The Brief

L.A. city officials have made it impossible to accurately track homelessness spending, in large part by outsourcing to an agency that has failed to collect accurate data on its vendors and hold them accountable, according to findings from an independent audit commissioned by a federal judge.

The problems heighten the risk of tax dollars being misspent, auditors found after reviewing $2.4 billion in city funding.

The draft audit report, released Thursday by U.S. District Judge David O. Carter, comes as Los Angeles City Council members weigh an overhaul of homelessness spending.

Many of the problems auditors identified were at the Los Angeles Homeless Services Authority, known as LAHSA. It’s the government agency, overseen by the city and county, that for decades L.A. mayors and council members have outsourced management of much of the city’s homelessness dollars for sheltering, feeding and serving people.

The report paints a blistering picture of a lack of accountability for taxpayer dollars in recent years.

Auditors said the document trail provided by the agency was so poor that it made tracking the spending nearly impossible. The agency “failed to verify whether the services invoiced were provided,” auditors also found.

The report states that insufficient “financial accountability led to an inability to trace substantial funds allocated to the City Programs.”

"The lack of uniform data standards and realtime oversight increased the risk of resource misallocation and limited the ability to assess the true impact of homelessness assistance services."

There was "a high level of noncompliance" among the small number of service provider contracts that were reviewed, auditors added. And a lack of oversight, they wrote, has "made it challenging" to determine how program funds were used and "whether they achieved the intended outcomes."

In one example, auditors said LAHSA leaders failed to provide them documentation to verify the existence of about 2,300 housing sites the agency was responsible for. Seventy percent of the contracts for those sites did not disclose any expenses over the prior year, the auditors added.

County Supervisor Lindsey Horvath responded to the audit by calling LAHSA’s problems “a nightmare,” and announced that she will schedule a vote by county supervisors to pull county funding from the agency and instead have the county manage it directly.

“We cannot accept this dysfunction any longer,” Horvath said.

Elizabeth Mitchell, an attorney for the L.A. Alliance for Human Rights, said the findings are "not just troubling — they are deadly.” The group’s high-profile lawsuit was the venue by which Carter initiated the audit.

“The failure of financial integrity, programmatic oversight, and total dysfunction of the system has resulted in devastation on the streets, impacting both housed and unhoused,” she said.

“This is not just mismanagement; it is a moral failure.”

The city is projected to send about $306 million in taxpayer dollars this fiscal year to LAHSA.

There has been no comment so far by LAHSA Chief Executive Va Lecia Adams Kellum, who has been leading LAHSA for the past two years. She was in charge for the last 15 months of the timeframe reviewed by auditors, which covered mid-2020 to mid-2024.

A spokesperson for LAHSA provided a statement about the audit, attributing problems to the “siloed and fragmented nature of our region’s homeless response.”

The statement did not address the findings about failures by the agency to monitor vendors and tax dollars. LAist has asked for comment on those details and has not yet received an answer.

In a statement, L.A. Mayor Karen Bass acknowledged the audit had identified a broken system.

“This audit validates our work to change what’s festered for decades,” she said, adding that there is still work to do. “The city, the county and LAHSA are working together to change and improve the system and we are committed to continuing to do that.”

Among the payments that have had no performance reports to LAHSA were $1.7 million last year to Adams Kellum’s husband’s employer, under a $2.1 million contract Adams Kellum signed in a breach of ethics rules, according to a records request response to LAist. Another with no performance reports was a $60,000 LAHSA consulting contract for Adams Kellum to advise the mayor in the six weeks leading up to becoming LAHSA’s CEO, according to a records response to LAist.

The new audit was conducted by the consulting firm Alvarez and Marsal, under Carter’s supervision.

Reaction to the audit from elected officials

While much of the management of homelessness spending has been outsourced to LAHSA, ultimate responsibility for the city’s tax dollars rests with elected officials: Bass and the City Council.

Councilmember Monica Rodriguez said the report confirmed what she’s been raising alarm bells about for years.

“We could never get clear answers about the tax dollars being invested in homelessness,” Rodriguez told LAist in an interview.

“I  hope this is a wake up call for my colleagues” on the City Council to shift the funding out of LAHSA, she added. After a scathing county audit in November, Rodriguez introduced a motion to explore pulling city funding from LAHSA and instead have the city oversee it directly.

In a statement, Councilmember Nithya Raman said the audit findings “reinforce the need for real oversight and performance management of our city’s homelessness response.”

That need, she said, is why she introduced a motion last week to create a centralized team at the city tasked with collecting data on homelessness spending.

In an interview last week, she said she’s been pushing for more data to be made available about what’s happening with homelessness dollars.

“ No one within the city is actually charged with tracking, how well are these programs working? Are our service providers doing what they're supposed to be doing? And how best can we spend our dollars?” she said.

