The Brief

A new audit finds that a Los Angeles homeless services agency with an $875-million annual budget has routinely paid service providers late, failed to track whether contracts were followed and, in some cases, gave taxpayer funds meant for other purposes to providers who weren’t supposed to receive the money.

The findings released Tuesday night by the L.A. County Auditor-Controller’s office highlight long-standing issues at the Los Angeles Homeless Services Authority (LAHSA) and raise new questions about how the agency is spending large pools of public money.

L.A. County Supervisor Lindsey Horvath, who requested the audit earlier this year, said she now plans to introduce a motion to create a new county department responsible for homelessness response.

"The audit findings make clear the structure we have for service delivery is not working. We need greater accountability and bold action," Horvath said. "The public is frustrated and there is no time to waste in delivering meaningful results.”

It's not yet clear what the proposal would mean for L.A. County's relationship with LAHSA, an agency established in 1993 and jointly overseen by the city and county of L.A. The agency currently administers funding from the county, the city, the state of California and the federal government. This year, the county contributed $348 million to LAHSA's budget.

How LAHSA is responding

LAHSA officials disputed a number of the audit's findings, and maintained that some problems were unique to the COVID-19 pandemic.

"The spending practices captured during the COVID-19 years of this audit should be viewed as an essential investment that contributed to achieving critical public health and service delivery outcomes," wrote Va Lecia Adams Kellum, LAHSA's CEO, in response to the audit.

After LAist's story was published, Adams Kellum sent an internal email to LAHSA staff citing LAist reporting and calling Horvath's proposal "alarming and confusing."

"At this time, I, along with LAHSA leadership, are [sic] working diligently to ascertain clarity on this proposal," Adams Kellum went on to say in the email obtained by LAist and confirmed by LAHSA spokesperson Paul Rubenstein. "In the meantime, please know that we are not treating this situation lightly. Our employees take top priority. The work that you all do matters — you save lives, plain and simple."

Among the 10 issues identified as top priorities, the auditors wrote that LAHSA had misused funds by taking money from one government funder “to pay for services provided under another government funder’s contract/grant.”

“LAHSA must discontinue this practice to ensure financial resources and operations for other programs are not inappropriately (and negatively) impacted,” the audit stated.

LAHSA has repeatedly found itself in the spotlight over public frustration with rising homelessness in recent years despite billions of dollars in new voter-approved funding.

Adams Kellum, who took over as LAHSA’s CEO in March 2023, told reporters in a news conference last Wednesday ahead of the audit’s release that some of the years covered by the report predate her tenure. She said LAHSA has already worked to address issues, and has rolled out new online dashboards to better track the agency’s performance.

“It is critically important that we are measuring our work and doing everything that we say we're doing,” Adams Kellum said. “We want to be able to show what's working. And in any report card, you also see what's not working — what improvements are needed.”

What else did the audit find?

Billions of dollars in new funding has been spent in recent years to address the region’s homelessness crisis, but the number of people experiencing homelessness across L.A. County has risen 37% since 2017. The latest count showed that about 75,000 people across the county are unhoused on any given night.

The Auditor-Controller’s office undertook an in-depth financial review of LAHSA with the goal of giving taxpayers and elected leaders a closer look at how homelessness funding is being spent to get people off the streets, connected with service programs and placed into shelters and apartments.

Among the audit’s findings:

• LAHSA hasn’t always paid service providers on time, even when funds were available. The auditors found that in a sampling between July 2023 and May 2024, LAHSA paid five out of 13 subcontractors late.
• The agency in some cases paid providers using the wrong funding source. For example, auditors found that one L.A. County subcontractor was paid 14 days before LAHSA received county funding intended to cover that cost. LAHSA confirmed to the auditors that they used another unrelated funding source.
• LAHSA does an inadequate job of monitoring contracts to make sure providers are complying with the terms of their funding. The auditors found that about half (51%) of LAHSA’s planned contract reviews did not include methods for monitoring a provider’s compliance with service delivery requirements.
• LAHSA did not establish agreements with service providers to require them to repay nearly $51 million in advances that the agency provided in 2017 using county taxpayer dollars. By July 2024, only $2.5 million of that money had been paid back.
• The auditors discovered an additional $15 million in outstanding cash advances to other providers — some dating back to 2016 — that still haven’t been paid back. Some providers with unpaid advances no longer contract with LAHSA.

LAHSA officials were given a chance in the audit to respond to the findings. They disagreed fully or partially with most of the points above, but agreed that payments to providers were often late. For the findings they agreed with, they laid out timelines for fixing the problems.

Why is this all coming out now? 

The audit was initiated by a motion earlier this year from L.A. County Supervisors Horvath and Kathryn Barger.

Barger on Wednesday said she was "deeply disturbed by what this LAHSA audit reveals."

