By Erica C. Barnett

The city of Seattle and King County will be on the hook for at least $16.7 million in previously unreported costs accrued by the King County Regional Homelessness Authority, city and county officials said Thursday afternoon.

The additional shortfall, a combination of excessive administrative spending and growing debt, was revealed in a new report from Turning Point, the consultant hired to reconcile the agency’s finances after a damning forensic audit found widespread, longstanding accounting irregularities earlier this year.

In a joint statement, King County Executive Girmay Zahilay and Seattle Mayor Katie Wilson said, “The $17 million unrecoverable balance is unacceptable, and the County and City are working together to address repayment while protecting critical services for people experiencing homelessness.”

Elected officials who previously called for the KCRHA to shut down immediately, including King County Councilmembers Reagan Dunn and Rod Dembowski and Seattle Councilmember Maritza Rivera, issued statements calling the latest news “shocking” (Rivera) and “outrageous” (Dembowski) and describing the KCRHA as a “failed experiment” in a regional approach to homelessness (Dunn).

Tough talk aside, city and county taxpayers are now on the hook for the KCRHA’s overspending; according to deputy county budget director Aaron Rubardt, paying back the KCRHA’s unpaid debts will likely take several years.

According to Turning Point’s report, as of July 31, the KCRHA had a net negative balance of more than $31 million, which was offset by money it was owed by the city and county, resulting in an overall negative balance of $16.7 million as of that date. Here’s the high-level breakdown:

For context, KCRHA has long blamed its persistent negative balance on its reimbursement-based model, in which the agency pays homeless service providers for their annual contracts and gets reimbursement from its funders, chiefly the city and county, after the fact.

However, if this was the only reason for the negative balance, the homelessness agency’s bank account should end up with a positive or zero balance once all those reimbursements come in; instead, the KCRHA’s negative balance grew larger and larger over time. “This was an argument for needing large cash advances to avoid those negative cash balances,” City Budget Office director Aly Pennucci said on Thursday. “However, even after those cash advances were approved, the cash position remained negative, raising further concerns.”

The overall net deficit of $16.7 million is what will remain after every entity that owes KCRHA money has paid everything they owe.

The bulk of the shortfall resulted from KCRHA overspending the amount of administrative funding they had coming in. That excessive spending included lavish outlays on high-priced temporary staffing firms like Robert Half, which charges hefty recruitment fees to do work that would more typically be done by regular full-time employees. It also includes the salaries of KCRHA CEO Kelly Kinnison and recently promoted Chief Operating Officer William Towey, who make a combined total above $600,000, according to the union that represents many KCRHA employees.

The largest portion of the KCRHA’s overspending resulted from errors in calculating how much money the agency would receive as the result of grants to homeless service providers.

Every dollar of funding the KCRHA receives and sends to service providers in the form of grants comes with an “administrative allowance”—a percentage of the contract amount that enables the KCRHA to administer the contracts. But that allowance is based on how much of the money actually gets spent—if a provider can’t use all the money it receives in a certain year, the amount the KCRHA receives to administer that money also decreases.

What the KCRHA did, according to the report, was assume that 100 percent of every grant it administered would be spent each year, and spent the administrative allowance that would apply if that was true. This resulted, over time, in an administrative “overspend,” based on contractor underspending of $259 million, of $15.7 million by July 2026. On top of that, the KCRHA overspent what it was bringing in by another $3.3 million on top of the amount that resulted from that miscalculation. And the KCRHA owed an outstanding $4.4 million in interest on its debt to King County, which serves as the KCRHA’s bank.

“The general idea is because they didn’t have the [necessary] financial practices in place, it was difficult for KCRHA to see this happening,” King County’s Rubardt said. “We have asked for a followup on the timing of all the accumulation, but my sense is that’s been occurring over the entire time the KCRHA has been in existence.”

Pennucci said the total amount of outstanding administrative debt will probably “come down” by the end of the year, as grantees spend more money. Interest payments, meanwhile, will keep accruing on the KCRHA’s negative bank balance, resulting in a larger interest balance by the end of the year.

The KCRHA’s governing board, made up of elected officials from across the region, will discuss the findings of the report at its meeting on November 6. When I asked whether anyone will be held accountable for the agency’s expensive errors, Wilson’s director of city governance and human services, Mark Ellerbrook, said it will be up to the governing board “to work on and wrestle with” that question.

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