The Current State of OMH Housing

New York is one of the most expensive states in the country to live in, while the consumers that our nonprofit OMH housing providers serve are among the poorest. This combination requires New York State to step in to help make available enough safe and affordable housing for the most vulnerable among us. Although the OMH funded, contracted and/or regulated housing system today is arguably the most varied and robust in the nation, if not the world, it is facing unprecedented financial challenges. This article will focus on the financial issues faced by housing providers.

The New York State Office of Mental Health (OMH) developed transitional residential programs for people with severe and persistent psychiatric illnesses at a brisk pace in the 80’s, and shifted its focus to permanent scattered site supported housing in the 90’s. Other models were developed after 2000 to address the emerging needs of all those being served. For the most part, the different housing and support levels matched the needs of the people being admitted. Statewide, New York now has: (1) 4,794 units of Transitional Licensed Treatment Apartments; (2) 5,113 units of Transitional Community Residences; (3) 3,139 units of Long-term transitional Community Residence – Single Unit Occupancy (CR-SRO); (4) 4,882 units of Permanent Support Single Unit Occupancy (SP-SRO); and (5) 18,933 units of Permanent Scattered Site Supported Housing 1

However, while the state focused on creating new housing, a laudable and necessary endeavor, it neglected the fiscal and programmatic health of the housing and programs that it spent so much manpower, energy, expertise and money developing. The nonprofits that operate OMH housing are facing more than 25 years of funding erosion with a mandate to admit people with the most compelling need, meaning those with the most serious co-morbid medical, psychiatric and substance use issues. The funding and programming no longer match the needs of the clients being served although the agencies do their best to use as much of their funds for direct care as possible, to reduce costs where they can and to operate with very lean administrations. Some engage in fundraising (although it is this writer’s opinion that they should not have to use fundraised dollars to subsidize government contracts) while others double and triple clients in apartments in the community to make the funding work, a practice that is clinically contra-indicated for some people with serious psychiatric illnesses requiring much more diligence and attention on the part of the staff during the admission process and beyond. This practice often results in reduced occupancy rates due to roommate compatibility issues. To highlight the problem in one program, scattered site supported housing, the following shows the per bed per year reimbursement rate by region for each unit as follows: (1) New York City and Long Island: $16,656; (2) Hudson River: $9,349-$16,156 depending on county; (3) Central:  $7,746 – $8,748 depending on county; and (4) Western: $8,500 – $9,502 depending on county 1

This rate must cover the rental subsidy, staffing, administration, i.e., ALL costs related to the program. In NYC, the rate does not even cover the rent, let alone all the other costs associated with operating a program. In all areas of the state, the rate is just ludicrously low.

While programming and housing dollars continue to erode, moving administration dollars to programming as a coping strategy is no longer a viable option. These non-profit housing providers must operate and develop housing in a much more complex world with scant administrative resources. Many are functioning with a 9 – 10 percent administrative share because they shift money to staffing to alleviate staff vacancy rates of up to 35% and staff turnover rates of up to 65-75%. 2 They operate in a highly-regulated environment where OMH, their Local Governmental Unit(s), the Office of the Comptroller, the Office of the Medicaid Inspector General and the Justice Center all have oversight authority. These last two are recent additions to the state’s array of oversight entities. Some organizations are under audit for months in a given year. Moreover, the newest and only new model of housing being developed – congregate mixed use – is developed with a dizzying combination of funding sources including, but not limited to, HUD, HCR, OMH, HPD, OTDA, NYSERDA, Low Income Tax Credits, and historic tax credits. Non-profits sometimes take on financial risk to build these. Development today is not for the faint of heart. Meanwhile, the state is moving the behavioral health system to managed care and value-based contracting, creating new structures for service delivery and payment. To add to the acronym list above, non-profits must understand, engage with, and/or become part of MCOs, PPSs, and Health Homes while being asked to join with their competitors to also become part of BHCCs, e.g., Behavioral Health ASOs, MSOs, and IPAs. Add legal fees related to staff and client care issues, evictions, etc., as well as the federal government, e.g. HIPAA, to all the above, and a 10% administration and overhead share is just not realistic.

Obviously, these organizations’ executive staff know the reimbursement rates are too low to sustain administration and daily operations. Yet their dedication to their mission, long wait lists that demonstrate a compelling need and faith that the state will eventually correct the problem, propel them to accept underfunded contracts. This is changing. Fewer and fewer organizations are responding to new state issued Requests for Proposals, particularly for the most integrated and independent model of all, scattered site supported housing. Some have failed and given beds back. Although so far there have been organizations willing to take on the contracts that others are giving up, or are forced to give up, that is also changing. Many who have done it in the past say that they will not again.

When Governor Cuomo first took office, he convened a team of people to redesign Medicaid – the Medicaid Redesign Team (MRT) – to significantly reduce the growth of Medicaid. Savings accrued, some of which was invested in new housing units and new housing models. The people placed in these new units were all high users of high cost Medicaid services:  The Department of Health tracked their progress. A recent DOH report 3 shows what all housing providers have known for years – housing and services support people in fundamental ways so that they can stay out of other high cost settings. The MRT Housing programs have realized significant cost savings to the state, successfully steering participants away from costlier venues. Yet none of that funding is invested in rate increases so that the programs can continue to do the work. They are not rewarded – just overburdened.

The state closes some number of state psychiatric institutional beds every year which results in savings that are re-invested into additional community-based programs. State staff work with housing providers to ensure that people coming out of state institutions are admitted to existing housing programs, usually transitional programs with 24/7 staffing. In some cases, admissions from state institutions are mandatory, however, the savings accrued from these bed closures are used for new programs and new beds in the affected catchment areas of the state institutions. These savings have never, as far as this writer knows, been used to increase the rates in the programs that accept state institution discharges making the closing of beds and, in some cases, entire wards of hospitals possible. The CR-SRO and CR models that accept most of the people coming out of state institutional care are significantly underfunded and understaffed. Moreover, there are no clinical staff integrated into these models that admit people with some of the most challenging service needs in the behavioral health system.

All of this translates into a mental health housing system that is spectacular on paper but is extremely difficult to manage and sustain.

The people served and the staff caring for them deserve better. Consumers need consistency and an essential array of services delivered by competent and caring staff that will help them become more integrated into the community. Their short- and long-term recovery depends on it. The staff who do this work deserve a living wage so that they can focus on the work and not on getting to their second job on time. The executives that bear the responsibility of operating these programs should be able to sleep at night knowing that they have done everything they can to ensure the safety, care, and futures of the staff and consumers in their agencies. They are all our family members, friends and neighbors. Let’s not let them down.

We recommend that significant dollars be invested into these housing programs to ensure their continued viability. ACL has determined that the programs have lost more than $100 million over the last 25 years, which should be restored immediately. Then a serious analysis of the consumers served, staffing needed and administrative capacity needs to occur. Future adjustments would need to follow.


1 New York State Office of Mental Health, Child & Adult Integrated Reporting System, Residential Program Indicators Report, March 2017.

2 For additional discussion of this issue see documentary trailer regarding inadequate non-profit administration funding levels at   as well as Human Services Council. “New York Nonprofits in the Aftermath of FEGS: A Call to Action”

3 DOH. Medicaid Redesign Team Supportive Housing Evaluation: Cost Report.

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