Los Angeles Audit Reveals $2.4 Billion in Homelessness Funds Untracked Amid Mismanagement Concerns

Los Angeles, California – An independent audit has revealed that Los Angeles city officials cannot accurately track approximately $2.4 billion in taxpayer funds allocated to homelessness programs, pointing to significant mismanagement and a lack of accountability. The audit, commissioned by U.S. District Judge David O. Carter, found that funds are not effectively reaching the unhoused population, despite billions spent. Paul Webster of the LA Alliance for Human Rights stated, "this concern cannot be ignored," echoing widespread frustration over the city's approach.

The comprehensive review, conducted by Alvarez & Marsal, highlighted "insufficient financial accountability" and a "lack of uniform data standards" within the system. Auditors found that the Los Angeles Homeless Services Authority (LAHSA), the joint city-county agency responsible for managing a significant portion of these funds, maintained poor documentation, making it nearly impossible to verify whether services were delivered as invoiced. This echoes a November report by the LA County Auditor-Controller that also cited lax accounting and unrecovered cash advances.

Elizabeth Mitchell, an attorney for the LA Alliance for Human Rights, whose lawsuit prompted the audit, described the findings as "deadly" and a "moral failure." She asserted that "billions have been squandered on ineffective bureaucracy while lives are lost daily." The audit further revealed that only 22% of individuals in shelters transitioned to permanent housing, while a concerning 48% returned to the streets, underscoring the system's low success rate.

In response to the audit, city and county leaders have acknowledged the systemic failures. Mayor Karen Bass stated the report "validates our work to change what's festered for decades," while Supervisor Lindsey Horvath called for "accountability and results right now." The Los Angeles City Council has already approved a motion to explore direct contracting for homeless services, potentially bypassing LAHSA, and the County Board of Supervisors is considering a similar proposal to shift hundreds of millions in funding.

LAHSA, which has an annual budget of approximately $875 million, noted a 10% decrease in unsheltered homelessness in its most recent count, claiming progress. However, the audit's damning conclusions about financial oversight and program effectiveness cast a shadow on these claims. A public court hearing is scheduled for March 27, where Judge Carter has invited key city officials to address the audit's findings and outline their plans for reform.