LA city leaders weigh pulling homelessness funds from LAHSA

Shifting control of L.A. city homelessness spending away from the agency long entrusted with it to a department in city government could take a year and a half, city officials said Wednesday.

Bringing that spending in house was one of several options discussed by L.A. city council members during a meeting of their housing and homelessness committee. Another option they’re considering is having the money be managed by the county, which started setting up a homelessness department about a year ago.

The city directs roughly $300 million per year to the L.A. Homeless Services Authority (LAHSA). L.A. County supervisors voted last April to withdraw funding for the agency, citing ongoing problems with the agency's oversight of homelessness funds. Now ten months later, city officials are debating what to do with the troubled agency.

Just after Wednesday’s discussion ended, L.A. Mayor Karen Bass’ office released a statement urging the council not to withdraw funding from LAHSA without a plan in place.

“Withdrawing from LAHSA too quickly, without a plan and without the capacity, will no doubt cause unintended consequences that will leave more Angelenos to die on our streets,” Bass said in her statement. “What we need is a serious, thoughtful transition plan – the last thing we need is a new department and more bureaucracy.”

What’s on the table?

A staff report presented to the homelessness committee last April included several paths forward. Those options are:

• not changing anything major
• keeping the city money at LAHSA, but beefing up city oversight
• shifting the funding from LAHSA to direct city control
• shifting the city’s funding from LAHSA to the county homelessness department to administer it

Councilmember Bob Blumenfield, who sits on the council’s housing and homelessness committee, said he’d be open to having the county handle the city’s homelessness spending if the county doesn’t charge the city for overhead costs.

 ”If they're doing that, then I might be willing to say, okay, let's give them some of our money…that's going help our programs and give us a more efficient route,” Blumenfield said. “We also need to get down to brass tacks and understand what it means financially.”

Currently, about 3.6% of the city’s spending through LAHSA goes to administration costs, according to LAHSA’s budget. That rate is 8% for the county’s funds at LAHSA, which will be pulled from the agency on July 1 and shifted to the new county department.

Councilmember Tim McOsker said he was leaning towards working with the county on a limited number of programs, like interim housing.

City officials said they currently lack staff dedicated to advising them on homelessness policy and setting up the infrastructure to potentially take on direct oversight of the spending.

“There are no dedicated policy staff on homelessness in the city [government],” said John Wickham, a legislative analyst official at the city who presented the staff report of options to the committee Wednesday.

Additional accountability

The statement from Bass’ office encouraged city council to develop a “thoughtful transition plan” before shifting funds away from LAHSA.

The statement touted a new Homelessness Bureau the city created for the budget that started last July to focus on “oversight, accountability and results” to the city’s homelessness spending.

But city officials noted at Wednesday’s committee meeting that no one has been hired yet at the bureau, nine months after the council approved its funding.

“We have not hired a single person for the bureau yet,” said committee chair Nithya Raman, who championed the bureau a year ago.

“We need more capacity to be able to manage this work at the city and to make sure that every dollar is working well. We just do,” Raman said. “We're not staffed to be able to handle that right now.”

Limited time for discussion

Wednesday’s discussion didn’t start until just before 4 p.m., following two hours of discourse on other items at the meeting, and lasted about 45 minutes.

“It's getting very late,” Raman said around 3:45 p.m., before the committee began talking about the possible funding shift from LAHSA.

It’s been two years since Councilmember Monica Rodriguez introduced the item that was up for discussion Wednesday, with the staff report of options delivered almost a year ago. She told council members Wednesday that they’ve been wasting precious time and need to be decisive.

 ”In the 316 days since this report was issued, we are finally here engaging in this conversation,” Rodriguez said. She recently criticized Raman, the committee’s chair, for not scheduling the discussion sooner.

“ No longer can we afford indecision in making decisive actions around how we change this system. We must act. We must act now,” she added.  ”We still have a broken and dysfunctional system without a singular entity directing our work around homelessness.”

Raman has said she plans to hold one more discussion — expected to be on March 18 — before the committee decides next steps. From there, it will be up to the full city council to decide. The committee’s recommendations are influential, as the panel’s five members are one-third of the full council and most of what it would take to form a deciding majority on the council.

No written agreement

Officials also noted Wednesday that under their current approach, there’s no written agreement laying out what LAHSA and the city’s responsibilities are. They said one is in the works.

“What I've seen in my short period is that…if we didn't ink it, nobody could think it and then they get away with, not doing the work,” said Councilmember Heather Hutt. “I think we need to be more intentional about identifying roles.”

LAHSA is in ‘crisis,’ its CEO says

LAHSA was created by the city and county in 1993 to oversee homeless services. It’s governed by a CEO who reports to a commission of 10 members. Half of the members are appointed by the L.A. mayor, and the other half by each of the five county supervisors. Bass also serves on the commission, having appointed herself in fall 2023.

While it’s long faced criticism, it’s been under particularly close scrutiny for more than a year.

An audit and court-ordered review found it failed to properly track its spending and whether services were being provided.

LAHSA also has been facing criticism more recently for months-long delays in paying tens of millions of dollars to reimburse service providers — a problem officials vowed to fix nearly two years ago. Several providers recently told LAist they've had had to dip into reserves or take on debt.

While addressing the commission that oversees the organization last Friday, CEO O’Neill said LAHSA was “in crisis. And I say this not as a criticism to any of our really hardworking staff. They've built what they were asked to build.”

“Morale is very low,” O’Neill said of LAHSA staff.