Office of Mental Health

 

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NYS Comptroller

THOMAS P. DiNAPOLI

Taxpayers' Guide to State and Local Audits

Office of Mental Health
Administration of Contract C007373 With the Institute for Community Living


Issued: December 30, 2016
Link to full audit report 2015-S-39
Link to 90-day response

Purpose
To determine whether the Office of Mental Health (OMH) is effectively administering its contract with the Institute for Community Living (ICL) by ensuring that contracted services were actually provided, and that only appropriate and supported expenses were reimbursed. The audit covered ICL’s Consolidated Fiscal Report (CFR) for the contract year ended June 30, 2014. We also performed on-site observations of ICL staff, clients, facilities, and reviewed prior year endreconciliations through October 22, 2015.

Background
The mission of OMH is to promote the mental health and well-being of all New Yorkers. OMH operates psychiatric centers across the State and regulates, certifies, and oversees a variety of inpatient, outpatient, residential, and family care programs. One of OMH’s major programs is “supportive housing,” which combines affordable housing and varying levels of community-based support services, depending on the needs of the individuals served. OMH hires independent contractors to operate many of these programs.

ICL is one of the largest providers of supportive housing services in the State, providing both multiple and single-occupancy apartments in Brooklyn, the Bronx, Manhattan, and Queens. ICL is authorized to service a maximum of 1,420 clients. OMH makes four quarterly (advance) payments to ICL throughout the contract year. Service providers such as ICL must file an annual CFR, categorizing and summarizing all contract costs, which serves as a claiming document for program reimbursement. OMH is responsible for reviewing the reported CFR data for reasonableness and comparing the total advance payments to the contractor to the total costs claimed on the CFR. ICL claimed total program expenses of about $21.5 million for the fiscal year ended June 30, 2014.

Key Findings

We found that ICL provided the required contract services and charged its personal service costs to the contract in an appropriate manner. However, we also determined that:

  • ICL charged $138,132 in inappropriate and/or unsupported non-personal service (NPS) costs to the contract;
  • OMH staff did not perform required annual reviews and reconciliations of ICL’s CFRs in a timely manner. As a result, we identified $561,011 in unrecovered contract overpayments from the 2010-11 and 2011-12 fiscal years; and
  • Per OMH guidelines, providers should set aside about $500 per client for contingencies, primarily to ensure that clients retain their housing. Based on the number of clients it served, ICL should have established a contingency fund of about $281,000. However, there was no documentation that such a contingency fund was established.

Key Recommendations

  • Establish effective fiscal controls to ensure that providers’ use of program funds is appropriate, allowable, and documented.
  • Ensure ICL officials claim only program-appropriate and properly supported NPS expenses on its CFR.
  • Recover the $138,132 in inappropriate and unsupported NPS expenses reported by ICL on its CFR.
  • Initiate recovery procedures for the $561,011 overpaid to ICL for the 2010-11 and 2011-12 contract years, and perform all future reconciliations in a timely manner.
  • Work with ICL officials to establish a contingency fund, along with an appropriate recordkeeping system for such fund.
  • Ensure that all service providers superintend contingency funds properly, including but not limited to requiring separate tracking and reporting on spending and using such funds in compliance with program requirements.

Other Related Audits/Reports of Interest

NYC Dept. of Health and Mental Hygiene: Administration of the Contract With the Center for Urban Community Services (2014-N-5)
Office of Mental Health: Sky Light Center Inc. - Supported Housing Program (2012-S-37)


State Government Accountability Contact Information:
Audit Director: Frank Patone
Phone: (212) 417-5200; Email: StateGovernmentAccountability@osc.state.ny.us
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236