The Los Angeles County’s Auditor-Controller’s Workplace is investigating the joint L.A. Metropolis-L.A. County homeless providers company, saying failures to pay homeless-service suppliers even after the county supplied the funding constitutes negligence, the county introduced on Thursday, Feb. 26.
The difficulty arose on Feb. 20 at a Los Angeles Homeless Providers AuthorityFinancial Committee assembly during which gaps have been revealed within the the company’s oversight, together with not paying county-funded service suppliers, and never correcting an analogous downside from final 12 months when the county Board of Supervisors ordered LAHSA to pay suppliers upfront, not months and months later.
Earlier audits, in addition to testimony from many nonprofit suppliers of road providers and non permanent housing that that they had to make use of their director’s personal bank cards simply to remain afloat and have been getting ready to shutting down, displaying the identical issues cropping up once more have been the primary motive for the brand new probe, in response to a letter despatched to Gita O’Neill, LAHSA interim chief govt officer. The letter was signed by Joseph Nicchitta, the county’s appearing CEO, and dated Feb. 26.
By not adhering to the brand new supplier cost system the county put in place to appropriate the issue final Might, this creates “a severe operational hole that jeopardized the supply of providers and our shared dedication to supporting service suppliers,” Nicchitta wrote.
Nicchitta additionally identified that LAHSA admitted it was having hassle making the funds and dealing with the excessive variety of incoming invoices bombarding the company and thereby making a backlog. The letter additionally quoted LAHSA management as saying the issues have been as a result of excessive workers turnover.
The identical points coming to mild once more prompted L.A. County Third District Supervisor Lindsey Horvath to name for the county to take away all taxpayer funds for homeless providers from LAHSA.
“Our communities are achieved with LAHSA’s mismanagement and cost delays. These failures have destabilized suppliers and eroded public belief —they usually should finish,” mentioned Horvath in an announcement launched Thursday. She mentioned L.A. County is taking new steps “to deal with continued negligence at LAHSA.”
In a response despatched to media retailers on Thursday, O’Neill mentioned LAHSA takes duty for passing on taxpayers {dollars} to pay homeless service suppliers and is working shortly to maneuver the funds that proceed providers for unhoused folks in L.A. County.
“Whereas the present backlog was pushed by a mixture of contracting delays, outdated inside insurance policies, and the lack of key midlevel leaders with institutional data ensuing from funding shifts, we have now recognized most of the issues and are already taking corrective motion,” O’Neill wrote.
She mentioned her company was flooded with invoices, which turned overwhelming. Two weeks in the past, LAHSA employed outdoors consultants to assist modernize its monetary methods by rushing up funds, examine disbursements and choice procedures that may make sure that suppliers are paid on time and might proceed their work, she added.
The company mentioned it acknowledges issues O’Neill known as “ache factors” in its bill cost processes and is keen to work with the Auditor-Controller Workplace who can present “perception and help.”
Horvath mentioned in an announcement “LAHSA doesn’t have the staffing or experience to pay its payments.” She mentioned whereas LAHSA has acknowledged a necessity for help, it has refused assist from 24 members of the county workers to help with day-to-day operations, for gratis to the company.
LAHSA’s issues prompted Horvath, with the cooperation of a majority of the Board of Supervisors, to create its personal homeless providers division on April 1. That vote included transferring providers and different obligations, together with tax {dollars} from the not too long ago handed Measure A for homeless providers and new inexpensive housing, away from LAHSA to the brand new county division.
The L.A. County Division of Homeless and Housing Providers, with 1,000 staff, is the most important division within the county.
After that vote, LAHSA CEO Va Lecia Adams Kellum resigned. Adams Kellum was handpicked for the job by L.A. Mayor Karen Bass.
The brand new L.A. County homeless division will handle about $1 billion per 12 months, together with taxpayer funds earmarked for homeless providers. The brand new division was established Jan. 1, with full funding transferring from LAHSA applications to the county division by July 1. It can report on to the Board of Supervisors.
LAHSA will proceed to conduct the Higher Los Angeles Homeless Rely, in addition to present providers via contract businesses and is managing {dollars} for homeless providers for the county till July 1.
“At the same time as we construct a brand new homeless providers system rooted in transparency and outcomes, we should additionally maintain the present system accountable,” mentioned Horvath in an announcement. “It’s clearer than ever why the county of Los Angeles should take away our taxpayer funds from LAHSA.
“Taxpayers deserve transparency. Suppliers need to be paid on time. Folks experiencing homelessness deserve a system that works,” mentioned Horvath.
In 2024, a number of audits of LAHSA identified related issues: Lack of funds and incapacity to trace {dollars} from taxpayer funds.
In March 2025, a brand new evaluation by Alvarez & Marsal, on behalf of U.S. District Decide David Carter, discovered that “fragmented information methods” throughout LAHSA, town of Los Angeles and the county made it “difficult” to trace key figures, such because the spending, the variety of beds supplied or the outcomes for contributors from June 1, 2020, to June 30, 2024.
“The shortage of uniform information requirements and real-time oversight elevated the danger of useful resource misallocation and restricted the power to evaluate the true affect of homelessness help providers,” auditors wrote.
Horvath known as for the forensic audit on Feb. 20, after the LAHSA committee listening to, in addition to rapid cost of all excellent invoices for providers rendered by suppliers contracted by L.A. County. She additionally needs LAHSA to clarify to the general public what’s been taking place at a public listening to performed by the Board of Supervisors. No date has been set.
“Undoubtedly, there’s extra to uncover that may disappoint us all. We should cease this insanity,” Horvath wrote.
