The Trump administration has barred Los Angeles County’s main homelessness agency from accessing federal funds while it investigates the agency’s alleged “wanton mismanagement of public funds.”

The move puts at risk almost $200 million that LA area service providers count on to help California’s largest homeless population.

In a letter Thursday to the Los Angeles Homeless Services Authority, the U.S. Department of Housing and Urban Development accused the LA agency of fraud, while also blaming it for failing to decrease homelessness. The agency failed to record when people left their motel housing, misused government money by using it to pay for services provided under another contract and could not provide documents to prove the existence of homes it was responsible for, according to HUD. The LA agency is suspended from participating in federal funding competitions until HUD’s Office of Inspector General completes its investigation.

“Taxpayers will no longer bankroll an organization that puts its own self-interests ahead of the Americans it was created to serve,” HUD Secretary Scott Turner said in a news release.

The Los Angeles Homeless Services Authority is a joint city-count agency that has spearheaded the LA-area’s fight against homelessness since the 1990s. It has faced a myriad of issues recently, resulting even in local officials pulling their confidence – and their money – from the agency. After two critical audits found the Homeless Services Authority wasn’t properly tracking its spending or outcomes, the LA County Board of Supervisors withdrew its money and moved it to a newly created county agency. The head of the beleaguered Homeless Services Authority, who had been criticized for signing contracts with a nonprofit tied to her husband, resigned. In April, the authority laid off 284 people.

But despite that turmoil, the Homeless Services Authority is still officially the LA region’s lead homelessness agency, and it receives federal homelessness funding on behalf of the city, county and nonprofit service providers.

Last year, the authority received nearly $200 million in federal funds through the Continuum of Care program – the largest source of federal homelessness funding.

Blocking that funding could jeopardize the work the authority has already done to fight homelessness by putting thousands of formerly homeless people back on the street, the Los Angeles Homeless Services Authority said in a statement.

“This appears to be a blatant attempt to pull yet more resources from Los Angeles, a city they have targeted time and again, when it is clear that LAHSA has either corrected or is in the process of correcting nearly all of the issues raised,” spokesperson Ahmad Chapman said in a statement

The authority is fixing its internal controls, modernizing its financial system and doing a better job tracking its work, Chapman said. Its immediate priority is “to explore all available options” to ensure federal funds keep coming to LA.

LA Mayor Karen Bass said that while she shares HUD’s concerns about the homeless authority, threatening its funding does nothing to house people.

“Ultimately people will lose their lives,” she said in a statement. “We urge HUD to work with the City of Los Angeles to provide the necessary funding to reduce homelessness.”

Homelessness actually started improving recently in LA County, with the number of unhoused people dropping in 2024 and 2025, according to the point-in-time count. As of last year, there were an estimated 72,000 unhoused people in the county.

Even so, the Trump administration has been attempting to overhaul the way LA and other places across California address homelessness. The administration wants to move funds from permanent housing into temporary shelters and prioritize housing programs that require sobriety.

Earlier this month, HUD opened this year’s application for federal homelessness funding via the Continuum of Care program, which laid out these changes. The National Alliance to End Homelessness estimates those changes could cost California nearly $238 million in funding for permanent housing, which could mean nearly 15,000 people would lose their homes.

California sued over a prior attempt by the Trump administration to make similar changes. That case is still ongoing.

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This story was originally published by CalMatters and distributed through a partnership with The Associated Press.

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