LA Homeless Funding Cut
HUD Suspends Nearly $200 Million for LA Homeless Agency Amid Fraud Allegations
The Trump administration has suspended nearly $200 million in federal funding for the Los Angeles Homeless Services Authority (LAHSA), the region's main homeless agency, citing "obvious fraud" and "wanton mismanagement" of public funds. HUD Deputy Secretary Andrew Hughes issued the suspension notice to LAHSA CEO Gita O'Neill on June 11, 2026, putting rental assistance for thousands of homeless Angelenos at immediate risk. Fox13 Now reported the move jeopardizes nearly half of the funds that LA-area service providers rely on to shelter California's homeless population.
HUD Secretary Scott Turner was blunt in his reasoning. "Taxpayers will no longer bankroll an organization that puts its own self-interests ahead of the Americans it was created to serve," he said. LAHSA CEO O'Neill fired back, calling the suspension a "blatant attempt to pull yet more resources from Los Angeles."
Years of Audits and a $23 Million Theft Scandal
LAHSA's troubles did not start with the Trump administration. A November 2024 audit by the LA County Auditor-Controller found the agency misused funds and failed to secure repayment agreements for $51 million in cash advances going back to 2017. A 2023 LA City Council review revealed LAHSA could not even confirm whether funds were spent on occupied hotel rooms, due to sloppy record-keeping.
The most damaging blow came in January 2026, when federal and local prosecutors charged Alexander Soofer, director of a LAHSA-contracted charity called "Abundant Blessings," with stealing $23 million in homeless funds between 2018 and 2025. Prosecutors say he used fake boards and fabricated invoices to divert money toward a Greek vacation home and a $7 million Westwood estate. A separate audit found LAHSA failed to spend $108 million of its own budget in a single fiscal year due to program delays.
Federal Dollars Going Directly to Rent — Then Gone
The suspended funds flow through a federal program called the Continuum of Care, which gives money to local agencies to house homeless people. Federal dollars make up only 7% to 8% of LAHSA's total annual budget — but 90% of that money goes straight to rental subsidies, according to the Los Angeles Times. That means the cuts fall hardest on the most vulnerable people already in housing.
LAHSA has received $944 million in federal taxpayer money since 2021, according to News5 Cleveland. Despite that spending, Los Angeles still has an estimated 72,308 homeless residents as of 2025. The National Alliance to End Homelessness warned that broader federal policy changes tied to this suspension could cause 15,000 people in California to lose their homes, by shifting $238 million away from permanent housing toward temporary shelters.
LA County Already Moving to Replace LAHSA
Even before HUD acted, local officials had begun to dismantle LAHSA. In February 2026, the LA County Board of Supervisors voted to pull $300 million in annual funding from the agency, citing "systemic failure." On April 1, 2026, LA County officially launched a new Department of Homeless Services and Housing (HSH), led by Sarah Mahin, to take over LAHSA's county-level duties.
The agency's problems also include a leadership scandal. Former LAHSA CEO Va Lecia Adams Kellum resigned after signing a $2.1 million contract with Upward Bound House — a nonprofit where her own husband was a senior executive. LA County Supervisor Lindsey Horvath dismissed the HUD suspension as a "publicity stunt" and "retribution against Los Angeles," but independent court-appointed monitors have described LAHSA's financial tracking as "non-existent" regardless of which party is in power.
Debarment Risk Could Mean a Permanent Funding Ban
The HUD Office of Inspector General has opened a formal probe into LAHSA. If investigators confirm fraud, the agency faces permanent debarment — meaning it could be banned from receiving any federal contracts ever again, according to NBC26. LAHSA remains the lead homeless agency for the LA region for now, but its future is in serious doubt.
Mayor Karen Bass's office warned that "threatening federal funds does nothing to house people" and puts lives at risk. The Corporation for Supportive Housing also criticized the shift toward mandatory treatment and work requirements, arguing that sudden funding cuts destabilize both housing providers and the tenants they serve. With LA's homeless population still topping 72,000, the stakes of getting this wrong are enormous.
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