The audit reported a $44.7 million deficit and attributed the unrecoverable funds to persistent financial mismanagement. It did not find evidence of fraud. Council members on the Executive Finance Committee are seeking an explanation of how the money was spent without the authority being able to determine what it paid for.

The findings could shape decisions about the authority’s future and whether King County and Seattle provide financial assistance. Councilmember Rod Dembowski, who chairs the committee, said the loss reflected poor management and inadequate oversight.

Some local officials have called for dissolving KCRHA. But King County Executive Girmay Zahilay has warned that shutting down the agency could put federal homelessness funding at risk. He said roughly $60 million in Continuum of Care funds flows through the regional system to support housing for about 4,000 people.

The debate comes as local governments face pressure to show that homelessness spending is properly tracked and producing results. Dembowski also criticized the authority’s record, saying unsheltered homelessness had doubled during its existence. That assessment has intensified scrutiny, though the audit’s financial findings do not by themselves establish the causes of broader homelessness trends.

The executive’s office says it is developing a “regional reset” for the homelessness response, with further details expected in the coming weeks. It remains unclear what form any bailout might take or what changes would follow the council’s review.