The Department of Housing and Urban Development immediately suspended federal funding to the Los Angeles Homeless Services Authority on Friday, citing allegations of fraud in an escalating clash between the Trump administration and California.
In a letter to Lahsa, the nation’s largest continuum-of-care homeless services agency, HUD said it would withhold funds pending an investigation. HUD Secretary Scott Turner said in a statement that the department would “fund results, not corrupt failure or the homeless industrial complex.”
“Taxpayers will no longer bankroll an organization that puts its own self-interests ahead of the Americans it was created to serve,” Turner said.
According to HUD, Lahsa has received nearly $1 billion in taxpayer dollars over the last five years. About 8% of the agency’s budget currently comes from federal funding.
In its letter the department alleged that Lahsa had violated federal conflict-of-interest rules, misused government funds by paying for empty hotel rooms, and failed to provide documentation verifying housing sites it oversaw.
The announcement is the latest in a series of Trump administration actions to cut federal funding to California programs. The administration has previously targeted high-speed rail, sex education programs and public universities, citing their handling of student protests against the war in Gaza. MSI previously reported that the administration also held back more than $1.5 billion in grants from four Democratic states and froze safety-net funding in five states, actions that prompted litigation. The pattern has drawn legal challenges from state attorneys general.
Lahsa said in a statement that local oversight actions had “already resulted in strong repairs and reforms to Lahsa’s internal controls, which are accountable and viewable to the public.” The agency said a fair review by HUD’s inspector general would show how its systems allowed it to “clearly track the work and investments that have resulted in LA outperforming the nation by reducing homelessness over the last two years.”
Los Angeles has long recorded one of the largest homeless populations in the country. In 2025, Lahsa estimated that 72,308 people in the city were homeless, down from a 2023 peak of 75,518.
In a separate statement to the Guardian, an emailed statement attributed to Lahsa described the action as “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.”
Los Angeles Mayor Karen Bass, who has pushed to move homeless services away from Lahsa, said the federal funding threat “does nothing to house people and jeopardizes the progress” the city has made in reducing homelessness over two years. “Ultimately people will lose their lives,” Bass said in a statement. “We urge HUD to work with the city of Los Angeles to provide the necessary funding to reduce homelessness.”
Los Angeles County Supervisor Lindsey Horvath criticized the decision. Horvath was involved in a February decision by the county to pull $300 million from Lahsa and redirect the funds to a newly created county department of homeless services and housing. She said Friday that the Trump administration’s choice “is for publicity, not for results.”
“In a statement, she added: “I have been calling for change and accountability at Lahsa, but if this administration desires accountability, too, they should work with LA county.”
City Councilmember Nithya Raman, who advanced to a runoff against Bass in the city’s mayoral primary this week, said the federal action “directly impacts the housing stability of Angelenos who are housed right now from this federal funding, and jeopardizes future housing efforts.” Raman had previously called on the city to build its own capacity to manage contracts and funding.