NY health department terminates LGBT Network contracts worth millions

The New York State Department of Health has terminated eight contracts, which the agency said Wednesday totaled about $10 million "over several years," to the Hauppauge-based LGBT Network because its financial records were incomplete and did not show how the group spent state funding.

State health officials said the state comptroller asked the health department to examine contracts in 2019 with the LGBT Network’s subsidiary, the Long Island Gay and Lesbian Youth Inc. Health department officials said a review of records left them with "no confidence" in the LGBT Network.

LGBT Network officials said Wednesday the contracts were worth about $2 million annually, and could potentially reach $10 million if they were renewed and extended over five years.

The health department said Wednesday they were ending five current contracts, elected not to extend two contracts and rescinded one recent contract offer.

The LGBT Network had complied with several financial reviews by the health department, at the direction of the state comptroller’s office, over the past two years.

The nonprofit’s leaders are seeking at least $1.2 million that they say the Department of Health still owes the LGBT Network for previous contracts, although network officials said they did not expect the loss of state funding to affect operations or events like the planned June Pride festivals in Farmingdale and Queens.

"The organization has repeatedly failed to provide the department with required documentation to show it has spent state funding efficiently and effectively," health department spokesman Jeffrey Hammond said in a statement last week. "As a result, the Department has terminated current and future contracts with LIGALY. We are working with other providers to ensure that comprehensive LGBTQ services are available to the people who need them on Long Island."

LGBT Network officials, led by their chairman, David Kilmnick, said they requested a further review by the state comptroller, but the Department of Health declined their request.

"For 30 years the LGBT Network has stood up to bullies," the organization said in a statement. "We are not going to allow a state bureaucracy to bully us now. Our services will continue, our other contracts with the state of New York, New York City and Long Island will continue, and vital programs and services will not be interrupted."

Officials with the office of state Comptroller Thomas DiNapoli said they were only involved in the initial referral to the Department of Health and were not asked to review the nonprofit's finances.

"If asked, it's something we would consider," spokeswoman Jennifer Freeman said Wednesday.

Health officials said in a January 2020 statement that they were working with the LGBT Network "to improve their billing practices and other financial and administrative procedures" and continued to "post payment for approved vouchers submitted by the organization as appropriate."

The health department notified state representatives Friday that they were ending all of its contracts with the LGBT Network "after attempting to rectify serious accounting issues."

"Essentially the issue boils down to a failure to provide records showing proper use of funds, including incomplete time and effort reports, lack of information about its use of affiliated subcontractors, unexplained costs and an incomplete general ledger," health officials said in a letter to state lawmakers on Friday. "Unfortunately, the issues have not been resolved. DOH is taking this action because DOH has no confidence that the important LGBTQ services supported by this funding are being adequately managed."

Kilmnick called the statements "categorically false."

The LGBT Network sent state officials a timeline of documents they had provided to the Department of Health since November 2019, when health officials first asked for financial records. LGBT Network officials said LIGALY completed all the corrective actions required, including restructuring its finances with a time sheet policy and shared services agreements by June 2020.

LGBT Network leaders said they held additional meetings during the next year with the health department and were later awarded a $1 million additional contract, before the health department's AIDS Institute informed the LGBT Network they'd been referred to the health department's audit services unit to review the shared service agreements.

At the same time, Kilmnick said they were running low on HIV tests because their contracts had not been paid.

LGBT Network officials said they tracked expenses using new time keeping software and procedures that had been approved by the state in June 2020. Expenses also were paid through contracts and grants, organizers said.

The health department told organizers that reimbursements of contracts may be withheld because in August 2021, the LGBT Network did not properly track time sheets.

"They kept holding this carrot over our head and nonprofits have to do what they say no matter what or we’re not getting paid," Kilmnick said.

By John Asbury

john.asbury@newsday.comJohnAsbury

John Asbury is a breaking news and general assignment reporter. He has been with Newsday since 2014 and previously worked at The Press-Enterprise in Riverside, California.