Homeless Agencies Strapped After County Authority Fails to Pay

By Olin Ericksen
Staff Writer

August 10 -- Hundreds of thousands of dollars owed by the County’s lead agency on homelessness appears to be taking its toll on local groups who help people living on the street, forcing at least one service provider to draw down an additional credit line.

City officials and service groups said it has been months since they were last reimbursed by Los Angeles Homeless Services Authority (LAHSA), which still owes an estimated $280,000 to the City and tens of thousands more to each of the nearly half dozen groups that clothe, counsel, feed and provide shelter to the area’s homeless population.

A July 19 audit of LAHSA’s finances found that the authority -- which has a decimated financial staff and no chief financial officer since May -- had a backlog of $5 million in unpaid bills from service providers.

LAHSA officials said the authority is working “diligently” with County officials and service providers to correct the situation and has recently sent $1.8 million owed to the agencies.

“No services have been ceased, and we’re working closely with providers to make sure they receive all the money they need,” said Mitchell Netburn, LAHSA’s executive director.

As a result of the delays, some service providers have had to use loans and lines of credit to pay their staffs and vendors, jeopardizing their programs, agency officials told The Lookout.

One local provider, St. Joseph’s Center, is still waiting for nearly $68,000 in funding from LAHSA. The last time they received payment was in January, for services from February through June, according to officials with the center.

As a result, the center has asked for and received a loan -- one of the worst case scenarios for a non-profit like St. Josephs.

“It’s makes it all very tight, obviously, to have to draw on a credit lines that forces you to pay interest,” said Rhonda Meister, executive director for St. Josephs’ Center, who declined to give the size of the loan or the how much they will pay in interest.

“Any time your paying interest, that’s money not going into services,” Meister said.

Other groups such as the Ocean Park Community Center (OPCC) and Chrysalis have fared better, because they have more substantial private funding, but the accounting debacle has taken its toll, agency officials said.

"That money is significant in terms of cash flow, and we're certainly waiting for a reimbursement," said John Maceri, executive director for OPCC, who estimated his group is still owed nearly $70,000 by LAHSA.

“It can be a serious difficulty to have to float that kind of money,” he said. “Luckily, we have the kind of resources where we don’t have to” look for an additional line of credit.

While City officials said they, too, are waiting to be reimbursed, they reported the City is experiencing no financial repercussions.

"Our approach is we are monitoring the situation and we're in contact with our LAHSA representatives nearly every day,” said Stacy Rowe, human services administrator who works on homeless issues for the City. “It's not that there's not enough money to pay everybody. The process just got overwhelmed and everything grinded to a halt."

It was reported in the LA Times that as of July 23, LAHSA had $700,000 in the bank, however, the authority said it had a balance of more than $1.4 million and was waiting to get an additional $3.9 million.

At least one additional probe was being launched by The U.S. Department of Housing and Urban Development into LAHSA’s cash management, and the City of Los Angeles has assigned several staff members to work with the authority full time during the crisis.

For groups such as St. Joseph’s Center, it came as welcome news that the City and County were spending a considerable amount of time and energy to rectify LAHSA’s financial problems.

"I feel like it was a fairly impressive response to dispatch people quickly to assess what was happening with providers and to find out exactly what they need," said Meister. "They really seemed to step up to the plate."

The July 19 audit also said the agency has suffered from a high turnover rate, with seven of 11 finance positions vacant. LAHSA has not had a chief financial officer since May.

The news comes shortly after the County Board of Supervisors pitched in $24.6 million to tackle homelessness, the largest single payment of local funds ever by either the City or County of Los Angeles.

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