Audit reveals billions in taxpayer dollars wasted as L.A. homelessness crisis worsens

By isabelle // 2025-03-07

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A court-ordered audit revealed $2.3 billion in taxpayer funds were mismanaged in L.A.’s homeless services, with no accountability for spending or outcomes.
The audit found poor oversight, vague contracts, and fragmented data systems, leaving funds vulnerable to waste and fraud.
Nearly half of program participants returned to homelessness, while only 22% secured permanent housing.
Contracting and payment processes were chaotic, with inconsistent costs and delays in executing agreements.
Officials and advocates expressed outrage, calling for systemic reform and accountability to address the crisis.

A scathing court-ordered audit has exposed shocking mismanagement and inefficiency in Los Angeles’ homeless services system, revealing that billions of taxpayer dollars have been squandered on ineffective bureaucracy while the city’s homelessness crisis continues to spiral out of control. The audit, conducted by global consulting firm Alvarez & Marsal (A&M) and submitted to U.S. District Judge David O. Carter, examined three major city-funded programs—Inside Safe, the Roadmap Program, and the Alliance Settlement Program—between June 2020 and June 2024. The findings paint a damning picture of a fractured system plagued by poor oversight, vague contracts, and a complete inability to track spending or measure outcomes. The audit identified approximately $2.3 billion in funding tied to these initiatives but found that the city, county, and Los Angeles Homeless Services Authority (LAHSA) failed to account for how much was actually spent or whether services were delivered. Fragmented data systems, inconsistent financial reporting, and a lack of coordination between agencies left billions vulnerable to waste, fraud, and abuse. “These findings are not just troubling—they are deadly,” said Elizabeth Mitchell, an attorney for the L.A. Alliance for Human Rights, the group whose lawsuit prompted the audit. “Billions have been squandered on ineffective bureaucracy while lives are lost daily. This is not just mismanagement; it is a moral failure.”

A system in chaos

The audit revealed a litany of failures, including:

Inconsistent financial tracking

Auditors were unable to verify how much was spent on homelessness services due to incomplete and inconsistent financial records.

Lack of accountability

LAHSA and the city routinely approved invoices from service providers without verifying whether the billed services were actually provided.

Poor outcomes

Nearly half (47.8%) of program participants exited back into homelessness, while only 22% found permanent housing. The report also highlighted glaring inconsistencies in how LAHSA tracked shelter beds and services. Auditors found no standardized method to determine bed availability, and funding was not adjusted based on occupancy rates. This lack of oversight likely contributed to inequitable fund distribution and decreased motivation to maximize occupancy.

Contracts and payments in disarray

The audit uncovered severe issues with contracting and payment processes. Contracts were often vague, allowing wide variations in services and costs. For example, personnel costs per bed per day ranged from $67 to just $7, with no clear explanation for the discrepancies. Additionally, 82 days passed on average between the start of a contract term and its official execution, leaving service providers operating without signed agreements for months. The invoicing process between LAHSA and the city was entirely manual and prone to human error, raising concerns about potential accounting inaccuracies and funding mismanagement. Auditors also noted that LAHSA’s oversight structure was compromised, as the same team that approved invoices was responsible for monitoring performance. The audit has sparked outrage among elected officials and advocates. County Supervisor Lindsey Horvath called LAHSA’s dysfunction “a nightmare” and proposed creating a new county department to take over its contracting duties. “No more waste through duplicated resources,” Horvath said. “No more contracts for services that don’t deliver. We need accountability and results right now.” Mayor Karen Bass, whose signature homelessness program Inside Safe received mild criticism in the audit, acknowledged the findings but framed them as a validation of her efforts to reform the system. “The broken system the audit identifies is what I’ve been fighting against since I took office,” she said.

A moral and fiscal failure

The audit’s findings underscore a broader issue: Los Angeles’ inability to effectively manage its homelessness crisis. Despite billions in taxpayer dollars allocated to address the problem, the city has failed to provide transparency, accountability, or measurable results. The audit’s revelations are a perfect example of the consequences of prioritizing diversity, equity, and inclusion (DEI) initiatives over merit-based hiring and competent management. Sources for this article include: Breitbart.com LATimes.com LAist.com WestsideCurrent.com