A recent audit commissioned by a federal judge has brought to light significant deficiencies in the homeless services managed by the city of Los Angeles and the Los Angeles Homeless Services Authority (LAHSA). Conducted by Alvarez & Marsal, a global consulting firm, the audit uncovered issues related to financial oversight and data management that could expose the system to inefficiency and potential fraud.

Lack of Financial Oversight

The audit reported a troubling inability to accurately track expenditures related to homeless programs, raising concerns about the effectiveness and delivery of these services. According to the findings, the city had not implemented rigorous reconciliation methods to ensure that spending aligned with the services rendered, hindering the ability to assess service effectiveness.

Moreover, the contracts created by LAHSA exhibited vague language, resulting in inconsistencies regarding the services provided and their associated costs. This necessitates an overhaul to create clearer guidelines and accountability measures.

Echoes of Previous Findings

These concerns align with an earlier report from the Los Angeles County Auditor-Controller, which highlighted poor accounting practices that led to substantial losses, including unreturned cash advances to service contractors.

Context of Audit

This audit stems from a 2020 lawsuit filed by the L.A. Alliance for Human Rights, representing various stakeholders who argued that both the city and the county had failed in their responsibilities to provide necessary services and shelter for the homeless population. In response, the city and county agreed to settlements that included expanding shelter options and improving access to mental health and substance use treatment services.

Calls for Reform

Elizabeth Mitchell, an attorney for the plaintiffs, expressed that the audit supports the core claims of the lawsuit, emphasizing the urgent need for systemic reform. She stated, “These findings are not just troubling — they are deadly.” According to Mitchell, the ineffective oversight and lack of financial integrity have contributed to severe outcomes for those living on the streets.

Response from Officials

LAHSA acknowledged the fragmentation of the homeless response system, identifying it as a significant barrier to achieving effective oversight and service delivery. In light of the findings, some officials have proposed reforms to enhance accountability. Supervisor Lindsey Horvath advocated for the establishment of a new county department to oversee contracting duties previously handled by LAHSA, whereas Mayor Karen Bass highlighted her commitment to reforming the existing structures.

Los Angeles Councilmember Nithya Raman also noted that the audit underscores the necessity for her proposed city division aimed at centralizing oversight of homelessness expenditures.

Adequate Resources and Services

The audit did not specify instances of fraudulent activity but pointed out multiple areas lacking essential controls, thereby increasing the risk of inefficiency. The absence of a standardized approach to assess available shelter beds and adjustments in funding based on occupancy levels were cited as contributing factors to data discrepancies and unequal fund distributions.

Furthermore, issues such as insufficient storage at shelters could deter individuals from accepting aid, compounding the challenges faced by the unhoused community.

Personal Accounts of Struggles

Diane Rafferty, a managing director at Alvarez & Marsal, shared poignant observations from her visits to shelters and encampments, highlighting the urgent need for immediate, compassionate services. Reports of inadequate staffing, such as case managers being stretched thin across large client bases, revealed significant gaps in service delivery.

Rafferty’s experiences underscored the human toll of systemic failures in addressing homelessness effectively, with many individuals not receiving the necessary support despite available funding.

Conclusion

The Alvarez & Marsal audit presents a critical opportunity for Los Angeles to reassess its approach to combating homelessness. By addressing the identified issues of financial oversight, contract clarity, and service integration, officials may enhance the effectiveness of homeless services and ultimately improve the lives of those most affected. The urgency for reform has never been clearer.