The president of the board for the drug treatment nonprofit Samadhi is blaming miscommunication with officials at the Ulster County Department of Social Services for a budget gap which led to the abrupt closure earlier this week of the group’s Refuge emergency housing facility in Saugerties.

Kathy Nolan told Kingston Wire that the lost funding along with other financial difficulties were likely to have a serious impact on Samadhi's efforts to provide outpatient drug treatment and direct outreach to addicts.

Samadhi incorporated as a nonprofit in 2019 with a mission to combat the opioid epidemic by combining mindfulness-based therapy with peer-led direct outreach to addicts and an emphasis on harm reduction. During the pandemic, the agency grew rapidly along with a massive spike in opioid-related deaths. The group drew praise from county officials, who awarded Samadhi a $797,000 contract for outreach services, brushing aside lower bids by more established providers. Additional funding came from the billion-dollar nonprofit NoVo Foundation and contracts with the state Office of Alcohol and Substance Abuse Services. By 2023, the nonprofit’s operations had expanded to include the Refuge program at a 27-bed former motel and an outpatient treatment facility housed in space leased from the county at 368 Broadway in Kingston.

But as the agency grew, it began running into financial difficulties based on administrative oversights or unrealistic revenue projections. In January 2024, Ulster County Comptroller March Gallagher stopped payment on the county grant after just two months. The funding freeze came in response to an audit of the agency’s 2022 financials, which included a “qualified opinion” based on auditors’ inability to account for $55,000 in ATM cash withdrawals. The contract was eventually terminated; Gallagher has said that she will not release $110,000 spent by Samadhi to purchase a vehicle as required by the contract until she had reviewed an outside audit of the nonprofit’s 2023 financials, which remains incomplete.

This January, in a statement announcing her intention to continue the freeze on funds, Gallagher recommended that the county Department of Social Services reconsider placement of individuals at the Refuge shelter, using state and federal emergency housing funds not under her control. In a social media post Wednesday, Gallagher called the shutdown of the emergency housing program “unfortunate,” while placing the blame on Samadhi officials for failing to address issues with internal financial controls.

“A year ago we raised the red flag on the financial and administrative controls at Samadhi,” wrote Gallagher. “We tried to work with them to obtain compliance, but they refused our requests for information needed to bring controls.”

Nolan, who is also a Democratic county legislator representing Shandaken, blamed the shutdown of the Refuge program on a misunderstanding with DSS about reimbursement for individuals housed there through the same emergency housing program that funds rooms for individuals and families at motels around the region. Many people coming into the program had not completed paperwork or had been dropped by DSS for missing therapy appointments or other requirements, Nolan said. As a result, reimbursement from the county ran well behind actual expenses.

Nolan, who stressed she was speaking only in capacity of chair of Samadhi’s board and not in her role as a legislator, said the missing payments were placed in an accounts-receivable budget line in the belief that those expenses would be reimbursed retroactively once Samadhi staff managed to bring clients into compliance with the DSS rules.

“We knew that we were doing something innovative there,” said Nolan of the Refuge program which included on-site drug counselors and other supports unavailable at the motels used as emergency shelter by DSS. “And we thought that because we were filling a gap in housing for Ulster County that there would be a great deal of spaciousness to let us correct the record, if you will.”

Nolan said that it was only recently that it became clear to Samadhi staff that DSS would not retroactively reimburse the agency for individuals who stayed at the Refuge facility while ineligible regardless of whether they were subsequently enrolled in the emergency housing program. By that time, Nolan said, the “accounts receivable” line had swelled to $400,000 and was fast becoming an unsupportable drag on the entire nonprofit’s operations.

“Once we realized [that the reimbursements would not be coming] we didn’t see any benefit to trying to prolong things. We felt that it was very important to communicate what was happening to the staff and the clients and go ahead and make this transition,” said Nolan. “Every day we were keeping the residence open, we were going further and further in the hole.”

DSS Commissioner: We Were Clear With Samadhi

In a statement issued Tuesday, DSS Commissioner Michal Iapoce pushed back on the claim that there had been a lack of clarity about the status of the rejected reimbursement claims. Iapoce said that Samadhi officials had been consistently informed about the invoicing and payment process. Iapoce added that whenever the nonprofit brought up questions about denied reimbursement claims, they were provided with detailed information about why the claim would not be paid.

“It is not accurate for Samadhi to suggest that they did not understand how emergency housing placements are transacted and were not informed about invoices that would not be paid,” said Iapoce. “While the suddenness of the closure is challenging, the county and DSS will continue to provide supports and services to all of the individuals affected by this closure to ensure that they can be safely relocated to alternative placements where their needs can continue to be met."

Nolan, meanwhile, said the write-off of $400,000 from the accounts receivable budget would add to financial strain that was likely to impact Samadhi’s ability to provide services. In addition to the lost contract and withheld funds from Ulster County, Nolan said insurance reimbursement revenue from the Broadway outpatient program — money that officials hoped would be enough to support other Samadhi’s programs — was running far behind expectations.

Nolan chalked up the financial issues to growing pains as the nonprofit expanded rapidly from a tiny startup to a full-fledged service provider with a $2 million annual budget and more than a dozen employees.

“The first five years of a nonprofit’s existence … are the most difficult, especially if they start to grow very rapidly,” said Nolan. “There’s a balance that has to be attained of having enough revenue coming in to keep the structures in place for management and oversight. It’s a difficult phase and we have had difficulty in all of our programs with having revenue come in as anticipated.”