Paying vendors through LAHSA, Raman added, has meant that at “the city, we don't have information that we need in order to make sure these dollars are being spent well, and that people on the streets are getting the help that they need.”

Councilmember Bob Blumenfield said the audit documents “the same frustrations that I have had with the complexity and opaqueness into how the city funds homeless services."

“The fragmentation of the system makes it difficult for the City to follow the money and the lack of direct control over the homeless contracts and data exacerbates the problem,” he added.

Councilmember Ysabel Jurado, who represents Skid Row, said in a statement on Friday that she was deeply concerned with the audit’s findings. 

“It’s long overdue that we implement uniform data standards and real-time oversight to ensure accountability,” she said. “Every dollar spent on homelessness services needs to be accounted for and contribute to real, measurable improvements in the lives of our unhoused neighbors.”

Bass has voiced concerns on exiting LAHSA

Bass has been critical of plans to pull funding from LAHSA, saying the city’s work should focus on serving unhoused people, not creating new bureaucracies.

Rodriguez’ motion to yank the funding was in limbo for three months, until Wednesday when the City Council’s housing and homelessness committee voted to further explore an exit from LAHSA by directing city staff to prepare an analysis. It now goes to the full City Council.

At the county level, the Board of Supervisors voted, 4-0, in November to explore redirecting its funding of LAHSA and instead have it managed directly by the county. Supervisors recently received a report from county staff on what it would look like to take control from LAHSA of the county’s funding. A vote on next steps could take place in the coming weeks.

The backstory on the audit

Carter, the federal judge, initiated the audit after learning that L.A’s independently-elected city controller is blocked from auditing the mayor’s signature homelessness program Inside Safe.

Carter called the situation “ridiculous” at a hearing in January, adding that the audit overseen by the court may be the only independent review of city homelessness spending in decades.

The audit has been blocked by the city attorney’s office. Officials there say their understanding of the city charter is that it doesn’t allow the controller to audit the performance of a mayoral program unless the mayor consents. That position has been disputed by the controller and the chair of the charter committee that wrote the charter language.

The city charter says that the controller’s powers include conducting “performance audits of all departments and may conduct performance audits of City programs.”

Carter plans to hold a public court hearing on March 27 about the newly released audit, and has asked Bass, Council President Marqueece Harris-Dawson, City Controller Kenneth Mejia, county Board of Supervisors Chair Kathryn Barger and the auditors to attend.

Also at that hearing, Carter will consider a request by L.A. Alliance for consequences against the city for allegedly failing to add the shelter beds it committed to in a 2022 settlement deal.

City officials say the city can’t afford to add much more shelter because it’s financially broke, amid rising lawsuit payouts and police department increases. Carter, for his part, has suggested that more people could be served if existing homelessness funds are spent more efficiently.

Auditors are flagging major problems with the handling of tax dollars by the L.A. Homeless Services Authority.

The failures surround poor bookkeeping and accounting of taxpayer money at the agency — which spent over $800 million in public funds last fiscal year. The issues emerged despite previous audits flagging serious oversight problems in prior years. The latest audit was conducted by an outside firm hired by the agency to meet federal requirements.

The agency’s financial statements initially included “significant” inaccurate amounts that needed to be adjusted late in the audit process, auditors found in their review of LAHSA’s last fiscal year that ended in June 2025.

The findings are from the federally-required “single audit,” a draft of which was presented to LAHSA’s audit committee on Monday. It found the inaccuracies stemmed from a "significant deficiency” in LAHSA’s “internal controls,” which are supposed to safeguard against financial inaccuracies and fraud.

The accounting failures contributed to delays in completing the audit — which was due to the federal government on March 31 — according to the draft report. Missing that deadline can put future federal funding at risk. LAHSA officials said at the committee meeting that they hope to submit the final audit report this coming Friday, more than three weeks after the deadline.

At a public meeting Monday, LAHSA CEO Gita O’Neill told LAHSA’s audit committee that her team was working to implement many of the auditors’ recommendations, which she called “great suggestions.”

The draft audit report now goes to the LAHSA Commission for approval on Friday. The audit committee was asked to approve it Monday but didn’t have majority support to move forward.

L.A. Mayor Karen Bass, who oversees the agency and is the only elected official on LAHSA’s governing commission, did not respond to a request for comment through a spokesperson.

The backstory

In response to previous audits that found major problems with LAHSA’s oversight of tax dollars, county supervisors decided last spring to withdraw all of the county’s $300 million-plus in annual funding of services through LAHSA and instead have the county directly manage it starting on July 1.

Problems identified in the latest audit reiterate why the county pulled its funding, Supervisor Kathryn Barger said in a statement Monday.

“LAHSA’s inaction and inability to meet its audit deadline is inexcusable,” Barger said.

