Office of Mental Health


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NYS Comptroller


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Office of Mental Health
Administration of the Contract With the Postgraduate Center for Mental Health

Issued: December 30, 2016
Link to full audit report 2015-S-88
Link to 90-day response

To determine whether the Office of Mental Health (OMH) is effectively administering its Supportive Housing Contract C007374 with the Postgraduate Center for Mental Health (PCMH) by ensuring that contracted services were provided and that only appropriate and supported expenses were reimbursed. The audit focused primarily on the contract year ended June 30, 2014. We also reviewed certain transactions incurred during the prior fiscal year (ended June 30, 2013), and performed certain observations of PCMH staff and facilities through the end of our fieldwork.

OMH’s mission is to promote the mental health and well-being of all New Yorkers. One of OMH’s major programs is known as “supportive housing,” which combines affordable housing and varying levels of community-based support services. OMH hires independent contractors to operate many of these programs. PCMH, a not-for-profit entity, is one of New York’s largest providers of supportive housing services. PCMH is authorized to serve a maximum of 725 clients. Through the supportive housing program, PCMH assigns clients to private apartments scattered throughout the local communities as well as in multiple dwelling units.

PCMH must file an annual Consolidated Fiscal Report (CFR) with OMH. The CFR categorizes and summarizes all contract costs and serves as a cost claiming document for program reimbursement. At the end of each contract year, OMH reviews the reported data on the CFR for reasonableness, and reconciles the total advance payments to the contract budget and total approved costs claimed on the CFR. PCMH was paid $9.67 million for its supportive housing program during the 2013-14 contract year.

Key Findings

We found that the sampled clients were program-eligible and were referred to the program via the proper authorities. We also found that the sampled client case files contained documentation of the client’s required Service Plan and subsequent monthly case manager contacts. However, our visits to certain client apartments identified what appeared to be ongoing conditions that could negatively affect the health and/or safety of clients. Also, we identified:

  • $697,938 in unsupported and/or inappropriate expenses charged to the audited contract and other related OMH contracts. These expenses include charges for a profit-sharing account that primarily benefited three PCMH executives; a deferred compensation plan reserved solely for PCMH’s Chief Executive Officer; parties and alcoholic beverages for staff; and unsupported professional fees and staff travel.
  • Deficiencies in efforts by OMH program staff to follow up on recommendations to PCMH resulting from field visits.
  • Excessive delay in actions by OMH fiscal staff to recover apparent overpayments to PCMH. During the course of our audit fieldwork, we determined that OMH had not taken actions to recover $1.4 million in surplus advances from the 2011-12 through 2013-14 fiscal years.

Key Recommendations

  • Require PCMH case managers to take prompt action where apartment conditions pose potential health and/or safety hazards to clients.
  • Ensure that only program-eligible and properly supported expenses are reimbursed to PCMH.
  • Recover the $697,938 in inappropriate and unsupported expenses charged to the audited contract and other OMH contracts cited in our report.
  • Follow up on OMH program staff requests for corrective action plans from providers, and determine whether corrective actions were actually taken.
  • Expand desk reviews of provider CFRs to include reviews, on a sample basis, of supporting documentation to ensure that claimed program expenses are reasonable, necessary, and appropriate.
  • Develop formal time frames for CFR close-outs and recoupments to help ensure that surplus advances are accounted for and recovered in a timely manner.

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:
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236