Objective

To determine whether the New York City Department of Homeless Services (DHS) is effectively monitoring its contract with Samaritan Daytop Village, Inc. (Samaritan) to ensure reported costs are allowable, supported, and program related. The audit covered expenses claimed by Samaritan for the fiscal years ended June 30, 2020 and June 30, 2021. In addition, we reviewed limited aspects of DHS’ claim expense monitoring for the three fiscal years ended June 30, 2022.

About the Program

DHS, an administrative unit of the New York City Department of Social Services (DSS), is the agency responsible for providing transitional housing and services for eligible homeless families and individuals in New York City (City) and for providing fiscal oversight of the homeless shelters. In July 2013, DHS contracted with Samaritan, a City-based not-for-profit organization, to provide temporary housing, case management, housing referrals, placement services, and on-site medical and mental health services for men with mental illness at their 160-bed Myrtle Avenue Men’s Shelter (Myrtle) for the period from August 2013 to June 2018. The original contract for $30.1 million was renewed and increased during the period July 1, 2018 through June 30, 2022, to an aggregate cost of approximately $44 million. During the COVID-19 pandemic, per DHS directives, Myrtle operations were moved to an alternative site (in Long Island City) from mid-May 2020 to early July 2021. During the two fiscal years ended June 30, 2021, Samaritan claimed $15.1 million in reimbursable expenses for the contract.

DHS is responsible for monitoring its contract with Samaritan to ensure reported costs are allowable, supported, and program related. To qualify for reimbursement, Samaritan’s invoices/expenses must comply with the DHS’ Human Service Providers Fiscal Manual (Fiscal Manual), the New York City Health and Human Services Cost Policies and Procedures Manual (Cost Manual), and the Myrtle contract.

Key Findings

DHS is not effectively monitoring its contract with Samaritan to ensure reported costs are allowable, supported, and program related. It is unclear whether DHS completed expenditure reviews. In addition, DHS did not ensure that year-end close-outs were completed in a timely manner. Consequently, for the two fiscal years ended June 30, 2021, we identified $566,556 that did not comply with the requirements in the Fiscal Manual, Cost Manual, and contract, including: $235,993 in personal service costs, $277,662 in other than personal service costs, and $52,901 in indirect costs.

Key Recommendations

• Review and recover, as appropriate, $566,556 in reported expenses that were not in compliance with the Fiscal Manual, Cost Manual, and Myrtle contract.
• Ensure that providers comply with the DHS and contractual requirements to retain sufficient documentation to support claimed expenditures.
• Provide training to providers and DHS staff members to ensure that they are aware of the reimbursement requirements.