old news,” he said, referencing nearly two decades of failed oversight. He recounted efforts dating back to 2007 to audit the Los Angeles Homeless Services Authority (LAHSA), which have repeatedly flagged poor fiscal monitoring, vague goals, and unreliable data.
Key Audits and Reports Targeting LAHSA Since 2007
2007 — HUD Inspector General Audit
The U.S. Department of Housing and Urban Development’s Inspector General found that LAHSA failed to conduct onsite fiscal monitoring of project sponsors. Auditors cited missing documentation, ineligible expenses, and poor cash management—warning of systemic accountability and compliance failures.
2019 — Los Angeles City Controller Audit
Then-City Controller Ron Galperin criticized LAHSA’s $54 million investment in street outreach, noting a success rate of just 4 to 6 percent. The audit cited vague goals and inconsistent data collection, concluding that LAHSA’s performance metrics were ill-defined and unverifiable.
2022 — Judicial Oversight and Court Warnings
U.S. District Judge David O. Carter publicly raised concerns about the inability to track $600 million in homelessness funding. He accused agencies of “stonewalling” and failing to require providers to justify services rendered.
2024 — LA County CEO & LAHSA Internal Operations Review
Commissioned by the L.A. County Board of Supervisors (Agenda Item 4, Feb. 27), this review exposed major financial control issues. LAHSA issued $50.8 million in Measure H cash advances since FY 2017–18 without repayment agreements. By July 2024, only $2.5 million had been recovered. An additional $8 million remained unrecovered, including $409,000 held by defunct providers. Auditors recommended stronger fiscal oversight and grant compliance practices.
March 2025 — A&M Audit Findings Released
The $2.8 million audit revealed that LAHSA, the City, and the County failed to provide complete or reliable financial data. Of the $50.8 million in provider advances, only $220,000 had been recovered. The report concluded that there was “nearly zero financial oversight or accountability.” Judge Carter responded: “All these promises now — they’re meaningless.”
In the most recent audit, A&M reported that fragmented data systems across LAHSA, the city, and the county, along with inconsistent reporting formats, made it difficult to verify expenditures, assess bed counts, or measure performance.
“The lack of uniform data standards and real-time oversight increased the risk of resource misallocation and limited the ability to assess the true impact of homelessness assistance services,” the firm concluded.
According to court filings, LAHSA did not initially provide all requested financial data, requiring A&M to repeatedly request information to reconcile expenditures. As a result, auditors were unable to quantify the total amount spent by the city to create shelter beds or deliver supportive services.
In court Thursday, Carter raised concern about the timing of a similar audit conducted last year by Los Angeles County. The audit was released a few days after the public approved Measure A, a new tax intended to generate more funding for homelessness.
“I’m on the record as saying I’m concerned about the timing of this audit,” he said.
He also took aim at LAHSA’s physical presence, describing its downtown headquarters as an “ostentatious high-rise” that sends the wrong message.
“I made a record on three different occasions that I will never go into LAHSA’s building again,” Carter said. “I don’t think it does the public any good with that kind of money spent. When you come back and say you’re short of money — trust me — we’ll have a real argument if you don’t have money or not.”
L.A. Karen Bass made a hasty trip to U.S. District Judge David O. Carter’s courtroom.
Mayor Karen Bass, who was not present at the start of the hearing, arrived after the judge summoned her assistant and publicly questioned her absence. Carter had requested — but did not order — that Bass, Council President Marqueece Harris-Dawson, City Controller Kenneth Mejia, and Board of Supervisors Chair Lindsey Horvath attend. He was particularly frustrated that LAHSA CEO Va Lecia Adams Kellum was not present.
“Told that Kellum was in Boston,” Carter said, “that’s not acceptable to me. This should take precedence. This is important. This is not business as usual.”
When she addressed the court, Bass acknowledged the system’s dysfunction.
“There’s much in the report I agree with,” she said. “I believe we can stop people from dying on our streets.”
Attorneys for the plaintiffs, the L.A. Alliance for Human Rights, said the audit validated long-standing concerns. As part of the settlement, both the City and County committed to benchmarks aimed at reducing unsheltered homelessness.
The agreement outlined targets of 12,915 beds created, 9,800 encampment reductions, and 3,000 treatment beds added. However, reported progress to date has fallen short of those goals. According to LA Alliance website, only 4,815 beds have been created, 4,705 encampments reduced, and 1,353 treatment beds added—less than half of what was promised in each category.
In court Mitchell told the judge the city is backing out of a promise to expand shelter beds if Measure A passed.
“There was an agreement if Measure A passed,” said Elizabeth Mitchell, counsel for the Alliance. “Measure A passed, and that offer was rescinded.”
Mitchell said the city and county had invoked a “fiscal emergency” in an attempt to walk back their obligations — a justification she called disingenuous.
“We are out of patience,” she said. “There are the best of intentions. But for 24 years, audits have said the same thing. The city and county keep throwing money at the same thing, and now all of a sudden we’re surprised that it isn’t working?”
She pointed to prior audits from HUD , which also highlighted LAHSA’s performance failures. Despite the repeated warnings, Mitchell argued, “the culture of unaccountability remains unchanged.”
“This is about the people, Mayor,” she said. “We have seven people a day dying on the streets and the system is broken. It’s a waste of money, time, and lives.”
In a formal statement issued to Westside Current after the hearing, Mitchell expanded on her remarks:
“Today’s findings from the A&M audit confirmed what we’ve long argued: the City, County, and LAHSA are operating within a broken system that fails to serve the people it was created to help. As Judge Carter noted, the entire ‘homeless industrial complex’ lacks accountability, transparency, and the ability to track outcomes—leaving the door wide open to fraud and failure.
The City has admitted it cannot meet the metrics and milestones it agreed to under our settlement. We filed this lawsuit to compel real solutions to a crisis that has festered for over 40 years, and the evidence shows the current leadership lacks the will, means, and infrastructure to deliver results.
We have proposed receivership as the only viable path forward—an extraordinary step, but one we believe is necessary to restore accountability and deliver real results for unhoused Angelenos, residents, and taxpayers. We recognize Judge Carter is giving the City, County, and LAHSA every opportunity to improve—but we have no confidence they will succeed. With the right leadership under receivership, we believe real progress is finally possible.”
Although the Alliance asked the court to consider appointing a receiver, Judge Carter said he was not yet ready to take that step.
“I don’t think we’re at the receivership level yet,” Carter said. “I’m giving you a chance to solve it. But every time I say it, it sounds like it doesn’t mean it.”
Paul Webster, executive director of the Alliance, said the audit exposed just how fractured and ineffective the city’s homelessness infrastructure has become.
“We knew this was a fractured, ineffective system, rife with financial mismanagement,” Webster said. “We just didn’t know how deep it went, and how difficult it was for A&M to get basic accountability information.”
The court is expected to reconvene in May. Until then, Carter made clear that the city and county will be expected not only to account for how much they’ve spent — but to show whether it made a difference.
“All these promises now,” he said, “they’re meaningless.”
Information from City News Service was used for this report.