Multnomah County has left millions of dollars for homeless services sitting in county coffers, as nonprofit service providers struggle to get funding.

In the first three quarters of the fiscal year, Multnomah County spent less than half of the Metro Supportive Housing Services dollars it had planned to use, meaning it fell $46.4 million short of its spending goals.

The county blamed the underspending in part on staffing shortages at many of the service providers that the Joint Office of Homeless Services contracts with, as well as providers’ limited capacity to front program costs and wait for reimbursement.

Service providers say those issues are real, but the county hasn’t done enough to quickly fund programs, even as the region experiences a homelessness crisis.

Laura Golino de Lovato, executive director of Northwest Pilot Project, said the county has shown “a lack of urgency in getting the money out the door.”

Northwest Pilot Project provides case managers and rent assistance for seniors in Multnomah County who are homeless or at risk of becoming homeless.

“There are a lot of unanswered questions about why the Joint Office, in particular, is holding on to money that was collected specifically to address this urgent need. And it’s very frustrating,” Golino de Lovato said.

Golino de Lovato said that frequently, requests to the Joint Office of Homeless Services for additional funding have been rejected because the county says it’s already reached its budget.

Since Metro Supportive Housing Services tax revenue dollars have become available, Northwest Pilot Project and other agencies that contract with the county for homeless services “know that there’s money there, so that answer doesn’t really fly. But it’s been extremely challenging to engage in a meaningful conversation that gets to the question of, (since) you’re sitting on a lot of money,” Golino de Lovato said, “why can’t you give us more money for rent assistance, which would help us place homeless people into housing, and help us prevent evictions?”

Andy Nelson, executive director of Impact NW, said the nonprofit is “eager and excited about partnering with Multnomah County.”

Impact NW offers case management and rent assistance for housing-insecure families in the Metro area. The organization has three contracts with Clackamas County, which also receives Metro Supportive Housing Services funds, and has been pre-qualified for contracts with Multnomah County.

Clackamas County has also had challenges getting SHS funding out, Nelson said, “but based on our experience, the funds have flowed more freely in Clackamas County.”

Impact NW applied for housing placement and retention funds from the Joint Office last December and was formally rejected in March, in a letter that noted a highly-competitive process and limited funds, Nelson said. For that application cycle, the county awarded a total of $3 million to 10 providers but Impact NW’s proposal was ranked 14th out of 24 proposals, Joint Office spokesman Denis Theriault said. Providers have expressed confusion about why such funding is strictly limited while millions sit unused.

“We’re hopeful that the Joint Office will fund organizations like ours that are ready, willing and able to help, but have not yet seen any funding,” Nelson said.

High hopes

Multnomah County’s high expectations have made its underspending look even worse.

“I think initially, many of us on this committee thought as this was rolled out, Multnomah County was the county that was most likely to be able to get in there and spend,” Susan Emmons, co-chair of Metro’s SHS program oversight committee said at a May 22 meeting. “They had an existing system. They had existing providers, as contrasted with Clackamas County and Washington County that were really building programs from the ground up.”

None of the counties are close to spending all the money in their annual budget. Washington and Clackamas counties both planned to spend roughly three-quarters of their available budgets this fiscal year, since this is only the second year that SHS funding has been available.

In the first three quarters, Washington County spent more than it had anticipated, but still less than half of the amount available for the entire year.

By the end of March, both Clackamas County and Multnomah County reported they had spent less than a third of their total budgets for the year. But Clackamas County had only planned to spend $11.6 million out of its $29 million budget in the first three quarters, so its actual spending of $9.5 million wasn’t a massive letdown. Clackamas County also only budgeted using funds carried over from the prior year, unlike Multnomah County, which planned to also use new SHS tax revenue as it came in.

Multnomah County isn’t just behind on spending: The county is also far behind on most of its outcome goals.

By the end of the third quarter, Multnomah County was just over halfway to its goal of placing 545 households in permanent supportive housing. The county’s goal of rapid re-housing for 800 households was only 18% complete; the goal of eviction and homelessness prevention for 800 households was 52% complete. The county was ahead of schedule on its goal for new shelter beds, but both Clackamas and Washington counties were doing better.

Slow reimbursements

Multnomah County attributed some of the funding delay to reimbursement issues.

While grant funds, like those from private foundations, are typically paid out before a program starts, county contracts require organizations to submit monthly invoices for reimbursement.

While the SHS funding means there’s a massive increase in available dollars, that doesn’t necessarily mean organizations could instantly grow to swallow as much funding as possible. Small organizations don’t generally have the savings in the bank to start hiring staff and distributing funds before getting reimbursed.

“For an organization like Impact NW, that can be a challenge,” Nelson said. But Impact NW, which has more than 200 employees and had nearly $14 million in expenses last year, is fairly large. “For a very small organization, I think it’s nearly impossible.”

Golino de Lovato said it often takes months longer than expected to get reimbursements from Multnomah County. NW Pilot Project also has contracts with the U.S. Department of Housing and Urban Development (HUD) and Home Forward, which both process reimbursements faster than Multnomah County, Golino de Lovato said.

At the state level, a senate bill sponsored by Sen. Wlnsvey Campos (D-Aloha) would set minimum rates for some aspects of some state agencies’ contracts with nonprofits and create a task force to craft recommendations for changes in the state’s contracting, payment delivery, and reporting requirements.

“We can’t do the same things that we were doing before,” Dan Fowler, a Metro SHS oversight committee member, said. Nonprofits working with the counties “need the cash flow,” Fowler said. “Some of them are hurting because they’re ramping up so fast, they’re caught. So the counties really need to develop a different system in paying.”

