King County homelessness agency board votes to tighten purse strings following damning audit

Board members of the troubled King County regional homelessness agency appear committed to correcting its overspending and weak financial systems, rejecting calls from other officials to abandon it entirely.

The board of the King County Regional Homelessness Authority met on Friday to discuss a forensic audit released this week that painted a dire financial picture of the agency. The board — made up mostly of elected officials including King County Executive Girmay Zahilay and Seattle Mayor Katie Wilson — voted to establish a finance committee to oversee corrective actions including a pause on most hiring and discretionary spending.

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Launched as a partnership among King County and its 39 cities, the KCRHA was meant to coordinate homeless services on a regional level and administer grant money to a vast network of service providers.

Zahilay seemed to reject calls from other politicians to dissolve the agency.

“This is not just a light switch that can be turned on and off,” he told reporters after the meeting Friday.

He said these decisions involve ongoing contracts, federal funding, jobs, and homeless services that can’t be disrupted.

“This is a very complex issue. Of course we have to move with urgency to fix these problems, but we also have to move methodically and thoughtfully,” Zahilay said.

Zahilay said he was surprised to learn from the audit that the agency doesn't currently have a chief financial officer and said filling that position will be another priority.

The audit, released Wednesday by Bellevue-based firm Clark Nuber, said weak accounting and shortcomings with management and oversight had resulted in $13 million that constituted overspending and money that couldn’t be accounted for. Examining KCRHA’s first four years of operations, auditors found increasing deficits, with operations in the red by $44.7 million when the study concluded last year.

Auditors said they found no evidence of fraud but said they could not rule it out.

Clark Nuber’s Brian Nurse told the board Friday that the KCRHA will need to implement widespread, potentially costly changes in order to strengthen its systems. He also highlighted more findings from the forensic audit, noting that the agency has paid a premium for costly temporary employees, and has never implemented any policy around the use of purchase cards meant for incidental expenses.

Nurse said 100% of the purchases they sampled showed “noncompliance,” such as a lack of receipts. He also pointed out purchases of MasterCard gift cards totaling $36,700 with no documented recipients.

The board also heard from agency CEO Kelly Kinnison, hired in 2024. She said the agency is working to correct problems with earlier systems “that didn’t talk to each other.”

Kinnison said the agency has made progress addressing the highest-risk areas and “it’s reflected by the provider community.”

Some of the nonprofits serving people experiencing homelessness in King County told KUOW that they were apprehensive about the fallout from the audit.

“A dissolution of the agency would be an overcorrection and a challenge for the people that we serve and the rest of the service providers,” said Christopher Ross, president of the Compass Housing Alliance, one of the service providers funded by the regional homelessness authority. Ross said the agency’s performance is headed in the right direction and he wants to see it preserved, with stronger controls in place.

RELATED: Citing audit as 'last straw,' officials seek to dissolve King County Regional Homelessness Authority

Another service provider that contracts with the agency said KCRHA should be dissolved. Speaking to KUOW on condition of anonymity for fear of retribution, they said that dysfunction at the agency has been “brutal” for organizations that work with vulnerable communities. But they also said dismantling the agency should be done slowly — over a time period longer than a single year — to avoid chaotic gaps in services.

On Thursday, Seattle Councilmember Maritza Rivera and King County Councilmember Rod Dembowski said they planned to propose a 12-month timeline for dissolving KCRHA. They said they will introduce “companion measures” to be passed by their respective councils. While King County Councilmember Reagan Dunn endorsed the idea Friday, it’s not clear that either proposal has the votes to move forward.

Meanwhile, a letter released this week by Zahilay and Mayor Wilson requires a written response from Kinnison by May 8 explaining how the agency plans to address the high-risk findings from the audit, including new procedures for employee reimbursements, gift cards, expenditures, and purchase cards. The board incorporated the demands from that letter into the language creating the new finance committee.