The Social Development Commission, or SDC, is facing new developments with its funding, board and lawsuits. 

Here is what you need to know. 

Questions raised about vendor payments, leadership at board meeting

Amy Rowell, executive director of COA Youth and Family Centers, attended the SDC’s board meeting on July 17 to ask the board about the status of an unpaid invoice. In March, NNS reported programming changes at COA, which serves families in the Amani, Riverwest and Harambee neighborhoods of Milwaukee.

Rowell said SDC owes more than $153,800 in reimbursements related to the Workforce Innovation Grant, which COA has requested from the agency multiple times since last August. 

“It’s been putting a pretty significant hardship on the organization because we paid the invoice and now we’re just waiting for reimbursement,” Rowell said. 

Jorge Franco, chair of the board and interim CEO of SDC, told Rowell that SDC would follow up with her but did not have an estimate of when the invoice would be paid.   

SDC Commissioner Pam Fendt thanked Rowell for her comments and voiced concern about Franco’s leadership.

“I would like to make a public statement at this time that I do not feel that the board has been staffed by the interim CEO in a way that allows me to have input on budget or funding decisions,” Fendt said. 

Commissioner Walter Lanier agreed, adding that the board should focus on how to govern more effectively. 

“I think it’s extremely high priority, top priority, for us to do that and I think we need to make some changes to make that happen,” Lanier said. 

Federal review of community action status

The Wisconsin Department of Children and Families in May planned to remove the SDC’s community action agency status, effective July 3. Removing that status would make SDC ineligible for millions in Community Services Block Grant funding and hinder the organization’s path to relaunch services and secure other funding. 

However, that decision is on hold while the U.S. Department of Health and Human Services, or HHS, conducts a review of the state’s hearing and decision-making process and evaluates if it followed federal guidance. 

The Department of Children and Families has sent documentation to HHS to examine for the review, according to Gina Paige, communications director for the department.

State moves forward with plans to replace SDC

The Department of Children and Families continues to look for agencies in the state that could possibly use the remaining block grant funding to be an interim provider of anti-poverty services in Milwaukee County if the state’s decision is upheld. 

“DCF has received applications from interested community action agencies and is currently in discussions with relevant parties,” Paige said. 

The state is preparing to move quickly to resume services if HHS upholds its decision and the de-designation is completed, she said.

“I think we’re likely going to see more of, like, the food services turned back on, probably some of the rental housing assistance, just because there’s some established networks there that folks will be able to leverage to get those turned back on,” Paige said. 

The department is requesting applications from existing community action agencies to serve the unserved county because of the Wisconsin CSBG State Plan, which requires the state to see if an existing agency can take over services before creating a new community action agency.   

Additionally, the future of the program is uncertain because President Donald Trump proposed eliminating CSBG funding in his budget for 2026. 

If Congress decides to continue CSBG funding, the state will consider starting a process to select one or more permanent community action agencies to serve Milwaukee County, Paige said.

Foreclosure hearing scheduled

A new motion in the foreclosure lawsuit against the Social Development Commission’s property corporation could result in a judgment by October. 

Earlier this year, Forward Community Investments Inc. filed a lawsuit against SD Properties Inc., the tax-exempt corporation that owns SDC’s buildings. The lawsuit resulted from SD Properties defaulting on mortgage payments on its North Avenue buildings, and it now owes over $3 million in loan obligations, interest and other costs, according to court records. 

In June, the attorneys representing Forward Community Investments filed a motion requesting a summary judgment hearing, which has been scheduled before  Circuit Court Judge J.D. Watts for 11 a.m. on Oct. 6 in Room 414 at the Milwaukee County Courthouse, 901 N. 9th St.

A summary judgment hearing asks the court to grant judgment in favor of a party based on the law without a full trial, according to William Sulton, SDC’s attorney. 

“That is something that is common in foreclosure cases and other cases,” Sulton said. “It’s not something that surprised us or alarmed us.” 

Before the summary judgment, there will be a scheduling conference in the case on July 24 at 9:30 a.m. in Room 414 of the courthouse. 

Board changes and vacancies

Milwaukee Area Technical College appointed Michael Rogers, MATC’s vice president of student engagement and community impact, to its seat on the SDC board. 

Commissioner Vincent Bobot’s term expired on June 1, but he remains as the chair of the SD Properties board. 

Bobot was serving his third term as an elected commissioner for SDC’s District 6, in the southern portion of the county, and briefly served as the agency’s CEO and board chair last fall. 

He said on July 17 that he is not sure if he plans to run for re-election.

Many appointments have been made to the SDC board in the last few months, but the board now has vacancies in all six elected board seats.

