The Los Angeles County Board of Supervisors will vote April 1 on whether to shift hundreds of millions of taxpayer dollars from the much-maligned L.A. Homeless Services Authority to a new county department promising greater accountability.

The motion by Supervisors Lindsey Horvath and Kathryn Barger says the county would reallocate most of the $350 million sent to LAHSA annually to a “transparent, efficient system overseen by one entity, directly responsible to the Board of Supervisors and held accountable to clearly defined performance-based outcomes.”

“To end the madness of the homelessness crisis in Los Angeles, we must streamline and consolidate our services and resources, and be driven by measurable outcomes,” Horvath said in a statement. “This proposal isn’t more government; it’s smarter, more effective government. With recent audits underscoring the urgent need for reform and stronger accountability, now is the time to implement long overdue change.”

Under the proposal, the first phase would merge the Chief Executive Office’s Homeless Initiative and the Department of Health Services’ Housing for Health programs — which have a combined budget of nearly $2.4 billion — to serve as a foundation for the new department. The department then would absorb much of LAHSA’s funding — and part of the agency’s staff — over the following year. A transitional administration will lead the department until a director is selected through a national search.

LAHSA, jointly funded by the county and the city of Los Angeles since its creation in 1993, would continue to receive some support from the county for a small number of programs and services required by the federal government, such as the annual homeless count, according to the motion.

LAHSA failures

The move comes after a series of audits over the past year have raised significant questions about LAHSA’s handling of taxpayer funds. In November, the Los Angeles auditor-controller reported that LAHSA, as of July 2024, had only recovered 5% of the $50 million in cash advances issued to its partners since 2017 due to its failure to establish formal agreements determining “how and when” those advances should be repaid.

The agency was unable to provide adequate supporting documents for approximately $5 million of the advances, according to the audit. Other payments to its partners were made excessively late, or improperly paid out using the wrong funding sources, the report said.

In December, L.A. City Controller Kenneth Meija, in an audit of the city of Los Angeles’ interim housing programs, found that LAHSA “does not have a formal process in place to regularly review the performance of providers” or to “hold underperforming service providers accountable.” The review found that fewer than 20% of people in the city’s interim housing programs ended up in permanent housing. An average of one-in-four interim beds went unused, at a cost of $218 million to taxpayers, over the five-year period reviewed, according to the report.

Rapid expansion, COVID blamed

In separate responses to both audits, LAHSA attributed many of the deficiencies identified to a period of “rapid organizational expansion” as a result of the passage of Measure H and the challenges brought by the COVID-19 pandemic.

This month, a new assessment by Alvarez & Marsal, on behalf of U.S. District Court Judge David Carter, found that “fragmented data systems” across LAHSA, the city and the county made it “challenging” to track key figures, such as the spending, the number of beds provided or the outcomes for participants from June 1, 2020, to June 30, 2024.

“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 auditors wrote.

That review found vague contracts with ambiguous scopes, failures by LAHSA to verify services provided before issuing payments and a wide variability in costs across the network. For example, one service provider might submit expenses of $7 per bed, per day for personnel, while another asked for $67 per bed, per day, according to the report.

“These disparities made it difficult to compare the performance of each service provider and determine the cost-effectiveness of each intervention,” the auditors wrote.

A review of a sample of housing programs found that about 22% of participants left for permanent housing, while 48% returned to homelessness.

‘Bleak picture’ painted

The L.A. Alliance for Human Rights sued the city and the county in 2020 on the grounds that neither was doing enough to address the homelessness crisis. The city and the county settled with the alliance in 2022 and 2023, respectively, and pledged to increase funding for more beds, services and interim housing. Carter, the judge who requested the audit, continues to monitor the terms of those agreements.

In new court filings, Elizabeth Mitchell, the attorney for the L.A. Alliance for Human Rights, wrote that the audit’s findings “paint a bleak picture of a City and County system that cannot accomplish what’s required under the settlement agreements” and urged Carter to find the city out of compliance with the terms of its settlement.

“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,” Mitchell wrote. “There is near zero financial oversight or accountability by the City and County of LAHSA, or by LAHSA of the service providers with whom it contracts.”

The Los Angeles City Attorney’s Office, in a response, called the motion to compel compliance “premature,” and argued its obligations were put on pause as a result of the wildfires. The city has until 2027 to create 12,915 beds and has dedicated $1.4 billion to the effort, according to the response.

City also mulling pullout

The city now may end up following the county’s lead and could pull its funding from LAHSA as well. At its March 5 meeting, the L.A.— City Council’s housing and homelessness committee approved a motion from Councilmembers Monica Rodriguez and Bob Blumenfield requesting a report on how the city can bypass LAHSA to contract with service providers directly. The motion, filed in November, was prompted by the auditor-controller’s findings.

“As the Council awaits the report on the steps for the creation of a Department of Homelessness, it is clear that the alleged mismanagement of public funds, reportable outcomes, metrics and lack of consequences for failure to perform associated with the services contracted by homeless service providers and LAHSA require an expeditions (sic) review of immediate actionable steps to provide city oversight of the programs it funds,” the motion states.