At Tuesday’s L.A. County Board of Supervisors meeting, five major nonprofit leaders that provide much of the homeless services in Los Angeles spoke for two hours about the months-long delays in getting reimbursed by the Los Angeles Homeless Services Authority (LAHSA).

The Homeless Outreach Program Integrated Care System (HOPICS), L.A. Family Housing, The People Concern, People Assisting the Homeless, and Special Service for Groups said providers are struggling to make payroll for their staff and are taking out private loans to cover the gaps which result in hundreds of thousands of dollars a year in interest payments, which the government does not reimburse.

John Maceri, CEO of The People Concern said the system challenges the county is facing now aren’t new, as they’ve been developing over many years. He said the service provider can no longer sustain financing substantial amounts of debt and carrying receivables on government contracts that don’t pay the actual costs of delivering services. He added that due to the significant payment delays, cash flow then dries up, which leaves officials to continue fronting millions of dollars each month.

Maceri said it often takes 90 to 120 days or longer to get reimbursed by LAHSA. Invoices are received about 45 days after services are given, which are then sent to the funding sources.

“We’ve collectively reached the breaking point and can no longer carry this system.,” said John Maceri, CEO of The People Concern. He added that a $1.2 million contract only gets reimbursed for $1 million, leaving the rest to be covered by the provider.

“We can be accumulating debt on one contract of $200,000 a month. We are amassing millions in unfunded expenses,” said Maceri. He said his group is borrowing $8 million from a bank loan and doing fundraising to stay afloat.

Kimberly Roberts, Chief Program Officer of L.A. Family Housing said the agency has been drawing from its $7 million line of credit. With its reserves already gone, the cash flow crisis may put 565 people now in housing at risk of losing shelter.

“The greatest impact will be felt in the next seven days when L.A. Family Housing will be unable to process $1.2 million in payments due to hundreds of landlords for over 565 households who are currently in permanent housing,” said Roberts “And when $1.5 million will be needed to continue services across our housing sites, and dozens of nightly motels placing 1,000 households. Households that make up over 3,000 men, women, and children are at risk of losing shelter.”

Supervisor Holly Mitchell, who represents the second district called the cost reimbursement model the devil. “There is no flexibility, it’s old, it’s antiquated, and is based on a concept of lack of trust,” said Mitchell.

Supervisor Lindsey Horvath, supervisor for the third district, and current Chair of LAHSA said officials have got to get the money out to stop the suffering on the streets.

“Our payment system is broken. Our payment system needs to be fundamentally reformed,” said Horvath.

As of May 17, LAHSA owes $60 million to service providers.

Adams Kellum, Chief Executive Officer at LAHSA said the agency payment system shuts down whenever there’s an amendment to an invoice (often more than a dozen) which slows the process for payment. She said she asked staff members how to prevent it from happening, but did not get an answer.

“Some internal systems at LAHSA have contributed to delays. I do think it is time for a change,” said Kellum.

Supervisors will hear a verbal progress report on June 18. The board also voted to receive a written report from the Homeless Initiative Department in four months on how they plan to replace the current reimbursement payment model.

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