Who Watches the Money After LAHSA?
THE NAVARRO REPORT - The agency that sat at the center of Los Angeles homelessness spending for years is now a much smaller operation, yet the city still supplies nearly three of every four dollars it has. That arrangement deserves scrutiny before the next mayor settles into City Hall.
In July, the LAHSA Commission unanimously approved a $496 million budget for 2026-27, down 40 percent from $829 million a year earlier. The city of Los Angeles now funds 73 percent of it. Over the same period, the number of people living outdoors in the city grew 7.9 percent, according to the latest count. A smaller agency is not producing a smaller problem.
The shrinkage was deliberate. Last year, county supervisors voted to withdraw more than $300 million in annual funding from LAHSA and build their own Department of Homeless Services and Housing, led by Sarah Mahin. The county has committed $843 million to that department for the current fiscal year. City Council President Marqueece Harris-Dawson said at the time that the move meant LAHSA had effectively ended. Yet the city has not said so itself. It keeps funding the agency while the council weighs three paths: contracting directly with providers, routing money through the county department, or staying with LAHSA.
Whichever path the council chooses, the record deserves a careful reading. A 2024 county audit found LAHSA paying providers late and failing to track whether services were delivered. A later review found at least $2.3 billion in homelessness spending across LAHSA, the city and the county poorly documented, and auditors could analyze only about a third of the budget because records were missing or incomplete. Reviewers also found that invoices were routinely approved without verifying that the billed work occurred.
The most recent outside audit, covering the year that ended in June 2025, is more nuanced but not reassuring. LAHSA's financial statements initially contained significant inaccuracies, most tied to lease accounting, that had to be corrected late in the process. The agency is locked into $75 million in long-term leases it cannot cancel. Auditors found that three of 40 sampled timesheets lacked required approval, a problem when salaries are charged to federal grants. LAHSA also missed the March 31 federal filing deadline, which can put future funding at risk. In fairness, the auditors still issued an unmodified opinion, meaning the final statements were fairly presented, and CEO Gita O'Neill told the audit committee that her team is adopting the recommendations and has engaged KPMG to modernize its systems. Still, LAHSA has not completed an internal audit in years.
The stakes are not only local. LAHSA is also in a court fight with the federal government, which seeks to cut its access to hundreds of millions of dollars. An agency that files late and corrects its books at the last minute makes a weak witness in that argument. Nearly 300 employees faced layoffs this spring as funding shifted, so the organization the city relies on is also losing capacity at the moment it needs more rigor, not less.
Governance adds another wrinkle. A ten-member commission oversees the agency, half appointed by the mayor and half by the county supervisors. The mayor has also served on it since 2023. The supervisors who fill half of those seats have since moved their money elsewhere. Who is accountable for an agency whose largest funder is now the city, while its former partner has taken its dollars and many of its programs to a new department?
The county model is no automatic cure either. The new department reports directly to the Board of Supervisors, which means the body that funds the work also operates it. At its launch, critics warned that Los Angeles risked trading one bureaucracy for another. A department with an $843 million budget and no track record deserves the same audit discipline that LAHSA lacked.
A practical standard is within reach. First, require a single ledger that reconciles what the city, the county and LAHSA each report spending, so that auditors never again have to guess at two-thirds of a budget. Second, tie payment to verified delivery, so that no invoice is approved before someone confirms the service occurred. Third, publish an audit calendar with deadlines, so that a missed filing becomes a public event rather than a quiet extension. None of this is exotic. Any controller would recognize it as basic stewardship.
The mayor's race was still undecided on Wednesday, with the count continuing. Whoever prevails inherits an unfinished decision about where roughly $360 million in city homelessness dollars should go and who answers for them. That choice will shape the city's accountability for years. The council should make it with the audit record in hand, not after the next one arrives.
(Jose E. Navarro, MBA, is a San Diego–based financial controller, public finance analyst and founder of The Navarro Report. With more than 20 years of experience in public finance, nonprofit management and government contract compliance, he writes about government spending, transparency and public accountability.). [email protected]
