By FRED SHUSTER
City officials called to a Los Angeles federal court hearing Thursday are expected to respond to the bleak picture of the region’s homelessness assistance programs painted by an independent consulting firm that spent months trying to track expenditures.
The court-ordered audit by the firm Alvarez & Marsal identified $2.4 billion of funding, including appropriations, commitments or spending related to city programs.
The scathing assessment released earlier this month by U.S. District Judge David Carter revealed a disjointed and poorly managed system resulting in the auditors’ inability to track substantial funds allocated to assistance services.
Carter requested Mayor Karen Bass, Council President Marqueece Harris-Dawson, City Controller Kenneth Mejia, and Board of Supervisors Chair Lindsey Horvath show up at the hearing Thursday morning.
According to the A&M report, information gaps, coupled with a lack of accurate and complete data and documentation, posed “significant obstacles” to auditors. Further, insufficient financial accountability led to an inability to trace substantial funds allocated to the city’s programs, investigators found.
Fragmented data systems across the Los Angeles Homeless Service Authority — a city-county joint homeless agency — the city, and Los Angeles County, along with 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,” A&M said.
“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 report determined.
In other words, according to court papers filed by the county, “LAHSA does not know who it is paying, and for what. The city doesn’t know how much it is paying, and for what. The system is disjointed and mismanaged, with layers of redundancies and bureaucracy built on top of itself. 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.”
A&M stated that due to the manner in which the city recorded expenditures for homelessness assistance services, the firm “was unable to completely quantify the total amount spent by the city for each component of the city programs using the data provided.”
In addition, auditors said, the city and LAHSA “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.”
Because 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.
Bass issued a statement when the assessment was published, saying, “The 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 in on Dec. 12, 2022, to succeed Eric Garcetti, who was not allowed to run for re-election because of term limits.
Los Angeles City Councilwoman Nithya Raman, chair of the City Council’s Housing and Homelessness Committee, has said the report underlined her own findings that more oversight of the city’s programs was needed.
“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,” she said.
The audit looked at three specific areas, including Bass’ Inside Safe program, designed to move unhoused residents from street encampments indoors, and two other agreements.
Carter’s decision last year to order the assessment 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 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.