“We had a whole system that was built on scarcity before the SHS money,” Emmons said. “Then all this money got flooded into the system and I think it’s taking time to catch up and say, ‘how do we do this — and do this in a deliberate way, and in a transparent way?’”

In a May 31 letter to tri-county leaders, the Portland Business Alliance and 63 nonprofits and businesses called for higher wages, faster reimbursements, and changes to “outdated and inefficient nonprofit contracting protocols.”

“We are concerned that the service providers are often forced to finance their programs while waiting months to be reimbursed under their contracts with governmental entities. This puts those entrusted with managing their organizations’ finances in a precarious position to front payment for their staff with no certainty when they will be funded,” the letter stated. “Long wait times for reimbursements and the administrative burden of navigating the contracting processes strain the resources of organizations that are already operating on limited budgets.”

Last fiscal year, the county piloted a grant program to front up to two months of expenses for organizations that were trying to build capacity and couldn’t afford to wait for initial reimbursements. The county also started offering technical assistance grants in areas like finance and human resources. By the end of March, Multnomah County had only spent $1.5 million of the $4.9 million budgeted for system development and capacity building this year.

Inconsistent and inefficient

Golino de Lovato said the Joint Office has been accommodating in some instances, like when the opening of a new building was delayed because of supply chain issues and Northwest Pilot Project needed money to keep the future tenants in motels until the housing was ready.

“Ten percent of the time, maybe twenty percent of the time, they’re great. Most of the time, not so much,” Golino de Lovato said. “That demonstrates an inconsistency in how they’re managing their funds.”

Other providers have noted inconsistent experiences working with the Joint Office.

The county’s flexibility on contract negotiations “really is varied, (it) depends on which contract and which contract administrator it is,” Nelson said. “There isn’t consistency, even in the Joint Office, let alone at Multnomah County. What we have is kind of a patchwork system.”

Scott Kerman, executive director of Blanchet House, said the nonprofit has never relied on government funding.

“Sometimes it’s more trouble than it’s worth,” Kerman said. “It takes a lot of resources to apply for and manage that funding, and sometimes, depending on the funding, it can kind of tie your hands in terms of how you want to operate. So there’s a lot of benefit to being independent. We can respond to changing circumstances very quickly, which is what has really characterized our service in the past three years.”

The organization mostly relies on private donors, grants from foundations, and donated food and clothing to fund its meal services in Old Town and residential programs in Portland and at a Yamhill County farm.

Kerman said that if the application and reporting process for county contracts was streamlined, and if the allowed uses were less restrictive, Blanchet House would likely apply for more funding.

“I understand we need to have accountability, we’re using taxpayer money. It’s not a question of just throwing money at nonprofits and letting them do whatever. But right now, the restrictions, I think, are hurting our services more than they’re ensuring public confidence that the money is being well spent,” Kerman said.

The way the county approaches contracts with housing services providers feels like if a homeowner told a roofer to only spend a set dollar amount on nails; a set amount on shingles; and to only pay providers a certain wage, Golino de Lovato said.

“If (the county) would tell us what their expectations are for us to deliver, and then just give us some money and let us figure out how to do that, that would be the adult way of doing a contract,” she said. “Part of what’s going on here is a patronizing attitude from the county toward contractors… this idea that we need to be micromanaged, we need to be told what to do and the money has to be doled out carefully, is getting in the way of actually moving the dial.”

Golino de Lovato said Northwest Pilot Project and other providers jointly applied for funding to start a master-leasing program, which would allow the providers to lease multiple apartment units and sublease to low-income housing-insecure or homeless tenants.

That program was supposed to last three years, but after submitting the application, the groups got word that the application was only for one year, she said.

Other providers also said the duration of contracts is an issue. Each county has a pre-qualification process for providers, before the providers can apply for funds. In Multnomah County, the pre-qualification is valid for five or seven years, but the actual funding contracts are annual, according to a Metro report. Although most Multnomah County contracts are renewed annually, the uncertainty creates more risk for providers.

Nelson said it’s easier for organizations like Impact NW to seek funding when contracts run for at least three years.

“There’s a lot of costs that go into starting a program, of course, and for just one year, it’s not always really worth it,” Nelson said.

Looking forward

Kerman was hopeful that things may change under the county’s new leadership, with Dan Field running the Joint Office of Homeless Services since April and Multnomah County Chair Jessica Vega Pederson in office since January.

“It’s frustrating, there’s no question,” Kerman said. “Sometimes I’m just baffled by how things work, but that doesn’t mean I’m pessimistic.”

In a May 15 letter to fellow local leaders in response to the underspending, Vega Pederson outlined three immediate steps the county would take: identify short-term ways to quickly spend SHS dollars; hire a consultant to recommend changes that would make the system more efficient; and “Quickly convene key Joint Office-contracted service providers to identify immediate barriers and impediments to service delivery towards outcomes, address underspending, and outline new accountability measures for the Joint Office and contracted providers.”

The meeting with key service providers is scheduled for June 23 (though providers weren’t invited until the week of June 5), Theriault said.

Metro publicly announced that it would initiate a corrective action plan for Multnomah County on May 16, but that plan has not been released as of June 13.

The corrective action plan wasn’t a quick response to the third-quarter data submitted the day before; it was a response to the county’s underspending in the first two quarters. That data had been released by mid-February, but Metro officials didn’t reach out to Joint Office leadership until two months later. Multnomah County’s April 29 proposal for how it would increase spending “did not adequately address the material deviation,” Metro Housing Department Director Patricia Rojas said, so Metro took the step of starting a corrective action plan.

By the time a corrective action plan is produced, it will have been at least four months since the county reported its substandard progress in the second quarter.