Committee hears controller audit alleging repeated UCHS noncompliance; HSH says funding moved to Felton Institute

The Government Audit & Oversight Committee held a status hearing on a November 2022 City Services Auditor report that found multiple fiscal and compliance failures at United Council of Human Services (UCHS), a long‑standing HSH provider.

Mark De La Rosa and Amanda Sobrepena of the Controller's Office summarized the audit’s key findings: the review focused on six HSH grant agreements managed through a fiscal sponsor and found repeated noncompliance in eligibility verification, income calculations and record keeping. Sobrepena said 24 of 29 sample tenants — about 83% — lacked required eligibility documentation and 19 of 29 (about 66%) had income calculated incorrectly when entering programs. The audit also identified at least $108,000 in tenant rent collected by UCHS from March through August 2022 without department approval and at least $30,000 not turned over to the fiscal sponsor as required.

Noel Simmons, chief deputy director at HSH, told the committee that HSH requested the audit and has since taken several actions. He said UCHS was placed on red-flag status by the controller’s office and, after the organization’s charitable registry status was suspended by the state, HSH moved all funding for the affected programs to the Felton Institute; as of March 7, all HSH funding for those programs now flows directly to Felton, and UCHS is no longer a subcontractor on those grants. Simmons said five of the controller’s 14 recommendations became effectively moot because of that funding transition, six recommendations have been implemented and three are in progress.

Committee members pressed both the controller and HSH on chronology and oversight: why the city stopped contracting directly with UCHS in 2009, how earlier audits and fiscal‑sponsor arrangements were followed up, whether whistleblower complaints played a role (the controller said whistleblower specifics are confidential), and how HSH ensured Felton had capacity to assume services. Simmons said Felton was already the prime grantee for certain agreements and took on fiscal‑sponsor duties informally before the March funding transition; he said Felton has been responsive and HSH provided funding for Felton’s administrative capacity.

Supervisors sought a quantification of the audit’s financial and service impact. The controller's team said that scope was not part of the November audit, and HSH said it has not completed a quantifiable analysis but indicated anecdotally that programs generally continue to meet service expectations. Vice Chair Stephanie said she will work with the controller’s office on legislation to strengthen nonprofit contract monitoring. At the hearing’s conclusion, the committee voted to file the hearing.