Yet another Fed audit finds CA homelessness spending wide open to fraud
A critical new federal audit calls out California for doing too little to prevent fraudulent spending of homelessness funds. Nearly $320 million was at risk. Calmatters explains.
California put hundreds of millions of homelessness dollars at risk because of its “disorganized” and “chaotic” anti-fraud policies, according to a critical federal audit.
The audit analyzed California’s Department of Housing and Community Development, which oversees the state’s homelessness programs. It gave the California agency its lowest possible ranking, finding that it lacked adequate policies to prevent, detect and respond to fraud. As a result, the audit found, the state agency failed to properly protect $319.5 million in federal homelessness funds, which were distributed during the COVID-19 pandemic, from the possibility of misuse.
“Fraud poses a significant risk to the integrity of federal programs and erodes public trust in government,” Inspector General Rae Oliver Davis, with the U.S. Department of Housing and Urban Development, said in a news release. “Enhancing its robust antifraud program will help the California Department of Housing and Community Development ensure that its pandemic grant funds, and future homelessness assistance funds, are safeguarded from fraud.”
With the arrival of the COVID-19 pandemic in 2020, the federal government poured $4 billion into its Emergency Solutions Grant program, which was intended to help people struggling with homelessness. California’s share of that pot was $319.5 million — a 2,505% increase from its typical annual allotment. With that huge influx of money also came an increased risk that bad actors would attempt to use those funds for nefarious purposes. But California failed to adequately step up its anti-fraud measures, according to the federal housing department.
In March 2022, the state housing department found out a local law enforcement agency was investigating potential fraud and misuse of Emergency Solutions Grant funding. The state agency did not report that allegation in the proper channels because, in part, officials worried doing so could create a publicity risk, according to the audit. The agency finally reported the incident nearly a year and a half later — and only after federal auditors started asking questions, according to the audit.
Read the whole thing here.
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