A critical audit of the financial controls at the King County Regional Homelessness Authority (KCRHA) — the county’s primary agency for addressing homelessness — has put its existence at risk. The review, commissioned by the City of Seattle and county administration, found a lack of basic internal controls and budget oversight, resulting in the loss of at least $8 million in public funds.
The homelessness problem in Seattle and King County has been exacerbated by a mix of factors: a sharp rise in housing costs, a shortage of affordable housing, high income inequality, and the effects of the drug crisis and mental health issues. Earlier efforts to combat homelessness were fragmented — the City of Seattle and King County operated separately, leading to duplication and inefficiency. KCRHA was created in 2019 as a single regional body to coordinate programs, pool funding and avoid “passing the buck” between authorities.
The agency’s chief weakness lies in its financial model, which relies heavily on retroactive reimbursements — an approach that makes the organization vulnerable to losing track of expenses and revenues. Under a retroactive reimbursement model, the agency first spends money on services — housing subsidies, shelters, social workers’ salaries — and then applies to have those expenses reimbursed from public funds. The risk is that if the agency misestimates budgets, exceeds limits or faces payment delays, it can be left without funds — potentially running deficits in the tens of millions. This is especially dangerous for public agencies, which are obligated to continue providing services even without funding. While the audit did not find direct evidence of fraud, it concluded that the existing accountability system is not reliable enough to guarantee its absence.
Two local lawmakers — Seattle City Councilmember Maritza Rivera and County Councilmember Rod Dembowski — have already called for dissolving the agency. “KCRHA has a long history of dysfunction and inefficiency; it’s time to acknowledge that it has failed its mission,” Rivera said. Seattle Mayor Cathalyn “Cat” Wilson, meanwhile, noted that “all options are on the table” and that “urgent steps are needed to protect public funds.” The City Council does not directly control KCRHA, since it is a joint city-county body, but Seattle plays a key role in funding, providing a large share of the agency’s budget. The mayor and council can appoint representatives to the oversight board, influence priorities through policy statements and pressure leadership, but they cannot fire the director without county agreement.
The agency was established in 2021 as an ambitious regional initiative to tackle homelessness across the county. Seattle began directing more than $100 million annually to KCRHA, but the idea of a regional approach was complicated from the start by disagreements among participating cities over homelessness strategies. Current Mayor Wilson, like her predecessor Bruce Harrell, approaches the agency with evident skepticism.
Previous reviews had warned about the risks tied to dependence on reimbursements, but the latest audit, which cost taxpayers $600,000, showed that the problems not only persisted but worsened. Audits from 2021–2022 flagged systemic issues: poor cash planning, delays in financial reporting, weak oversight of contractor spending and an inability to accurately forecast revenue from retroactive reimbursements. Warnings went unheeded due to bureaucratic inertia, a shortage of qualified staff and political pressure to “not slow down the pace of assistance.” As a result, when federal and local funds started to be delayed in 2023, the agency found itself in a cash shortfall — without cash for ongoing operations. In July 2024 the agency went overdrawn by more than $44 million, including a $4 million administrative operating deficit. Auditors were unable to find documentation supporting $8 million in expenditures.
This scandal comes amid a broad review of all social service contracts in King County, which has already called into question the efficiency of budget spending. Members of the Seattle City Council are demanding tougher financial oversight of KCRHA and additional audits.
Councilmembers Alexus Mercedes Rink and Dione Foster issued a joint statement: “Every mistake this audit uncovered is another missed opportunity to prevent further harm on our streets and in neighborhoods across the region.” They called for the immediate implementation of strict financial controls and for combining efforts to determine the future of the regional homelessness system.
KCRHA CEO Kelly Kinnison, appointed in June 2024, partially acknowledged the problems in a letter to the agency’s board, but attributed them to the “start-up period of forming the organization, the pandemic and a complex funding model.” The audit’s conclusion notes that remedying the situation will require “substantial time and financial investment,” as well as close coordination across all levels of government.
Based on: Lawmakers call for dissolving King County homelessness agency following audit