Why It Matters
The Trump administration is systematically dismantling the federal approach to homelessness, and a House subcommittee hearing on September 15 provided the political stage to make its case.
The subcommittee heard testimony about alleged fraud and mismanagement at the Los Angeles Homeless Services Authority (LAHSA), which received nearly $1 billion in taxpayer dollars over five years through the Los Angeles Continuum of Care. The administration has already suspended LAHSA's federal funding and is pushing Congress to shift billions away from permanent housing programs toward treatment-first and enforcement-focused models.
The Big Picture
According to a recent Federal report, approximately 745,000 people experience homelessness on any given night, with roughly 250,000 living on the streets. Homelessness has increased 27 percent since 2013, while street homelessness has risen 36 percent. Yet the federal government spends about $8 billion annually to prevent homelessness.
The city has the nation's largest homeless population, with approximately 50,000 people experiencing homelessness within city limits and another 75,000 in surrounding LA County. Los Angeles has spent over $20 billion on homelessness over the past decade, making it the city that spends the most to combat the crisis.
The hearing, titled "Fixing Fraud And Failure In Federally Funded Homelessness Services," was held by the House Subcommittee on Delivering on Government Efficiency at 6:00 PM in room 2154 Rayburn House Office Building. The subcommittee is chaired by Rep. Tim Burchett (R-TN), with Rep. Melanie Stansbury (D-NM) serving as Ranking Member.
On July 24, 2025, Trump issued an executive order calling for ending support for Housing First policies that don't promote treatment, recovery, and self-sufficiency. On June 2, HUD Secretary Scott Turner announced what the New York Times described as the sharpest change in homelessness policy in a generation, declaring that success would be defined not by dollars spent or housing units filled, but by how many people achieve long-term self-sufficiency and recovery.
The administration has framed its funding overhaul as ending a lack of program accountability that led to waste, fraud, and abuse. Trump's fiscal 2026 budget proposal calls for $532 million in cuts to the federal government's Homeless Assistance Grants account and proposes no additional funding for the Continuum of Care or Permanent Supportive Housing programs. It would consolidate the CoC program along with Housing Opportunities for Persons with AIDS (HOPWA) into the Emergency Solutions Grants program.
What They're Saying
Three witnesses testified at the hearing, including Paul Webster from the Los Angeles Alliance for Human Rights, Jonathan Choe from the Discovery Institute, and Samantha Batko from the Urban Institute.
Webster, a former HUD senior policy advisor under the first Trump administration, testified that LAHSA "has done a very, very poor job in managing its contracts, living up to the law and regulation in terms of having sufficient financial oversight, providing money to entities that do not provide services and also to underwriting." His testimony aligned with the administration's critique of Housing First.
Webster referenced specific instances of LA-area nonprofits billing for services never rendered and clients who were deceased. He noted that the LA Continuum of Care has been cited for significant compliance failures in HUD monitoring reports. The federal government's own audits have flagged tens of millions in questioned costs across Continuum of Care grantees nationally.
Choe cited investigative findings of nonprofits billing for "navigation" services with no documented outcomes and specific cases of federally funded encampment outreach workers who had no professional credentials and minimal oversight.
Choe testified that "life is now imitating art, and the cycle continues, with more taxpayer dollars being wasted on questionable public health policies tied to housing first."
Batko, a senior researcher at the Urban Institute, testified that more than 745,000 people experienced homelessness on a single night in 2025, with more than 266,000 people living outside, in cars, or in other places not meant for human habitation. Yet she also testified that peer-reviewed research including randomized controlled trials shows Housing First participants are significantly more likely to maintain stable housing than those in treatment-first models. HUD data shows that chronic homelessness declined substantially in years when Continuum of Care funding increased.
Rep. Pat Fallon (R-TX) grilled Batko on the rise of homelessness in the United States despite increased federal spending. Rep. Michael Cloud (R-TX) stated that "the real problem is not just that some providers are corrupt" and argued the entire federal funding structure rewards programs rather than outcomes.
According to reporting on the hearing, Republican members focused on accountability and fraud, while Democratic lawmakers focused on the consequences of the lack of housing affordability and who profits from criminalizing homelessness.
Broader Context
The subcommittee hearing centered on allegations of mismanagement and fraud at LAHSA, the public authority jointly controlled by the city and county of Los Angeles and the main conduit for public funds for homelessness services.
HUD suspended federal funds for LAHSA after allegations of fraud. In June 2026, HUD suspended further federal funding to LAHSA until officials could show adequate safeguards were in place to protect taxpayer dollars. HUD was attempting to withhold nearly $250 million in funding from the Los Angeles region. However, a federal court initially blocked HUD's suspension attempt of LAHSA funding.
