QUESTION
How are shelter provider contract rate changes and savings affecting service providers?
1:30:07
·
3 min
The NYC Mayor's Office of Management and Budget (OMB) explains the restructuring of shelter provider contract rates, emphasizing it is not a cut but a redistribution of savings.
- OMB's approach involves a pre-emptive 2.5% net reduction to shelter provider contract rates, expecting providers to identify 5% savings on their contracts.
- Half of the identified savings can be reinvested towards staff retention, aiming to mitigate impact on providers.
- OMB claims many providers historically do not expend all allocated funds, hence the restructuring should not worsen their financial standing.
- Council Member Diana Ayala and other speakers raise concerns about the practical impacts of these adjustments on providers, including payment delays and insufficient net income to sustain services without additional capital investment.
Diana Ayala
1:30:07
And the adopted fiscal year 24 budget included baseline reduction of 36 $200,000 for DHL shelter service providers.
1:30:16
Savings were generated from 2.5% net reduction to shelter provider contract rates.
1:30:22
Providers were required to identify 5% in savings of their contracts and were permitted to reinvest half of that or 2.5% towards staff retention costs.
1:30:32
At that time, DHL stated that many shelter providers were not spending down all of the PS costs allowed in their contracts and therefore the reduction would not affect providers.
1:30:43
Providers through DOL have stated that the only reason that they could not spend the entirety of their contract was because of the restrictions placed on what they could spend on funding on.
1:30:56
Where is DHS in the process of implementing this change?
Jacques Jiha
1:31:01
This is they are not necessary step needed because this is on their spending.
1:31:06
Savings that we're taking.
1:31:08
Okay.
1:31:09
I mean, there is a misunderstanding, which is which I just want to clarify.
1:31:15
Typically, what we do, these these decisions is to spend 95%, okay, of their budget.
1:31:22
And at the end, we usually takes 5% of the savings every year.
1:31:25
Okay?
1:31:27
This year, we said instead of taking the money on the back end, we're going to take the money on the front end.
1:31:32
What we did different is we're saying, instead of taking the entire 5%, we're taking 5, we're taking half, and we give them we give them half.
1:31:40
So I don't know I don't see Alec would be worse off.
1:31:43
You know what I'm saying to you?
1:31:44
So we usually take 5% every year.
1:31:47
Okay?
1:31:48
On the back end.
1:31:49
Now we're taking an afford end.
1:31:50
We only said, you know what?
1:31:51
We're gonna take that 75% that we take from you every year because you go, you never manage it to spend all your resources.
1:31:57
We're gonna give you half of it, and we're only taking half.
1:32:01
So this is the piece that I just wanna clarify.
1:32:04
This and then we're also giving them all the flexibility and more latitude, okay, to spend.
1:32:09
And they also have the ability if they could spend above that 97.5%.
1:32:15
Okay?
1:32:16
They could do so.
Diana Ayala
1:32:18
Okay.
1:32:19
Well, we've been hearing from providers that the cut has been quite painful for them.
Jacques Jiha
1:32:26
Again, as I said, this is not a cut.
1:32:28
This is on the you know, usually, we really don't spend a 100% of their thing.
1:32:32
So usually, they usually spend 95%, and we usually take that 5%.
1:32:37
And this time, there are different differences this time.
1:32:40
We want we're giving them half.
1:32:41
We're taking half.
1:32:42
Okay?
1:32:43
So I don't see how could that be a cut?
Diana Ayala
1:32:45
Mhmm.
1:32:46
I mean, I I I I would imagine that the fact that, you know, many of our nonprofit groups have had such a hard time even getting paid.
1:32:54
Those contracts are really slow and and, you know, the process is a challenge.
1:32:58
Is a challenge.
Rita Joseph
1:32:59
And then, you
Diana Ayala
1:33:00
know, our nonprofit just don't have, right, the net income to sustain services without the capital investment.
1:33:09
So we have to do better.
1:33:12
Yes.
1:33:12
Yeah.
1:33:13
Okay.