When homeless residents request housing assistance from Keene, the city must help, even when shelters are full. As the number of New Hampshire’s homeless has grown, that has become increasingly expensive.

During the fiscal year that ended in June 2023, Keene spent $568,000 to provide housing to people who could not get a shelter bed, most often by providing vouchers for hotel stays, Mayor Jay Kahn said in an interview Monday. Come June, when the current fiscal year ends, the city will have spent more than twice as much, $1.2 million. It is tapping into its reserve funds to do so.

And the city’s shelter, Hundred Nights, has its own financial constraints. The state pays about $20 per day for each person given a bed, says Executive Director Mindy Cambiar. But the actual cost to provide that bed is around $58, Cambiar said.

“(We get) less than half of what we spend per night per person for all the services that are provided,” she said.

It’s a widespread problem. Since the COVID-19 pandemic, cities and towns are increasingly struggling with their statutory responsibility to provide housing to those who need it, especially as federal rental aid programs have ended. Some say the state should do more to pitch in.

“This is exceeding the expectations of any city in the state,” said Kahn.

This year, Senate lawmakers are moving ahead with legislation to boost funding to homeless shelters in the state. But experts and housing advocates say more funding and effort is needed to help reduce the number of people who might need them in the first place.

“We’re creating these shelters, but we’re not creating any more beds,” said Sen. Donovan Fenton, D-Keene.

Senate Bill 406, as originally introduced, was intended to be a comprehensive bill to help cities reduce homelessness. Sponsored by Fenton, the bill would have required that the Department of Health and Human Services (DHHS) create a pilot program to help create individualized service plans for families who are homeless. And the legislation would have devoted $5 million to the department to distribute to cities and towns for “eviction prevention, rehousing or shelter accommodation.”

After amendments by the Senate’s Health and Human Services Committee, the bill has since been changed to send $2.5 million to DHHS to raise the daily rate it pays to existing shelters in the state.

Shelter directors like Cambiar say they would appreciate the additional state funding. But Fenton and others say increasing funding to the shelters alone will not fix the root causes of homelessness, and will not add enough capacity to solve the crises. And they say cities will still be paying the cost for those who can’t get into the shelters.

The end of the emergency rental assistance program in early 2023, coupled with a persistently low vacancy rate and high prices for rental units, has pushed many to the brink of homelessness all at once, city officials say.

“We are meeting our statutory responsibilities at an unsustainably high cost to property taxpayers,” wrote Manchester Mayor Jay Ruais in a March letter to senators co-signed by nine other mayors, including Kahn, urging passage of the original SB 406. “We seek your support to lessening this cost and to finding equitable solutions that assist cities.”

The $2.5 million in the current iteration of the bill would allow the state to raise the per-day rate it pays shelters for each bed from the current $20 to $27. To Cambiar, the increase would help; the 48-bed shelter has been full almost every day since it opened in its new location last August. But it would not close the gap between what the state provides and what her shelter needs.

The shelter fills that gap through a mix of city funding, grant funding and private philanthropy. And Cambiar and her staff work hard to secure enough funding to create multiple months of reserves.

Lawmakers have helped. Years ago, the state paid only $8 per day, per bed. The current $20 per day came as part of a boost in funding for homeless shelters in the two-year budget passed in 2023. But Hundred Nights is facing a budget shortfall even with the increase.

“Right now, everybody — the board of directors and myself — we’ve been working overtime trying to figure out how we’re going to make up what is predicted to be the loss,” she said. “So I think that any additional funding would certainly be very helpful.”

To Kahn, a former Democratic state senator, the state should be spending more for shelter beds. But he said it should also be finding ways to alleviate the cost for cities, too. While Hundred Nights can use philanthropy and other sources to fill the gap, Keene City Hall has only its budget to provide its services.

“When the shelters are full, and there’s no option but to try to house the family in a hotel or some type of temporary condition, that burden shouldn’t fall exclusively to the municipalities,” he said.

Even those who want more state support for services to prevent homelessness admit that finding the right path forward is difficult.

As originally introduced, Fenton’s legislation gave broad latitude to the state on how best to spend the money to reduce homelessness. But early on, the Department of Health and Human Services had raised concerns about the distribution of money under the original bill. If the money were spread around to all cities and towns evenly, no one municipality would meaningfully benefit, Jenny O’Higgins, senior policy analyst for the department, said in an interview.

In order to better target the funds, DHHS and Fenton had considered instead using the “point-in-time count,” the annual night in January when DHHS oversees an attempt to calculate how many people are homeless that evening, and use it to spread the aid based on need.

Those discussions gave way to the Senate’s simpler approach: Direct all the money into the shelters. O’Higgins said that would help the shelters, even if the bill no longer includes funding for “upstream” services to reduce shelter use.

“As far as the department is concerned, an investment in homelessness services is good … regardless of where exactly along that continuum of care is invested,” O’Higgins said.

But she added that the state still needs a “multipronged approach” to address people in acute crisis.

“We need to serve people experiencing homelessness,” she said. “And at the same time, we need to be adequately looking at funding and having robust services for people who are at risk of homelessness.”

Not doing so, O’Higgins and others say, would simply cause the shelters to continue to overflow, no matter how much they grow.

“A shelter is not a long-term solution,” she said.

This story was originally produced by the New Hampshire Bulletin, an independent local newsroom that allows NH Business Review and other outlets to republish its reporting.