"It’s clear to me that management practices need to dramatically improve at LAHSA," she said in a statement. "I’m also disappointed that LHASA's management team responded by pushing back on some of the audit’s conclusions instead of taking full ownership of its findings and charting a new and improved path forward."

The audit follows a separate analysis by the L.A. City Controller’s Office released on Thursday that found the city of L.A. did not spend at least $513 million in public funds that were budgeted to help with the homeless crisis during fiscal year 2024. The office said a lack of staff and old technology contributed to the spending problems.

Concerns about LAHSA’s performance stretch back years, with some elected leaders suggesting the city should consider withdrawing from the agency. A federal judge overseeing a major homelessness case in L.A. has recently chided LAHSA officials for failing to provide timely data on spending and outcomes for a separate, ongoing audit commissioned by the court.

The judge has ordered officials from LAHSA, the city and the county into court Thursday morning to justify why they’re behind schedule in providing auditors with needed information.

Is any progress being made? 

The payment delays identified in the audit have long been familiar to service providers who say they often wait months for reimbursement. Outreach workers who help unhoused people typically earn low wages, often struggling to pay their own rent. Lengthy payment disruptions can put their jobs at risk.

Back in 2018, the Auditor-Controller’s office found that LAHSA was failing to pay service providers on time. By 2021, the office reported that LAHSA had only partially fixed the problem.

Agency leaders said during the news conference last week that LAHSA has paid about 80% of contracts on time over the past two years.

LAHSA leaders added that their staffers are now checking in with providers on a monthly basis and gauging their performance through more frequent “desk audits.”

Janine Trejo, LAHSA’s chief financial officer, said, “We go out and we conduct a monitoring of the service providers, their facilities, their expenses and a sampling of their documents.”

As for the $51 million in advances from 2017, Rachel Johnson — LAHSA’s chief of staff — said that money was meant to buoy service providers through 2027.

“This allowed the providers to really expand rapidly into the work, as was required by the funding,” Johnson said. Agency officials told auditors their agreement with the county did not require the creation of formal repayment agreements with providers for those advances.

What will be different moving forward? 

L.A. County voters just approved a big boost in the funding that LAHSA manages. Starting in April, Measure A will increase sales taxes in the county by a quarter-cent for every dollar spent, with most of that money going to homelessness services overseen by LAHSA.

Adams Kellum said Measure A already includes new accountability requirements — such as five-year progress reports — that follow the audit’s recommendations.

“We're in alignment,” she said. “I'm encouraged that these are things we have been working on over the last year and a half.”

However, the audit could increase scrutiny of LAHSA from L.A. County supervisors and city council members who’ve repeatedly said they feel like the agency is a black box. After being told last year that L.A. taxpayer funds could have been spent on motel room shelters that weren’t actually occupied, Councilmember Bob Blumenfield discussed halting city dollars to the agency due to extensive data problems. Blumenfield chairs the council’s budget committee.

Councilmember Monica Rodriguez said at the time, “Get me off this merry-go-round from hell.”

Read the full audit

Long-term eviction defense funding for Los Angeles renters could soon begin to flow now that city officials have announced a break in an impasse dating back to May 2025.

L.A. City Attorney Hydee Feldstein Soto said Thursday she intends to sign a new $107 million contract with the Legal Aid Foundation of L.A. She said the contract — which was approved by the City Council and the mayor in April but still awaits her approval — was “nearly finalized.”

“I am fully committed to supporting these crucial eviction defense services for our vulnerable neighbors in need,” Feldstein Soto said in a statement.

Feldstein Soto — who will not secure a second term after placing third in last month’s primary election — pledged to continue investigating the legal aid group. She has frequently criticized the nonprofit for what she sees as a lack of transparency, though L.A. Housing Department officials say the group has consistently provided accounting and caseload data to the city.

“Taxpayers deserve transparency and accountability and to know that their money is being used as intended,” Feldstein Soto said.

Barbara Schultz, a Legal Aid Foundation attorney overseeing the city-funded Stay Housed L.A. program, said both parties have been negotiating final contract details for more than a week. She said the city attorney’s announcement was encouraging.

“[Feldstein Soto] said she was going to approve the contract, so I'm very excited to hear that,” Schultz said. “Moving forward… we can continue to grow, fully implement the ‘Right to Counsel,’ and tenants in Los Angeles will be much better off as a result.”

In response to Feldstein Soto’s claims that more than $58 million in eviction defense grants remain “unaccounted for” in the foundation’s financial audits and IRS forms, Schultz said taxpayer dollars have not been misspent and that no findings have been made to that effect.

“[The Legal Aid Foundation] is a very large nonprofit law firm that has over 40 federal, state and local government contracts,” Schultz said. “We are very used to being audited. Any audit the city wants to do to satisfy itself is absolutely fine with us.”

