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Audit Faults Shelter Contracts

State Comptroller’s audit criticized the high costs of past homeless shelters leases; the agency responded that it is in the process of tightening its leasing procedures.

In October of 2017, the New York State Comptroller’s office released an audit regarding contracts signed over the past four years between the City and landlords providing homeless shelters. The audit found that the Department of Homeless Services does not have written policies and standard operating procedures for key aspects of shelter contract procurements and rate-setting processes and that such documentation is neither readily available nor maintained, as required the City.

As of 2016, there are about 750 homeless shelters within New York City costing roughly $1.1 billion annually to operate. The Comptroller looked at 40 shelter contracts and found that shelters named any price and received little if any push back from the DHS. The audit found that 23 of the 40 shelter contracts were missing any indication of budget negotiations. Even worse, on 17 of the contracts, the audit found that 24 percent of the budgets were approved for an amount higher than the provider initially proposed. Although some increases were a result of changes in rent, a term deemed non-negotiable, most lacked any justification in all. Further, among the 40 contracts the rates were inconsistent and varied as much as $250 a day. The Comptroller’s office recommended that DHS improve controls over the rate-setting process, collaborate with related City agencies to achieve highest efficiency, and maintain adequate documentation.

In its response to the audit, DHS requested that the Comptroller include knowledge of the context in which this audit took place. DHS was in the “midst of significant reorganization and had undertaken a significant examination and reform of many of the very policies and processes at issue in this audit.” As a part of Mayor Bill de Blasio’s reorganization, DHS along with the Department of Social Services have developed a “Shelter Budget Model Tool” to facilitate contract negotiations and rate setting, similar to the comptroller’s recommendations. DHS promised to document the model budget, the shelter’s initial proposed budget, all interim proposals, the recommended budget, and the final budget approved. Maria Ciniglio, the Deputy Commissioner of DHS, stated that the department was, “concerned that the audit recommendations were made on evolving processes and did not reflect the end result of their re-engineering efforts.” She later referred to it a “disservice to the public’s understanding of the audit,” that they would report on issues without reporting the reform and model budget processes that the agency was in the midst of implementing. At close, both the DHS and the audit have expressed their great interest and efforts to reform the issue of homelessness in New York City.

Oversight of Selected Fiscal Aspects of Homeless Shelter Services, 2016-N-1, Office of the State Comptroller, Thomas P. Napoli (Oct. 2017).

By: Danielle Hendler (Danielle is a student at New York Law School, Class of 2019.)