Philly lawmakers slam Homeless Services leaders for mismanaged funds: ‘This is astronomical money’

A half-dozen leaders of the Philadelphia agency tasked with housing the city’s homeless each stepped to a microphone in City Council’s chambers Monday and vowed they did not steal money from the city.

It was an extraordinary moment prompted by Council Majority Leader Katherine Gilmore Richardson, a Democrat who has for more than a year probed Philadelphia’s Office of Homeless Services. The office overspent its budget by nearly $15 million and is the subject of at least three separate investigations.

At the same time, the office is requesting a more than $8 million funding increase for the next fiscal year, which begins in July.

“If we continue to allow this office to operate in this way, we are culpable for their dysfunction,” Richardson said. “Until we see written policies and procedures and a system of oversight that will lead to fundamental change, I do not support their operations or any additional funding.”

The one-by-one promises from the agency’s interim executive director and other members of the office’s leadership team came after they sat for questioning for more than two hours during its annual budget hearing.

The hearing came in the middle of the negotiation process for Parker’s first city budget, which must be finalized by the end of June. It marked the most tense encounter between lawmakers and administration officials through what has otherwise been a largely cordial budget season.

» READ MORE: Philly City Council wants more oversight of the Office of Homeless Services amid questions about its finances

David Holloman, the office’s interim executive director, explained to Council that the overspending occurred over the course of more than three years because the office expanded its contracts with a network of nonprofits that house and treat the city’s homeless population, despite not having enough money in its budget to pay for all the work.

Officials in some cases delayed paying contractors for months until the next city budget was approved and new dollars flowed into the office’s coffers. The office’s former executive director, Liz Hersh, has said top finance officials were aware of the contracts.

“It will not happen again,” Holloman said Monday. “We were not the final decision maker. I need to make that extremely clear. We don’t believe that spending outside of your budget is the correct thing to do.”

Still, at least a half-dozen Council members expressed frustration with the budget overruns, and several said they were unsatisfied with the office’s plan to ensure it doesn’t happen again.

“This is astronomical money that could have been spent for permanent housing to house some of these families,” at-large Councilmember Jim Harrity said. “I am literally upset with what’s going on here and the lack of concern, frankly. I don’t feel it coming from you guys. I believe that you were completely unprepared for this meeting.”

» READ MORE: How Philly’s Office of Homeless Services overspent $15 million: ‘Things got away from everybody’

At-large Councilmember Isaiah Thomas said the office’s fiscal mismanagement has put Council “in a very bad position.” He said members now must choose between funding a department they believe have misspent taxpayer dollars, or risk reducing the amount of services available to a vulnerable population.

“It just sounds like you’re freestyling,” Thomas said. “It’s not fair that we have to look at a department that’s as important as yours, especially at a time like this, and decide whether or not we have to give you money because we’re scared how you’re going to spend it or not spend it.”

Richardson added: “This is going to be a very difficult process because we’re in the middle of our budget process. And they’re in the middle of being investigated.”

Council members called for Homeless Services officials to return to testify a second time later in the negotiation process. That hearing has not yet been scheduled.

Inquirer staff writer Aubrey Whelan contributed to this article.