Office of Mental Health


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NYS Comptroller


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Office of Mental Health
Oversight of the Supported Housing Program: Rehabilitation Support Services, Inc.

Issued: May 4, 2017
Link to full audit report 2016-S-5
Link to 90-day response

To determine whether the Office of Mental Health (OMH) is ensuring that Rehabilitation Support Services, Inc. (RSS) expended funds appropriately and provided the required services under its Supported Housing Program contracts. The audit covered the period from January 1, 2014 to August 31, 2016.

OMH provides services to New York State residents with mental illness both directly (through State-operated facilities) and indirectly (through service providers). OMH offers, among other programs, the Supported Housing Program (Program), which is an initiative to provide stable housing to individuals who have a serious mental illness, but are able to live independently rather than in a facility. Eligible individuals include those discharged from State psychiatric centers and public and private hospitals, as well as other individuals currently in the community who need housing. Clients in the Program receive support services and a subsidy toward their monthly rent to ensure they are able to live independently. The Program provides assistance in locating and securing housing, resolving landlord or roommate disputes, and choosing and purchasing apartment furnishings. Clients who need additional services, such as mental health services, receive them through other programs.

RSS is a Program service provider in upstate New York, serving eight different counties. For calendar year 2014, RSS claimed nearly $7.8 million in expenses to provide 708 beds for Program clients.

Key Findings

  • OMH has not provided sufficient fiscal oversight or programmatic guidance to Program service providers to ensure that expenses are appropriate and that Program goals are met. Further, OMH has not established meaningful performance measures and has not set targets for the performance measures it has established.
  • RSS claimed expenses on its Consolidated Fiscal Report (CFR) that either are not allowable or require additional review by OMH to determine whether they are reasonable and necessary for the Program, in accordance with the CFR Manual and with Program guidance issued by OMH. In total, we identified $32,271 in unallowable expenses and $489,616 in questionable costs claimed by RSS. Of these amounts, $6,282 in unallowable expenses and $137,836 in questionable costs were charged to the Program; the remainder was charged to other OMHfunded programs operated by RSS.
  • RSS is generally providing appropriate Program services to clients, though it does not always ensure that clients are in affordable housing. We identified two clients who were paying more than the fair market value for their housing and another two clients who were paying more than 30 percent of their income for rent, which is the threshold set by OMH.

Key Recommendations

  • Establish controls to ensure that service providers are claiming only reasonable and allowable expenses on the CFRs for the Supported Housing Program.
  • Establish specific quantitative and qualitative goals or targets for all Program performance measures.
  • Recover the $32,271 in expenses ($6,282 charged to the Program and $25,989 charged to other OMH-funded programs) we identified as not reasonable, necessary, or allowable for the Program.
  • Review the $489,616 in questionable expenses ($137,836 charged to the Program and $351,780 charged to other OMH-funded programs) we identified to determine whether they are reasonable and necessary, and recover any amounts determined to be not allowable.

Agency Response

In response to our draft report, OMH officials disagreed with our recommendations or asserted that they were unnecessary. Moreover, officials appeared to sidestep the central issue of this audit: the lack of adequate guidance, oversight, and monitoring which allowed RSS to bill for ineligible costs and could have compromised the provision of Program services. RSS is the sixth supported housing service provider that OSC has audited in the past two and a half years, consistently finding that OMH did not provide sufficient fiscal oversight or Program guidance to ensure that claimed costs were appropriate and goals were achieved. Collectively, these audits identified about $3.2 million in ineligible, unsupported, and/or questionable costs claimed for State reimbursement.

Given the extent of our cumulative audit work, including the consistent and significant nature of the resulting findings, we are disappointed that OMH officials have taken a dismissive and defensive posture toward this important matter. Officials’ apparent inability to recognize the clear need for substantive corrective actions could be indicative of a negative “tone at the top” of the agency. It also reflects a control environment wherein OMH officials have placed excessive trust in certain service providers to properly handle State taxpayer dollars. Our recommendations are intended to enhance internal controls to ensure that limited public funding is used economically and efficiently to provide stable housing to a vulnerable population. These controls include mechanisms to ensure that Program costs are reasonable and necessary. 

Other Related Audits/Reports of Interest

Office of Mental Health: Sky Light Center Inc. - Supported Housing Program (2012-S-37)
Office of Mental Health: Assertive Community Treatment Program (2014-S-25)

State Government Accountability Contact Information:
Audit Director: John Buyce
Phone: (518) 474-3271; Email:
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236