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California officials often blame a lack of funding for their failures to address the state’s multiple crises, yet an independent audit of Los Angeles’ spending of $2.3 billion in homeless services last year reinforces a point these pages often make: California governments fail to spend the money effectively. Officials can’t even tell taxpayers where the money went. As usual, the state’s pretty good and analyzing what went wrong after the fact.
As LAist summarized, “L.A. city officials have made it impossible to accurately track homelessness spending, in large part by outsourcing to an agency that has failed to collect accurate data on its vendors and hold them accountable,” according to the court-mandated audit. Auditors concluded the homeless authority’s lack of standards and oversight risks “resource misallocation and limited the ability to assess the true impact of homelessness assistance services.”
City and county officials responded with predictable outrage, but where was their oversight as such an astounding amount of money was being spent? County officials are now looking at moving the services to their own county agency, but however one rearranges the deck chairs, the audit’s findings spotlight the reality that more public spending rarely translates into better results.
The draft audit, by the firm Alvarez & Marshal, is rightly described as scathing. It noted poor data quality: “Repetitive information gaps, coupled with a lack of accurate and complete data and documentation, posed significant obstacles to this assessment.” It detailed an insufficient process for detailing the expenditures. It reported on a “disjointed” system for continuum-of-care services.
It also pointed to limited financial oversight and performance monitoring: The agency “did not contemporaneously verify that the service provider invoices reflected actual services provided at the given location before approving payment.” There’s a lack of contractual clarity that “reduced transparency, blurred roles and responsibilities, and impeded effective coordination of homelessness assistance services.”
The programs were plagued by bureaucratic incompetence, inefficiency, and a lack of oversight and accountability—everything we’ve come to expect from a highly funded program run by government agencies. The audit offered a variety of recommendations, but they basically amount to, stop doing the stuff you’re already doing and start auditing the spending correctly. If anything, this latest debacle reinforces the need for more outsourcing.
Judge David O. Carter, who demanded the audit, called on Mayor Karen Bass and other city officials to answer basic questions: “Nobody is asking our providers what they did or what services they performed. We may have providers who committed fraud and we may never know. We may have providers that provided excellent services and we’ll never know,” he said. “If we’re so short on money, why aren’t these providers being sued…These parties owe you that money. Are they waiting for us to get senile or die? Go and get that money.”
This is just the latest embarrassment after the Los Angeles wildfires exposed myriad other public failures and incompetency. Some observers called for the federal courts to place the city into receivership. And it all comes as the county’s Measure A half-cent sales tax goes into effect to pay for homeless services. One recent news report asks where the extra $1 billion annually will go. Based on the results of the audit, the answer is obvious: Who knows?
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