This post originally appeared at https://www.badgerinstitute.org/yet-another-sdc-scandal-points-to-deeper-systemic-issues-at-milwaukee-social-services-agency/

Thirty years of problems beg fundamental change or permanent closure

The Social Development Commission, Wisconsin’s largest anti-poverty social services agency, abruptly closed its doors in late April after the latest in a series of scandals stretching back over more than 30 years.

At this point, it’s unclear whether the SDC will ever reopen. Both its most recent board chair, Elmer Moore Jr., and its chief executive officer, George Hinton, are gone after the recent “misallocation” of $100,000 in federal home-weatherization program funds and non-payment of tens of thousands of dollars to contractors.

The shutdown has focused attention once again on a community action agency that has operated more than two dozen social programs funded at one point by as much as $60 million in annual federal grants — but an agency that has no direct state, county or local supervision.

The sole oversight comes from an 18-member board of directors that rarely met for more than an hour or had anything close to a full complement of board members present over the last year prior to the latest scandal becoming public, according to a Badger Institute review of meeting minutes.

The review found that no fewer than three board members were absent for every meeting. For five of the meetings, including the annual meeting on Sept. 13, 2023, seven board members were not there, and at two of the meetings five members were absent.

Half of those monthly meetings lasted less than 45 minutes, and four were adjourned in 37 minutes or less. The annual meeting adjourned in 44 minutes. Only three lasted more than an hour, the longest an hour and 32 minutes.

Since the agency’s closure and the resignations, the board has met weekly for hours of discussion, most of it in sessions closed to the public, William Sulton, the SDC’s outside legal counsel, told the Badger Institute.

The foundation for some of the problems was built into what was thought to be an idealistic and inclusive board structure for the more than 1,000 “community action agencies” created by the Economic Opportunity Act of 1964, part of President Lyndon Johnson’s blizzard of anti-poverty, civil rights programs. The SDC was created by state statute in 1963.

Boards like the SDC’s are tripartite, meaning their membership must consist of a third who are public officials, a third who are private sector leaders, and a third being people who are either low income themselves or who represent low income people, according to the National Community Action Partnership.

In addition to elected officials, board members include representatives of the African American Chamber of Commerce, the AFL-CIO Milwaukee Labor Council and Milwaukee Public Schools. Individuals representing low-income families are elected in six Milwaukee districts.

The results in Wisconsin and across the country are unwieldy at best. At full strength, the SDC board is supposed to have 18 members, six from each group.

More than 25 years ago, during one of the many board and management crises, state and local officials, including then-Mayor John Norquist of Milwaukee and then-Milwaukee County Executive Thomas Ament, pressured the SDC to trim the size of the board from 24.

Eighteen is still large in comparison to many other boards, though not as big as some other anti-poverty organizations.

Western Dairyland Community Action Agency, serving Buffalo, Eau Claire, Jackson and Trempealeau counties, for instance, has 24 board members. NEWCAP, serving 10 northeastern counties, has 22 board members. Racine Kenosha Community Action Association has 14 board members. Community Action Coalition for South Central Wisconsin, serving Dane, Jefferson and Waukesha counties, has a 13-member board.

Some say the number of board members is less important than who they are.

The process of choosing people for the SDC board “makes absolutely no sense,” said Ken Harris, host of Truth in the Afternoon, a talk show on 101.7 The Truth, a Milwaukee radio station. “Some commissioners are elected and some are appointed. Almost everyone on the board runs something else in the city, so you never get fresh eyes to look at things and say, ‘We shouldn’t be doing this.’”

Harris also is the chairman of and an associate professor in the Justice and Public Policy Department at Concordia University Wisconsin and a former lieutenant with the Milwaukee Police Department.

Harris criticized the SDC on air in late April for a failure of leadership and oversight and told his listeners he wouldn’t be surprised if more discrepancies emerge.

While praising the SDC’s “phenomenal work” over the years and objecting to its dissolution, Harris said SDC leadership has “got to go.”

Later, in an interview with a Badger Institute reporter, Harris said the “incestuous” nature of community groups in Milwaukee contributes to mismanagement. Agencies and organizations often hire friends and family for jobs or appoint them to boards instead of seeking the most qualified people, he said.

Those hired or appointed people then are beholden and “nothing ever quite changes … because we keep hiring the same people who have failed,” Harris said.

Nonprofit groups typically have little vested interest in change, said Harris. “Why change something if you’re making money off it?” he asked. “The goal of a non-profit group should be to eventually go out of business.”

