HUD pulls federal funding from Los Angeles County Homeless Services Authority

The U.S. Department of Housing and Urban Development on Thursday suspended federal funding for the Los Angeles Homeless Services Authority after investigators claimed the local agency "abused hundreds of millions of tax dollars per year."

In a letter to LAHSA executives, HUD staff said they "uncovered evidence" that LAHSA lacked financial management, internal controls and safeguards against conflicts of interest for the $944 million it has received since 2021. 

"Year after year, hundreds of millions of taxpayer dollars were funneled to LAHSA with little accountability," Housing Secretary Scott Turner said. Meanwhile, homelessness skyrocketed. Taxpayers will no longer bankroll an organization that puts its own self-interests ahead of the Americans it was created to serve." 

Similar to previous audits of the agency, the allegations against LAHSA included a failure to maintain adequate records for its housing sites and the misuse of government funding by paying for services already covered.

Following HUD's announcement, LAHSA called the suspension of funding "a blatant attempt to pull yet more resources from Los Angeles" and claimed the decision could "put thousands of formerly homeless people back on the street."

The agency, which was a joint city-county program, has been under fire for years. In 2024, an audit found it could not account for tens of millions of taxpayer dollars. A later audit ordered by a federal judge found that LAHSA could not track how it spent $2.5 billion. During a court hearing in March 2025, county and city leaders acknowledged accounting problems.

In April 2025, just days after the federal court hearing, the LA County Board of Supervisors withdrew hundreds of millions of dollars in funding for LAHSA, opting to create a new county-run agency for homeless services. 

After HUD's announcement, Supervisor Hilda Solis said the county created a new Department of Homeless Services because of "concerns regarding oversight, accountability and management at LAHSA."

"That is why Los Angeles County established the Department of Homeless Services and Housing to bring greater transparency, accountability and coordination to homeless services," she said. 

Solis urged the federal government to continue working with county staff to continue services for homeless residents. 

"Suspending federal funding risks reversing hard-earned progress and jeopardizing housing and supportive services for thousands of vulnerable residents," she said. "I urge HUD to continue working with the County to ensure our communities have the resources needed to reduce homelessness and save lives."  

The agency added that after the audits in the last two years, staff had "corrected or are in the process of correcting nearly all of the issues raised," which included reformed internal controls "which are accountable and viewable to the public."

"We are also beginning to implement KPMG's recommendations to modernize our financial systems and prevent similar findings from occurring again," LAHSA wrote. "If HUD's Inspector General actually conducts a fair review of LAHSA's current and future practices, they will clearly see how our systems now allow us to clearly track the work and investments that have resulted in LA outperforming the nation by reducing homelessness over the last two years."

Both candidates for LA Mayor, Councilmember Nithya Raman and incumbent Karen Bass, said the city should cut ties with LAHSA. 

"This action by the federal government is exactly what I have been concerned about, and why I have pushed for years for the City to build the capacity needed to manage our own contracts, programs and dollars," Raman said. 

They both shared concerns about the ultimate impact the suspension of federal funding will have on the formerly homeless residents in the city. 

"Threatening federal funds does nothing to house people and jeopardizes the progress Mayor Bass has led to reduce homelessness for two years in a row, after it only went up in Los Angeles for years," Bass' office wrote. "Ultimately, people will lose their lives. We urge HUD to work with the City of Los Angeles to provide the necessary funding to reduce homelessness."