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HomeMy WebLinkAboutSH Additional AttachmentBUDGET NARRATIVE FISCAL YEAR The budget has been prepared to align with the Shelter House Fiscal Year which is the calendar year. The table begins with FY23 (1/1/23 – 12/31/23) and runs through FY25 (1/1/25 – 12/31/25). REVENUE Joint Funding Calculations: UWJWC, Johnson County Block Grant, and City of Iowa City Aid to Agencies award amounts have been recalculated to align with Shelter House’s fiscal year to demonstrate and align with the period in which funds were received. City of Coralville and City of North Liberty awards are issued in a one-time payment and are therefore consistent the original FY award amount. Johnson County Funding Other: FY23 revenue includes Johnson County Emergency Assistance funding to stabilize Winter Shelter staffing and Eviction Prevention and Diversion funds for payments of rent and utility arrears for qualifying households. FY24 and 25 award amounts demonstrate continuation of Eviction Prevention and Diversion fund availability. 100% of these funds are passed through to local landlords, property managers, and utility providers. Funding is not available for staffing, administration, and indirect costs. City of Iowa City Other: Includes federal pass-through funds (CDBG and CDBG-CV) awarded by the City of Iowa City for replacement of the HVAC system in Emergency Shelter in 2023 and Emergency Shelter facility renovations in 2024. Renovation will be complete in Q1 2025. The correlate project costs, while outside of the operating budget, have been included in the Other Expenses line items so as to not overstate income. Also included in this revenue line are COVID response funds awarded to provide Housing Stability and Homelessness Prevention services throughout the County, Winter Shelter services, and Street Outreach services. These services are projected to be maintained at the current level through the 2025 budget period. East Central Mental Health Region: Shelter House was awarded a Fund Balance Grant in FY23 and again FY24 from the East Central Region (ECR). In each instance, Shelter House was invited to apply for specific uses. Fund Balance dollars are remaining funds within the ECR budget that have not been expended toward the end of the ECR’s fiscal year and would be remanded to the State of Iowa if not expended. The awards, while significant, are one-time awards and do not permit Shelter House to include for any future budget projections. FY23 ECR funding included $900,000 to pay down an interest-bearing commercial loan incurred on the construction of the 501 Project, an apartment building comprised of 36 one-bedroom units through which Permanent Supportive Housing is provided for individuals meeting the HUD definition of chronic homelessness. The construction project was completed in June 2022. $446,816 was received in 2023 to reimburse previously unrecovered case management and supportive services provided in Permanent Supportive Housing between 7/1/22 and 6/30/23. As the funds were received in 2023, the full amount has been reported in the Joint Funding Budget form; however, 50% of the correlating costs occurred in 2022 (7/1/22-12/31/22) and are not reflected in the Expense side of the Joint Funding Budget. The remaining $20,000 was awarded by the ECR to support technology improvements. FY24 ECR funds were again awarded from the fund balance and are a one-time award. The full amount of $452,145 was awarded to reimburse previously unrecovered case management and supportive services provided in Permanent Supportive Housing between 7/1/23 and 6/30/24. As the funds were received in 2024, the full amount has been reported in the Joint Funding Budget form; however, 50% of the correlating costs occurred in 2023 (7/1/23-12/31/23). In FY25, the ECR will commit $244,000 to a project to develop a dynamic homelessness response system. Funding from the ECR will be applied to Phase I to develop data sharing and integration capabilities necessary for cross-sector data-driven decision making and the implementation of an efficient and effective homelessness response system. These are, ultimately, pass-through funds, as Shelter House will engage expert technical partners and collaborate with key stakeholders to assess the current state of data sharing, identifying both capabilities and gaps. The results of this analysis will inform the proposal of any improvements necessary to establish data sharing and integration capability while ensuring fidelity to all legal and compliance requirements. Upon implementation, the framework will improve communication between providers, enhance visibility and identification of individuals experiencing or at risk of homelessness, and improve client health, service provision, and housing outcomes, ensuring experiences of homelessness in our community are rare, brief, and nonrecurring. The total project cost is $589,603. Grants (Federal, State, Foundations): In 2023 Shelter House received one-time development fee of $787,500 for a new construction project of 36 units of Permanent Supportive Housing completed and