LA homeless agency has been underspending tens of millions of dollars allocated to it

As federal officials suspend funding to L.A.’s main homelessness agency — citing mismanagement — a recent audit found the agency did not spend tens of millions of dollars allocated to it.

The audit found the L.A. Homeless Services Authority (LAHSA) underspent its overall budget by $108 million in the last fiscal year ending in June 2025, mainly because of “program delays.” The year before, the underspend was nearly $150 million. Some of it was carried forward to future years, auditors wrote.

Specifically to federal dollars, the audit shows LAHSA spent at least $7 million less than it had budgeted last fiscal year. LAHSA had budgeted $61.5 million in such dollars. It spent only about $49 million to $54.4 million, per the audit.

Underspending at LAHSA was called out more than four years ago, in a January 2022 audit that found the agency left $3.5 million in federal grants on the table by not using them.

A spokesperson for LAHSA has not responded to a request for comment.

LAHSA is governed by a 10-member commission that is half appointed by L.A. Mayor Karen Bass, and half appointed by each of the five county supervisors. Bass has served on the commission since she appointed herself to it in fall 2023.

Bass’ office said in a statement that the mayor “has grave concerns about LAHSA and zero tolerance for mismanagement and negligence.” The federal money suspension puts lives and progress on homelessness at risk, the statement added.

The mayor’s office statement says the mayor “previously directed the city to evaluate how to move away from the agency.”

When the City Council considered in March whether to withdraw the city’s funds from LAHSA and instead have the city directly oversee the dollars, Bass cautioned that the city first would need “a serious, thoughtful transition plan,” adding that “the last thing we need is a new department and more bureaucracy.”

Spokespeople for the county supervisors have not returned messages for comment on the underspending.

City of L.A. also underspends

The city of L.A. also has been underspending its homelessness budget — to the tune of $513 million in Bass’ first full fiscal year as mayor that ended June 2024, according to an analysis later that year by City Controller Kenneth Mejia’s office.

Federal officials cited that in their letter Thursday as one of many reasons for their suspension of funds to LAHSA. The letter incorrectly attributed the full underspend to LAHSA. The findings were instead about the city’s overall homelessness spending, a portion of which goes to LAHSA.

Spokespeople for HUD have not responded to an emailed request about the inaccuracy.

A controller’s analysis for the following fiscal year, ending June 2025, found the city again underspent its homelessness budget, by at least $473 million.

“Breaking City Hall from its decades old dysfunctional system is how we finally brought homelessness down by 17%,” Bass said in a statement at the time. “I’m glad to support the controller’s recommendations to further reform the status quo.”

Other problems found in audit

The federally required audit, known as a single audit, must be done each year by an accounting firm hired by LAHSA.

The latest one, finalized last month and covering the fiscal year that ended last June, found failures surrounding poor bookkeeping and accounting of taxpayer money at the agency — which spent over $800 million in public funds last fiscal year.

The agency’s financial statements initially included “significant” inaccurate amounts that needed to be adjusted late in the audit process, the auditors found.

It found the inaccuracies stemmed from a "significant deficiency” in LAHSA’s “internal controls,” which are supposed to safeguard against financial inaccuracies and fraud.

Vacant tax-funded apartments

LAist reported Thursday that LAHSA has been using tax dollars to pay for more than 250 empty apartments as part of an initiative Mayor Karen Bass introduced years ago to make housing readily available to unhoused people. That’s just over a third of the units in the strategy, known as master leasing, according to an LAist review of official data.

The vacancies have been tying up tax dollars — largely overseen by the county — that could house hundreds of people in other approaches, according to official financial data.

Other funds leaving LAHSA

In response to previous audits that found major problems with LAHSA’s oversight of tax dollars, county supervisors decided last spring to withdraw all of the county’s $300 million-plus in annual funding of services through LAHSA and instead have the county directly manage it starting July 1.

Problems identified in the latest audit reiterate why the county pulled its funding, Supervisor Kathryn Barger said in a statement Monday.

The city is considering moving in a similar direction as the county. A key City Council panel — its homelessness committee — recently recommended the full council start shifting city homelessness funding out of LAHSA over the course of the next fiscal year. Bass urged caution, saying moving too quickly to shift funding could disrupt services for unhoused people.

LAHSA has long functioned as the L.A.’s homeless services department, with over $300 million in city money expected to flow through LAHSA this fiscal year.