NYC shelter operators pocket massive taxpayer-funded salaries while others hide pay: Report

During a Tuesday New York City Council meeting, members discussed an October report that discovered rampant mismanagement within the city's taxpayer-funded shelter system, including conflicts of interest and nepotism.

The report resulted from a year-long investigation by New York City's Department of Investigation into the city's $4 billion homeless shelter system.

'We are paying an indirect cost rate.'

The investigation uncovered instances where shelter providers had personal business interests that enabled them to receive additional payments, including situations where executives were employed by a private company that the shelter contracted using public funds.

The DOI also discovered that some shelter providers had employed family members of executives and board members in violation of their contracts.

The report highlighted "numerous cases" involving shelter providers' noncompliance with competitive bid requirements.

"For example, the review identified multiple instances where shelter providers awarded multimillion-dollar building maintenance service contracts to companies affiliated with the buildings' landlords," it read.

Additionally, the DOI revealed that multiple shelter executives received generous taxpayer-funded salaries totaling more than $500,000 annually, noting "in some cases, more than $700,000 per year, from providers and related organizations."

Of the city's 87 contracted shelter providers, 13 have still not disclosed their executive compensation levels, violating their agreements with the Department of Homeless Services.

During Tuesday's oversight meeting, City Council Finance Chair Justin Brannan (D) stated that "blank checks to outside vendors and no-bid emergency contracts seem to flow like a never-ending freshwater stream through city hall."

Council member Julie Won (D) said, "When providers can submit and receive approval for invoices with over $117,000,000 in unspecified vendors, it suggests a fundamental weakness in the city's contract management systems."

Department of Social Services Commissioner Molly Wasow Park faced questions regarding the report's findings, including an instance where a shelter provider's chief executive paid himself over $1 million in a year.

Wasow Park stated that the DHS no longer partners with that provider.

"Executive compensation is not paid directly through our contracts," Wasow Park explained. "We are paying an indirect cost rate that not-for-profits then use to pay for a variety of overhead costs, including executive compensation."

She also noted that the city has "absolutely strengthened our disclosures across the board, executive compensation or otherwise."

Following the release of the report, a spokesperson with the DSS told the Associated Press that "every instance of non-compliance very seriously, which is why DSS has completely stopped doing business with a number of providers highlighted in the report, enhanced invoice review policies and practices, and reinforced our robust audit and accountability mechanisms."

The spokesperson noted that the report "does not reflect our current contracting and oversight processes."

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