Shelters are bracing for change — and the potential loss of funds — as the state begins requiring them to move the homeless more swiftly into permanent housing.

This month, the Department of Human Services begins its new system of distributing $13 million annually based on a shelter’s performance.

“We’re looking at public dollars,” said Scott Morishige, the state homeless coordinator. “We want to make sure public dollars are being spent in the most effective and efficient manner.”

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Using seven performance measures to evaluate a shelter’s performance, the department aims to ensure shelter beds stay full, the homeless find permanent housing, and that they don’t fall back into homelessness again. If Hawaii’s shelters don’t keep up, they will get less public money.

Some shelter operators worry about the new rules will affect their already bare-bones budgets.

“We’re too small to lose anything,” said Holly Holowach, director of Weinberg Village Waimanalo, a transitional shelter that serves 132 people, including 81 children. “We’ll go belly up before we lose anything,” she said.

Starting in August, if a shelter doesn’t meet the state goals, they risk missing out on a portion of their funding.

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The department is introducing the performance measures slowly, ramping up expectations and allowing each shelter to choose which metric they aim to meet until mid-2018, when all seven metrics will be tied to funding.

Only small amounts of money will be at risk at first, increasing from one percent at the end of October until it reaches 30 percent.

Morishige said the new system will make the state more competitive when applying for federal funds from the U.S. Housing and Urban Development Department, which awards Continuum of Care funding based on similar performance measures.

“It was time to have a new contract and really align with HUD goals,” said Connie Mitchell, director of the Institute for Human Services in Iwilei, which operates the state’s largest homeless shelter. “It’s just tough to deal with the changes sometimes because there’s a lot of changes happening at one time.”

Following A National Trend

Two years ago, the homeless advocacy group PHOCUSED found Hawaii homeless shelters had an alarming number of vacant beds.

“That’s millions of dollars every year wasted on vacant beds,” said State Sen. Jill Tokuda, who introduced the measure that changed the way the state funds shelters.

Rather than simply offer a roof over their head, Tokuda said her measure was aimed at getting the homeless back on their feet and into permanent housing quickly.

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“It’s not really a matter of looking at how many beds are available,” Morishige said. “It’s really looking at the flow through the shelter.”

Moving people out of shelters more quickly, Morishige said, will allow the system to serve more people.

The changes followed a national trend referred to as Housing First.

Morishige said DHS will redirect the funds to other efforts to address homelessness.

Tom McDonald, the executive director of Alternative Structures International which operates two transitional shelters in Waianae, calls it a “rational reallocation of money to where it’s needed.”

“As long as it’s done fair, transparent and as long as it’s not punitive,” he added.

A number of shelter operators say they would have liked to see bonuses given to shelters that achieve or exceed expectations rather than money withheld from those that don’t. With less money, they argue they’ll have to put more effort into fundraising.

“The amount of money that we ask for and that we’re awarded is usually less than what’s required to actually run the shelter,” said Mitchell of IHS.

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State funds that Gregory House Programs’ 15-bed transitional shelter receives each month barely covers its rent, said Jonathan Berliner, the nonprofit’s executive director. That’s just one of the many expenses of the shelter, which serves people with HIV and AIDS.

While shelters fear they’ll see less state money, state officials hope the new system will attract more federal funds.

Hawaii receives about $11 million in HUD Continuum of Care funds, Morishige said. Last year HUD declined to approve $1.3 million in grant renewals, leaving seven nonprofits short changed.

Michael Ullman, a volunteer coordinator at the National Homelessness Information Project said HUD didn’t grant those funds because the programs receiving the money didn’t focus enough on permanent housing.

‘Pulling Housing Out Of The Air’

Most months, shelters on Oahu and neighboring islands see twice the number of people entering homeless shelters than exiting to permanent housing, according to a state database of the figures from November 2016 through May 2017.

“I tell the staff ‘OK, we’re not going to get paid unless we get people into permanent housing.’” -Maude Cummings, executive director of Family Life Center

With affordable housing in short supply, case managers at shelters feel pressed to meet two of the seven metrics: within a year, the state wants transitional shelters to move 50 percent of the people out in 90 days or less, and 75 percent of them into permanent housing.

Emergency shelters are held to similar standards.

“Those performance measures have challenged the staff to make miracles and pull housing out of the air in 90 days,” Holowach of Weinberg Village said.

With limited Section 8 rental assistance and public housing units, caseworkers find themselves competing with college students for affordable rentals.

“We utilize the same tools that everybody would, the internet,” said Adrian Contreras of Catholic Charities Hawaii’s Family Assessment Center. The center is not subject to the state’s new performance measurements, but aims to move people into affordable housing within 90 days.

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This year, the National Low Income Housing Coalition ranked Hawaii the most expensive state to rent a two-bedroom apartment.

To meet the state goals, McDonald of ASI says shelters need to get creative.

“If you’re a housing specialist and you’re just sitting around waiting for units to open up on Craigslist — guess what, it’s not going to happen,” he said.

Shelter operators need to establish relationships with landlords, McDonald said, who are often hesitant to offer their units to people on Section 8 or who are homeless.

“I’m actually creating inventory,” he said.

Some nonprofits are better poised to meet the performance measures because they already deal with a networks of landlords.

Maude Cumming of Family Life Center, which runs an emergency shelter on Maui, said the state’s performance measures have pushed her staff to seek out and work with more landlords. They’ve shifted to a Housing First focus in practice rather than just in philosophy, something she’s long strived to do.

“I tell the staff ‘OK, we’re not going to get paid unless we get people into permanent housing,” she said. “It’s really made us rethink how we look for housing.”