Lanier focused on filling vacancies, board consistency

Before the meeting, Lanier, the SDC commissioner, said he believes that working on the board’s governance, such as filling vacancies and holding elections to get community representation, will put the board in a better position to address the organization’s challenges. 

“​​I think once we finish some of our transitions and get the board fully active, the board will be able to be moved forward in a more effective way,” he said. 

SDC’s next board meeting is scheduled for Sept. 4. 

Money owed, pending reviews and lawsuits: the latest on Milwaukee’s Social Development Commission is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.

The Social Development Commission, or SDC, is asking the federal government to reverse a decision made by the state that could alter the anti-poverty agency’s funding options. 

Here’s what we know.

The community action decision 

The Wisconsin Department of Children and Families decided in May to remove the SDC’s community action agency status, effective July 3.

Although the department believes SDC has not been operating anti-poverty services since it shut down in April 2024, despite reopening in December, SDC’s leaders have said the state did not follow the proper process to make this decision.

Without this designation, SDC will not be eligible for a Community Services Block Grant, which is a small portion of its budget but significant to its efforts to pay back employees and rebuild its service programs.

How does a federal review work? 

When a state decides to rescind community action status or the related block grant funding from a local agency, the agency can request a review from the U.S. Department of Health and Human Services within 30 days. 

SDC submitted a request for a review of the state’s community action decision to the department on June 9, citing concerns about due process. 

The Department of Health and Human Services, or HHS, will evaluate if the state’s determination process followed the guidance on the termination or reduction of funding for entities eligible for the Community Services Block Grant, according to a spokesperson from the department. 

The Division of Community Assistance, which is part of the Office of Community Services within the federal department, oversees block grant funding for community action agencies. 

“I think that HHS is concerned about the process that was used to de-designate SDC, and so my expectation is that they will be talking to the state about the process,” said William Sulton, SDC’s attorney.

The Department of Children and Families received notification on June 11 from the Office of Community Services that SDC requested a review, but did not receive the request itself, according to Gina Paige, communications director for the department.

The review will be completed within 90 days of receiving all required documentation from the state, according to federal law. If not completed in the 90-day time frame, the state’s decision will be upheld. 

As part of the request, SDC is asking the Department of Health and Human Services for direct financial assistance. 

According to the CSBG Act, if a state violates the de-designation process –  by terminating or reducing funding of an eligible entity before the state hearing and the secretary’s review – the Health and Human Services secretary is authorized to provide financial assistance to the entity affected until the violation is corrected.

SDC’s concerns 

SDC raised two main concerns with the state’s determination process in the request, based on state and federal laws.  

The first concern is that the public hearing on SDC’s community action status, held by the Department of Children and Families on April 4, did not meet the legal requirements of a “hearing on the record.”

“You’re supposed to be permitted to call witnesses and present evidence,” Sulton said. “… We were given seven minutes to make a speech, and that was it.” 

SDC also says that both the Department of Children and Families’ secretary and the legislative bodies of the city of Milwaukee and Milwaukee County would have to sign off on the decision, based on a state statute that requires the legislative body that initially granted the agency community action status to approve rescinding it. 

“They didn’t go out and get position statements from the city and the county’s legislative bodies,” Sulton said. 

The department did not comment on these claims. (Paige previously said it has worked closely with the Office of Community Services and Milwaukee County to determine the process needed to move forward with de-designating SDC.)

Although Milwaukee County’s Office of Corporation Counsel submitted a letter to say it found no records of the Board of Supervisors taking action on SDC’s status as a community action agency, Sulton said that doesn’t mean there are no records. 

He argues that this provision of the law, added in 1983, was put in place to protect SDC from arbitrary state action.

Funding deadline

In May, three state lawmakers asked SDC to consider voluntarily de-designating, which would allow the state and Milwaukee County to more quickly find an interim service provider to use SDC’s allocated funds in Milwaukee County. 

The $1.18 million in 2024 block grant funding could be recouped by the federal government if not spent by Sept. 30, 2025, according to the Department of Children and Families. 

However, Sulton said when he reached out to the Department of Health and Human Services before filing the review, an employee told him the 2024 funds had to be obligated by 2026.

“To the extent that anybody has the impression that this money has to be obligated by September or it’ll be lost, HHS says it’s not the case,” he said. 

States and subrecipients usually have two years to distribute funds, but it depends on state-specific policies, according to HHS.

The state’s Sept. 30 deadline marks two years after the beginning of the 2024 fiscal year in October 2023, according to Paige. 

Though Paige said that SDC’s request for review is perpetuating the lack of services in Milwaukee County, she added that the department plans to seek a six-month liquidation extension from the federal government.

