No charges after preliminary investigation into Philly’s Office of Homeless Services

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A review of Philadelphia’s Office of Homeless Services by the inspector general did not turn up any criminal activities, even though the review found OHS went over budget by millions of dollars.

Mayor Cherelle Parker said that while the investigation showed no criminal activities, it did show the budget had been disregarded and services given in one year were paid for in the next when budget money was available.

“There is no evidence of criminal wrongdoing or criminal misconduct by any city employee,” Parker said.

Philadelphia Inspector General Alex DeSantis explained to members of City Council and others at City Hall, “The evidence does not support a public discussion of corruption or fraud, and it’s time for us to begin discussing this matter in an honest way that frames the right issues squarely and clearly.”

He said going back to Fiscal Year 2020, funding for the office had been cut by several million dollars, but officials disregarded the decrease and kept spending at the previous year’s level in the interest of saving people who were living on the streets of the city.

As deficits built up, officials shifted the bills to subsequent years, delaying some payments until Fiscal Year 2022, when some funding was restored, although not to the previous amount.

Programs were not adjusted to deal with the decrease in funds because former OHS director Liz Hersh decided “the department’s emphasis was on saving lives above almost all other considerations during her tenure,” DeSantis said.

“We will be very specific and clear about the controls that were flaunted in the name of that mission and the negative consequences that resulted and the risks that the department now faces.”

DeSantis said the pandemic brought on more costs than what was budgeted to pay between 150 to 175 contracts, mostly with nonprofits.

He explained the extra pandemic extra costs included renting entire hotels to house people experiencing homelessness when the city was shut down. There were also supply chain issues. While grant money covered much of those costs, when those funds dried up, the department took on about $4 million in debt.

“The department did not adjust their spending practices in face of that cut,” said DeSantis. “They took no action to cut services. They took no action to adjust their programs.”

Instead, he explained, “They decided to push through because, as under the leadership of Liz Hersh, saving lives and their mission was too important, and they were not going to be faced with those difficult decisions.”

DeSantis said in some cases new contracts would be done to pay for previous years’ shortfalls in the next fiscal year. In each case, the department got authorization from the city’s finance department because the contracts were for legitimate services that were rendered to the unhoused community.

He did say the department “lost a bit of control” with contracts as the debt mounted and were only able to pay portions of agreements. “Records were highly inconsistent with respect to what contract was being paid and what year the services were rendered.”

Moving forward, a deeper forensic audit into the agency is planned to be sure of no wrongdoing, but for now, none has been discovered. Council Majority Chair Katherine Gilmore Richardson had started a process for a charter change to install an ombudsman to oversee the agency.  She declined any comment after hearing about the inspector general’s report.