LA County leaders lay out plans to pull funding from troubled homeless services agency

In what would be a seismic shift in how homeless services are delivered across Los Angeles, two top county officials are proposing an overhaul that could pull hundreds of millions of tax dollars from the region’s troubled homeless services agency.

The plan, which is still in early stages and will be up for a vote on Tuesday, proposes largely exiting the Los Angeles Homeless Services Authority (LAHSA) and instead creating a new homeless services department within the county that would give the board more direct control over how public money is spent.

LAHSA is an agency jointly overseen by the county and the city of L.A. Its annual budget currently stands at $875 million. About $348 million comes from county coffers.

The idea to revamp the regional homeless services system comes from L.A. County Supervisors Lindsey Horvath and Kathryn Barger and arrives days after a scathing audit of LAHSA that highlighted serious accounting and contract monitoring issues.

Their motion states that the audit by the County Auditor-Controller's office showed LAHSA may not be the right steward of public money to address homelessness. They noted that voters recently approved Measure A, a quarter-cent sales tax increase that calls for increased transparency and accountability of public funding. The measure is expected to bring in over $1 billion a year for homeless services and the development of new housing.

“The findings and data indicate a lack of adequate internal controls at LAHSA related to finances, contracts, risk management and grants management, which is especially concerning as the County will collect increased funding from Measure A,” the motion states.

The audit covered LAHSA’s financial operations going as far back as 2016. LAHSA officials said they have significantly improved services in recent years. They pointed to the results of the latest homeless count, which showed a 5% drop in the number of people county-wide living without shelter compared to levels in 2023.

“We must continue collaborating to further this success and ensure everyone living on the streets comes home,” said Paul Rubenstein, LAHSA’s spokesperson, in a statement to LAist. “LAHSA will work with the County to evaluate the feasibility of the proposal and offer our input based on the best path to continue that success.”

What happens next

Horvath and Barger called for the audit to be conducted earlier this year. Their new motion to create an alternative to LAHSA is scheduled for a vote by the Board of Supervisors on Tuesday.

It’s not yet clear if other supervisors will support the plan. Supervisors Hilda Solis and Holly Mitchell did not immediately return requests for comment. A spokesperson for Supervisor Janice Hahn said the supervisor was examining the motion and did not yet have comment. If the motion gets enough votes, it would direct county officials to report back in 60 days on plans to stand up the new department and transition responsibilities away from LAHSA.

The plan envisions LAHSA continuing to carry out important functions, such as coordinating system-wide data and conducting the L.A. region’s annual homeless count. But under the proposal, funding for the critical services that move people from encampments into shelters, and help them find permanent housing, could be redirected away from LAHSA.

In the past, other county leaders have been skeptical of stripping funding and power from LAHSA in favor of other entities. In 2022, former Supervisor Sheila Kuehl compared the idea to “resetting the deck chairs on the Titanic, and thinking that might keep it from sinking.”

In recent years, some L.A. City Council members have expressed support for withholding funds from LAHSA. During a council meeting in August 2023, Bob Blumenfield, city council member and chair of the council’s budget committee, said he was at the end of his rope dealing with LAHSA’s data problems.

What an alternative to LAHSA might look like

Sarah Hunter, director of the RAND Center on Housing and Homelessness, said winding down operations at LAHSA and rebuilding them within the county government could take significant time and effort — potentially slowing down work on ground-level services during the transition.

“Clearly, given the audit that was just conducted, something needs to be done to improve contracting for homeless services in Los Angeles,” Hunter said. “Whether this board initiative is the solution, I think, is questionable.”

Hunter also questioned one provision in the motion that would give initial priority to “applicants who are currently employed at LAHSA” for staff recruitment at the new department.

“Obviously they have some expertise,” she said. “But given the reason why we're doing this is because of the issues inherent at LAHSA, you’d definitely need to start the new agency with a new culture.”

Ensuring accountability, wherever money flows

Once the sales tax increase takes effect in April, Measure A is slated to bring in more than $1 billion a year for homeless services and efforts to build new housing.

Miguel Santana, president and CEO of the California Community Foundation and a proponent of Measure A, said the new money will come with outcome reporting requirements for LAHSA — or any other entity that might receive the funding.

“Where you move things is secondary,” Santana said, explaining that local leaders face a lot of work ahead to restructure homeless services based on the requirements voters approved with Measure A. “That's going to be a messy process, because you still have an existing system.”

Gary Blasi, UCLA School of Law professor emeritus, said LAHSA is not alone when it comes to inefficiently using taxpayer funds. He pointed to the General Relief program run by the county that gives monthly cash to needy adults and L.A. Mayor Karen Bass’ signature homeless program, Inside Safe, as other efforts that involve expensive bureaucracies.

“The system we have evolved over 30+ years has been staffed by many good people with good intentions playing their role in the system, with minimal results,” Blasi said in an email to LAist. “That's one of the reasons I and a lot of other people think we could help a lot more people get off the streets with a direct subsidy to unhoused people.”

Editor’s note: The California Community Foundation is an LAist supporter. CCF has no influence on coverage.