MILWAUKEE (CBS 58) -- The Social Development Commission (SDC) is in jeopardy of losing millions of dollars in federal funding amid its restructuring.
During a public hearing on Friday morning, community members, including former SDC employees, defended the organization, speaking of its importance and longstanding in the community.
This comes as the Wisconsin Department of Children and Families (DCF) is considering stripping SDC of its status as Milwaukee County's 'Community Action Agency'. CAA designation qualifies SDC to receive millions of federal dollars as reimbursement for services provided to the community.
"The funding that we provide is reimbursement-based funding. It reimburses them for services provided. It's intended to add to other funding sources available to SDC," said Connie Chesnik, DCF division administrator.
Chesnik says SDC has not provided sufficient verification that they can cover expenses upfront at this time. DCF would like to see the organization at a better place of financial health for it to continue receiving this federal reimbursement, which specifically is provided through the Community Services Block Grant.
SDC is the only agency in Milwaukee County that holds the status to receive this funding. DCF is questioning the future of SDC, its infrastructure, and ability to financially continue to provide full service to the community.
"Federal law does not allow us to give the funding to any other entity until we de-designate the current entity, so that would be the next step in the process," said Chesnik.
In its official testimony during the public hearing, DCF cited "outstanding financial issues regarding allowable expenses previously billed to DCF."
Chesnik says DCF has been working with SDC over the past year to address these issues. "We have not received sufficient verification from SDC since their closure last April," said Chesnik. SDC argues this point. "SDC has provided all the information that they've requested. They just keep moving the gold post," Sulton said.
In April of 2024, we saw a major shakeup at SDC amid financial difficulties. Services were impacted greatly by this. William Sulton, the attorney representing SDC, maintains that the organization never shut down. He says the financial issues caused a temporary pause in some services and others having to be scaled back due to fewer employees and less funding.
Sulton says the SDC is restructuring and working to return to its full capacity as a major anti-poverty resource in Milwaukee.
"We have a new board, new governance structure, new accountants, outside accountants, outside auditors...we have the infrastructure and the human resources that we need to make this thing go," Sulton said.
Sulton says while losing CAA designation for the federal dollars won't shut the organization down, it would present a major challenge during the SDC'S restructure.
"DCF doesn't have to make this decision. There are other options that they have not fully explored, and they also haven't given this new iteration of the board enough time to address some of the concerns that they have," Sulton said.
"We want to make sure that the people of Milwaukee receive services and services have not been provided since SDC's closure last April," said Chesnik.
Public comments in support of SDC, along with written statements, will all be reviewed by DCF Secretary Jeff Pertl before a final decision is made.
The final decision is expected within the next 90 days. If SDC does lose its CAA designation, DCF did not name a replacement agency, but Pertl says they're not ruling out possibly creating a coalition of agencies to split the fund among. This would need county approval and could likely take a few years to finalize, before those federal dollars make it to the community.
Sulton says Milwaukee residents can't afford to wait for that to happen and is urging DCF to continue supporting SDC.