5 takeaways from the scathing federal court hearing on LA's homeless services agency

Update: LA County to strip hundreds of millions of taxpayer dollars from troubled agency overseeing homelessness

The Los Angeles County Board of Supervisors made a big move Tuesday, pulling more than $300 million in funding away from the region’s beleaguered homelessness services agency.

The Los Angeles Homeless Services Authority — or LAHSA — has been under fire in recent months after several audits showed the agency had failed to track billions in homelessness spending and could not adequately account for what city and county taxpayers received.

Late last year, Supervisors Lindsey Horvath and Kathryn Barger introduced the motion that was heard by the full board today (Tuesday, April 1) during its regular meeting. The board voted, 4-0, with Supervisor Holly Mitchell abstaining.

That means the end to county funding for LAHSA and the beginning of a new county department to oversee homelessness programs. Funding would shift to the county by July 1, 2026.

The vote comes after a hearing last week in federal court, where Judge David O. Carter scolded L.A. city officials for their failure to track spending on homelessness, called for a forensic audit to look into allegations of fraud and abuse, and warned that the court may order a third-party to take control.

“This is a slow train wreck,” Carter told the officials, adding he would not be complicit by doing nothing to change the situation.

Here are five takeaways from the court hearing:

1. The judge is pushing for a new audit

During the hearing, Carter asked for a new audit of LAHSA that would look into where money from taxpayers in the city of L.A. went for homelessness programs like the mayor’s Inside Safe initiative.

Carter said that if the city doesn’t agree to a forensic audit, he would consider drastic measures like ordering a third-party receiver to step in.

He commended City Controller Kenneth Mejia’s work on an audit last year that looked at L.A.’s work with LAHSA to get unhoused people into permanent housing. The audit found that the number of people who moved from temporary to permanent housing between 2019 and 2023 was “woefully inadequate.”

Carter asked whether Mejia would be able to conduct a new audit.

Mejia said he could do it. But Bass resisted.

The mayor told the judge she believes it would be improper “for one elected official to audit another.”

Mejia disagreed.

A couple days after the hearing, Mejia posted a video on social media with headlines from LAist and the Los Angeles Times about the court hearing in front of Carter and the city’s budget deficit. Text displayed on the video asks what else Mejia does as L.A.’s controller “besides making awesome videos” that let people know what’s going on in the city.

The answer, also in text form, that appears in the video — as Mejia and others, including a few dogs, step to a Kendrick Lamar song — is that his department is “about to release an audit & a Fraud, Waste, & Abuse Investigation.”

2. Will the city of L.A. get a new homelessness czar?

Carter said he would take “drastic” measures if Bass and Mejia could not agree on a forensic audit. He said he would consider ordering a third-party receiver, or homelessness czar, to take over the city’s homelessness efforts.

Carter said the bureaucracy now in place is “doomed to failure.” He noted, however, that if a third party stepped in, it would need power over the city budget. He acknowledged that tapping a third-party to step in might be viewed as judicial overreach.

The judge also said he was open to ordering the city to stop making payments to homelessness service providers until they can show that they’ve made public, by posting on a website, information about where the funds from the city are being spent.

3. Carter’s frustrations with LAHSA

An independent audit, released last month, looked at about $2.4 billion the city of L.A. spent over a four-year period ending last year. It found that LAHSA had made it impossible to accurately track homeless spending because it had failed to collect accurate data on vendors and hold them accountable.

Carter pointed to several audits conducted since 2007 that showed similar problems within LAHSA, and he criticized the agency’s CEO, Va Lecia Adams Kellum, for not being present at last week’s court hearing.

Had she been there, the judge said, he would have pressed her on further auditing of LAHSA — just as he had with Bass and Mejia.

“There’s no transparency,” Carter said, referring to the agency. “There’s no accountability.”

An investigation by LAist found that Adams Kellum signed a $2.1 million contract and two contract amendments between the agency and her husband’s employer, an apparent violation of state conflict of interest laws. Adams Kellum had previously told LAist she followed rules barring her from any matters that involve the group.

LAist also reported last December that many LAHSA employees had failed to file state-mandated financial disclosures as required by state law. The agency acknowledged that around 300 staffers should have filed disclosures but did not. As of Friday, Adams Kellum said, 75% of LAHSA staff were in compliance and the rest would comply by June 2.

The L.A. City Council has also voted to explore the possibility of breaking from LAHSA.

4. Questions about the point-in-time homeless count

During the hearing, Carter criticized LAHSA officials for their decision to release incomplete data from this year’s point-in-time homeless count months earlier than expected.

Officials said the full results, which they expect to announce in the summer, would likely show a decrease of 5% to 10% of people living without shelter in L.A. County.

Carter said he viewed the release of unverified numbers from the count as “political gamesmanship” and is skeptical of their accuracy.

“My view is that they're in a political battle for their lives right now,” Carter said.

5. County supervisors weigh in

Barger, chair of the county Board of Supervisors, is one of two board members who authored the motion to pull county money out of LAHSA. She said during the court hearing last week that responsibility for how the money is spent is “on the county.”

And she said the board intends to work with all parts of the county to remedy the accountability and transparency issues.

County Supervisor Hilda Solis issued a statement to LAist in early March that indicated she supports the idea of the county pulling out of LAHSA and creating a new department, because “it will continue to reform a system that has long been broken.”