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iAUDIT! - My last column asked the rhetorical question, “Can the problems with homelessness programs get any worse”? I said they could and probably would, and it didn’t take long to show I was right. Last Wednesday, Nick Gerda with LAist published an investigative article on LAHSA’s failure to require management employees to file conflict of interest forms with the state of California. There’s much more to this story than not filing a few forms with an obscure state agency.
The form in question is known as the Form 700, or formally the Statement of Economic Interests. According to the state’s website, the Form 700’s purpose is to provide transparency and ensure accountability by requiring elected and managerial officials to divulge any sources of income that may affect their financial decision-making. When I worked full-time, I had to submit a Form 700 every year. Among other things, I had to report my spouse’s income from her job as a senior manager at an insurance company, and income from a rental property we owned at the time. Had my city done business with my wife’s insurance company, or if our rental had been in the city I worked for, I would have been prohibited from making any decisions that would affect either of those. In my city, everyone from first-line supervisors to the City Manager had to file a Form 700.
According to the LAist report, at least 39 positions in LAHSA should be filing a Form 700, but so far, only the CEO, Dr. Va Lecia Adams Kellum, has. The list of positions was first created more than two years ago, but nothing has been done to require employees in those positions to file the forms, nor will it be until at least February 2025, when the County Board of Supervisors (one of the two agencies that created LAHSA, along with the City of LA) approves the requirement. In what has become typical for LAHSA’s management when questioned about unnecessary delays, neither the CEO nor Wendy Greuel, who chairs LAHSA’s governing committee, answered the reporter’s questions asking why its taken more than two years to implement a fairly simple rule. In my former city, the rule was clear; any management-level employee was required to file the Form; it was baked into our required job duties and not subject to debate or negotiations.
LAHSA’s failure to require proper reporting is even more concerning because 82 percent of its budget, or about $717.5 million, goes to service providers. Creating and managing contracts are its core duties, yet nobody other than the CEO is disclosing what their relationships may be to the organizations they fund. Taken together with the recent L.A. County Auditor/Controller’s report on LAHSA’s sub-par contract administration, the LAist article raises real concerns about fraud and conflicts of interest within the agency.
Those concerns appear to be well-founded. The LAist article details two potential conflicts. One is a part-time Chief Executive Strategist who is paid up to $322,000 per year. The position is budgeted for 29 hours per week, meaning it pays about $213 per hour. The person Admas Kellum hired for the job, Kris Freed, continues to work as a consultant for homelessness agencies. Although Ms. Freed claims she works exclusively with contractors for LA County and not LAHSA, she co-owns her consulting business with the head of HOPICS, a major LAHSA contractor, whose performance has been seriously questioned. There may be other conflicts, but we don’t know what they are because Ms. Freed has not had to file a Form 700, and LAHSA won’t share the list of positions subject to reporting.
Closer to home as far as LAHSA’s CEO is concerned, is that her Form 700 shows her husband is a manager with Upward Bound House, a nonprofit homelessness and housing organization that contracts with LAHSA. Upward Bound House’s website lists Edward Kellum as Director of Operations and Compliance. His bio says he is responsible for “developing metrics and key performance indicators to gauge the effectiveness of operations and ensuring efficiency across [Upward Bound House] the agency”. In other words, he oversees performance reporting to LAHSA, which his wife runs. And, as described in the County’s audit, we already know LAHSA has done an abysmal job of monitoring its contractors’ performance. According to its most recent IRS tax filing, Upward Bound House gets $5.27 million of its $7.03 million in revenues (75 percent) from government contracts. We don’t know how much of that comes from LAHSA because LAHSA doesn’t make its contracts public without a public records request, which often takes months for a response. The LAist reporter asked LAHSA for all of the contracts it has with Upward Bound House, but they did not arrive in time for him to include the amount in the article. In all likelihood, he will have quite a wait; I asked LAHSA for some simple data on the number of PIT Count volunteers, and it took three months to receive a response. The federal court’s audit team has also faced prolonged delays receiving program performance data.
Dr. Adams Kellum assured LAist’s reporter she recuses herself from any decisions about Upward Bound House, but in what may be the height or irony, the reporter noted LAHSA’s Board of Commissioners authorized Adams Kellum to enter a $2.6 million contract with Upward Bound House at the same meeting where they approved LAHSA’s new conflict of interest policy. In addition, Upward Bound House’s tax filing shows it has acted as a sub-contractor with St. Joseph Center, one of LAHSA’s largest provider contractors, and of which Dr. Adams Kellum was CEO before she got the job at LAHSA. Although she claims she “walls herself off” from decisions about Upward Bound House, she is LAHSA’s CEO; she develops the Commission’s agenda and makes fundamental financial decisions. How would you like to be LAHSA’s contract manager for Upward Bound House, and have to send it a notification it was underperforming? What if LAHSA needs to terminate the contract—would Dr. Adams Kellum have to approve the cancellation? It is structurally impossible for her to recuse herself. The contracts with Upward Bound House benefit both her husband’s organization and the nonprofit she formerly ran. That is a clear conflict of interest and raises serious ethical questions about the way LAHSA operates.
The casual attitude of LAHSA and County leaders towards these conflicts is astonishing. Wendy Greuel, who is a member of LAHSA’s Board of Commissioners and chairs LAHSA’s governing committee, was LA’s City Controller. She is quite familiar with the state’s financial reporting requirements and the dangers of conflicts of interest, yet she did not respond to the LAist reporter’s questions about why its taken so long to develop a list of positions required to file the state forms.
LAist’s article also reveals a troubling trend in the local press, which is supposed to be a watchdog for the public interest. LA’s traditional media simply refuses to recognize homelessness programs aren’t working. While the LA Times’ editorial board lectures residents about our unhoused neighbors, its reporters are describing the inhuman conditions created by the fentanyl epidemic among the homeless, and how it has engulfed MacArthur Park, one of the few green spaces available to working families in the middle of the city. Too many mainstream reporters don’t do the in-depth work necessary to place stories in the proper context. It has been left to smaller nontraditional organizations like LAist, the Westside Current and Circling the News to detail how badly—and how consistently—homeless agencies have failed taxpayers and the homeless themselves..
When I said it could get worse, I had no idea about LAHSA’s failure to require its employees file conflict of interest forms or the personal relationships between its leadership and its contractors. But I must admit I am not surprised. I have written several times about the interlocking relationships among public agencies and nonprofits, and how those relationships create a structure where accountability and performance measurement is virtually unknown. LAHSA’s sluggish response to fulfill a routine, yet important, state requirement is just one more sign fundamental structural change is needed in LA’s homelessness system.
(Tim Campbell is a resident of Westchester who spent a career in the public service and managed a municipal performance audit program. He focuses on outcomes instead of process.)
