The Trump administration announced plans to eliminate nearly $400 million in federal homeless assistance funding, citing widespread fraud and the Los Angeles Homeless Services Authority’s failure to reduce street homelessness despite receiving billions in taxpayer dollars.

Federal Audit Reveals Missing Billions

The White House budget proposal released Friday specifically targeted LAHSA for its inability to address the nation’s largest street homeless population. An independent audit issued in March 2025 found the agency failed to accurately track billions in federal and local funding. The administration plans to eliminate the Continuum of Care program, a major initiative previously funded by the Department of Housing and Urban Development.

The budget proposal stated that nonprofits serving the homeless should prioritize the most vulnerable individuals, but investigations nationwide have uncovered fraud and corruption among existing homeless service providers. The administration’s decision targets $393 million in cuts, arguing that current funding mechanisms have failed to deliver results despite massive expenditures.

LA Officials Defend Spending Record

Gita O’Neill, LAHSA’s interim chief executive, warned that cutting federal funding would increase visible homelessness rather than reduce it. She told the Los Angeles Times that the agency needs additional funding to cover rising costs and maintain current momentum. City Councilmember Nithya Raman, who chairs the committee overseeing LAHSA, suggested an audit of homeless spending to establish clear accountability, though she opposes completely separating the city from the agency.

Billion-Dollar Programs Under Scrutiny

Los Angeles allocates more than $1 billion annually to homelessness programs, yet the city remains among the most criticized for failing to address the crisis effectively. Critics consistently accuse city officials of misspending funds while visible street homelessness continues to worsen. The administration’s proposal reflects growing frustration with local agencies that receive substantial federal support but demonstrate minimal progress in reducing homelessness. The March 2025 audit’s findings about billions in untracked spending intensified concerns about financial oversight and program effectiveness across California’s homeless services infrastructure.