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iAUDIT! - On August 29, I attended the status update of the independent audit of city homelessness programs ordered by federal Judge David Carter. Although a bit dry at times, it was actually quite revealing about how the city, the county, and LAHSA view their roles in reducing homelessness. More on that shortly; first a bit of context.
In 1886, the U.S. Supreme Court made one of the few pro-civil rights decisions of the era, in Yick Wo v. Hopkins. What makes the decision especially interesting is that the San Francisco ordinance it overturned wasn’t explicitly racist in the way the federal Chinese Exclusion Act or the infamous Plessy v. Ferguson decision that followed a decade later were. The law the Yick Wo decision overturned seemed innocuous. It simply stated laundries, which used fires to generate steam, could not operate in wooden buildings, and laundries needed a city permit to operate. There was no prohibition on who could own a steam laundry. However, the law was targeted at the city’s Chinese population. Since they were excluded from most other business opportunities, many Chinese immigrants opened laundry services in the densely packed Chinatown, where nearly all the buildings were wooden. Since it was almost impossible for an immigrant to get a loan to purchase a brick building, the law had the practical effect of forcing hundreds of small businesses to close, giving white-owned laundries in brick structures a massive advantage. Lawyers for Yick Wo, a Chinese laundry owner, successfully argued that even though the law was superficially color-blind, it was overtly racist in application. This was one of the first examples of post-Civil War institutional racism; the intentional creation of superficially race-neutral laws to oppress a racial or ethnic minority. It would not be the last.
I use Yick Wo to illustrate the difference between institutional versus overtly discriminatory policies. Prohibiting a specific minority from voting is obviously discriminatory. Creating a set of rules that prevents the same minority from voting, without mentioning race, is institutionalized racism. Institutional bias can infect a wide range of government operations, including homelessness policies. In the case of homelessness, the evil isn’t racism, but institutional corruption. It is a set of policies and practices that, while superficially intended to reduce homelessness, both perpetuate it and result in monetary benefits to an extremely small population of privileged nonprofits, construction firms, and developers. The difference between overt and institutional corruption is methodology. Overt corruption is what most people think of; fat envelopes of cash being passed in back room deals, and of politicians trading money for power. Institutional corruption sustains ineffective systems and organizations.
We already know the city and county can’t produce reliable statistics on the number of people sheltered, housed, or served. You have only to look at some of the reports on the City’s homelessness program website to see why. Relatively few performance measures are directly related to reducing homelessness. Field outreach providers report on things like the number of PPE kits distributed or pre-packaged meals served. County mental health and multidisciplinary teams (MDT) report on the number of service contacts, but not long-term outcomes. Even the statistics around permanent housing are misleading. The reports show the length of time people who’ve stayed in housing have been housed, making it look like vast majority stay housed for two or more years. But the charts don’t show the number of people who left housing, So, in essence, the charts are telling us “We’re doing a great job of housing the people who stay housed”. It’s a circular argument.
This is where institutional corruption comes in. Let’s say you’re an outreach service provider and you’re required to get 40 percent of the people you serve into transitional housing within six months of first contact. The performance measures seem straightforward: the number of people contacted, the number sheltered or housed, and how long it took to get them off the streets. Now suppose your organization comes nowhere near the required number; if you go the “traditional” corrupt route, you fake the stats and pay LAHSA’s program analyst to accept them—that’s old-fashioned straight-up corruption.
But what if your nonprofit’s executives were able fashion a contract that doesn’t require you to report actual performance? What if it just pays you for going through the contact and referral process? You check a series of boxes, send the forms to LAHSA, and get paid. Its all perfectly legitimate, at least on paper, but it does nothing to reduce unsheltered homelessness. Additionally, what if the contract is written in such a way that only the few largest corporate nonprofits can qualify, (e.g. burdensome record-keeping unrelated to performance, human resources requirements no small NPO can meet)? This makes it much easier for the City or LAHSA to use the “unique needs” exception to bid requirements and grant sole source contracts to the same small cadre of NPO’s. Institutional corruption is baked into the system. No single person, or collusion among a group of people, is necessary to perpetrate this kind of corruption—they just need to follow the established procedures. No official in local government receives a surreptitious payment, other than campaign financing and vocal advocacy as needed to sustain the system. The financial benefit is primarily one-way: it goes to the large non-profits providing services and development/building firms creating overpriced housing developments. It is this kind of institutionalized corruption that sustains L.A’s broken homelessness and housing system.
If you attended last Thursday’s hearing, you would have seen the practical effect of institutional corruption. Even though the audit is directed at City homelessness programs, the County is supposed to provide supportive services to keep people housed in the facilities the City provides, and LAHSA should coordinate those services. The audit firm's staff were very diplomatic about it, but they made it clear they're not getting the data they need to make a determination about program effectiveness. Judge Carter was clearly displeased with the County and LAHSA's inability to produce timely and accurate data, as well as the City’s casual acceptance of one delay after another, and said he'd issue an order telling them to expedite the delivery of data so the audit can be released on schedule. He'll also order Supervisor Horvath and Dr. Adams-Kellum from LAHSA to appear at September’s status hearing to have them commit their agencies to cooperate with the auditors.
The lack of coordinated program management is painfully clear. As reported in the Westside Current and LAist, A&M referred to tracking invoices and payments as untangling spaghetti. Trying to connect payments to performance is especially difficult because contracts are not performance-based. Basically, LAHSA is writing checks without confirming performance, and the City is paying LAHSA based only on its invoices.
The City Controller made a brief presentation on a new performance tracking website. If I understood him correctly, somewhere between 25 and 30 percent of the payments to LAHSA are advance payments. LAHSA is being paid for services yet to be rendered. LAHSA then submits records and invoices to justify the payment. The fact Mr. Mejia didn't express more concern about this speaks to his inexperience as an auditor. Submitting supporting documents after the fact allows LAHSA to back into its billings, creating justification for its requests to meet its billings instead of billing for services rendered.
I believe the big problem the City, County, and LAHSA will have responding to the court order is that they simply don’t have the data the auditor requested. Because contracts are written to maximize provider income instead of measuring performance, critical data such as unique clients served, the type of services each person received, and outcomes is either missing or widely dispersed among a web of departments and organizations. For example, the County’s homelessness program performance website has plenty of invoices and payment records, but had only one actual performance report date January 30, 2024. That report has since disappeared from the site.
When it was available, the performance report contained information on the Department of Mental Health’s Homeless Outreach and Mobile Engagement (HOME) team. An example of what it considers performance tracking stated, "For example, over the two years prior to the [L.A. Alliance] settlement, HOME teams served upwards of 1,000–1,500 unique individuals, rendering 3,500–4,000 services per month". "Upwards” is an odd word to use in this context, indicating the County doesn’t know how many unique people they served. And those numbers aren't consistent with the HOME Team website, where it says teams served 2,100 clients in 2021 alone (when there were fewer teams), when the performance report says they served between 500 and 750 people per year. Where'd the rest go?
The report also claimed to have provided 3,500 to 4,000 “services per month”. What is a “service”? What does a “‘service” accomplish? How are services related to the person’s homelessness status?
Statistics and reports like this are what the audit firm and the court will have to deal with when they try to measure homelessness program performance. Vague and meaningless numbers are a symptom of institutional corruption, designed for the benefit of the organizations being paid instead of the people who need help. One of the most pernicious things about institutional corruption is that it normalizes nonperformance. As I listened to the City and County attorneys try to explain why they didn’t have basic performance data, I was struck by how unconcerned they were. I could tell the idea of accountability was something completely foreign to them. Perhaps, after the audit is released, they will have a better understanding.
(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.)