opened in June 2022. Annual Endowment Draw: There was a significant drop in the Q3 2023 fund balance which wiped out Q2 2023 gains. This dramatic fluctuation in the fund balance gave pause to pulling funds in 2023. The full amount of available funds was drawn in 2024 and is intended to be drawn in 2025. Other Revenue: This line item is comprised of contract services including: • Rent: $600,862 in rent payments for Permanent Supportive Housing (the majority of rent is sourced through Project Based Vouchers and other specialized vouchers) in 2023. • Per Diem UIHC: Currently UIHC provides $24,000 annually to ensure two beds are prioritized year-round in emergency shelter for patients discharging to homelessness. • Fresh Starts Janitorial Services: A social enterprise offering professional cleaning services provided through Shelter House Supported Employment programming. Contract revenue in 2023 was $147,887. • Technical Assistance: Shelter House is the Subject Matter Expert on Permanent Supportive Housing to the UI Center of Excellence in Behavioral Health and provides statewide technical assistance on behalf of the Iowa Finance Authority for the Iowa Rapid Rehousing and Homelessness Prevention Project sourced through the US Treasury ($43,576). FY24 and FY25 amounts are expected to be consistent with FY23. EXPENSES Other Expenses: Shelter House facilities and properties are integral to our programming. One cannot be separated from the other. Therefore, expenses ordinarily considered to be “operating expenses” have been included in the Other Expenses line item as these traditional operating expenses immediately support our facilities through which our programs occur. Utilities, Insurance, IT, Repairs and Maintenance, are each assigned to this line item. Capital Improvements and Debt Service are also included in this line. While not considered a part of the ordinary Operating and Program Budget, these costs significantly and negatively impact the agency’s cash position. By way of example, Capital Improvements to the Emergency Shelter in 2023 (sourced through the State, City of Iowa City, and the HTFJC) cost $580,000. This is above and beyond the regular maintenance and repair ($40,000 in Emergency Shelter and $71,000 in Permanent Supportive Housing in 2023) incurred annually. Debt repayment on Permanent Supportive Housing and Shelter Renovations came to $1.24 million in 2023 and was made to pay down the interest-bearing commercial loan incurred to develop the property located at 501 Southgate Avenue and 0% interest repayable loans to the City of Iowa City and Housing Trust Fund of Johnson County maintained on other PSH properties and the Emergency Shelter. Importantly, all direct client assistance is included in Other Expenses. This includes food, transportation, and over $1.26 million in utility and rent assistance in 2023 (these are direct payments to landlords, property managers, and utility providers). Debt service is budgeted to decrease over time with significant paydowns of principal made on the commercial loan and payoff intended in 2025. Annual debt service for locally sourced 0% interest loans will continue at $105,560 annually. Capital expenses are up significantly in 2024, returning with a major renovation in the Emergency Shelter, and are expected to return to 2023 levels in 2025. Direct client assistance will be maintained through 2025 with augmentation intended in 2026 and 2027. Other Reserve Balances: Reserve accounts are required to be maintained for both Permanent Supportive Housing facilities developed with National Housing Trust Fund awards. Minimum balances must be maintained, and monthly deposits made totaling $28,880 annually. There are strict compliance requirements on both the allowable use and ability to draw on these funds. SUMMARY Between 2018 and 2023, Shelter House grew from operating and managing one 24/7 shelter facility and three residential homes, with an annual average employee count of 23, an annual operating budget of $2.42 million, and assets totaling $5.36 million to—just five years later— operating and managing three 24/7 facilities (adding two apartment buildings to our PSH portfolio) and four residential homes, with an annual average employee count of 91, an annual operating budget of $5.67 million, and assets totaling $18.8 million. This is a 296% increase in employees, a 134% increase in the operating budget and a 250% increase in assets. Not insignificantly, thirty percent of Shelter House employees are individuals with lived experience and are employed as Fresh Starts Janitors, Coordinators and Services Coordinators (who staff our facilities), Peer Support Specialists, Case Managers, and Team Supervisors. In the past five and a half years, Shelter House has completed two major new construction projects, Cross Park Place and the 501 Project, both Permanent Supportive Housing (PSH) developments providing a combined total of 60 one-bedroom apartments dedicated for individuals for whom homelessness had become a chronic condition. Also during this time, Shelter House rebuilt a fire-destroyed Fairweather Lodge home through