Homeless Agency Makes Changes to Untangle Accounts

In the wake of a scathing review of its finances, the Los Angeles Homeless Services Authority moved Friday to unsnarl its accounts, hiring a consulting firm and establishing committees to oversee contracting and staff performance.

Authority officials also stressed that the financial missteps had not hindered services to the homeless.

“To date, not one single bed has been closed and no services ceased,” said Executive Director Mitchell Netburn. “We’re triaging things, and where people have said they can’t make payroll, we’re getting them a check.”

The city controller and the county auditor-controller found in an assessment released this week that the authority had a backlog of $5 million in unpaid bills from service providers. As a result, some have had to use loans and lines of credit to pay their staffs and vendors, jeopardizing their programs.

Netburn said that, in the last 10 days, the authority had paid more than $1.8 million in invoices.

Members of the commission that oversees the authority met Friday for the first time since the review and said they had been unaware of the seriousness of the problems. Some also apologized to service providers, many of which have gone months without being paid.

“We want to thank them, because this is a sacrifice for all of them,” said Commissioner Sarah Dusseault.

The report found that the authority had only $700,000 in the bank. But Friday, the authority said it had a balance of more than $1.4 million and was waiting to get an additional $3.9 million.

Officials said they were working to reconcile all accounts within a few weeks. The authority’s problems stem from poor management of its cash flow.

The city of Los Angeles has sent several staffers to work with the authority full time to help ensure that client agencies most in need get paid quickly.

The U.S. Department of Housing and Urban Development is conducting its own review.

“The attention now is on how to make the program work as intended and what steps need to be taken to see that happens,” said spokesman Larry Bush. “We have found some areas where we’ll be making recommendations for corrective action.”

Agencies that serve the homeless generally praised the authority’s performance but said they were hurting.

“I’m shocked more agencies are not here,” Brenda Wilson, executive director of New Image Emergency Shelter, told commissioners. “There are a lot of little mom-and-pop agencies that haven’t been paid for a long time. We’re your fighters in the field, and you need to support us.”

Wilson said her agency, which provides more than 400 year-round shelter beds, recently had to use its $200,000 line of credit to make payroll and pay for food and transportation. New Image has racked up at least $10,000 in interest, Wilson said.

The authority still faces questions about whether it is equipped to address the needs of the 90,000 people in the county who live on the streets.

It has an annual budget of about $48 million, most of it from the federal government, with the city and county of Los Angeles contributing about $8.4 million.

Officials said some financial problems stemmed from having too few administrative employees to keep up with the growth in services to the homeless.

“We have to take our heads out of the sand and say this is what we need in order to do what we need to do,” said Commissioner Howard Katz.

The authority has about 40 administrative employees and about 20 who run homeless programs. When Netburn headed New York’s homeless agency, he had a $500-million budget and 2,400 workers.

The authority has also suffered from high turnover. At one point, seven of 11 finance positions were vacant. It has been without a chief financial officer since May.

Last month, the county Board of Supervisors set aside $24.6 million to attack homelessness, the largest single such investment of local funds ever by the county or the city. Some advocates fear that the revelations of financial mismanagement could stall the momentum.

The authority is also coordinating efforts to devise a 10-year plan, called Bring LA Home, to end chronic homelessness.

“This is bad timing, unfortunately, because we’ve got a new mayor, a charismatic leader to really move Bring LA Home forward in a rapid way,” said Bob Erlenbusch, executive director of the Los Angeles Coalition to End Hunger and Homelessness. With the authority now “having this management crisis, it really sucks their energy, saps their ability to continue to drive the process.”

Some reform advocates have suggested that the authority may have outlived its usefulness, and others want it to be more accountable to local governments.

Tanya Tull, executive director of the housing group Beyond Shelter, said the authority was being made the scapegoat for systemic problems. Her agency has been waiting nearly six months to be reimbursed and had to borrow $150,000 to meet obligations, she said.

“I’ve been working with LAHSA since it started and, unfortunately, you’ve got the city and county and different government entities with different reporting requirements and systems and somebody having to integrate it all,” Tull said. “I’m not saying they’ve been perfect, because they haven’t been, but I don’t think they’ve been that bad either.”