Austin has a homelessness crisis. Now, city will vote on $2M contract to review strategies

Austin American-Statesman
Ella McCarthy, Austin American-Statesman
January 18, 2024

Homelessness is one of the largest crises city leaders in Austin are facing. The city lacks shelter beds, people sleep up and down the streets of downtown Austin and many underpasses and wooded areas are dotted with tents.

The city of has spent hundreds of millions of dollars over the past decade to address the issue, but the number of people experiencing homelessness in the area has doubled in the past two years, according to data from ECHO.

In August, the city approved a record $80.9 million in the annual budget for homelessness. But since that budget was passed, several changes, some planned and others unplanned, have shaken up City Hall.

The city's top leader for homeless strategy resigned in August, and months later the office tasked with solving the crisis was reorganized. Interim City Manager Jesús Garza, who made the change to the Homeless Strategy Office when he pulled it out from under the wing of Austin Public Health, said, "the City’s current organizational structure does not effectively respond to this critical priority in our community."

The issues the city is facing aren't isolated. Integral Care, a public entity that provides mental healthcare, faced a critical budget issue in 2023, which prompted the mayor and key leaders to intervene or else risk cuts to jobs and services.

A client sits in the cafeteria at the Austin Resource Center for the Homeless on Thursday November 16, 2023.
Jay Janner/American-Statesman

Integral Care's financial crisis spurred the idea to undergo a review of contracts and strategies and attempt to measure just how effective each provider is in improving homelessness in Austin, according to Austin Mayor Kirk Watson.

District 6 Council Member Mackenzie Kelly had also called for an audit of spending related to homelessness.

This review could soon get underway.

On Thursday, Council Members will vote on a $2 million contract with the consulting firm McKinsey & Company to facilitate a review of homelessness related contracts and strategies used by Austin and other area agencies. The City Council agenda item states the city will only be financially responsible for funding for work specifically related to the city, and that other entities would reimburse the city under the contract.

The review would encompass an assessment of strategies, programs, services and contracts by the city and other agencies, which could include Central Health, Travis County, Integral Care, and The University of Texas at Austin Dell Medical School, according to the scope of work for the review.

"It’s past time for us to evaluate the effectiveness of our strategies, programs, and services in achieving intended outcomes and long-term solutions," Watson said in an online newsletter Wednesday. "I believe this work will give us recommendations for improvements in strategy design and implementation to better align our work."

Here's what could be evaluated.

What could be reviewed?

The primary focus of the review, according to the scope of work, is three things:

1. Assessing the effectiveness of current public sector strategies.
2. Evaluating the use of funds allocated for homelessness services and homelessness prevention, including contracts with third-party entities related to homelessness.
3. Examining the extent to which the agencies align strategies, programs, and services to address homelessness.

As it is related to contracts specifically, according to the scope of work, the review would, "Examine the terms of a representative sample of relevant homelessness contracts to ensure clarity and alignment with each Partners’ goals and purpose."

Under review of the contracts would also be the "cost-effectiveness of services and programs compared to industry benchmarks to identify areas for potential cost savings or efficiency improvements."

Other evaluations would include looking at the effectiveness of strategies, including budget allocation and expenditures, and how well they achieve their intended outcome.

Changes to Austin's Homeless Strategy Office

The move to facilitate a review comes on the heels of several major changes to the city's homeless strategy office.

Diana Grey, the city's former homeless strategy officer, resigned in August. David Gray, who was previously the assistant director in the city's Economic Development Department and was placed on special assignment to oversee the office in June 2023, was made the interim director.

A few months later, when the Homeless Strategy Office was pulled out from under the wing of Austin Public Health and made a stand-alone office, Gray was made the permanent director.

In a memo announcing the change in November, Interim City Manager Jesús Garza said that he created the new office to "to serve as a focal point for addressing homelessness comprehensively, strategically, and compassionately."

One of the tasks the new office is charged with is to procure, manage and monitor third party contracts, which were previously spread over many departments.