HUD's Inspector General opened a formal investigation into LAHSA. HUD accused LAHSA of "wanton mismanagement" and a "clear pattern of fraud," giving LAHSA 30 days to request a hearing or face permanent suspension.
According to reporting on HUD's investigation, HUD alleged that LAHSA failed to record when people left motel housing, misused government money by paying for services already covered under another contract, and could not provide documents to prove the existence of homes it was responsible for.
An independent court-ordered assessment of LAHSA's finances found alarming financial control weaknesses that leave the door open to rampant fraud. Federal law enforcement arrested two employees of California-based homelessness nonprofits on corruption charges alleging they misappropriated millions in taxpayer dollars. The Department of Justice charged three people in separate federal homelessness corruption and fraud cases.
Bass appointed herself to LAHSA's board in 2023 but has allegedly not shown up for most board meetings. LAHSA gave a $40,000 per month contract to a former Bass campaign manager who was then hired as its CEO. The CEO subsequently gave a $2 million LAHSA contract to her husband's employer, an LA-based nonprofit.
LAHSA provided $25 million over five years to a nonprofit whose CEO received $1.6 million in compensation over a recent two-year period. That CEO was living in Hawaii. LAHSA recently provided funds to an LA area nonprofit whose CEO had just been indicted for fraud by the Justice Department.
The chair of LAHSA's audit committee, an advocate of greater scrutiny of LAHSA spending, was recently removed from his post by Mayor Bass's hand-picked LAHSA Board Chair, Stephanie Graves.
The subcommittee had asked Mayor Bass to testify about waste, fraud, and mismanagement in LA's federally funded homelessness system. However, Bass removed herself from the LAHSA board after being invited to appear at the hearing. She declined to appear at the hearing and said the hearing and document request was a waste of time and money. Rep. Burchett sent a letter to Bass calling on her to testify and produce documents related to "corrupt contracting and grant-making." Burchett warned he and the Oversight Committee's chair would use every tool at their disposal to secure Bass's appearance if she did not cooperate. Bass could face a congressional subpoena.
Political Stakes
A court blocked a Trump administration proposal that critics warned could send as many as 170,000 formerly homeless people back to the streets. However, just one day after the September 15 hearing, a three-judge federal appeals panel ruled the Trump administration can proceed with its homelessness program overhaul, overturning a lower court injunction that had barred HUD from imposing changes to grant funding awarded through the Continuum of Care program. The appeals panel noted that HUD only has until December 1, 2026 to make awards to applicants for Continuum of Care funds.
The National Alliance to End Homelessness filed suit in coalition with the National Low Income Housing Coalition, several cities, and counties, challenging HUD's fiscal 2026 Continuum of Care Notice of Funding Opportunity as unlawfully politicized. A court ordered HUD to vacate the 2026 Notice of Funding Opportunity in the case National Alliance to End Homelessness et al. v. Turner et al.
HUD declared it remains committed to reforming the Housing First approach. The administration is proposing to provide more money to localities that prioritize treatment-first policies such as sober living, more cooperation with law enforcement, and more temporary and transitional housing. HHS announced it had awarded $42.3 million in supplemental funding to states and territories through two federal block grants in support of Trump's executive order on ending homelessness.
The Other Side
The Washington Times argued that Housing First failed America's homeless. However, peer-reviewed research including randomized controlled trials shows Housing First participants are significantly more likely to maintain stable housing than those in treatment-first models. Urban Institute research shows that every dollar invested in permanent supportive housing generates savings in emergency room, jail, and emergency shelter costs.
HUD data shows that chronic homelessness declined substantially in years when Continuum of Care funding increased. It took the Department of Housing and Urban Development roughly a decade to determine that Los Angeles was wasting its awards. Thousands of homeless people died while HUD took roughly a decade to determine that Los Angeles was wasting its awards.
Rep. Stansbury stated that the lowest earning Americans had their taxes go up under the recent bill, that the bill gutted food assistance for millions of Americans, the vast majority of whom are seniors and children, that the bill gutted health insurance starting on January 1st with Medicaid and Medicare to be cut for tens of millions of Americans, and that the bill gutted educational assistance for students all over the country. She noted that the most comprehensive bipartisan housing legislation passed in probably three decades was recently passed by Congress, but President Donald Trump refused to sign it.
The Bottom Line
Rep. Burchett stated he will introduce the Recovery First Housing Act, which requires federally funded housing services to offer substance abuse treatment. He also stated he has introduced legislation to codify President Trump's work to end crime and disorder on America's streets and ensure federal tax dollars only support housing services for U.S. citizens.
HUD announced that the 2026 Continuum of Care Notice of Funding Opportunity awards are expected by December 1, 2026.
As of September 21, 2026, no legislation has been formally associated with the September 15 hearing, and no criminal referrals have been documented from the proceeding.
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