City Council members were left “completely confused” and frustrated following a budget meeting Monday centering on the Office of Homeless Services, and lawmakers appear to be considering freezing or reducing the department’s funding.
The bulk of the hearing was focused on OHS’s finances, given that the office is facing multiple ongoing investigations into how it overspent its budget by nearly $15 million over the past several years.
City Council Majority Leader Katherine Gilmore Richardson, near the end of the OHS testimony, asked each of the department’s top officials to come forward, state their name and title, and say whether they had ever “personally benefited” from money earmarked for homeless services – effectively asking if they had committed a serious crime.
Each of the administrators crowded around a table at City Hall and replied that they had not taken any dollars from the office.
Gilmore Richardson has been scrutinizing the department’s budget for more than a year, and she introduced legislation earlier this year that would establish an independent ombudsperson to oversee OHS.
“There is a deep systematic, structural issue with the operation of homeless services in the city of Philadelphia,” she said Monday. “It is clear to me that, in order to actually end homelessness, we need a complete overhaul of that department.”
Equipped with 23 pages of questions for the office, Gilmore Richardson urged her colleagues to reject any requests for more money for OHS.
“Until we see written policies and procedures and a system of oversight that will lead fundamental change, I do not support the operations of this office or any additional funding,” she said.
Mayor Cherelle Parker, in her first spending plan, has proposed allocating $88.7 million in city dollars to OHS – an increase of about $8 million compared to the current year’s budget, but $2.8 million less than the department expects to actually spend.
OHS also receives tens of millions of dollars in federal and state grants, and provides services through dozens of nonprofits with a complex web of contracts.
Councilmember Nicolas O’Rourke asked David Holloman—who was appointed interim OHS executive director in the waning days of Mayor Jim Kenney’s administration—what effect not fully funding the office would have on the homeless population.
“I think we would see a devastating impact, to be honest,” Holloman answered.
Parker in early February hired an outside accounting firm to investigate OHS after saying she had “grave concerns” from reviewing initial findings prepared by the city’s inspector general. The budgetary issues came to light late last year, when OHS requested a $14.7 million mid-year transfer to cover shortfalls dating from 2021 through to the current fiscal year.
Liz Hersh, who led the office under Kenney before resigning in October, told Metro last month that she “makes no apologies” for how she managed OHS, and she pointed to significant declines in the number of unhoused individuals in Philadelphia in recent years.
At Monday’s hearing, OHS Deputy Director Peter Curran acknowledged that the office “entered into contracts with funding that we did not have appropriated.”
“How does that work, if you don’t mind me asking?” Council President Kenyatta Johnson responded. Curran replied, “Well, it doesn’t.”
Holloman, who previously served as Hersh’s chief of staff, said there was a “difference of opinion,” and he indicated that he disagreed with the practice. The department, under his leadership, no longer believes “that spending outside the budget is the correct thing to do, given that this is taxpayer’s dollars here,” he said.
He told lawmakers that the department anticipates instituting any recommendations that come from the audit.
In the meantime, Holloman said OHS has implemented a multi-layer review process for contracts to prevent overspending. Additionally, the office has reworked terms with providers to align with the city fiscal year, which runs from July 1 to June 30, as opposed to the calendar year.
Several legislators were unsatisfied with the explanations.
“I believe that you were completely unprepared for this meeting,” Councilmember Jim Harrity said to OHS officials.
Council leaders said they would call the department back in for a follow-up budget hearing, likely later this month or in May. The body is in the process of evaluating Parker’s spending plans for each department as part of fiscal negotiations.
Johnson said he hopes the investigation into the office’s finances is “expedited,” so Council can see the findings before deciding on the budget. Lawmakers and the Parker administration must reach a spending agreement by June 30.
‘Housing For All’ is a two-year project in which Metro Philadelphia will investigate the city’s affordable housing crisis. It is made possible by The Lenfest Institute for Journalism’s Philadelphia Local News Sustainability Initiative grant.
