By Erica C. Barnett

A consensus appears to be growing among regional decision-makers that it’s time to start “winding down” the King County Regional Homelessness Authority, which received the results of a devastating forensic audit earlier this month, according to people familiar with internal discussions about the agency’s future who spoke with PubliCola over the past few days.

But what that plan, and the path forward for homeless services, will look like, if it happens, remained murky after the weekend, which KCRHA board members, Seattle and King County elected officials, and homeless service providers and advocates spent discussing how to ensure homeless service providers keep getting funded even if the KCRHA no longer exists.

KCRHA’s board, made up primarily of elected officials from around the region, met on Friday to discuss the findings of a forensic review  that found pervasive, ongoing financial oversight and accounting problems that resulted in overspending, a persistent negative fund balance, and at least $8 million that could not be accounted for. Between the $8 million and another $4.26 million in overspending (which included $1.26 million in unfunded interest payments on loans), the audit found nearly $13 million in money that was effectively missing from the KCRHA’s accounts.

Kinnison, who made an unusual in-person appearance at Friday’s meeting, cued up a presentation by Mike Nurse, a principal with the auditing firm Clark Nuber, by reading a prepared statement full of reassuring claims. The problems the auditors identified, she said, were “serious” but not fatal, and stemmed largely from decisions made before she arrived in mid-2024—when, she suggested, things started turning in the right direction.

“This audit identifies real weaknesses in KCRHA’s financial systems, controls and reporting, particularly during our early formation period,” Kinnison said. “I want to be clear about one important point. The audit did not find evidence of fraud or misuse of funds. … There are no missing funds.” Finally, whatever problems the audit identified with the agency’s “internal tracking and reconciliation processes,” Kinnison said, all the money was “used on services for people experiencing homelessness.”

Kinnison, who did not attend most of the regular meetings with auditors, concluded by saying she was the right person to get the agency back on track. “I just want to say, I’m a career public servant. I was hired to do this work. It’s what I’ve been doing, it is a passion for me. It’s part of my identity to uphold the public trust, and I am really honored to be the person that’s helping to understand [how] KCRHA can improve to the level that meets public expectation and scrutiny.”

The rest of the meeting might as well have taken place in a different reality.

For the next hour, Nurse made the case that KCRHA’s financial oversight and accounting practices had left the door wide open for waste, financial abuse, and fraud.

“Did we find fraud at KCHRA? The answer to that remains unclear,” Nurse said. “In our testing, we did not identify any direct evidence of fraud.” However, that testing was based on a small sample of KCRHA’s financial transactions, and ” transparency issues on the accounting record between 2021 and late 2024″ made it impossible to track spending on a detailed level.

Many of those “legacy issues,” Nurse said, persisted after that period—meaning that previous leaders, including controversial founding CEO Marc Dones, were not solely to blame for the casual accounting practices and opaque record-keeping that contributed to overspending, negative balances, and opaque financial records. As recently as last year, many different people had access to the spreadsheets KCRHA used to track spending, and various people deleted, and made other changes to “thousands” of financial transactions, the audit found.

“Under current conditions and without corrective action, the challenges I’m talking about are likely to continue, including ongoing cash shortfalls and the reliance on advances in borrowing to meet funding requirements,” Nurse said. Without any formal financial controls, he continued, the KCRHA is at risk of having to pay back federal funding they’ve already spent. Several past audits, including county and state reports in 2023 and a second state audit in 2024, both unearthed many of the same issues, Nurse noted, but KCRHA did not take any apparent actions to fix the problems, and “these issues still remained” as of last July, when the audit began.

In a separate but related issue, KCRHA staffers spent more than a million dollars using agency credit cards and reimbursing staff without providing detailed justifications for their purchases, which included clothes, office furniture, and $13,000 in relocation costs for a chief program officer who lasted less than a year. Payroll records and receipts, obtained through a records request and provided to PubliCola, show that the KCRHA paid nearly three times that much—more than $38,000—to relocate Kinnison to Seattle from Washington, D.C.

Nurse also knocked down one of the KCRHA’s chief justifications for its persistent negative cash balances—the fact that the agency uses a “reimbursement” framework, paying providers first and refilling their bank account when money comes in from outside funders. (The KCHRA switched to this system after providers complained about payments that were often months late, an especially severe financial burden for small and less-established nonprofits.)

Many agencies use a reimbursement model, Nurse said, results in accounts whose balances dip into the red and back into the back on a consistent monthly basis, like a “sine wave”; in contrast, the KCHRA’s balance has been inconsistent and mostly in the red, with a negative balance that actually grew from $44.7 million in July 2025 to nearly $63 million this March. On the chart above, which is included in the report, “you can see the receivables continue to grow, grow, grow, and the cash continue to decline, so that is not what you would expect to see.”

Implementing all the recommendations from the audit, Nurse said, could cost the KCRHA “potentially in the millions of dollars” and take a year or more. It could also lead to a disruption in homeless services, since the agency would need to use existing staff and resources to work exclusively on correcting all the problems the report identified.

Currently, there seems to be little enthusiasm for that option. After Friday’s meeting, board member and King County Executive Girmay Zahilay said he wanted to work “methodically and thoughtfully” while deciding what happens next. “We have to make sure that anything that we do moving forward is going to be better than the status quo.”

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Board member and Seattle Councilmember Dionne Foster told PubliCola after the meeting that she thinks it’s important to create a “strong foundation” for the future homelessness system by not acting rashly and immediately moving to the nuclear option—a shutdown process that, under the agreement that established the KCRHA, be required to last at least one year.

“When the auditor talks about this being something that was built over time because of the poor foundation of the agency, that’s something that we have to take into account in how we respond,” Foster said. “I want to make sure that as we’re thinking about how we address these audit findings, we do not pivot so quickly that we have another poor foundation.”

During a City Council briefing on Monday, Seattle Councilmember and KCRHA board member Alexis Mercedes Rinck said she is introducing a resolution that will lay out “next steps for our contracts, staffing, Continuum of Care … and how we will ensure a continuity of services with or without KCRHA.”

On Monday, King County Councilmember Rod Dembowski—one of the first elected officials, along with Seattle Councilmember Maritza Rivera, to explicitly call for shutting down the agency—told PubliCola he’s started working with other council members on a plan to “take back, in an orderly way” some of the functions KCRHA oversees and revert to a system where the county, Seattle, and other cities run their own homelessness systems the way they did before the KCRHA existed. That option couldn’t happen overnight, because HSD no longer has a formal homelessness division or the staff to manage large, complex grants.

“I know we’ve used this phrase ‘homelessness is a regional problem that requires a regional solution,'” Dembowski said, “but I think there’s an opportunity to ask, is that really the case? It’s certainly a regional challenge, but I think this trite statement that it requires a regional response deserves some assessment and reflection, because I don’t think that’s what we’re doing.”

Most smaller cities decided not to contribute funding to the KCRHA, preferring to keep funding local homeless service providers directly, and the KCRHA eventually moved toward “subregional” planning that takes the different political and financial realities of different parts of the region into account.

Zahilay, along with Seattle Mayor Katie Wilson, sent a letter to Kinnison giving the agency until May 8 to present a plan to address some of the “high-risk findings” in the audit, and until May 23 to come up with a corrective plan to address the other audit findings. Wilson, through her deputy mayor, Brian Surrat, also added amendment to a resolution creating a finance committee with the authority to approve or reject new agreements, discretionary spending, and new hires; the changes effectively put KCRHA under a hiring and spending freeze for the indefinite future.