“It’s quite possible that we’re gonna be on a really tight timeline to get that money out the door, so that’s why we’re hoping that we can work with the federal government and see if they can allow us an extension to expend it a little bit longer,” Paige said. 

Board member changes

The SDC board added two commissioners in May – Milwaukee Public Schools appointed Michael Harris, and the Interfaith Conference of Greater Milwaukee appointed Peter Fetzer, an attorney at Foley & Lardner LLP. 

In the last seven months, the SDC board has expanded from three to 10 commissioners, thanks to several appointments to vacant seats. The board is designed to have 18 members at full capacity. 

Commissioner Lucero Ayala’s term has ended, according to Sulton. Ayala was nominated and selected last year to fill the remainder of Serina Chavez’s term as an elected commissioner.

Milwaukee Social Development Commission wants feds to reverse state funding decision   is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.

The Wisconsin Department of Justice filed a lawsuit against the Social Development Commission on Friday to secure back pay for former employees. 

At the same time, three state legislators are asking the agency, also known as the SDC, to consider voluntarily giving up its community action status. 

According to court records, the Department of Justice lawsuit filed on behalf of the Department of Workforce Development alleges that SDC failed to pay $359,609.73 in wages and benefits owed to former employees. 

However, the department is seeking double that amount – a total of $719,219.46 – as a penalty for “willful failure to pay.”

Sarah Woods’ claim against SDC seeks roughly $4,800 of back pay. 

“These are not small payments,” said Woods, a former youth and family services supervisor for SDC.

This marks the latest stage in a long-running wage dispute following the agency’s abrupt April 2024 shutdown, leaving some employees unpaid. SDC, which reopened in December, has provided a variety of programs to serve low-income residents in Milwaukee County.

SDC’s response

William Sulton, the attorney for SDC, said Thursday that the agency will file a third-party complaint against the Wisconsin Department of Children and Families, which he claims failed to reimburse the agency for services SDC provided.

“DCF needs to be held to account,” he said, adding that SDC should sue the Department of Children and Families regardless of what the Department of Justice does. 

Woods remains skeptical that further legal back-and-forth will get people what they’re owed. 

“I just want the workers to get paid,” she said. “SDC needs to … just leave it alone.” 

Dispute over proper documentation 

Sulton said a major dispute between SDC and the Department of Children and Family Services is about documentation. 

“They had all of the required paperwork, but they kept asking for additional information that had never been asked for before,” he said. “We met every one of those obligations.”

In a letter sent last month, the Department of Children and Families said SDC failed to meet federal audit requirements and had not provided enough documentation to justify its reimbursement request. 

State legislators ask for voluntary de-designation 

Earlier this month, the Department of Children and Families decided to rescind SDC’s status as a community action agency effective July 3, making the agency no longer eligible to receive certain federal block grants that support anti-poverty work.

SDC plans to request a review of the decision from the U.S. Department of Health and Human Services, Sulton said, which could take up to 90 days after the department receives documentation. 

On Thursday, however, State Sen. LaTonya Johnson, Sen. Dora Drake and Rep. Kalan Haywood — all Milwaukee Democrats — sent a letter to SDC’s Board of Commissioners, asking the agency to voluntarily de-designate.

In the letter, the lawmakers said voluntarily de-designating would create a pathway for $1.182 million in block grant funding that had been allocated to SDC to be used in Milwaukee to support services such as food security, rent assistance and workforce development. 

“These dollars must be spent by September 30, 2025, or they will be lost to the federal government,” the letter states. “At present, SDC’s operational instability prevents these funds from reaching the people who need them most.” 

Sulton said this pathway does not seem viable because the state has not presented a plan. There is, he said, a lack of alternative agencies prepared to provide these anti-poverty services. 

“If you want the board to consider de-designating so that these funds can go to another program, you gotta tell us what that is,” Sulton said. 

Additionally, SDC leaders argue the state lacks authority to make this de-designation decision without also getting approval from the city and county’s boards, based on state statute. 

Even if SDC steps down, Johnson said in an interview, there is no guarantee the money will be spent in time, as the state must meet federal requirements to move the funds and find another agency to administer services. 

“This is a really difficult place to be if you are an African American elected official because this is an agency that has been in the community forever that has a lot of support,” Johnson said. 

“Everybody is rooting for SDC to be successful. … But the reality is that I cannot choose the side of an organization over the community’s needs.” 

Edgar Mendez contributed to this report.

Meredith Melland is the neighborhoods reporter for the Milwaukee Neighborhood News Service and a corps member of Report for America, a national service program that places journalists in local newsrooms to report on under-covered issues and communities. Report for America plays no role in editorial decisions in the NNS newsroom.

Wisconsin Department of Justice sues SDC as lawmakers push for new funding path is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.