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iAUDIT! - On Friday, March 22, federal judge David Carter ordered a comprehensive financial and performance audit of the City of Los Angeles’ homelessness programs. You can see details of the audit’s scope and purpose here. In the Purpose section, the document mentions transparency as one of the audit’s main objectives. Coincidentally, on the same day, the LAHSA Board of Commissioners held a regular meeting that included the Authority’s review of Los Angeles ordinance 41.18, prohibiting camping near sensitive areas like schools. These two events are vivid examples of the difficulty ordinary citizens have understanding where their tax money goes when it comes to homelessness.
The audit will be a wide-ranging study of everything from financial processes to the effectiveness of LAMC 41.18. The judge’s order includes a requirement for the City to begin posting invoices and billing details related to homeless programs within two weeks. The audit’s scope was agreed upon by the City, the L.A. Alliance for Human Rights, and homeless advocacy groups. (I have done volunteer work for the Alliance). It will be both a procedural audit of financial operations, and a performance audit of the City’s homeless programs’ effectiveness. Both parts of the audit are equally important. As Judge Carter said during a hearing on the audit’s scope, “there had apparently been ‘absolutely no accounting and no transparency’ for at least $600 million that had flowed through the city to combat homelessness in years before [Mayor Karen] Bass was elected mayor in 2022.” While it is vital the public knows where the money comes from and where it goes, it is equally important we understand its impact; that is the performance audit component. The scope not only includes measures of effectiveness, but an assessment of how those measures are determined and how data is gathered. Given the often-conflicting numbers published by the City, County, and LAHSA, having a reliable number for people who are sheltered and housed, and how long they are housed, is key to determining if homelessness programs have been successful.
What can we expect during the audit and after it’s completed? A key section in the audit’s requirements is that it will be conducted according to professional standards, either from the Institute of Internal Auditors, or more applicable to public sector audits, the US Government Accountability Office’s Yellow Book standards. Both publications have strict requirements for gathering, interpreting, and presenting evidence. Staff from the chosen audit firm should meet the standards’ requirements for training and experience. Most important, the standards prohibit any type of interference from the audited agencies. Neither the City nor LAHSA will have the opportunity to spin the facts in their favor, as they usually do when the data contradicts their narrative. They will have a chance to respond to the audit’s findings, but not until the report is complete and then they can only make comments relevant to the audit findings. They won’t get to use words like “NIMBY” or shift accountability to nebulous economic or social forces.
An audit this complex will likely take several months to complete. There will be entrance interviews with City and LAHSA staff, most likely written questionnaires to be completed, and extensive research into related documentation, a phase called fieldwork in the audit profession. The audit firm may issue periodic updates, but we won’t know the findings until the report is complete. Auditors never speculate on conclusions based on partial evidence.
On their part, Mayor Bass and LAHSA CEO Va Lecia Adams Kellum have publicly stated they support the audit and will fully cooperate. At the March 22 LAHSA Commission meeting, Dr. Adams Kellum went out of her way to say she welcomes the audits and looks forward to proving how effective and transparent LAHSA is. She mentioned LAHSA recently passed its federal financial audit, as if that proves the Authority is an effective and well-run organization. In terms of effectiveness, the federal audit means little; it is primarily a ministerial action to ensure an agency can properly account for federal money, with little focus on program performance.
If Friday’s Commission meeting is any indication, transparency is not something LAHSA is interested in. The meeting’s important items came before the presentation on the 41.18 report. The Commission—whose members are appointed by the City and County—approved a series of contracts with very little comment and no negative votes. One of the items was approval of funding of $345 million for homelessness programs. The staff making the presentations seemed unfamiliar with the details, such as exactly how much would go towards administrative and support costs. The presenter said 70 percent of the money would go to providers—contractors for whom LAHSA has shown little proclivity to effectively manage. The remaining 30 percent will go to unspecified administrative and support costs. Initially, staff said the funds would come from Measure H, but during follow-up questions, they said “most” of the funding would be Measure, H, but didn’t have exact figures.
During public comments, several providers voiced their frustration with the City, County, and LAHSA for lack of communication and results. Comments included statements like “I have been trying to help a [homeless] client for months, but nobody returns my calls”. Comments also included sharp criticisms of the emergency shelter system. The Commission even approved a contract involving HOPICS, a nonprofit that received $140 million in taxpayer money to provide rent subsidies to newly housed people. As LAist reports, HOPICS has handled its contract with LAHSA and its own subcontractors so poorly that hundreds of its clients are on the verge of eviction. Again, the Commission approved the contract with no dissention. Although some Commission members asked questions during the presentations, it was clear none of had the least intention to challenge approval, despite many comments from providers and the public about poor performance and lack of positive outcomes.
Transparency is more than going through the motions. Allowing the public to speak without a meaningful response isn’t transparent. Not having details on hundreds of millions of dollars in funding is unacceptable. It is not just an issue of transparency - it is an issue of ownership and leadership. Why don’t leaders know how well their own programs are operating? Why is there such a lack of expertise after decades of budgets, contracts, and effort? With thousands of lives at stake, leaders should take a laser-like focus on ownership and accountability, something they’ve done their best to avoid.
Renewing contracts with little or no discussion of past or expected performance isn’t responsible leadership. No Commission members asked what LAHSA was getting for the money. (I didn’t stay online for most of the 41.18 review after several commentors presented clearly scripted “testimonials” from people who’d allegendly had their property thrown away by City crews. Hoarding behavior among the homeless is common, and the City provides ample notice to camp dwellers of an impending clean-up). Transparency is truly listening when people express their concerns, and then making a real effort to find out if those concerns need to be addressed. Transparency involves all stakeholders in the decision-making process, not just advocates with the loudest voices. Transparency is having the honesty to admit it when something isn’t working, and the willingness to try new ways of doing things.
We won’t know what the auditors will find. We have some hints. We already know the City and LAHSA have had problems producing consistent and meaningful statistics on their homelessness programs. One of the biggest problems is their habit of claiming a given number of people have been sheltered or housed, when they really don’t know how many unique individuals have received services, nor how many simply walked away from a facility. You can discern the audit’s direction from some of the questions included in the scope’s work product requirements. People like those in the Alliance—and more importantly residents living the reality of unaddressed homelessness- are aware the budgets don’t match the performance, that leadership takes no responsibility for its failures, and that management is unaccountable, and that the impact of this massive spending and political rhetoric is not positive. At the March 22 LAHSA Commission meeting, several members declared LAMC 41.18 is not a solution for homelessness, and only outreach and proper shelter is the answer. Yet the City and LAHSA have failed to make even a small dent in homelessness despite billions of dollars spent on the programs LAHSA insists are effective.
An auditor goes into an engagement with no predetermined positions; we go where the evidence takes us. However, there are some hints. Judge Carter himself said, “If our providers in the field don’t have the underlying documentation, the presumption is the opposite — that they didn’t do the work.” His statement is supported by comments from the public and providers during LAHSA’s Commission meeting. Surveys of the homeless have shown at least 40 percent have never been offered any kind of service.
Only time will tell us the audit’s results. What is if true importance is how the City responds. Will it try to defend the status quo? Will it embrace change if that’s what the audit recommends? A beacon of hope is that, for the first time, the City will not have the last word. This audit was ordered by a federal judge, and it will, in large part, be up to him how homelessness programs will be structured in the future.
(Tim Campbell is a resident of Westchester who spent a career in the public service and managed a municipal performance audit program. He focuses on outcomes instead of process.)
