HOMELESS CASH BADLY HANDLED? AUDIT TO CHECK LAHSA, LACKING EXECUTIVES, SAID TO BE LOSING ITS PURPOSE.

Byline: TROY ANDERSON Staff Writer

The embattled agency that oversees $60 million in homeless programs for Los Angeles city and county is the target of a financial audit to determine whether it violated rules on use of federal funds, the Daily News has learned.

County Auditor-Controller Tyler McCauley launched the inquiry of the Los Angeles Homeless Services Authority after the resignation last week of its chief financial officer, Lorraine Lynch, after just five months on the job.

The agency's controller, Ferdinand Lang, was fired last week, officials confirmed Thursday.

``We are looking into allegations of improper financial activities, including comingling of funds,'' McCauley said. ``They just lost their chief financial officer and controller. They are back to having key positions unfilled.''

Lynch and Lang did not return calls seeking comment.

The inquiry comes as LAHSA officials acknowledge their 10-year plan to end homelessness -- unveiled just months ago after years of work -- fails to meet federal requirements and must be revised.

Officials said the plan lacks certain benchmarks and details needed for LAHSA to compete with dozens of other agencies nationwide for a record $1.5 billion in federal grants.

The revelations are the latest to rock the agency, which oversees the region's homeless programs. Its executive director, Mitchell Netburn, resigned earlier this year after a city-county audit found significant delays in making payments to homeless agencies and improper comingling of funds. City officials defended the agency and said they believe the county audit will find no problems.

``They just received an entirely clean audit by an outside auditor,'' said Torie Osborn, Mayor Antonio Villaraigosa's senior adviser on homelessness. ``They have been through a tough leadership transition and there have been some changes.

``The (LAHSA) commission will be meeting next week to appoint a new executive director and a new day will dawn for LAHSA.''

But Los Angeles County Supervisor Don Knabe expressed concerned that LAHSA is losing its focus on helping the nation's largest homeless population.

``The biggest question here is fiscal responsibility,'' said Knable's spokesman, David Sommers. ``LAHSA has to get its books in order to get back to its chief mission of serving the homeless.''

A city-county agency, LAHSA was created in 1993 to address homelessness throughout the county. Starting with an initial budget of $5 million to support five small programs, LAHSA has more than 65 staff members and manages more than $60 million annually.

The agency operates the countywide emergency response and homeless family outreach teams and administers more than 200 programs through contracts with 90 nonprofit agencies.

Last year, a joint city-county audit found that LAHSA owed its subcontractors more than $5 million but had only $700,000 in its bank account, and nearly two-thirds of the bills were more than 30 days past due.

In February, the Daily News learned that LAHSA had repeatedly violated U.S. Department of Housing and Urban Development regulations by using about $1.7 million in federal funds to bail out other programs. At the time, HUD officials said the authority violated federal rules that ban comingling of funds and noted that the agency's funding would be in jeopardy if the issue was not addressed.

Villaraigosa and county Supervisor Zev Yaroslavsky called for a management change and reconfiguration. Since then, the supervisor has questioned whether LAHSA is the proper agency to administer homeless funds.

Last month, former LAHSA Commission Chairman Larry Adamson said the agency's financial problems had been fixed.

Still, supervisors voted recently to extend the agency a line of credit because it is still lagging in payments to groups that help the homeless.

LAHSA Commission Chair Rebecca Avila said auditors have found that contractors performed the work for which they were paid and that no funds have been misspent.

``The issue was a cash-flow problem,'' said Avila, associate dean for administration at the University of Southern California Annenberg School for Communications.

``LAHSA gets its funding from three competing bureaucracies -- the city, county and HUD. The process of drawing down funds is not a simple one and as a result, there are often lags and waiting periods between the time a shelter provider gives an invoice to LAHSA and they get paid.''

Osborn and Avila said they are confident that the agency's financial problems will be resolved and LAHSA will play a vital roll in redrafting a 10-year implementation plan to end homelessness.

Under U.S. Department of Housing and Urban Development requirements, cities and counties must perform homeless counts, prepare annual grant proposals and have a 10-year spending plan to end homelessness. LAHSA's ``Bring LA Home'' report -- a landmark three-year study prepared by more than 60 government, business, faith-based and nonprofit groups -- outlined seven guiding principles that aim to end homelessness. But it does not qualify, under HUD rules, as a spending plan.

``We still need a 10-year implementation plan,'' Osborn said. ``HUD has mandated these 10-year plans. Los Angeles doesn't have one yet. We have the `Bring LA Home' plan. It's a very strong background document. But it's not a business plan. It's not an implementation plan.''

Philip Mangano, President George W. Bush's point man on homelessness and executive director of the U.S. Interagency Council on Homelessness, said a 10-year spending plan is vital.

``What we are looking for is a business plan that will establish baselines, benchmarks, budget implications and best practices ... to actually address homelessness and really drive away the nonsense, drive away the status quo and get to the common sense and dollars and cents,'' Mangano said. ``Cities around the country are doing that. New York, San Francisco, Atlanta, Denver and Chicago are seeing fewer people on the streets -- and fewer people in their shelters -- because they are implementing a business plan that tends to get results.''

Mangano said the federal government has sent record amounts of funds for homeless programs to LAHSA, which plays a key role in the development of the plan and whether the region will get more funds as it competes with jurisdictions across the country.

``Restoring health to LAHSA is absolutely vital to the cure,'' Mangano said. ``We are rooting for L.A. L.A. is ground zero. But within L.A. there is another ground zero, and that's Skid Row. When Skid Row is restored, when Skid Row no longer has homeless people, that will be an inspiration to the entire country.''

troy.anderson(at)dailynews.com

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