Feldstein Soto denied a five-year contract to the legal aid group last year, arguing it should have gone through a competitive bidding process. After the city solicited applications and selected the group for new long-term funding, she later told city councilmembers in a confidential memo that they should consider withholding support for “a frequent litigant against the city.”

While she announced the contract should be ready for her signature by July 7, Feldstein Soto said her office would move forward with plans to assign forensic accountants to study how the legal aid group has spent more than $90 million in city funds since 2021.

At the Bristol Swap Mall in Santa Ana, people are flocking to buy their Mexico soccer team jerseys and paraphernalia.

“The color is green and that says Mexico right here,” said Catherine Hernandez, who’s entering third grade, as she pointed to the replica Mexico soccer jersey her mother had bought her at a nearby stall.

She asked her mother to get her one the day after Mexico’s win against Ecuador and is already thinking about how she’ll feel wearing it Sunday during Mexico’s knockout game against England in the Round of 16.

“Excited, very excited because I’m Mexican and I love this shirt,” she said.

Hernandez was born in the U.S. and her mother was born in Mexico. Both say their Mexico jerseys symbolize those similar but different prides in their Mexican backgrounds.

They're among fans rooting for Mexico’s men’s national soccer team to advance further than ever before into the World Cup tournament. A win against England would move the team to the Round of 8, the quarterfinals, for the third time. Along the way, this Mexico team has captured the imagination of many in the U.S. who have, or are close to, those of Mexican heritage.

Proudly wearing the green jersey

The market vendor at the stall said only one adult-size 2026 jersey remained. So many had been sold they'd had to place an order for more.

A replica of Mexico's 2026 FIFA World Cup soccer jersey.

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Adolfo Guzman-Lopez

/

LAist

)

Many Mexico fans have been wearing their jerseys on the days leading up to the team's World Cup matches.

“On Monday, I looked around to see a sea of green, white and red, and it nearly brought me to tears in line at Costco,” said Alex Alcantar, who lives in Norwalk.

He was born and raised in the U.S. and he says his Mexico soccer jersey symbolizes that experience.

“Why I wear my Mexico jersey is because I want to visibly represent this community when our contributions to society are so heavily discounted,” he said.

The team’s growing prominence has also coaxed some others in Mexican communities in the U.S. to feel more confident in their identity.

“I've never used [a Mexico jersey] before,” said Xochi Flores, who was born in Oxnard and whose great-grandparents were Mexican.

“I didn't feel like I could go around representing Mexico when I'm a Chicana, third generation, not the best Spanish speaker,” she said.

Xochi Flores (left), with her husband Cesar Castro, has become more comfortable wearing the soccer jersey recently.

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Courtesy Xochi Flores

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In the past year, she said she’s felt closer to her Mexican roots as she’s seen reports of farmworkers and other people of Mexican descent arrested by ICE agents.

So to her, wearing her Mexico soccer jersey means leaving behind insecurities she used to have about not being “Mexican enough,” as well as “not being American enough.”

“I want my kids to see me embracing all of the parts of me. … They don't have those insecurities, and that makes me happy,” Flores said.

Wearing the jersey when you're Mexican-ish

The stalls are attracting all types of customers. “I'm just looking for a Mexican soccer jersey,” said Son Lam, who lives in nearby Orange and identifies as Vietnamese.

Lam says he’s become devoted to soccer since the World Cup started June 11. Buying and wearing a Mexican soccer team jersey means showing off his newfound sports fandom already embraced by his extended family

“My wife is Mexican and to me, [wearing the Mexico jersey] means I can fit in with the family more," he said as he laughed.

However they identify, all these shoppers will likely be wearing their jerseys as they watch Mexico compete against England on Sunday, July 5. Joining millions of fans rooting for their team to advance to the next round, and keeping dreams of a 2026 FIFA World Cup championship alive.

Santa Ana voters could be asked in November to maintain the city’s 1.5% sales tax, which was set to decrease in 2029 and eventually expire.

Voters approved the citywide sales tax in 2018 on the condition that it sunset in 20 years. Now, the Santa Ana City Council will vote Tuesday on whether to ask voters in November to make the tax permanent.

The big picture

Only about one-third of cities in Orange County have a local sales tax on top of the county-imposed sales tax of 7.75%. Sales taxes in most of Los Angeles County are much higher — L.A.’s countywide sales tax is 9.75% and the highest total sales taxes for cities in L.A. County are in Lancaster and Palmdale, at 11.25% each, according to the California Department of Tax and Fee Administration.

Other potential tax hikes in OC

Voters in Orange will be considering a sales tax hike on their November ballot, after failing to get voters’ approval in 2024. San Clemente voters will also consider a local sales tax in November to pay for more sand to shore up local beaches.