New York (CNN) -- The New York City Department of Homeless Services is defending its decision to exclude 200 struggling New York families from a taxpayer-funded program that offers prevention services to people at risk of becoming homeless.
Homebase was created as a one-stop shop, which now serves communities in all five boroughs, to help families and individuals get customized assistance and keep them out of shelters, but DHS made this decision in an evaluation study to see whether the program has flaws.
The DHS randomly selected 400 families seeking assistance from Homebase and divided them into two groups. One group continued to receive services such as rental assistance, employment opportunities, free legal assistance and public benefits, and the other received a list of community-based resources that provide similar assistance, but they would need to pursue it on their own.
The $400,000 taxpayer-funded study allowed researchers to monitor these families for two years to see how well they can utilize the services and whether they will end up in shelters.
The DHS is stressing the fact that all group members were aware they might be chosen to participate in the study and have signed informed consent forms agreeing to the terms.
"They had an option; they knew there was a possibility and signed a document reflecting that," said DHS Commissioner Seth Diamond.
City officials questioning the circumstances under which people looking for help signed up for the study. Manhattan Borough President Scott Stringer scorned the idea of signing a waiver, asking why anyone would "sign a document denying them services for 18-24 months."
Stringer said he was "appalled" that "families on the verge of homelessness are being treated like guinea pigs in a cruel and heartless experiment."
Council Member Gale A. Brewer, D-Manhattan, questioned whether prospective participants were able to fully understand what was offered to them.
"People sign things they shouldn't all the time under stressful situations," Brewer said. "I can't believe this is happening in 2010. This thing really hit a nerve in all of us."
Neil Donovan, spokesperson for the nonprofit National Coalition for Homelessness, told CNN his agency received numerous calls for help from people who became part of this study, which he called "reprehensible" and "draconian."
"To set somebody up in situation like this is unethical. Donovan said. "The person asking you to sign something like this, controls all the resources."
Donovan said the DHS commissioner "needs to be removed from office."
"He really doesn't have in mind the homeless of New York City," Donovan said.
DHS spokeswoman Barbara Brancaccio defended the study. "No one is going under," she said. "There are services."
Since its opening in 2004, the program served thousands of families and individuals, more than 90 percent of whom avoided entering shelters, according to the DHS. The "control group" consisted of 400 families out of nearly 8,000 seeking assistance this year, the agency said.
Jason Post, spokesman for Mayor Michael Bloomberg's office, said, "It's important to have data on what works and what doesn't."
Diamond echoed that point, telling CNN that such data is important in tough economic times. Through this control group, he said, budgetary arrangements could be made to serve more people more efficiently.
Donovan said blaming economy is not an excuse.
"There are no financial reasons for doing something unethical," he said.