A deepening rift between Los Angeles County and City leaders erupted last week over who bears responsibility for tens of millions of dollars in late payments to homeless service providers, as Supervisor Lindsey P. Horvath accused Mayor Karen Bass of hypocrisy and the mayor warned that county actions were creating "more bureaucracy."
The political clash centers on the Los Angeles Homeless Services Authority, a joint city-county agency that has repeatedly failed to pay contractors on time despite administering hundreds of millions of dollars in public funds annually.
The exchange came after the Board of Supervisors voted March 3 to embed county staff at LAHSA to review financial operations and directly oversee a plan ensuring providers are paid through June 30.
Horvath fired back at Bass after the mayor suggested the city might withdraw from LAHSA, pointing to what she characterized as a double standard in the mayor's approach to homeless spending.
"When the Mayor created a new program — spending hundreds of millions of your dollars without prior City Council approval — she called it 'strategic,'" Horvath said. "Now, when the County withdraws hundreds of millions of your dollars from an agency that failed multiple audits, she calls it 'more bureaucracy.'"
The supervisor added: "Angelenos know the truth: the current system doesn't work. You want us to work together to find solutions that protect lives and public funding. I'm ready to work with the City Council and show the Mayor what locking arms actually looks like."
The war of words comes as LAHSA faces another payment crisis. At a Feb. 20 Finance Committee meeting, the agency confirmed it was experiencing serious cash flow issues. In late February, LAHSA told its oversight body it owed providers $69.3 million, including $26.9 million on invoices at least two months overdue. By March 3, LAHSA reported reducing the backlog to $53.4 million.
The current crisis echoes problems dating back years. In May 2024, major service providers raised alarms about months-long reimbursement delays, with LAHSA figures at the time showing $48 million in past-due payments.
LAHSA's troubles have drawn scrutiny from multiple directions. A County Auditor-Controller review in late 2024 found weak financial controls and late payments even when funds were available. In federal court, an independent assessment by Alvarez & Marsal identified invoicing inefficiencies, prolonged budget amendments and inadequate invoice validation.
County leadership must return to the board with a financial analysis and corrective action plan by April 14.
"The Los Angeles Homeless Services Authority has repeatedly failed to provide meaningful oversight or transparency for taxpayer dollars," Horvath said. "That is why Los Angeles County is transitioning to direct accountability through our new Homeless Services and Housing Department."
The county established its Department of Homeless Services and Housing on Jan. 1 to bring direct oversight to the system, following recommendations from a 2021 Blue Ribbon Commission on Homelessness that called for centralizing county homeless services contracting after repeated failed audits.
LAHSA's audited financial statements for fiscal year 2024 showed grant revenue of $730 million but noted liquidity strain, with cash and investments falling to $31.8 million. The agency attributed the decrease partly to delayed payments from funders while continuing to pay service providers.
The payment system itself has undergone changes. After the 2024 crisis, county officials shifted from a cost-reimbursement model — which forced nonprofits to front payroll and vendor costs for months — to quarterly advance payments. But that approach has proven administratively complex and remains a bottleneck when staffing and tracking systems are weak.
The City Council Housing and Homelessness Committee on March 4 expressed openness to collaboration with the county, though the path forward remains uncertain as both sides trade blame for the system's failures.
A new county review of LAHSA's financial operations is underway, with officials reiterating plans to shift county homelessness contracting away from the agency by the next fiscal year.