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February 19, 2016, Contact: Press Office (518) 474-4015

DiNapoli: Weak Monitoring of Financial Reporting by NYC Housing Provider Led to Overbilling of $1 Million

A non-profit provider of supportive housing for the City’s Dept. of Health and Mental Hygiene (DOHMH) overbilled the agency by $1 million according to an audit released today by New York State Comptroller Thomas P. DiNapoli.  DOHMH’s weak oversight of the Center for Urban and Community Services (CUCS) made the overpayments possible and raises concerns about potential overpayments to other vendors.

“Inadequate monitoring of financial reporting by contracted providers can result in waste of needed funds for supportive housing,” DiNapoli said. “It’s a concern that in just one year $1 million was overbilled on one contract alone. The agency needs to come up with a better system for monitoring and reimbursing expenses for these important services, particularly in light of recent plans to expand the availability of supportive housing.” 

CUCS is one of DOHMH’s largest providers of supportive housing and services, especially for people suffering from serious mental illnesses, HIV/AIDS, and other disabling conditions. In 2010, DOHMH signed a three-year, $27.7 million contract with CUCS for a variety of mental health services. The contract was increased to $28.7 million to include expanded services. The New York State Office of Mental Health (OMH) covers about 75 percent of this contract.

The bulk of the funds pay for Single Room Occupancy housing at the Prince George Hotel ($4.7 million), the Times Square Hotel ($5.7 million), Uptown SROs ($4.9 million) and 350 Lafayette TLC ($5.1 million), a transitional living community for mentally ill homeless women.

DOHMH’s payments to CUCS are based on the provider’s quarterly financial reports. A review of those reports determined that in the year ending June 30, 2013, CUCS overbilled DOHMH by $1.06 million. This overbilling occurred in large part due to DOHMH not requiring that amounts claimed on the quarterly financial reports be based on actual expenses incurred by CUCS in providing the contracted services.

DiNapoli’s audit found that much of the overbilling, $829,000, was the result of CUCS submitting claims for higher average salaries on their quarterly financial reports than the actual average salaries paid to staff. For example, eight Times Square Hotel social workers were listed in quarterly reports as having average annual salaries of $45,774, when their actual average annual salaries were $36,806. CUCS overbilled DOHMH $8,968 for each of the social workers.

CUCS also erroneously double-billed DOHMH for portions of employee salaries to the tune of $224,000. For example, CUCS charged DOHMH for the entire $203,000 annual salary paid to its Associate Executive Director under the category of Agency Administration. But $85,000 of his salary was billed again, as a direct care personal service cost.

DOHMH contracts with non-profit entities to provide supportive housing for individuals and families who were recently homeless, hospitalized or incarcerated. During a two year period, from July 1, 2013 to June 30, 2015, the agency had 164 contracts totaling $193 million with such providers.

DOHMH and CUCS disagreed with the audit findings regarding the overbilling and the agency’s lapses in oversight.


The full audit can be found at

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