Portland Faces State Crackdown Over Welfare Program Violations, GA Over-billing — Risks Losing Millions

Maine’s Department of Health and Human Services (DHHS) formally notified the City of Portland of multiple violations in its General Assistance (GA) program, following an extensive audit conducted between September 2023 and May 2024.

The findings, detailed in an initial notice issued by the Maine DHHS to the city on September 13, 2024, and a final notice on October 18, 2024, highlight significant non-compliance with state statutes and regulations concerning a municipal welfare program.

General Assistance is a statewide welfare initiative managed by municipalities that offers vouchers for housing, food, and other essential needs to Maine’s most impoverished residents. Since 2019, the cost of the program has surged, primarily due to Portland’s increasing homeless population and an influx of unemployed, homeless noncitizens.

Many of these individuals have been drawn to the city partly because of the readily accessible welfare benefits, which were infamously touted in the pages of the New York Times by the city’s former socialist mayor Ethan Strimling.

After years of handing out taxpayer-funded welfare to mostly noncitizens, it appears the financial chickens are coming home to roost.

The DHHS audit reviewed 196 client case files, 974 hotel/motel invoices, over 1,000 hotel stay authorizations, and 43 shelter applications, focusing on Portland’s administration of its GA program, which also provides financial aid to eligible residents for basic needs such as housing and utilities.

The department identified three primary areas of non-compliance, and the implications could be severe for the city’s over-burdened taxpayers. The looming bill already has Portland officials turning to state officials with requests for greater financial assistance.

Improper Shelter Reimbursement Billing

The audit revealed that Portland’s Homeless Service Center (HSC) was requesting reimbursement for shelter bed-nights at a rate of $84 per night, based on operating expenses, including staffing costs.

This exceeds the state’s allowable maximum of $44 per night, which is based on the market rent for a zero-bedroom (studio) unit.

However, the city reverted to an incorrect billing method, resulting in $157,170 in ineligible expenditures claimed for February 2024 alone.

The state directed Portland to revise its billing practices starting September 2024 and submit a detailed spreadsheet accounting for overpayments from July 2023 to August 2024, data which the department said would be used be offset against future reimbursements.

Failure to Verify Conditions of Future Eligibility

In 15 case files, the DHHS found that Portland failed to document whether applicants had met conditions of future eligibility, such as work requirements or verification of income and resources, from prior assistance decisions.

State law mandates that municipalities verify these conditions upon reapplication to reduce dependency on assistance.

While Portland imposed these conditions, case files lacked proof of compliance or justifications for non-compliance, compromising program integrity.

To remedy this issue, the state directed the city to clearly note if conditions of future eligibility from previous applicant decisions are met in each case file, and to provide additional training to staff.

Lack of Repayment Plans for Fraudulent Benefits

In three cases, applicants who received benefits fraudulently were not required to enter repayment plans or reimburse the city, as mandated by GA rules.

State regulations require municipalities to recover fraudulently obtained assistance and deny further aid until repayment is arranged or a 120-day disqualification period is served.

The state admonished Portland that they must establish repayment plans when benefits are received fraudulently, and directed the city to provide annual fraud and payment plan training to staff.

Portland’s Response to the DHHS Audit

In a detailed response dated September 23, 2024, the City of Portland, through Social Services Director Aaron Geyer, disputed the DHHS’s finding on shelter reimbursement, arguing that the $84 per night rate for the HSC is permissible and does not include ineligible expenses.

The city contended that the DHHS’s reliance on a 2015 Notice of Violation and Plan of Correction is misplaced, as those agreements pertained to the now-closed Oxford Street Shelter and did not establish a binding methodology for the HSC, which opened in 2023.

Portland highlighted that a 2016 legal challenge resulted in a settlement with no specific bed rate mandated, rendering the 2015 agreements irrelevant.

Portland further argued that state law and the General Assistance Manual allow municipalities to consider the “actual costs” of emergency shelters, like the HSC, without being capped by the $44 per night rental housing rate.

The city emphasized that the HSC serves individuals in an emergency state of homelessness, as defined by statute, and its costs—distinct from rental housing—justify the higher rate.

Portland also pointed to the DHHS’s approval of hotel/motel rates up to $255 per night for emergency shelter, questioning the inconsistent application of reimbursement standards.

The city asserted that the $84 rate reflects basic operating costs, such as rent, utilities, and staffing, and does not include administrative or wraparound service expenses.

The Legal Battle Continues

The violations by the city were followed by a significant policy shift by the DHHS, which adopted Rule 26 on April 1, 2025, clarifying reimbursement rates for emergency shelters.

The rule ties payments to the “zero-bedroom rate” based on federal fair market rents, currently set at $48 per night for Portland as of October 1, 2024, and unchanged through April 1, 2025.

This formalizes the state’s longstanding policy, which Portland had exceeded by billing $84 per night, according to the DHHS.

The city, which operates Maine’s busiest homeless shelter, faces a near-halving of its reimbursement rate, projecting a $4.4 million loss in state funding.

The Portland City Council held a meeting with city attorneys in executive session last week to discuss the findings and “pending litigation” related to September 2024 DHHS audit of their GA program. It is unclear whether the litigation is only related to the shelter reimbursement, or if it extends to the other findings of the DHHS audit.

The city is currently lobbying in favor a bill that would raise the state’s reimbursement rate for municipal GA spending from 70 percent to 90 percent for Portland and the next five highest-spending cities by 2030.

From January 1, 2019, to June 30, 2023, Maine’s total general assistance spending reached $109.3 million, with Portland accounting for $79.6 million—72.8 percent of the state’s total, according to Maine Department of Health and Human Services (Maine DHHS) records.

The state reimbursed $55.7 million of Portland’s welfare costs, while local taxpayers covered $23.9 million. Per resident, Portland spent $1,164.93 on general assistance, compared to $171.67 in Bangor, the next highest spender, and a statewide average of $79.71. The next biggest spenders were South Portland, Lewiston, Augusta, Westbrook and Sanford.

Read more:

• Portland City Council to Vote on Third Emergency Extension of 50-bed Expansion to Homeless Shelter
• Migrants Arrive at US Border With Address of Portland, Maine Shelter: Mayor Mark Dion on WGAN
• “People see us as different”: Portland Officials Bemoan State Lawmakers’ Reluctance to Fund City’s Homeless Shelters and Welfare Programs
• Portland Budget Woe: Decline in State, Federal Funding, Staffing Shortages, Shelter for Homeless and Asylum Seekers
• Bipartisan Maine Bill Proposes Higher State Reimbursement for Municipal Welfare Programs