(The Center Square) – The King County Regional Homelessness Authority is working to adjust its funding model in order to stop ending the fiscal year with a negative cash balance.
The King County Regional Homelessness Authority Governing Board held its first meeting of 2025 on Thursday. Board members, which include leaders of King County and Seattle, were briefed on the agency’s funding model.
KCRHA starts off its fiscal year with zero dollars and works through a cost-basis model. This means it incurs expenses, pays for those expenses, and then can submit them for reimbursements.
The cost-basis model forces the agency into a negative cash position. This was flagged in a 2023 audit on KCRHA. That audit reported that the funding model places KCRHA’s current service levels and future obligations at risk.
The audit also identified a “significant timing gap” between when KCRHA pays its service providers and receives cash.
KCRHA’s bank balance sits within the King County Treasury Department as part of a pooled account. KCRHA Chief Financial Officer James Rouse explained to the Governing Board that the county allows the agency to go into the negative and through that process the agency is able to continue to reimburse its providers so that there is no delay in receiving allocated funding.
Because KCRHA consistently has negative cash balances, King County provides cash to the agency through an interfund loan.
KCRHA’s 2024 cash balance was negative for most of the year. There were two instances in the year when King County and Seattle provided the agency with cash advances. The county provided $5.4 million in March 2024 and Seattle provided $29.1 million in July. The latter cash advance helped KRCHA get to a positive cash balance in August, but it soon became negative again in October.
For 2025, KCRHA projects a positive cash flow starting in March, with the end-of-year cash balance to end at $0 if KCRHA receives regular cash advances, according to Rouse.
According to Thursday’s presentation, KCRHA’s funding model only works with consistent cash advances. In order to maintain a positive cash balance, the agency said it will need to receive monthly cash advances from King County and Seattle.
Rouse said that the agency has been in constant talks with both the city and county to find a solution that alleviates a need for an interfund loan.
“We’re not there yet, but we’re getting close,” Rouse said during the board meeting.
There have been improvements in KCRHA’s financial workings. KCRHA CEO Kelly Kinnison told the Governing Board that as of last week, the agency was able to complete 98% of its contract renewals with service providers, totaling 193 contracts. That is compared to 45% done around this time in 2024, according to Kinnison.
The agency has also received and paid 99% of its 2024 provider invoices compared to 45% around this time last year.
Tracking of the agency’s spending is expected to improve after KCRHA recently transitioned to a new grants management system. On Jan. 27, KCRHA successfully launched its SalesForce Grants Management System, which Kinnison said will provide the agency with better data for tracking its contracts with service providers and budget information.
