The Trump administration suspended the embattled Los Angeles Homeless Services Authority from receiving federal funds Thursday, citing repeated financial mismanagement and lack of control over conflict of interest safeguards.
In a letter, Housing and Urban Development Deputy Secretary Andrew Hughes told LAHSA that the federal agency had reason to believe the authority may have violated federal law and federal funding would be suspended during an investigation by HUD’s inspector general.
Depending on the outcome, funding could be restored or LAHSA could be permanently barred.
“HUD cannot ignore LAHSA’s wanton mismanagement of public funds,” Hughes said in his letter. “Diverting dollars from worthy programs to LAHSA merely makes the homeless crisis worse.”
Jerry Jones, executive director of the Greater LA Coalition on Homelessness, which represents 63 groups that provide services to the county’s unhoused population, had a different view.
“This is intended to create chaos,” he said.
Federal funding made up 8% of LAHSA’s annual budget — about $69 million — this fiscal year, mostly paying for permanent housing subsidies through a HUD program known as the Continuum of Care, agency officials said.
In a statement, LAHSA said HUD’s action “could put thousands of formerly homeless people back on the street” and that it was exploring “all available options” to keep federal dollars flowing.
Established in 1993 as a joint city-county agency, LAHSA oversees the region’s homelessness response and collects money from the city, county, state and federal governments to do so.
In recent years, the agency has faced withering criticism locally for mismanagement and lack of oversight of its programs and funds.
After two critical audits, the county voted last year to pull most of its funds from LAHSA, effective in July, and set up its own homelessness department. The city is exploring similar measures.
In recent months, another audit, required by the federal government and submitted past its deadline, found “significant deficiency in internal control over financial reporting” during the 2025 fiscal year.
Nonprofit providers that have contracts with LAHSA have also repeatedly complained about delayed payments.
In its letter, HUD cited these issues — as well as a contract LAHSA had with a nonprofit that employed its then-CEO — as evidence that the local agency improperly certified to the federal government it had sufficient safeguards and that HUD needed to take “immediate action to protect the public interest.”
In its statement, LAHSA said it has “corrected or is in the process of correcting nearly all of the issues raised” by the federal housing agency and is confident that if the investigation is fair it will “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.”
Indeed, after rising for years in L.A. County, homelessness — especially the number of people living on the streets — fell in the last two years, according to LAHSA figures.
Though tens of thousands remain on the streets, Los Angeles Mayor Karen Bass has made the reductions a pillar of her reelection fight.
In a statement, her office said Bass supports exploring moving city money away from LAHSA because she too has “grave concerns” about the agency, but a sudden suspension of federal dollars not only threatens recent progress but “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,” Bass’ office said.
Los Angeles County Supervisor Kathryn Barger, the sole Republican on the five-member county board, called HUD’s decision “deeply concerning” but also said it is “consistent with long-standing issues” identified at LAHSA.
“My immediate priority is protecting the unhoused individuals who rely on these services and the frontline organizations working every day to help them,” Barger said in a statement. “They should not bear the consequences of management failures.”
Los Angeles City Council President Marqueece Harris-Dawson promised that the region’s politicians and nonprofit groups would push back.
“Last year, Trump came after immigrants in our city, and now he is trying to come after our unhoused neighbors,” he said in a statement. “Like last year, we won’t back down. We will stand with Mayor Bass, the County Board of Supervisors, and housing providers to fight these attacks.”
Elizabeth Mitchell, an attorney with the LA Alliance for Human Rights, a nonprofit group that has sued the city and county over their handling of the homelessness crisis, acknowledged that HUD’s decision has put both LAHSA and the city’s homeless population in a “difficult situation.”
“But we do welcome long-overdue federal recognition that the status quo is unacceptable,” Mitchell said. “Real accountability (not the performative words bandied about by our local officials) is the necessary precondition for actually helping people off the streets.”
The LA Alliance tried unsuccessfully last year to persuade a judge to put the city’s homelessness system into receivership, arguing that it has been failing the city’s most vulnerable population.
County Supervisor Lindsey Horvath, who spearheaded the pullout of county funds from LAHSA, accused federal officials of focusing on “stunts and retribution against Los Angeles.”
“This stunt is for publicity, not for results,” she said in a statement. “I have been calling for change and accountability at LAHSA, but if this administration desires accountability, too, they should work WITH LA County.”
