In the same week, two contrasting stories unfolded in parallel in Los Angeles. On one side, a newly created department in Los Angeles County announced achievements: the response time for clearing encampments and offering housing dropped from six to nine months down to 45 days in the first quarter of this year. On the other side, the agency that the county just defunded — the Los Angeles Homeless Services Authority, or LAHSA — is suing the federal government, alleging fraud and poor management after losing funding that sustains over 11,000 people. These two fronts are inseparable. They are two pieces of the same machine breaking apart into three sections, divided among the county, the city, and Washington, precisely when homeless people need a stable system most.
On July 1, 2026, the Los Angeles County Department of Human Services and Housing officially took over the entire homelessness budget that LAHSA had managed for over three decades. LAHSA is a joint agency of the city and county, established in 1993 to consolidate federal, state, city, and county funding into one entity. In April 2025, nearly all five county supervisors, except Holly Mitchell, voted to withdraw most of the budget from LAHSA following a series of harsh audits and a court ruling criticizing how the agency tracked spending. Sarah Mahin, who previously oversaw the county's Housing for Health program, was tasked with running the new department with a budget of 843 million dollars in the current fiscal year.
Three levels of government each release figures favoring their own positions — and the public loses the ability to know who is telling the truth.
The County Grades Itself — But Who Verifies the Scorecard
The initial numbers lean in the county's favor. Beyond the shortened response time, the new department reported paying 97% of vendor invoices on time, while previously nearly 40% of LAHSA's unpaid invoices had been overdue by more than two months. The rate of people placed in permanent housing who remain housed after one year stands at 91%, and 83% after two years. Among 210 staff members that LAHSA assigned to programs funded by the county, 184 were rehired by the county.
But here is the caveat: all of these figures were released by the new department itself, and the detailed public dataset available for independent verification is not scheduled to launch until October 2026. In other words, for the next three months, the public must rely on the self-reported claims of a newly created agency — precisely the type of risk LAHSA was accused of taking. The only difference now is that the new agency does not have four years of poor audit records to compare against.
LAHSA Lost More Than County Funding — Washington Is Calling It Outright Fraud
While the county quietly withdrew, the second front exploded far more violently. On June 11, 2026, the U.S. Department of Housing and Urban Development (HUD) announced it was suspending federal funding to LAHSA. According to Secretary Scott Turner, for years hundreds of millions in taxpayer dollars had been funneled to LAHSA with virtually no accountability mechanisms in place, while homelessness in the region continued to skyrocket. He asserted that taxpayers would no longer subsidize an organization that placed its own interests above the people it was created to serve. HUD's Inspector General investigation raised a series of specific allegations: LAHSA could not produce documentation verifying the location of 2,300 housing units in 2025, and was accused of falsifying certifications to hide the lack of a conflict-of-interest policy until September 26, 2025. A court-ordered audit previously found that LAHSA could not account for 2.5 billion dollars in spending.
LAHSA responded with a lawsuit filed Monday, requesting a temporary restraining order to prevent HUD from cutting funds while the case is litigated, arguing that HUD's notice contained multiple errors, including attributing to LAHSA responsibility for 500 million dollars in unspent funds that the original documents never mentioned. The agency also claimed it had corrected or was correcting nearly all the issues raised by audits. Both sides have incentives to overstate their positions: HUD under the Trump administration has political reasons to penalize a Democratic city known for its homelessness crisis, while LAHSA is fighting for its survival.
Historical context makes HUD's accusations difficult to dismiss entirely. Back in August 2023, LAHSA could not determine whether it had used money to pay for vacant hotel rooms because the agency did not record when homeless individuals left temporary shelter. In November 2024, City Auditor Kenneth Mejia discovered that LAHSA had failed to spend roughly 513 million dollars in budget allocations during the correct fiscal year. LAHSA's CEO at the time, Va Lecia Adams Kellum, resigned in 2025 after the County Board of Supervisors decided to transfer 300 million dollars and hundreds of staff members to the new department; she had previously signed a 2.1 million dollar contract with a nonprofit organization where her husband works, according to an investigation by LAist.
The City Takes the Long Road, Letting Election Politics Slow Reform
While the county acted decisively and the federal government attacked head-on, Los Angeles City took its own path, slower and filled with electoral calculations. Starting July 1, 2026, the city became LAHSA's primary funder after the county withdrew, but its seat on LAHSA's oversight committee maintained a 50-50 split between city and county. Mayor Karen Bass, along with councilmembers Tim McOsker and Ysabel Jurado, proposed renegotiating the joint powers agreement to give the city a majority on LAHSA's oversight committee, while gradually transferring the agency's administrative functions to city departments. The City Council's Housing and Homelessness Committee approved this proposal on April 15, 2026.
Meanwhile, councilmember Nithya Raman, who is running for mayor in direct competition with Bass, put forward her own proposal: gradually transfer management of city-funded programs out of LAHSA in the next fiscal year, and require a report assessing whether the city operating independently or contracting with the county would be more efficient. The city council's homelessness committee initially wanted the analysis completed by July 1, 2026, but the budget committee later pushed the deadline back to December 2027 — an eighteen-month delay that shows the city has no internal consensus on the pace of reform, even as two mayoral candidates both want to score political points by appearing tough on LAHSA.
LAHSA announced last week that it is laying off more than 250 staff members, and its oversight board recently approved a mandatory federal audit for fiscal year 2025, finding a significant deficiency in internal controls over financial reporting — evidence that despite losing most of its county budget, LAHSA has yet to fix the gaps that prompted the county to withdraw.
Who Bears the Risk as Three Government Levels Fight for Control
Amidst conflicting figures on effectiveness — the rate of reducing unsheltered homelessness at 10.3% in Los Angeles over the past year, a level HUD calls the largest regional decrease in the country, opposed to HUD's own claim that homelessness in Los Angeles has doubled 100% over the past five years — the public struggles to know whom to believe. Both figures stem from the same federal data source but are interpreted by each side in ways favorable to their arguments. This is the core problem: when three levels of government all release figures serving their own political positions, citizens lose the ability to independently assess whether the system is actually improving.
The greatest risk is borne not by county supervisors, the mayor, or federal officials, but by over 11,000 people whose housing depends on federal funds that Mahin warns could disappear if HUD follows through on cutting money. Within the Vietnamese American community in central and East Los Angeles, where many nonprofits previously contracted services with LAHSA, this fragmentation of management authority means Vietnamese social workers now must work with two, sometimes three different administrative agencies for the same clientele. For Vietnamese nail salon owners, restaurant proprietors, and small shop owners in Chinatown, Little Tokyo, and the jewelry district of downtown Los Angeles — areas that once complained most about LAHSA's slow response times to encampments outside their businesses — the county's 45-day figure is good news, but only if it is independently verified rather than self-reported.
Conclusion: Decentralization Diffuses Accountability, but the Price is Coordination
The county's decision to leave LAHSA was justified given years of terrible audit records. But decentralization is not a free fix. With the county gone, the city hesitating due to mayoral election politics, and the federal government exploiting this chaos to tighten or even cut off funding, Los Angeles's homeless services system is operating with three sets of rules, three data sources, and three different reasons to blame each other if someone falls through the safety net. In essence, this is decentralization that diffuses accountability rather than clarifies it.