Objective

To determine the extent to which the New York City Department of Homeless Services (DHS) implemented the recommendations in our initial audit report, Oversight of Selected Fiscal Aspects of Homeless Shelter Services (Report 2016-N-1).

About the Program

Governed by a “right to shelter” mandate, New York City provides temporary emergency shelter to every eligible person who requests services. DHS, an administrative unit of the New York City Department of Social Services, is responsible for providing transitional housing and services for eligible homeless families and individuals in New York City and for fiscal oversight of the homeless shelters. The majority of shelters are operated by private providers through contracts with DHS. As part of the procurement process, contract proposals go through a lengthy review and approval process to ensure they meet certain qualifications, including reasonableness of budget. Each contract proposal should include documentation of key elements of the review as well as the basis for the reasonableness of approved rates awarded by DHS. DHS has a number of tools to guide its rate setting, including a model budget tool used to negotiate the initial rates and renegotiate existing rates based on shelter occupancy and type (i.e., family or single adult) and internal documents such as Budget Construct, used to track approved amendments that contribute to contract rate adjustments. For City fiscal year 2016, DHS housed a daily average of 58,000 individuals at 748 shelter locations, with a budget of greater than $1.3 billion. As of March 2016, there were 126 providers with 351 registered contracts providing homeless shelters for single adults and families.

Our initial audit report, issued on October 10, 2017, found that DHS lacked internal controls over the shelter contract procurement and rate-setting process. There were no written standard operating procedures for key aspects of the procurement process, and we could not determine whether shelter rates were reasonable. The rates were inconsistent among similar shelters and often exceeded prescribed ranges. In addition, the various DHS data systems were not integrated, making data sharing and analysis difficult.

Key Finding

DHS officials have made progress in addressing the issues identified in our initial report. Of the report’s four recommendations, one was implemented and three were partially implemented.

Key Recommendation

Officials are given 30 days after the issuance of the follow-up review to provide information on any actions planned to address the unresolved issues discussed in this review.