Philadelphia Mayor Cherelle Parker orders independent investigation of the Office of Homeless Services

Philadelphia Mayor Cherelle L. Parker has ordered an independent investigation of the city’s beleaguered Office of Homeless Services after it was revealed that the agency overspent its budget by about $15 million over four years.

Parker announced Wednesday that her administration has retained an outside accounting firm to probe the office’s contracting and spending in tandem with Inspector General Alexander F. DeSantis, who launched a review late last year.

DeSantis has provided preliminary findings to the administration, which Parker described in a statement as “of grave concern.” Spokesperson Joe Grace said the administration could not publicize those findings, citing the ongoing investigation.

The outside probe, which will be conducted by the Philadelphia-based accounting firm Horsey, Buckner & Heffler LLP, is the latest step taken by city officials to increase oversight of the Office of Homeless Services. In addition to the dual investigations, City Council is considering legislation to initiate hearings about the office’s spending and create a new ombudsperson with subpoena power to oversee it.

Top officials in former Mayor Jim Kenney’s administration said late last year that they learned of the overruns in the fall and referred them to DeSantis’ office. The Office of Homeless Services, they said, had spent $9.6 million more that it was allocated by City Council for fiscal years 2021 through 2023, then overspent its budget in the current 2024 fiscal year by another $5.1 million.

» READ MORE: Some Philadelphia homeless shelters have gone months or years without being paid by the city

A spokesperson for the Office of Homeless Services has said the overspending came as the office experienced significant staff turnover and a budget that ballooned from $80 million in the 2020 fiscal year to nearly $130 million today. The overruns occurred during the tenure of former Homeless Services executive director Elizabeth Hersh, who stepped down in October while Kenney was still in office. Officials said it was unrelated to budgeting issues.

Over the same period, some nonprofits that contract with the city to provide services to the homeless experienced lengthy delays in payment, in some cases stretching for months or years, the providers told The Inquirer.

The Parker administration said it was working to complete all payments for fiscal year 2023 by the end of February. Less than two weeks after The Inquirer reported on the delayed payments, the city paid more than $340,000 to one contractor that was featured, a shelter called Philly House that had not been paid for years.

No one from Kenney’s or Parker’s administrations has said they have seen evidence of corruption or criminal activity. Both the external investigation and the Inspector General’s probe will consider all possibilities.

The Office of Homeless Services both employs its own workers and contracts with nonprofits to provide emergency housing, such as overnight shelters, and manage programs aimed at reducing homelessness.

In hiring Horsey, Buckner & Heffler to conduct the outside investigation, the city did not go through a competitive bidding process, instead invoking a provision of the city code that allows the administration to use a noncompetitive process and waive some public reporting requirements in the case of emergencies.

The city retained the same firm in 2018 to investigate what appeared to be $33 million in “missing funds.” Horsey, Buckner & Heffler’s auditors found that various errors contributed to the illusion the money wasn’t there — in fact, they said, almost all of it was.

Grace said the firm, which is based in West Philadelphia, provided “exceptional service.”

“We are confident that the background in city functions they acquired during that audit, in addition to their specialized expertise, make them an ideal partner as we work through this investigation,” Grace said.