Maine homeless shelters warn of financial crisis

Maine’s privately run homeless shelters are facing dire funding challenges and at least one is in danger of closing.

Mark Swann, the executive director of Preble Street Resource Center Andree Kehn/Sun Journal

“At a time when homelessness is exploding across Maine and when tragic encampments have popped up throughout the state, Maine’s critically important low-barrier shelters are in danger of closing due to lack of funds,” Mark Swann, executive director of the nonprofit Preble Street, said in testimony before the Legislature’s Joint Select Committee on Housing.

The committee heard from Swann and other operators of low-barrier shelters about their financial challenges during a meeting Tuesday. Low-barrier shelters such as those operated by Preble Street and other agencies do not require background checks, credit checks or income verification, previous program participation, sobriety or ID for access to services.

The shelter operators asked for state help to continue operating as the Legislature is about to consider bills to expand support and as communities around the state are grappling with record numbers of people who are homeless.

According to Preble Street, six shelters around the state together face a funding shortfall of about $4.1 million in the current year. The increase in homelessness, staffing challenges and inadequate revenue sources all have contributed to the problem, shelter operators say.

$4.1 MILLION BUDGET GAP

At least one shelter – the Hope House Emergency Shelter in Bangor – is in danger of closing.

Lori Dwyer, president and CEO of the Penobscot Community Health Center, which owns and operates Hope House, told the committee that the shelter has about an $800,000 budget gap and its board of directors has voted to close the shelter by October 2024 if it can’t find a partner organization to take it over.

The state has taken steps to help address the problem facing shelters, Dwyer said in written testimony, such as a recent one-time investment of $5 million and the creation of a statewide Housing First program. But more is needed, she said.

Her shelter’s funding currently comes from MaineHousing, the Maine Department of Health and Human Services, the United Way, General Assistance dollars from the city of Bangor and limited private fundraising.

“It’s just not sustainable,” Dwyer told the committee. “We can’t continue to do it. My hope is we can come up with a solution that includes perhaps increased funding at the state level.”

According to Preble Street, its two shelters, Elena’s Way and Florence House, Hope House and three other shelters around the state together face a $4.1 million net operating loss or budget gap. The other three are the Bangor Area Homeless Shelter, the Mid-Maine Homeless Shelter in Waterville and Milestone Recovery in Portland.

At Elena’s Way, which opened a little over a year ago and has 40 beds, Swann said Preble Street has “pursued countless funding streams.” They opened a licensed mental health program so Medicaid could be billed and federal funds used to help cover costs, but Swann said the effort has not brought in substantial money.

The shelter also raises private dollars and receives funding from MaineHousing’s Emergency Shelter Housing Assistance Program, General Assistance and United Way of Southern Maine.

Together, the shelters at Elena’s Way and Florence House have a shortfall of over $2 million, Swann said. “It will be devastating if Hope House is added to the list of closed shelters,” Swann said. “And, without long-term and sustainable support, Elena’s Way is not far behind.”

RESPONDING TO INCREASED NEEDS

The state’s low-barrier shelters serve Maine’s most vulnerable population of homeless people, many of whom have mental illness or substance use disorders. Because of that, they require intensive services and additional staffing, making the shelters expensive to operate.

The number of homeless people in Maine has more than tripled, jumping from 1,297 individuals in 2020 to 4,258 in January 2023, according to the state’s annual Point in Time Count, although the increase includes populations that weren’t previously counted.

Shelter operators said the problems that homeless people are dealing with have become more acute and more difficult for shelter staff to manage.

At Preble Street, Swann said shelter staff have administered Narcan 40 times so far this year to reverse opioid overdoses – about once every eight days and more than any year since they started counting in 2016.

And at Hope House, Dwyer said they have seen a rise in chronic homelessness, substance use and mental illness. “At the same time the population has become more complex, funding for shelters had remained relatively flat and any increases have not kept up with inflation,” she said in her testimony.

One shelter, the Mid-Maine Homeless Shelter in Waterville, saw a steep rise in increased costs when it moved two years ago from being a high-barrier shelter to a low-barrier shelter and stopped turning people away for drug use, criminal convictions, unsociable behavior and other reasons, the shelter’s chief executive officer, Katie Spencer White, said in written testimony.

“This transition was necessary and the right way forward for our organization and our community,” Spencer White said. “But it has had an enormous impact on our operations, which has resulted in a significant funding gap.”

The shelter took steps to improve harm reduction efforts, such as installing a $20,000 motion alert system to notify staff when the bathrooms are occupied but no one is moving. Just before Thanksgiving the system went off and allowed staff to intervene in an overdose, Spencer White said. Payroll costs also increased by over $1.2 million from 2018 to 2022 as the shelter increased staffing ratios in response to the needs.

Staffing costs also have factored into the financial challenges at other shelters, including Milestone in Portland, which is facing a $230,000 budget gap. “The losses are driven by increases in staffing costs that are being experienced by all organizations across our economy,” Thomas Doherty, Milestone’s executive director, wrote to the committee.

The city of Portland’s Homeless Services Center is also a low-barrier shelter – drugs and alcohol cannot be used on site but people are not checked for drug use upon arrival. City spokesperson Jessica Grondin said the city uses General Assistance, which the state helps pay for, to cover costs at the municipally run shelter, along with its general fund – a resource the private agencies don’t have.

“It’s not that we’re never in a tricky budget situation, too,” Grondin said. “We have our general fund, but that relies on taxpayers.”

LAWMAKERS LOOKING FOR SOLUTIONS

Rep. Traci Gere, D-Kennebunkport, co-chair of the housing committee, said Tuesday’s meeting was intended to be informational and help the committee understand the situation facing shelters as the weather gets colder and more people turn to them for help.

“It was very helpful today to hear from the shelter operators about the dire situation they’re in and the difficulties they face in building a full financing mechanism for their programs,” Gere said. “I think it’s something the committee is taking seriously and will be looking at going forward.”

Legislative leaders have approved a handful of new bills related to homelessness to be taken up in the new session that begins next month.

One bill from Rep. Anne-Marie Mastraccio, D-Sanford, would increase state funding for emergency shelters from $2.5 million to $12.5 million.

Another from Rep. Colleen Madigan, D-Waterville, would increase a nightly rate the state pays low-barrier shelters and direct the Department of Health and Human Services to pursue a waiver to access federal Medicaid funds to serve homeless people with substance use disorders, mental health disorders or who are disabled.

“Increasing support for our low-barrier shelters is crucial, especially during a time where many Mainers are unhoused and experiencing substance use disorder,” Madigan said in a statement Tuesday. “Increasing the nightly rate will allow these shelters to continue operating and providing an invaluable service to their communities.”