Review finds nearly $17 million shortfall at King County homelessness agency

Seattle and King County taxpayers face a nearly $17 million bill to cover a funding shortfall at the King County Regional Homelessness Authority (KCRHA).

“The $17 million unrecoverable balance is unacceptable,” King County Executive Girmay Zahilay and Seattle Mayor Katie Wilson said in a joint statement Thursday.

They pledged to address repayment while protecting critical homelessness services.

The city and county are still working out how to cover the balance after an independent review found a larger budget hole than previously estimated.

King County Chief Budget Officer Aaron Rubardt suggested a repayment plan may take several years.

“I think we can do it over a few years. That would be my recommendation, but we haven’t finalized that agreement yet,” Rubardt said during a media briefing.

The review, prepared by Turning Point Strategic Advisors, estimates a funding deficit of roughly $16.7 million based on financial records through July 31. The shortfall includes about $2.4 million in interest.

Officials had previously described roughly $13 million in financial concerns at KCRHA, including $8 million in unreconciled money, administrative overspending, and interest. The new findings change both the amount and the explanation.

Why the shortfall developed

The review found the agency counted on grant revenue to pay for its operations, including staffing, software, and office space. Some of that administrative funding, however, could be earned only as service providers used the underlying grants.

When providers used less grant funding than anticipated, the agency earned less money for its operations but continued incurring expenses. It also spent beyond what even full use of its grants would have supported, according to the review.

“Based on our analysis to date, we have not identified any evidence of fraud at the agency,” Seattle budget director Aly Panucci said.

The earlier $8 million discrepancy was resolved as an accounting error.

Renewed calls to shut down King County homelessness agency

The findings prompted Seattle Councilmember Maritza Rivera and King County Councilmember Rod Dembowski to renew their calls to dissolve the authority.

“Since its inception, KCRHA has been overspending its budget, not reconciling its accounts, and accumulating debt,” Rivera said in a statement. “We have already taken back our homelessness contracts; it’s time to entirely dissolve the agency.”

Dembowski called the agency “broken beyond repair” and said it “must be shut down.”

King County Councilmember Reagan Dunn also called for ending KCRHA, saying residents would be asked to cover the agency’s financial mismanagement.

“If we want to truly reduce homelessness and help those on our streets who desperately need assistance, rearranging the deck chairs on the Titanic isn’t enough,” Dunn said in a statement. “We must reverse our failed policies, restore accountability to taxpayer spending, and end the failed experiment that is KCRHA.”

Rivera and Dembowski’s dissolution proposals remain on hold while the city and county consider next steps. Officials announced no specific leadership changes Thursday.

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