In a statement, Supervisor Lindsey Horvath said the “significant financial problems” found in the audit give “further confirmation” why the county decided to shift its funds out of LAHSA.

“Accountability isn’t optional; it is required to end this emergency. Anything less is unacceptable,” Horvath said.

The city is considering moving in a similar direction as the county. A key City Council panel — its homelessness committee — recently recommended the full council start shifting city homelessness funding out of LAHSA over the course of the next fiscal year. Bass has urged caution, saying moving too quickly to shift funding could disrupt services for unhoused people.

LAHSA has long functioned as the L.A.’s homeless services department, with over $300 million in city money expected to flow through LAHSA this fiscal year.

As of last summer, LAHSA had $380.5 million in assets and $381 million in liabilities, and received a total of $810 million in operating revenues during the last fiscal year, according to the latest audit.

Other problems identified by auditors

During Monday’s discussion, lead auditor Justin Measley said LAHSA did not disclose millions of dollars in payments to a service provider whose executive was married to LAHSA’s CEO at the time, Va Lecia Adams Kellum. The audit is required to list “related party” transactions, Measley said, which involve an organization with immediate family ties to LAHSA’s leadership. He said auditors only learned about it later through reviewing news media coverage.

“The article is what triggered us knowing about this specifically,” said Measley, who works for the auditing firm CliftonLarsonAllen.

LAist uncovered documents showing Adams Kellum’s signature was on a $2.1 million contract and two other contract amendments with Upward Bound House, the Santa Monica-based nonprofit where her husband Edward Kellum works in senior leadership. The contract named Adams Kellum as the LAHSA official authorized to administer it.

Va Lecia Adams Kellum, former CEO of the Los Angeles Homeless Services Authority, at a news briefing at L.A. City Hall in June 2023.

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Gary Coronado

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Los Angeles Times via Getty Images

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A LAHSA-commissioned investigation cleared Adams Kellum of wrongdoing in part because “her signature was unintentionally applied by her staff, not by herself,” according to a summary released by LAHSA. LAHSA spokesperson Paul Rubenstein previously told LAist that Adams Kellum herself “mistakenly signed” the agreements. LAHSA officials also previously distributed an email from Adams Kellum’s official account to a colleague about one of the contracts with her husband’s employer, which stated “Please delete the document that I signed accidentally.”

Last year, state investigators at the Fair Political Practices Commission launched a conflict of interest investigation into the matter, which is ongoing.

Monday’s audit committee meeting also included discussion of the auditors’ findings that LAHSA is locked into paying $75 million for long-term leases over the coming years that cannot be canceled. Those leases are largely through its master leasing program that started over the last couple of years, which leases 14 apartment buildings, totaling 772 units, to provide housing for unhoused people. LAHSA management says the master leasing program is currently significantly underwater financially.

A presentation last week by LAHSA management said the master leases are causing an annual budget hit of $10 million to LAHSA, which is prompting the agency to pull from other grants to pay for the leases.

LAHSA’s lease accounting was at the center of a "significant” correction to the agency’s financial statements late in the audit process, the audit states in its findings.

The auditors also found that LAHSA failed to comply with requirements for payroll costs that it charged to the federal government. The agency’s management failed to ensure timesheets for its employees were approved for three of the 40 timesheets the auditors reviewed, despite the law requiring federally-funded salaries to be based on accurate records of work, auditors found.

Los Angeles Mayor Karen Bass on Monday unveiled a $14.9 billion budget that is significantly rosier than last year’s spending plan, when she suggested massive layoffs and service cuts to accommodate a billion-dollar deficit.

This year, because of a projected increase in revenues, the mayor is proposing no layoffs and a modest expansion of street services. Bass' budget also calls for hiring police officers to keep up with retirements and resignations, maintaining Fire Department spending and holding steady funding for homelessness programs.

“This budget is about protecting the progress we have made and making clear that Los Angeles is moving forward and will not go backward,” Bass said at a news conference.

In the proposal, the reserve fund is 5.7% of the general fund, or $490 million. The budget does not dip into the reserves, in contrast to last year’s plan.

Bass is seeking re-election this year. The primary is June 2.

Some of her challengers in the upcoming election, including Councilmember Nithya Raman, criticized Bass’ proposal as doing little more than maintaining the status quo.

“The budget the Mayor released today tells us the plan is to largely keep doing what we're doing — but what we're doing is not working,” Raman said in a statement.

Next, the proposal will go to the City Council for consideration. Budget hearings will be conducted in the coming weeks.

Increasing revenue

Among the reasons city officials say revenue will go up is the expected influx of thousands of visitors to World Cup soccer matches this summer. More travelers mean more people staying in hotels and paying hotel taxes, as well as more sales tax revenue.

The budget projects a $412 million increase in general tax revenue, including $71 in business taxes, $34 million in sales taxes and $67 million in utility taxes.

