City nixes $2M McKinsey homelessness study, signaling poor cooperation among partners

City Manager Jesús Garza has canceled a potential $2 million contract with consulting giant McKinsey & Company to perform an analysis of efforts to address homelessness by the city, Travis County, Integral Care and Central Health.

Garza released a memo Thursday morning that suggested there was a less-than-ideal chance of the needed collaboration and financial commitment among the four parties, noting “the conditions for the assessment have changed such that we cannot achieve the community-wide impact originally envisioned.”

Travis County commissioners voted earlier this month not to participate in the study at a cost of $400,000. City Council had approved the solicitation for the study in January.

Council Member Ryan Alter told the Austin Monitor that administrators from Central Health had also sought to amend the interlocal agreement for the study in a way that would have given the agency a form of veto power over certain components of the study.

In a prepared statement, Mayor Kirk Watson said there was early agreement among the four bodies on the need to improve and coordinate homelessness services. But differences soon arose over how to work together.

“This multi-entity review is essential to examine how we as a community can provide the best services for our unhoused neighbors and aren’t squandering resources.” he said. “There was also agreement on purpose and on the process for the scope from the outset. But some jurisdictions are no longer open to the more collaborative review, which has made it difficult to put together the scope this effort needs. It also robs the public of the evaluation we need when we’re spending this enormous amount of money to address those living homeless.”

Alter said that as talks among the four groups progressed, he became concerned that the differing levels of commitment would result in “a report that would sit on the shelf if everyone wasn’t bought in.”

“We needed to have a report that everybody was bought in to, and I felt like that was a sign that they were not,” he said. “If successful, this study could actually result in a multiplier. … If we spend, let’s say, $1 million to reveal that there is either overlap in services or that we can better coordinate so that way we can get even more than $1 million worth of value, that’s hugely impactful for years to come.”

In the coming months, Alter said the city should work to reconvene the group in a less formal process to find ways to optimize how each entity uses its funding and other resources to help people without a reliable place to live.

“That goal is still universally shared. We’re just trying to figure out what’s the best way to accomplish it,” he said. “We all still agreed that they want to have regular meetings to discuss what everyone’s doing. The next few months that is really where we should spend our time: to work together to figure out at least that first threshold question of ‘what is everyone doing?’”

In a prepared statement, Central Health Board Chair Ann Kitchen said: “While the contract with McKinsey & Company, Inc. isn’t moving forward, Central Health welcomes all opportunities to share with others the work we do as a healthcare provider and funder for low-income Travis County residents, including those experiencing homelessness. We remain committed to ensuring those services are optimally aligned and coordinated with the efforts of the city of Austin, Travis County, Integral Care, and all stakeholders and participants in the local continuum of care that helps our neighbors meet their needs as they work to exit homelessness.”

Walter Moreau, executive director of the Foundation Communities nonprofit group that creates housing for homeless people, said the local bodies will begin to see reduced federal money to spend on homelessness services because of the end of programs tied to the American Rescue Plan. With state lawmakers signaling intentions to pass laws next year that would limit cities’ options for assisting people without homes, Moreau said the city, county and Central Health should explore using their status as taxing entities to secure ongoing local dollars for permanent supportive housing, social services and other forms of assistance.

“This is a public problem. It takes public taxpayer dollars to help address the problem,” he said. “Private philanthropy can’t keep up. The public agencies have taxing authority, and part of their charter and mission at the city and the county and Central Health is to serve the homeless. So they all do need to coordinate, especially with a drop in federal funding.”

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