State moves to cut SDC from federal anti-poverty program, citing 'serious deficiencies'

Yahoo

21-03-2025

Three months after reopening, the Social Development Commission is once again under fire.
A stern letter from the Wisconsin Department of Children and Families released on Friday says SDC has continually given the department inaccurate information about its financial health and hasn't been compliant with state and federal requirements since the agency closed its doors in April last year.
As a result, the department is declining to fund SDC in 2025 and aims to remove its designation as a 'community action agency," which will destroy the organization's ability to receive federal Community Services Block Grant money in the future.
"It is clear to DCF that, despite the efforts of many, SDC is currently unable to perform its duties" as a community action agency, says the letter from Connie Chesnik, an administrator with the department.
"DCF did not arrive at this decision easily," the letter continues. "It is with heavy hearts that DCF takes the necessary steps required by law to ensure that (Community Services Block Grant) services are provided to Milwaukee County residents."
Community action agencies, which are defined by federal and state law, were created decades ago to address poverty. As the only designated community action agency for Milwaukee County, SDC oversees millions of federal tax dollars meant to assist low-income residents.
Some of SDC's key programs include income tax assistance, career services, child care and housing assistance.
The agency's attorney, William Sulton, said Friday that the agency disagrees with "a lot" of what is said in the letter. Losing the grant won't be the end of SDC, which had a $30.5 million operating budget last year, he said.
"It's not fatal, but is it disappointing? Yeah," Sulton said. "I think it's the wrong decision."
In the letter, the Department of Children and Families said it has been unable to verify the overall financial health of SDC despite nearly a year of working closely with the organization.
According to the department, SDC's reports have serious deficiencies and include unverifiable information about its funding and staffing levels.
For example, SDC reported it anticipated funding from external partners that the department later verified had neither been requested nor committed for 2025, the letter said.
The organization also reported it had 28 staff members but failed to show documentation to back that up, according to the department.
More: SDC's interim CEO Jorge Franco says he can get the anti-poverty agency back on track. Here's how.
In addition, SDC hasn't provided a "realistic plan" to resume services in Milwaukee County, the letter says. Despite providing "extensive" technical assistance to SDC, the department said the organization was unable to show "any meaningful return" of Community Services Block Grant programing since reopening in December.
The organization's quality improvement plan was out of compliance in all nine categories, the letter adds.
In addition, SDC has not yet submitted its 2023 audit report that was due last September. As a result, the department has been 'unable to verify the overall financial health of the organization, including a comprehensive picture of income, assets, debts, and/or liens,' the letter said.
SDC is also operating with fewer than half of the required number of board members, according to the Department of Children and Families. State statute requires at least 15 members.
The board must include a mix of people from the public sector, private sector and low-income community, according to state and federal law. The letter says SDC failed to prioritize finding board members to represent low-income residents.
More: 'We're not prepared': SDC's sudden closure leaves people scrambling for alternatives
According to the Milwaukee Neighborhood News Service, the Department of Children and Families originally planned to allocate about $2.2 million in block grant funding to SDC in 2025.
Sulton, SDC's attorney, previously told the Journal Sentinel that the Department of Children and Families was the only state agency that confirmed it would give SDC funding.
At the time, SDC had planned to use the Community Services Block Grant money from fiscal year 2024 to pay the majority of the outstanding wages and paid time off benefits it owed its employees.
Without that money, it is unclear how SDC will pay back what it owes to former staff.
A public hearing will be held on April 4 at 11:30 a.m. at the Milwaukee State Office Building to consider the agency's future as a community action agency. The department will share its final decision in a letter after the hearing.
Sulton encouraged community members to come out and advocate for SDC.
"This is an opportunity for the public to tell the state what they think about SDC not being a community action agency," Sulton said.
This article originally appeared on Milwaukee Journal Sentinel: Milwaukee anti-poverty agency SDC rebuked for 'serious deficiencies'