The city of Compton shelled out more than $2.2 million of its own money to cover a shortfall in funding for Section 8 housing because of poor accounting practices and a failure to follow federal procedures and controls, according to a federal audit report released Thursday.
The city's housing authority operated at a deficit and lacked sufficient funds to pay for certain Section 8 tenants, ultimately putting the tenants at risk of losing their housing assistance, the audit found.
"It really was an accounting problem," said Tanya E. Schulze, regional inspector general for the federal housing authority.
Schulze, who wrote the report, said the audit was triggered when concerns were raised by the Los Angeles Office of Public Housing.
Section 8 is a federally subsidized housing voucher program for low-income tenants. In 2009, Compton's housing authority received more than $6.7 million from the federal government for housing assistance payments and administrative fees, according to the audit report.
Recipients of federal housing assistance can move from one public housing authority to another so long as they can find a landlord who will accept the housing voucher.
The new housing authority can administer the subsidy on behalf of the previous one or absorb the tenant into its own voucher program, Schulze said.
If a family moves into Compton, the city can claim full payment for them from their old housing authority and 80% of the administrative fee earned for the unit they previously lived in.
As of Dec. 31, 2009, Compton's housing authority had 161 tenants who had moved to the city from other jurisdictions. But Compton's housing authority had not been fully reimbursed for some of these newcomers, according to the audit that covered the period between June and December 2009.
In fact, the housing authority was under-reimbursed by $140,754 in housing assistance for such tenants, failed to receive $49,046 in subsidies for them and owed $55,854 to other housing authorities, according to the report.
Compton housing authority officials didn't realize the situation, Schulze said.
"They were not paying close enough attention," she said. "They did not track and reconcile the payments."
By spending money from its general fund to cover its Section 8 program needs, the city risked running out of cash, which could have put some tenants at risk of being terminated from the program, Schulze said.
The report recommended that Compton implement procedures and controls to track and reconcile housing assistance paid and received for Section 8 tenants moving to and from the city, seek collection of money due from other housing authorities and repay money owed.
Compton city officials would not comment on the audit, but Schulze said they were already working with the L.A. Office of Public Housing to determine a timetable to undertake corrective actions.
Times staff writer Abby Sewell contributed to this report.