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NEWS from the Office of the New York State Comptroller
Contact: Press Office 518-474-4015

DiNapoli: Audit Questions Payments Made to Supportive Housing Provider

May 4, 2017

An audit issued today by New York State Comptroller Thomas P. DiNapoli has identified $32,271 in unallowable expenses and $489,616 in questionable costs that were paid by the state Office of Mental Health (OMH) to an Altamont, N.Y. company that serves as a supportive housing provider for New Yorkers with mental illness.

The audit released today examined Rehabilitation Support Services Inc. (RSS) which, in 2014, claimed nearly $7.8 million in expenses to provide 708 beds for program clients in Albany, Dutchess, Orange, Otsego, Schenectady, Schoharie, Sullivan and Tioga counties.

This is the sixth audit since 2014 that examined companies providing supportive housing services through OMH and the New York City Department of Health and Mental Hygiene (DOHMH) to individuals who have a serious mental illness, but are able to live independently. Cumulatively, these six audits have identified about $2.4 million in recommended disallowances and questioned additional claimed costs totaling over $848,000.

"The Office of Mental Health is not fulfilling its responsibility to taxpayers," said DiNapoli. "Without adequate oversight of these programs, the office has no way to ensure service providers are only receiving payment for appropriate expenses or if program goals are being met. Moving forward, as the state continues to invest in supportive housing programs to help other vulnerable populations, steps must be taken to protect public funds that support important services for those in need."

DiNapoli's audits identified weaknesses stemming from a lack of close monitoring and supervision by OMH and DOHMH. The audits have also identified times when providers did not meet requirements intended to safeguard the health and safety of the clients they serve. During site visits, auditors discovered apartments with bedbug infestations, heavily damaged ceilings and walls, water leaks, and missing smoke and carbon monoxide detectors.

Auditors identified over $32,000 in unallowable expenses paid to RSS in 2014, including nearly $17,000 for a company board retreat held in Lake Placid that included a lunch, cocktail hour, dinner and multiple nights of lodging. The company also spent $14,000 on a holiday party, coffee and food unrelated to providing client services, and flowers for staff.

Of the $489,616 in questionable expenses claimed by RSS in 2014, auditors said they could be reasonable and necessary for the program, but require additional review by OMH to make a final determination, including the correct amount that should be claimed. These questionable expenses include: contracts that were not competitively bid; food for clients and staff; unnecessary storage units; and gift cards.

Auditors found that RSS is generally providing appropriate program services to clients, though it does not always ensure that clients are in affordable housing. For example, two clients were paying more than the fair market value for their housing, and another two clients were paying more than 30 percent of their income for rent, which is the threshold set by OMH.

As part of the audit, DiNapoli made a series of recommendations to OMH. They include:

  • Recover the $32,271 in expenses identified as not reasonable, necessary or allowable;
  • Review the $489,616 in questionable expenses identified to determine whether they are reasonable and necessary, and recover any amounts determined to be not allowable;
  • Evaluate the performance of program service providers and take appropriate action when a program service provider is not meeting program goals;
  • Require service providers to rebid competitively bid contracts periodically or demonstrate that the contract remains competitively priced; and
  • Ensure that service providers obtain the required pre-approvals for clients to pay more than fair market value and/or more than 30 percent of their income for rent.

OMH officials disputed many of the audit's findings and recommendations. Their full response is included in the final report, which can be found at:

To read a report detailing DiNapoli's previous audits of the supportive housing program, visit:

For access to state and local government spending, public authority financial data and information on 130,000 state contracts, visit Open Book New York. The easy-to-use website was created to promote transparency in government and provide taxpayers with better access to financial data.