Purpose

To determine whether the Office of Mental Health (OMH) is ensuring that DePaul Group, Inc. and its affiliates, DePaul Community Services, Inc. (DCS) and Living Opportunities of DePaul, Inc. (LOD), expended funds appropriately and provided the required services under their Supported Housing Program contracts. The audit covered the 34‑month period from January 1, 2013 to October 31, 2015.

Background

OMH provides services to New York State residents with mental illness both directly (through State-operated facilities) and indirectly (through service providers). OMH offers, among other programs, the Supported Housing Program (Program), which is an initiative to provide stable housing to individuals who have a serious mental illness, but are able to live independently rather than in a facility. Eligible individuals include those discharged from State psychiatric centers and public and private hospitals, as well as other individuals currently in the community who need housing. Clients in the Program receive support services and a subsidy toward their monthly rent to ensure they are able to live independently. The Program provides assistance in locating and securing housing, resolving landlord or roommate disputes, and choosing and purchasing apartment furnishings. Clients who need additional services, such as mental health services, receive them through other programs. For 2013 and 2014, DCS claimed about $2.9 million in expenses to provide an average of 192 beds and LOD claimed nearly $3.4 million in expenses to provide an average of 241 beds, for a total of $6.3 million in Program expenses claimed by the DePaul Group for both direct Program services and indirect administration costs.

Key Findings

• The ultimate goal of the Program is to ensure that clients obtain permanent housing. To that end, we found DePaul Group clients are receiving appropriate housing services and that all but one of 14 clients we visited had adequate housing. For the one client we identified who had been living in an unsafe apartment for several months, the DePaul Group has worked with the landlord to make needed repairs.
• Both DCS and LOD claimed expenses on their Consolidated Fiscal Reports (CFRs) that are either not allowable or not documented or, at a minimum, require additional review by OMH to determine whether they are reasonable and necessary for the Program, in accordance with the CFR Manual and with Program guidance issued by OMH. These claims total $41,743 in nonallowed expenses, including both personal and excessive expenses associated with attendance at a professional conference. The questionable costs we identified total $109,987 and include expenses related to vehicle and pension costs. In addition, we also identified $216,262 in administrative expenses allocated from the parent entity, the DePaul Group, to DCS and LOD that were not correctly reported or adequately supported.
• OMH has not provided sufficient fiscal oversight and programmatic guidance to ensure that claimed expenses are Program appropriate or that certain Program goals are achieved. For example, we found several clients were paying more than 30 percent of their income on housing, which is the upper limit generally established by OMH for Program participants.

Key Recommendations

• Ensure service providers visit each client in their home at least once every three months, as required by the Program guidelines.
• Recover the $41,743 in expenses we identified as not reasonable, necessary, or allowable for the Program, including $27,020 in expenses that were not sufficiently documented.
• Recover the additional $9,707 related to the November 2014 Association for Community Living Conference charged to other OMH-funded programs which we identified as not allowable.
• Review the $109,987 in questionable expenses we identified, determine whether they are reasonable and necessary for the Program, and recover any amounts determined to be not allowable.
• Review the supporting documentation for the $216,262 that the DePaul Group charged to DCS and LOD for administrative expenses. Determine whether and to what extent these parent agency administrative expenses are allowable.
• Ensure service providers handle contingency funds properly.
• Establish effective fiscal and programmatic controls to ensure that: providers’ use of Program funds are appropriate, allowable, and documented; Program requirements are followed; and Program goals are achieved.
• Before approving any housing requests, assess each client’s ability to afford permanent housing if the rent will exceed 30 percent of income.

Agency Response

In responding to our draft report, OMH officials disagreed with our conclusion that its fiscal oversight of the Program was deficient. Further, officials described oversight efforts by regional field offices as “rigorous.” However, none of those efforts focused sufficiently on the fiscal aspects of OMH’s oversight responsibilities, nor did they include reviews of supporting source documentation or other assessments to ensure providers used Program funds for allowable, reasonable, and Program‑appropriate expenses. Further, our audit found that purported controls and procedures were not always put into practice. In fact, staff from OMH’s western New York
regional field office never visited one of the DePaul affiliates at all during the 34-month audit period and only visited the other affiliate once (in 2015).

Other Related Audits/Reports of Interest

Office of Mental Health: Sky Light Center Inc. - Supported Housing Program (2012-S-37)
Office of Mental Health: Assertive Community Treatment Program (2014-S-25)