The budget would add 170 new positions in the department that handles street repairs and increase funding for street and sidewalk fixes, curb-ramp installation, street sweeping, bulky item pickup and dedicated illegal dumping enforcement throughout the city.

The budget also proposes hiring 510 police officers, representing a target of 8,555 for the Police Department and enough to keep up with attrition, according to budget officials. Bass has set a goal of 9,500 officers.

“It’s about preventing the shrinkage of LAPD,” Bass said.

That proposal is likely to see opposition from some council members who want to see the department shrink and funding for unarmed response teams increase.

Inside Safe

The budget sustains citywide coverage for civilian unarmed crisis response, maintaining deployment of 500 crossing guards and expanding a program that aims to help children get to and from school safely and protect them from gang violence.

Under the budget, funding for Inside Safe, the mayor’s signature program to address homelessness, would remain about the same — $104 million.

The mayor touts an 18% drop in street homelessness as evidence of its success.

The budget maintains funding for the city Fire Department. In November, voters are expected to decide whether to increase the sales tax by half a percent to pay for more firefighters and equipment.

Criticism for the budget

Bass’ challengers immediately criticized her budget as lacking vision.

“This budget maintains a status quo of reduced services and higher fees, the direct result of fiscally irresponsible decisions made by this Mayor in prior years,” Raman said in her statement.

In January, the council member voted against Bass’ plan to hire 170 more police officers.

Adam Miller, a tech entrepreneur and another Bass challenger, said keeping the budget flat “implies that the status quo is working.”

“That is tone-deaf to the city of Los Angeles as Angelenos overwhelmingly feel we need change," he said.

The budget needs to be approved by the City Council and signed by the mayor by July 1, the start of the fiscal year.

Labor Secretary Lori Chavez-DeRemer is leaving her post amid an internal investigation brought on by complaints about misconduct.

White House Director of Communications Steven Cheung announced the departure on X, writing "she has done a phenomenal job in her role by protecting American workers, enacting fair labor practices, and helping Americans gain additional skills to improve their lives." Cheung said Chavez-DeRemer was taking a position in the private sector.

A senior official at the Labor Department not authorized to speak publicly about the departure said the secretary had resigned.

Chavez-DeRemer is the third cabinet member to leave during President Donald Trump's second term.

In early March, Trump fired Homeland Security Secretary Kristi Noem shortly after lawmakers on Capitol Hill berated her over her agency's handling of immigration enforcement — as well as its $220 million ad campaign featuring the secretary on horseback.

A month later, Attorney General Pam Bondi left amid simmering frustration over her leadership of the Justice Department and her handling of the Jeffrey Epstein files.

While Chavez-DeRemer has played a far less visible role than Bondi or Noem in Trump's second term, her tenure has also been marked by controversy.

In January, the New York Post first reported that the Labor Department's inspector general was looking into complaints that Chavez-DeRemer was having an affair with a subordinate, drinking alcohol on the job and using taxpayer-funded travel to visit with friends and family members.

NPR has not independently verified the contents of the investigation.

While in office, Chavez-DeRemer spent much of her time away from Washington. A year ago, she launched her "America at Work" listening tour, an initiative that took her to all 50 states.

Chavez-DeRemer's chief of staff and deputy chief of staff, who had been on leave since January, resigned in early March. A third senior member of her staff, Melissa Robey, said in a statement issued March 26 that she had been fired a couple days earlier, after giving a four-hour interview to the Office of the Inspector General.

Meanwhile, the New York Times was first to report that Chavez-DeRemer's husband, Shawn DeRemer, an anesthesiologist in Portland, Ore., had been barred from Labor Department headquarters in Washington, D.C., after at least two staffers reported he had touched them inappropriately. Washington, D.C. police and federal prosecutors closed the investigations without bringing charges.

An unconventional choice

Trump's selection of Chavez-DeRemer to lead the Labor Department was seen by many as a concession to Teamsters President Sean O'Brien. O'Brien had been friendly with Trump through the presidential campaign, taking a prime-time speaking slot at the 2024 Republican National Convention and later declining to endorse Trump's opponent, then-Vice President Kamala Harris.

O'Brien had pushed for Chavez-DeRemer's selection, noting that she was one of only a few Republicans in Congress to have supported the PRO Act. That bill aimed to make it easier for workers to organize unions, including by overturning state Right to Work laws, which weaken unions.

At the time, Trump wrote, "Lori's strong support from both the Business and Labor communities will ensure that the Labor Department can unite Americans of all backgrounds."

Deputy Labor Secretary Keith Sonderling, who has already been running much of the day-to-day operations of the Labor Department, has been named acting secretary, according to Cheung's post on X.

Sonderling previously served at the Labor Department during the first Trump administration and at the Equal Employment Opportunity Commission under the Biden administration, having been nominated by Trump during his first term to fill a Republican seat.
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