Homeless service cuts at risk due to payment delays at LAHSA, official warns

An L.A. city official sounded the alarm Friday that homeless service providers may go bankrupt or have to lay off staff over major reimbursement delays that still haven’t been fixed by the region’s homeless services agency — despite promises two years ago to fix it.

The L.A. Homeless Services Authority (LAHSA) is late in reimbursing more than $50 million to shelter, housing and other service providers — much of which is more than 90 days overdue — according to a report it issued last month. One service provider said LAHSA is more than 90 days late in reimbursing more than $12 million in invoices to their organization.

”Everybody involved with contracting is frustrated, is angry, is exhausted," said John Wickham, the lead city staff member who presented about the issue to the city council’s Housing and Homelessness Committee on Friday. Wickham said the frustrations are shared by all of the city departments that deal with LAHSA, as well as LAHSA staff and service providers.

Wickham said he’s heard that some service providers may be considering layoffs or even considering filing for bankruptcy because of the delayed payments.

“ When payment delays occur, [service providers] are forced to make difficult decisions that everyone is experiencing right now,” said David Carpio, the chief operating officer for Veteran Social Services, Inc.

Those decisions, he said, include reducing available beds, limiting intake of new people for services, increasing wait times, ending projects — which he said leads to increased homelessness and burden on the city for emergency services calls.

Sharon Sandow, a spokesperson for the city housing department, said the department has paid LAHSA upfront — known as “advances” — so it has cash on hand to pay service providers. Sandow said the city has, at times, borrowed money from the General Fund to make advance payments to LAHSA.

Wickham said advanced payments from the city to LAHSA were being passed “ back and forth and around and around in circles.”

“ I actually haven't been able to get to the bottom of that myself,” Wickham said when asked why that’s happening. “Nobody [can] understand that.”

Wickham said he and colleagues have held over 100 meetings with officials to try to understand how the city contracts for homeless services, but some aspects were still unclear.

Officials promised to get payments back on track two years ago by streamlining their processes. Councilmember Nithya Raman, who has chaired the council’s homelessness committee for the past few years, said on Friday the city is “stuck” and has not fixed the issue.

“We don't have the ability at the city to manage this process any better than we did last year or the year before. We have just not moved forward at all,” she added. “It is extraordinarily frustrating, and those same issues persist at LAHSA that we've been discussing. So we're literally in the same place that we've been for two years.”

What LAHSA leaders say

The agency’s CEO, Gita O’Neill, told the committee the delays are “unacceptable” and that LAHSA is working with a consultant to improve its processes. LAHSA’s chief financial officer, Janine Trejo, said LAHSA “is accepting responsibility,” while she also pointed at the city for what she described as delays in the city finalizing its agreements to fund LAHSA and payments to LAHSA.

Mayor Karen Bass oversees the city agencies that pay LAHSA and is the only elected official on LAHSA’s governing commission, which she has served on for more than two years. She did not respond to a request for comment through a spokesperson on Friday’s discussion of the payment delays. Raman is running against Bass in the June primary election for mayor.

What’s next

Following up on City Council requests from years ago, the council committee plans to decide next Wednesday whether to recommend pulling all of the city’s funding out of LAHSA and having a different agency manage it. It will then go to the full City Council for a decision.