(The Center Square) – King County Regional Homeless Authority officials are admitting that its internal failures led the agency to lose track of how it spent millions of dollars in funds, but they also blame the two key funders, the city of Seattle and King County, for some of its funding troubles.
The May 22 response from the Authority comes after a forensic audit last month found that its bookkeeping practices were so disorganized that it couldn’t fully document how $13 million in funds were spent, including $8 million for which there was no record at all.
Forensic auditors also found that the agency overspent its administrative budget by $4 million, commingled restricted funds and relied on casual bookkeeping practices, such as using shared Excel spreadsheets that anyone could edit.
The agency’s negative cash balance recently ballooned to $63 million.
While KCRHA leaders admit to these internal failures in their response report, they argue that they cannot fix the system alone.
The agency relies primarily on the City of Seattle and King County for its $200 million in annual funding.
KCRHA, under the current setup, must pay service providers first and then wait to be reimbursed by the city and county.
Officials blame this waiting period for the massive deficit, claiming it forces them to take out constant loans just to keep operating.
While agency officials promised to overhaul its internal rules and tighten its financial controls, authority leaders insist that a true fix will require the city and county to completely restructure how they distribute money.
“KCRHA accepts responsibility for correcting its internal deficiencies. At the same time, several of the highest-priority issues — including reimbursement timing, fund advances, KCIP exposure, backend funding adjustments, invoice review workflows, and administrative funding structure — cross organizational boundaries,” the report reads.
“Durable resolution will require active partnership by KCRHA, the City of Seattle, and King County. KCRHA owns its internal failures; the region must jointly fix the shared operating model.”
Requests by The Center Square to interview Authority CEO, Kelly Kinnison, were not acknowledged by the agency spokeswoman Lisa Edge.
Kinnison took office in mid-2024, the fifth CEO since the agency was established in 2019.
In an interview on KUOW’s Soundside program, Kinnison said she realized that after several months on the job, something wasn’t right with the agency’s practices.
Kinnison said accounting practices were inadequate and she reported the fact to city and county officials.
“I was very surprised by what I found at KCHRA,” she said.
Kinnison said the agency has begun implementing reforms, but she has asked King County and Seattle to let her hire an accountant to find $8 million that is missing.
She said the agency currently lacks the accounting sophistication to track its full spending on homeless services.
Kellison said after a couple of months on the job, it became clear something wasn’t right with how the agency monitored its finances.
Kinnison said the homeless agency is worth saving and said she was glad the audit brought the full dimensions of the agency’s problems to light.
But she wasn’t asked, and she did not address the auditor’s findings that she was missing in action during meetings held as the audit progressed.
Kinnison didn’t show up for most of the twice-weekly KCRHA board meetings held concurrently with the audit period, said fraud investigator Mike Nurse in the audit report.
“For a meeting whose purpose was solely to inform executive leadership on issues in progress, it surprised us from an ownership oversight and urgency perspective that she did not participate in these meetings,” Nurse told the authority board.
Both the Seattle City Council and the King County Metropolitan Council have passed resolutions calling on their respective executive leaders, King County Executive Girmay Zahilay and Seattle Mayor Katie Wilson, to decide by Aug. 1 whether the homeless authority should be dissolved.
Either Zahilay or Wilson could end the regional homeless effort within a year of giving notice.
Neither had indicated which decision they were leaning towards, but dissolving the commission would require both King County and Seattle to run homeless intervention programs on their own.
In a statement to The Center Square, Zahilay didn’t show his cards.
“King County has received the corrective action plan from KCRHA and we are carefully reviewing it to ensure it addresses the serious issues raised in the forensic evaluation report,” the statement said.
Wilson’s office did not respond to a request for comment.
