By Hank Russell
Joined by Suffolk County Executive Ed Romaine and members of the Legislature, County Comptroller John Kennedy held a press conference at the H. Lee Dennison Building in Hauppauge on February 20 to announce that his office discovered contractors with the county’s Department of Social Services’ (DSS) emergency housing services program were overpaid by a total of $6,845,791 between 2016 and 2018.
“That’s not just chump change …. This money could have been spent on what it was intended to do,” Romaine said. “We have to make clear [to the contractors] of what our rules and regulations are.”
According to the audit, the overpayment was made up of surplus county funding, underreported program revenues, and salaries paid to employees that were more than what the DSS approved, totaling $1,738,667. Some of those who were paid were not properly screened by DSS, in violation of Chapter 438 of the Suffolk County Code.
Other overpayments came from “excessive related party expenses and non-reimbursable and insufficiently documented expenses,” according to the audit.
Among some of the findings in the audit:
- The contractors in question underreported Suffolk County per diem funding by $2,055,709 and client fee revenues by $127,464 on the HSPFS.
- One contractor failed to report $20,000 of contribution income pertaining to the County Program on the HSPFS.
- $143,127 in salaries and wages were “inappropriately reported” by five of the contractors. The salaries were paid to employees who were not screened by the DSS.
- Contractors claimed $530,668 in “unallowable expenses” and $371,528 in ineligible fringe benefits.
“The findings are more than troubling,” Kennedy said. “They are absolutely outright, totally unacceptable. [It’s] unacceptable because we have had operators who, in the guise of providing service, acted in an unprofessional and unacceptable manner.”
DSS Commissioner John Imhof called the audit “a very serious and responsible overview of shelter operations. … It’s a great lesson of what needs to be done and what should never be done again.”
Kennedy accused the “bad actors” of taking advantage of those who are “most in need and most at risk and women and children who are trying to find a place on a day like today … and not freeze.”
Legislator Nick Caracappa (C-Centereach) recalled trying to get a homeless woman who was living on the Nicolls Road underpass into a shelter, but couldn’t because she said she had a negative experience there. He also pointed out how these operators resorted to unscrupulous tactics.
“This is a problem on both sides — the amount of homeless we have and, secondly, the ones who are running these shelters under the past administration,” Caracappa said. “Their business model [was] let in as many people as they can, collect as much money as they can and provide as little service as they can. That translates into a bad business model and a bad experience for those who stayed at those shelters.”
Kennedy also said many of the disallowances from these contractors ran up “to the millions of dollars.” The honest contractors will admit that an error has been made, Kennedy said, then the county will work out a payment plan “so they can remain solvent and operational.” However, the larger operators who acknowledge they have surplus funds “refuse to pay.” In the event that happens, the county withholds their monthly payments.
“One way or another, the money they took, that they are not entitled to, they will pay back,” Kennedy said.
Imhof announced that, going forward, the shelters will be run by the DSS, not the shelter operators. “We will have rules, regulations and contractual requirements and every obligation that [the shelter operators] will have to follow.”
He also pointed out that the audit showed that operators let the shelters run around the clock and, as such, they did not know if a resident left, thereby leaving the bed empty and having the county pay for it. Because of that, the county lost “millions of dollars” over empty beds and had to resort to housing homeless people in motels because of long waiting lists.
“Well, that’s over,” Imhof said. “That’s not going to happen anymore.”
Kennedy also called for the Request for Proposal (RFP) process to be “strengthened.” Citing the contract violations by these operators, “it undermines the process and it makes the RFP process look like a sham. … I’m optimistic that, working with the county executive, county attorney and county legislature, the process will be tighter and more adherence.” In addition, he called for prospective shelter employees to be screened and fingerprinted.
He also emphasized that his office will conduct annual audits as opposed to once every three years. That, he said, will mean more oversight and fewer egregious misplacement of funds.
“Anyone can make a mistake when it comes to math,” Kennedy said. “That’s why God put erasers on pencils. However, there’s a difference between an innocent mistake and an active attempt to conceal and go ahead to misappropriate. More often than not, that’s what we found.”