Comments
iAUDIT! - Lately, it seems there has been one shocking report after another about Los Angeles’ homelessness programs. In November 2024, L.A. County’s Auditor released a damning review of LAHSA’s financial and contracting practices, detailing a history of mismanagement. In December, the City Controller released a report finding, among other things, that about 20 percent of the city’s shelter beds are vacant every night because neither the city nor LAHSA accurately track usage. And there was the independent court-ordered assessment from Alvarez & Marsal (A&M) that found a huge galaxy of problems, from paying vendors with no contracts to double or even triple counting clients as they move through a fragmented system. These three reports are just the most recent examples of negative news about L.A.’s homelessness programs; elected officials have known about financial and performance issues for at least seven years, yet nothing seems to change, except that more taxpayer money goes into a black hole and homelessness gets worse.
Reading any one of these reports, one may—rightfully—get the idea that LA’s homelessness programs are broken nearly beyond repair and require fundamental restructuring. Despite all the talk about “locking arms” and bold action, what has really been happening is more money being spent on programs that don’t work. Neither providers nor the public agencies that pay them can show empirical proof of success, yet they continue to make claims they help tens of thousands of people get off the streets. A&M’s report made it especially clear there are major fraud risks throughout the system.
For anyone following homelessness in LA over the past few years, there is nothing new in any of these reports, except that each one brings into sharper focus just how egregious the waste of taxpayer money has been. Local officials have been unable to counter the reports’ findings with anything besides rhetoric. In a remarkable turnaround (or display of hypocrisy depending on your point of view), some leaders like Mayor Bass and Supervisor Horvath have tried to embrace A&M’s findings by claiming they’ve really been the voice for reform all along; this, despite their previous support of the status quo. Even now, Mayor Bass is resisting calls for restructuring or eliminating LAHSA.
Certainly, there are plenty of problems with the structure of Los Angeles’ homelessness programs. The City, County, and LAHSA are supposed to work together to provide shelter, housing, and support services to the unhoused population, but neither agency is responsible to or for the other, and as A&M pointed out, there is significant overlap and duplication in the system. Local governments depend primarily on contract providers (many of them large corporate nonprofits) to deliver services, yet most cannot produce reliable evidence they’ve delivered effective services to their clients. These same large nonprofits largely control the narrative around the causes of and solutions for homelessness, assuring a steady flow of revenues, (and huge salary increases for their leaders).
It would be easy to blame LA’s feckless leadership for its failure to address the homelessness crisis. But doing so would ignore the failures in other cities A recent story in the New York Times describes problems with documenting provider performance, and with close relationships between nonprofits and government officials. The report from the city’s Department of Investigations describes conflicts of interest among nonprofit leaders, and dangerous conditions in shelters, much the same as an investigative report from Calmatters found last month. Like A&M, the Department of Investigations found weak contract oversight allowed providers to bill for services they may not be supplying.
In November 2023, the City of San Francisco’s Auditor found serious problems with street outreach programs. Just as in Los Angeles and New York, auditors found weak contract management, and a lack of coordination among providers. Unsurprisingly, auditors also found a lack of reliable data to measure program performance.
Although Los Angeles, New York, and San Francsico have very different government structures, they all seem to share problems delivering effective services to their homeless populations. The lack of sound contract management is pervasive, as is poor data quality. There seems to be tremendous reluctance to hold providers accountable for their results, allowing them to bill for repetitive, ineffective, or nonexistent services. If you took A&M’s report, and the audits from New York and San Francisco and change the cities’ names, you would be hard-pressed to see any differences.
What is it about homeless programs that seems to cause universal failure? It doesn’t appear to be the size of the city or local government. L.A. has only about half of New York’s population, and San Francisco barely has a fourth of LA’s. Its not the disjointed nature of homelessness service provision. In Los Angeles, three agencies deliver those services, (the City, the County, and LAHSA), but in San Francsico the City and County are one in the same. Likewise, all homeless services are managed by the City of New York. Corruption or incompetence among leaders is an easy answer, but it would be a stretch to apply that to the majority of officials across all three cities. There must be more basic, more structural causes for the failure local homelessness programs.
First, we must realize homelessness is a growth industry. In Los Angeles alone, the City’s homelessness budget has exploded from about $100 million in 2016 to $1 billion in 2024-25. LAHSA’s budget was about $105 million in 2016 and just under $900 million this year. In total, the City, County and LAHSA spend at least $2 billion (and likely far more) on homelessness every year. Like any growth industry, money attracts business leaders who know how to take advantage of a situation. A perfect example is Urban Alchemy, (UA), a non-profit that started in the mid 20-teens and now earns $70 million in annual revenues. UA began in San Francsico and has since spread to several cities within and outside of California, including Los Angeles, Sausalito, Seattle and Austin. The City of Los Angeles pays Urban Alchemy about $20 million for outreach and other services. Many of those payments come from contracts that have been amended several times with no additional bidding.
As a 2023 article in The Nation explains, Urban Alchemy has created a unique business model using employees with lived experience (e.g. prior incarceration and/or addiction problems) to build peer-to-peer relationships with people on the streets. UA’s CEO claims this model is effective at building trust with unhoused people. However, the reality seems to be quite different. A recent article in The City Journal describes problems with Urban Alchemy’s performance, not only in terms of results, but in accusations of sexual assault, extortion, and drug dealing in shelters it manages. Despite UA’s claim it thoroughly trains its employees before sending them into the streets, a reporter for Knock LA who went through the nonprofit’s training program received just two days of video-based training. Despite these problems, UA continues to grow. Its “lived experience” model seems to resonate with local government leaders desperate to show they want to meet the unhoused where they are. UA is just one example of the gold-rush environment of homelessness.
But the main problem is homelessness programs’ heavy-handed top-down funding structure. Regardless of location, homelessness policy is set by the federal department of Housing and Urban Development (HUD). It makes no difference if you are homeless in L.A. or Dubuque; you will be subject to the same service structure. HUD provides billions of dollars in homelessness funding to state and local governments, and insists they follow its process-driven policies. If the state of California or the City of L.A. or the County want federal money, they must adhere to HUD’s bureaucratic and process-oriented means of providing housing and services.
HUD’s policies are built around Housing First and its one-size-fits-all approach to homelessness. Any agency that wants HUD money must adhere to its Housing First policies. But HUD takes it a step further and dictates specific structures and programs local governments must adopt. For example, HUD requires regional governments (e.g. counties) to designate a Continuum of Care (CoC) agency to coordinate homelessness services. The CoC for 85 of LA County’s cities is LAHSA. HUD then dictates what structure, priorities, and processes CoC’s must follow to procure federal funding. The process has become the goal. Despite its smothering regulatory requirements, HUD places surprisingly little emphasis on outcomes. As with many bureaucratic systems (public and private), the process takes precedence over outcomes. As long as a provider completes a process, it will be paid. As long as a local government agency completes the proper forms, it will be funded.
Until leaders from HUD and the state adopt policies that promote innovation and encourage locality-specific solutions, we will continue to see problems in cities from San Francisco to New York, and people will continue to suffer on our streets.
(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 in his iAUDIT! column for CityWatchLA.)