which Permanent Supportive Housing is made available in a congregate setting for up to six adults with histories of homelessness, each with a diagnosed serious persistent mental illness. Additionally, Shelter House expanded PSH for an additional 134 households utilizing targeted Housing Choice Vouchers (MSV and EHV); initiated Street Outreach services in collaboration with the City of Iowa City; designed and implemented a $1.2 million county-wide Housing Stability Pilot (securing local funds to staff Coordinated Entry, Homelessness Prevention Services, and, in collaboration with Iowa Legal Aid, a weekly Eviction Prevention and Diversion Clinic at the Johnson County Courthouse as well as semi-annual Expungement Clinics); and assisted the Iowa Finance Authority in the development of the Iowa Rapid Rehousing and Homelessness Prevention Pilot for which we are a funded provider and technical assistance partner. Today, the majority of people we serve through all aspects of our work present with complex behavioral health and chronic health conditions—serious mental illness, substance use, polysubstance use, chronic and acute health issues, co-occurring illnesses, ambulatory challenges, brain injury, and intellectual disabilities. And in fact, analysis of the occurrence of homelessness statewide demonstrates that in 2023, while Johnson County is the fourth most populace county in the state, we have the second highest rate of chronic homelessness among those served. As a low-barrier and Housing First provider, Shelter House provides immediate relief to area first responders and our hospital emergency rooms, as people with complex health and behavioral health challenges are able to access shelter and permanent housing and are not living their lives on the streets, in encampments, and other places not meant for human habitation. Individuals served and supported through our work have previously been trapped in a cycle of crisis and housing instability (including homelessness and chronic homelessness) due to poverty, trauma, violence, mental illness, substance misuse, or other chronic health conditions. The traditional service and housing interventions have not worked for these individuals and are instead experienced as functional barriers to stability and care with the result being the most vulnerable people in our community habitually cycle in and out of high-cost crisis services. This comes at great cost to our communities, our state, and indeed results in the greatest cost of all: the loss of life. Through our commitment to a low-barrier and Housing First approach, Shelter House disrupts this cycle and instead offers support, guidance, resources, a path to improved health and stability and a way home. In 2023, Shelter House leadership pressed pause, acknowledging the critical need to assess and address the cumulative effects of managing and maintaining the agency’s growing resources— staff, programs, and facilities—not to mention the increasing complexity of the people we serve. In Q1 2024, Shelter House launched a new organizational structure intended to improve organizational performance, increase operational efficiency and effectiveness, maximize program efficacy, and improve the client/tenant, stakeholder, and employee experience. The changes have been made to address priority needs of 1) improving management and maintenance of our properties, 2) better ensuring well-managed, healthy work environments, 3) ensuring the health and safety needs of our staff, partners, clients, and tenants are better addressed, and 4) ensuring all staff feel prepared and supported in the critical services they provide. Changes made have been in response to feedback from Shelter House staff, community stakeholders, and individuals with lived experience. A correlate step was taken to bring wages up to a more competitive standard for similar work using Iowa Workforce Development Wage Reports for analysis and comparison to the regional labor market. Because of a one-time development fee from the 2022 new construction project, unexpected grant awards, and healthy fundraising returns in 2023, Shelter House had the immediate financial capacity to commit to Phase I of the necessary structure and compensation changes; however, these sources are not annually reoccurring. Shelter House will require new funding and increased investment from our stakeholders to maintain this commitment in 2025 and beyond. As Shelter House moved to a low-barrier and Housing First approach, our impact shifted from a charitable deed to a public service. We are an essential community service, intrinsic to our community’s crisis response system. Because of the growth in our work, the complex needs of the population we serve, and growing demand evidenced in our community, we had to address these issues of structure, compensation, and programming to maintain the work already underway and as an essential bedrock for consideration of future growth. If we are unsuccessful in financing this endeavor, we are concerned that Shelter House will need to seriously consider significantly reducing our capacity and scope of work.