LA County investigates LAHSA financial practices, including inability to pay providers to homeless

Published February 27, 2026, 12:30 AM

The Los Angeles County’s Auditor-Controller’s Office is investigating the joint L.A. City-L.A. County homeless services agency, saying failures to pay homeless-service providers even after the county provided the funding constitutes negligence, the county announced on Thursday, Feb. 26.

The issue arose on Feb. 20 at a Los Angeles Homeless Services AuthorityFinancial Committee meeting in which gaps were revealed in the the agency’s oversight, including not paying county-funded service providers, and not correcting a similar problem from last year when the county Board of Supervisors ordered LAHSA to pay providers in advance, not months and months later.

Previous audits, as well as testimony from many nonprofit providers of street services and temporary housing that they had to use their director’s own credit cards just to stay afloat and were on the brink of shutting down, showing the same problems cropping up again were the main reason for the new probe, according to a letter sent to Gita O’Neill, LAHSA interim chief executive officer. The letter was signed by Joseph Nicchitta, the county’s acting CEO, and dated Feb. 26.

By not adhering to the new provider payment system the county put in place to correct the problem last May, this creates “a serious operational gap that jeopardized the delivery of services and our shared commitment to supporting service providers,” Nicchitta wrote.

Nicchitta also pointed out that LAHSA admitted it was having trouble making the payments and handling the high number of incoming invoices bombarding the agency and thereby creating a backlog. The letter also quoted LAHSA leadership as saying the problems were due to high staff turnover.

The same issues coming to light again prompted L.A. County Third District Supervisor Lindsey Horvath to call for the county to remove all taxpayer funds for homeless services from LAHSA.

“Our communities are done with LAHSA’s mismanagement and payment delays. These failures have destabilized providers and eroded public trust —and they must end,” said Horvath in a statement released Thursday. She said L.A. County is taking new steps “to address continued negligence at LAHSA.”

In a response sent to media outlets on Thursday, O’Neill said LAHSA takes responsibility for passing on taxpayers dollars to pay homeless service providers and is working quickly to move the funds that continue services for unhoused people in L.A. County.

“While the current backlog was driven by a combination of contracting delays, outdated internal policies, and the loss of key midlevel leaders with institutional knowledge resulting from funding shifts, we have identified many of the problems and are already taking corrective action,” O’Neill wrote.

She said her agency was flooded with invoices, which became overwhelming. Two weeks ago, LAHSA hired outside consultants to help modernize its financial systems by speeding up payments, check disbursements and selection procedures that will make sure providers are paid on time and can continue their work, she added.

The agency said it recognizes problems O’Neill called “pain points” in its invoice payment processes and is willing to work with the Auditor-Controller Office who can provide “insight and assistance.”

Horvath said in a statement “LAHSA does not have the staffing or expertise to pay its bills.” She said while LAHSA has acknowledged a need for assistance, it has refused help from 24 members of the county staff to assist with day-to-day operations, at no cost to the agency.

LAHSA’s problems prompted Horvath, with the cooperation of a majority of the Board of Supervisors, to create its own homeless services department on April 1. That vote included moving services and other responsibilities, including tax dollars from the recently passed Measure A for homeless services and new affordable housing, away from LAHSA to the new county department.

The L.A. County Department of Homeless and Housing Services, with 1,000 employees, is the largest department in the county.

After that vote, LAHSA CEO Va Lecia Adams Kellum resigned. Adams Kellum was handpicked for the job by L.A. Mayor Karen Bass.

The new L.A. County homeless department will manage about $1 billion per year, including taxpayer funds earmarked for homeless services. The new department was established Jan. 1, with complete funding moving from LAHSA programs to the county department by July 1. It will report directly to the Board of Supervisors.

LAHSA will continue to conduct the Greater Los Angeles Homeless Count, as well as provide services through contract agencies and is managing dollars for homeless services for the county until July 1.

“Even as we build a new homeless services system rooted in transparency and results, we must also hold the current system accountable,” said Horvath in a statement. “It is clearer than ever why the county of Los Angeles must remove our taxpayer funds from LAHSA.

“Taxpayers deserve transparency. Providers deserve to be paid on time. People experiencing homelessness deserve a system that works,” said Horvath.

In 2024, several audits of LAHSA pointed out similar problems: Lack of payments and inability to track dollars from taxpayer funds.

In March 2025, a new assessment by Alvarez & Marsal, on behalf of U.S. District Judge David Carter, found that “fragmented data systems” across LAHSA, the city of Los Angeles and the county made it “challenging” to track key figures, such as the spending, the number of beds provided or the outcomes for participants from June 1, 2020, to June 30, 2024.

“The lack of uniform data standards and real-time oversight increased the risk of resource misallocation and limited the ability to assess the true impact of homelessness assistance services,” auditors wrote.

Horvath called for the forensic audit on Feb. 20, after the LAHSA committee hearing, as well as immediate payment of all outstanding invoices for services rendered by providers contracted by L.A. County. She also wants LAHSA to explain to the public what’s been happening at a public hearing conducted by the Board of Supervisors. No date has been set.

“Undoubtedly, there is more to uncover that will disappoint us all. We must stop this madness,” Horvath wrote.