Seattle's homelessness agency ran $44.7 million into the red

The King County Regional Homelessness Authority, jointly funded by Seattle and King County, was running a negative cash position of about $44.7 million⧉ as of July 31, 2025 -- a shortfall that had been building since December 2023.▸ A forensic evaluation commissioned by the agency's two government funders found the shortfall alongside an $8 million receivable balance nobody could reconcile, a formal internal-control framework that was never adopted, and $2.96 million spent on temporary contract staffing.

From its 2021 inception through July 31, 2025, KCRHA received $533.9 million in funding⧉ from all sources -- Seattle and King County alone supplied over $260 million of that between 2022 and 2024⧉, with Seattle providing $113 million in 2024 alone.▸ But the agency largely operates on a reimbursement model: it advances money to nonprofit service providers, then waits for the city and county to reimburse it. Evaluators found expenditures consistently outpaced reimbursements and funding inflows, and that KCRHA's receivables balance grew to $49.8 million by July 2025 -- of which $8 million could not be reconciled to available records at all, a gap evaluators said may need to be written off entirely.

To cover day-to-day operations, KCRHA regularly carried negative balances in the King County Investment Pool -- in effect, borrowing against public money it didn't have.▸ The evaluation⧉ found the resulting interest charges reached $1.26 million (stated as $1.27 million elsewhere in the same report) by July 2025 -- an unrecoverable cost, since KCRHA identified no funding source to pay it back, and one still growing as of the report date. That interest is part of a broader $4.26 million administrative operating deficit, on top of a separate $6.4 million in programmatic overspending the City of Seattle flagged in a February 2026 letter to the agency. Evaluators also found KCRHA had never formally adopted a comprehensive internal-control framework such as COSO -- a standard required for organizations receiving federal funds -- and had no formal financial oversight committee.

When the evaluation became public in April 2026, local coverage widely reported⧉ that KCRHA "couldn't account for" about $13 million -- a figure that traces back to a City of Seattle Mayor's Office summary, not language the evaluation itself uses.▸ One outlet's own published breakdown of the number added the $8 million unreconciled receivable, the $4.26 million administrative deficit, and the $1.26 million in interest as three separate amounts. But the evaluation's own Executive Summary states the interest figure as already included within the $4.26 million deficit, not additional to it. Added without double-counting, the evaluation's own two headline figures total $12.26 million -- not $13 million.

Part of KCRHA's cash pressure came from relying on long-term temporary staff instead of direct hires.▸ The evaluation⧉ found KCRHA spent $2.96 million on staffing through Robert Half through June 2025, and singled out one example: an interim chief financial officer contracted through Robert Half from November 2023 to December 2024 cost the agency $448,497 over those 11 months. When KCRHA hired the same person directly at the end of that contract, the position's full annual salary was $285,000 -- meaning the contracted arrangement ran well above what the direct-hire salary would cost on an annualized basis.

The evaluation is explicit that it "did not identify specific evidence of large-scale fraud" in the transactions it sampled, even as it warned that weak internal controls -- particularly around purchasing cards and program-related gift cards -- left the agency exposed to a heightened risk of fraud, waste, and abuse going forward.▸ KCRHA's own response, signed by strategic director William Towey⧉, leaned on that finding, stating the evaluation did not find evidence of fraud or misuse of funds, and attributed much of the financial strain to its reimbursement-based funding model. CEO Kelly Kinnison, hired in 2024, said the agency is working to fix problems inherited from earlier financial systems "that didn't talk to each other," including tighter expense-reporting rules and segregated staff duties.

A Clark Nuber auditor pushed back on the reimbursement-model explanation directly, telling PubliCola⧉ that other agencies use a similar reimbursement structure without their cash balances just continuing to "grow, grow, grow" negative.

The evaluation's figures only run through July 31, 2025.▸ Since then, the picture has worsened: KCRHA's negative cash position reportedly grew to roughly $63 million by March 2026⧉, and the $8 million unreconciled receivable has become its own dispute -- KCRHA now says the figure represents money the city and county owe it for services it already provided but never billed for, while a King County spokesperson has pushed back⧉, saying failing to bill on time doesn't mean the county owes KCRHA $8 million, and that the receivables haven't been validated.

On July 1, 2026, Seattle and King County announced a "right-sizing" plan: about $160 million in homeless-service contracts⧉ will move back to direct city and county management by January 1, 2027, a shift that has already cost roughly 20 KCRHA jobs, with more expected as additional contracts move out.