Objective

To determine if the Office of Temporary and Disability Assistance (Office) adequately monitors and properly approves reimbursement of claims by homeless shelter providers, such as Westhab Inc.’s Coachman Family Center. The audit covered the period January 1, 2019 through December 31, 2019 and select expenses from 2020.

About the Program

Homeless shelters across the State provide an array of services to families and adults, including assessment and case management, access to health care and child care services, and assistance with finding permanent housing. Local departments of social services (Local Districts) either operate shelters directly or contract with providers to operate them. As of October 2021, the Office oversees 627 shelters and 195 shelter providers. According to the U.S Department of Housing and Urban Development’s point-in-time count for New York State, there were 92,091 homeless individuals in January 2019 and 91,271 homeless individuals in January 2020.

The Office’s funding of shelter services is administered through the Local Districts, comprising the New York City Department of Homeless Services and 57 county offices throughout the rest of the State. As reported in our prior audits of the Office’s homeless shelter program (2015-S-23 and 2018-S-52), the Office’s annual reimbursements to Local Districts for homeless housing total in the billions of dollars, generally increasing each year. Local Districts submitted $1.6 billion in gross claims for calendar year (CY) 2017, $2 billion for CY 2018, $1.9 billion for CY 2019, and $2.1 billion for CY 2020.

Since 1996, the Westchester County Department of Social Services (WCDSS) has contracted with Westhab Inc. (Westhab) to operate Coachman Family Center (Coachman) as a certified shelter for families with children. Westhab is the single largest provider of these services in Westchester County and receives substantially all its funding for Coachman through its annual contracts with WCDSS, which the Office approves. The 5-year contract term to operate Coachman, which began January 1, 2015, totaled $20,120,166. Specifically, for CY 2019, the contract’s approved budget for operating Coachman was $4,180,802, with actual expenditures of $3,784,968.

To guide its oversight of contracts and services, and ensure that expenses are allowable and supported, the Office follows its own Fiscal Reference Manual (Fiscal Manual), the federal Office of Management and Budget’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), as well as the contract, which provide guidance on the eligibility of reimbursable costs, the documentation necessary to support these costs, and cost allocation requirements for expenses related to multiple contracts. The contract requires providers, such as Westhab, to submit to the Local District monthly invoices of actual expenses as well as supporting documentation, such as receipts, invoices, proof of payment, and allocation methodologies. Expense documentation must comply with the requirements of the Fiscal Manual, Uniform Guidance, and contract.

Key Findings

• The Office is not adequately monitoring and properly approving reimbursements for Westhab’s homeless shelter program. For CY 2019, we identified $1,304,695 in reported costs for Coachman that did not comply with cost requirements.
• The Office has not established an effective budget review process for shelter budgets. The shelter budget is the basis of the per diem that is paid to the shelter. The Office’s budget review and approval process compares the current year’s budget to the prior year’s estimated budget and does not consider prior year actual costs. In essence, the current year’s budget is the basis for the following years’ budgets. For Coachman specifically, the unused budget for 2019 of $395,834 was not considered by the Office when reviewing and approving future years’ budgets. Additionally, Coachman’s CY 2019 budget was not approved by the Office until almost the end of September 2019, well into the budget year. This can result in costs exceeding approved levels or in the allocation of money year after year that historically has not been expended and that could be used elsewhere.

Key Recommendations

• Review and recover, as appropriate, the identified overpayments totaling $1,304,695, including: $751,273 in personal service costs, $509,920 in overstated depreciation from WCDSS, $40,162 in indirect costs, and $3,340 in other than personal service costs from Westhab.
• Establish additional monitoring controls and improve oversight to ensure that providers claim only actual expenses and that those expenses are allowable, allocable, reasonable, supported, and consistent with the Uniform Guidance, Fiscal Manual, and contract.
• Implement measures for cost savings such as monitoring and capturing actual costs reimbursed to shelter providers to be used in the budget approval process to ensure appropriate reimbursement of the program and future funding.
• Implement a budget process that is timely so that intended spending controls are meaningful and effective.