A $2 million contract between the City of Austin and consulting giant McKinsey and Co. to review the city's homeless programs and services will not move forward, according to a city memo.
In the memo, interim City Manager Jesús Garza said because the assessment conditions changed it could not achieve the community-wide impact the city hoped for.
“As a result, it has become difficult to define a successful scope, so we will not be proceeding with the contract,” Garza said.
Council Member Ryan Alter told KUT there was no collective buy-in for this project. Money was a concern, he said, but the other major factor was that some entities had already done some of this work.
Austin has done internal reviews of its homeless programs as well, he said.
"I think we all share the goal of figuring out what everyone is doing in the homeless space and then coming together on working collaboratively," Alter said. "The city, by great magnitude, have the most contracts involved, so our need for extra help might be different from somebody else's."
This was a domino effect set in motion by Travis County earlier this month when it withdrew from the project.
In January, the Austin City Council approved the contract that included reviewing programs and services provided by Integral Care, Dell Medical School, Central Health and Travis County.
The city agreed to pay $1 million using relief funding from the American Rescue Plan Act (ARPA). Travis County was expected to pay about $400,000. The rest would have been split between the remaining entities.
However, Travis County leaders felt that money could be better spent and elected not to participate in the study. County commissioners also cited concerns with the selection of McKinsey to conduct the study.
Commissioner Brigid Shea told KUT the county agreed there needed to be a holistic review of how each entity serves the homeless community. Still, she said this was an unfunded project.
Additionally, she said, the county’s efforts are still very new.
In 2021, the county dedicated $110 million to build permanent supportive housing and affordable housing with about half its ARPA funding. Most of those contracts are still being negotiated.
“We don’t see where it makes any sense for McKinsey to evaluate the effectiveness of this because there is nothing there yet,” she said.
Several community members also expressed concerns with the contract.
Central Health discussed the contract during closed session at its meeting on Wednesday but did not vote on it. Board of Managers Chair Ann Kitchen said while the contract isn't moving forward, that does not change its commitment to align and coordinate its efforts.
Homeless Strategy Officer David Gray was not available for comment Thursday.
He previously told KUT that the system cares for more than 5,500 people experiencing homelessness, and he hoped the review would find gaps and overlaps.
“As a city we invest tens of millions of dollars every year in direct services to our unhoused and sheltered population, and we saw this as an opportunity to plug the gaps and figure out how we make more impactful investments,” Gray said.
Garza was also unavailable for comment Thursday, but in the memo, he said he continues to support the need for a comprehensive review.
“The months of good work among representatives with all four entities to help define the scope of the assessment serve as a solid foundation to help us — together — determine a path going forward on our mutual purpose to make homelessness rare, brief, and nonrecurring,” Garza said.
Mayor Kirk Watson agreed the review was still essential. He said not moving forward "robbed" the public from understanding how this money is spent.
"And it is a tremendous amount of money," Watson said. "It deserves a thorough, proper, independent review. No one should fear the findings when we’re talking about people’s lives and taxpayer dollars.”
Alter said it was crucial that the city and its partners still move forward together to figure out how to be effective. All of the entities have agreed to meet with each other regularly.
"The city plays a large role in addressing homelessness, but we can't do it alone," he said. "This is a regional challenge, and we can only solve it all together. We just have to be unified in that approach. I think we will get there."
The Travis County Commissioners Court said it was committed to coordinating and aligning strategies through a collaborative and transparent process.
Hector Nieto, a spokesperson with the county, said "we will continue working with our partners at the City of Austin, Central Health, Integral Care, and other stakeholders to accomplish these goals."
