After an audit found nearly $13 million unaccounted for or overspent at the King County Regional Homelessness Authority (KCRHA), leaders say they’ve started to find some of that money through the processes they have created to address its financial issues.
On May 22, the KCRHA released its “Corrective Action Report,” categorizing the issues as internal, a product of its creation during the pandemic, or issues that need support from outside the agency.
The original audit and the corrective plan confirm many of the issues boiled down to unclear accounting records that muddied up the reimbursement model KCRHA operated under.
KCRHA pays service providers for contracts, and KCRHA gives invoices to Seattle and King County for reimbursement. KCRHA also was and still is the designated recipient for the U.S Department of Housing and Urban Development grants, which can total tens of millions of dollars each year, adding to the complexity of the organization.
For many of the issues, the KCRHA is looking to traditional accounting practices, such as having monthly budget updates, switching from manually reporting transactions in workbooks to software like NetSuite, and approval processes and limited access for purchase and gift cards.
“An organization of this size absolutely should have had those controls in place from the beginning,” King County Executive and KCRHA Board Co-Chair Girmay Zahilay said during the meeting as the report was presented.
KCRHA says it needs outside help to continue to fix the issue.
“KCRHA owns its internal failures; the region must jointly fix the shared operating model,” The corrective report read.
The corrective report says there was no regular or predictable timeline for KCRHA to be reimbursed from the city and county and calls for regular meetings in order to create a timeline externally, and keep better records of which government owes what money in the future.
In the report, KCRHA says it found $1.5 million in unspent money that can go towards to $4.26 Million of “administrative overspend,” but the agency did not respond to how or where that money was found.
KCRHA disagrees with the categorization that an additional $8 million is “missing,” even though that’s how the auditing firm, Clark Nuber, classified the money.
It has laid out a process to go through each and every transaction, especially those before 2024, to find whether the city or county should be billed for the missing money, or if it should be written off as unrecoverable.
In the process of sifting through transactions, KCRHA says it can reconcile $1 million of the $8 million. It’s not enough to win over the support of critics, like King County Councilmember Reagan Dunn, representing the 9th district, who also cosponsored legislation to dissolve the KCRHA.
“I appreciate the fact that they’re at least responding to the public concerns and public criticisms, but the corrective plan is their best shot. But all that’s happening right now is the leadership is just rearranging the deck chairs in the Titanic.” Dunn said, “The ship’s sinking."
Dunn’s bill requires Zahilay to present the steps to dissolve the KCRHA and issue a recommendation on whether or not to do so in August. That would kick off a one-year timeline to dissolve the agency. Dunn believes it will crater well before then.
“I think the county is going to cherry-pick the best employees, the city of Seattle cherry-pick the best employees, start cherry-picking some of these programs.” Dunn said, “So it needs to happen, I think, more quickly than that.
Seemingly aware of those lines of criticism, KCRHA warns against its dissolution in the corrective report.
“The region does not face only two choices: defend the status quo or dismantle the regional homelessness response infrastructure. A third pathway exists: disciplined stabilization, modernization, external validation where needed, strengthened governance, and repair of the shared operating model that supports the regional homelessness response system.”
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