Robert Miranda, a longtime community activist, said a lack of oversight in SDC programs wastes huge amounts of taxpayers’ money. In particular, Miranda, a spokesman for the Get the Lead Out Coalition (GTLO) and the Freshwater for Life Action Coalition (FLAC), cited lax control over weatherization and lead-abatement work funded by millions of dollars in federal grants.

“It really gets me when I see people like this putting their faith in organizations to do the right thing and they fail to do it,” he said, noting that he’s heard many complaints over the years about poor-quality work done by subcontractors hired by the SDC. “They’re not doing what needs to be done to protect the community.”

“If more people knew what was going on, they’d be upset, too,” Miranda added. “But they’re very good at keeping a lid on things.”

Hinton, the former CEO, didn’t respond to our request for an interview. Before he resigned, Moore, who is also CEO of the Wisconsin Housing and Economic Development Authority, referred all reporter’s inquiries to Sulton. Half a dozen SDC board members and former employees contacted by the Badger Institute either declined to talk or didn’t respond.

Lack of oversight 

The Badger Institute tracked a pattern of board struggles, mismanagement and lack of accountability by leaders of the SDC, going back more than 30 years.

• In January 1993, Robert M. Odom Jr. was fired as executive director amid a controversy over his travel expenses, long-distance phone calls and other management issues.
• In late 1995 and into early 1996, allegations of mismanagement and fiscal irregularity culminated in the resignations of then-executive director Barbara Burke-Tatum, of Elizabeth Coggs-Jones, chairperson of the SDC board as well as a Milwaukee County supervisor, and of Lloyd Barbee, the SDC’s attorney.

Coggs-Jones had authorized the construction of a $1.8 million food services building, even though a loan for the project had not been secured. The agency spent $500,000 on the project before construction was halted, even though only $100,000 had been approved by the SDC board.

• In June 1996, an audit by the state’s Legislative Audit Bureau and the Milwaukee County Department of Audit documented weaknesses in the SDC’s financial management, purchasing and personnel practices, and auditors recommended reforms.
• In December 1998, a nationwide audit of the U.S. Department of Agriculture’s federal meals program found that the SDC did not sufficiently document claims for its childcare centers or properly account for the federal funds the agency received.

A subsequent audit performed by the LAB found insufficient documentation for more than 700,000 meals served at facilities from March 1997 through March 1999.

• In 2012, due to concerns about mismanagement, the state terminated a contract with the SDC for administering the emergency assistance portion of the Wisconsin Works program. CEO Deborah Blanks abruptly resigned in January 2013 amid discontent over her leadership and management of the SDC. 
• In June 2013, after giving the SDC $20 million the year before, the federal Head Start program barred the SDC from applying for a $22 million grant. That ended more than 40 years of SDC involvement with Head Start. The SDC’s 2014 budget plummeted to around $16 million, compared to $38.9 million in 2013 and $50 million in 2021.

A Head Start spokesperson said the move was prompted by “ongoing concerns” about the health and safety of children in SDC Head Start centers, as well as the SDC’s “history of repeated deficiencies” in management systems and record-keeping.

Since 2003, SDC employees have filed at least 39 discrimination complaints with the state Department of Workforce Development, according to department records. (The dispositions of those cases were not available.)

Rapid demise 

The latest scandal at the SDC played out quickly in recent months.

A review in November by the state’s Division of Energy, Housing and Community Resources, part of the Department of Administration, revealed that some contractors hired by the SDC weren’t getting paid for weatherization services.

By March, the DOA suspended the weatherization program, and by month’s end the SDC laid off 28 employees, nearly a third of its workforce, due to “a sudden loss of funding,” according to a Worker Adjustment and Retraining Notification sent to the state’s Department of Workforce Development.

In early April, Patrick Kirsenlohr, the SDC’s finance director, was fired for misallocating weatherization funds. On April 18, Hinton resigned under pressure from the group’s board of commissioners. And on April 26, SDC employees were notified by email that the agency had temporarily suspended its operations.

The state Department of Administration and the City of Milwaukee began a review of SDC spending, including $10.4 million the agency received from the federal American Rescue Plan Act, according to a memo obtained by the Badger Institute.

The SDC owes contractors at least $219,647, and the city is trying to find other contractors who may be owed money. The review, however, found no evidence that the money spent by the SDC was misused, according to the memo.

Milwaukee Mayor Cavalier Johnson has since redirected city payments and unspent ARPA funds from the SDC to other programs, the memo said.

Thousands of area residents, meanwhile, have lost access to many of the group’s 30-some programs, which include tax,  elderly care, job training, meal and nutrition programs, and mental health and wellness services. Roughly 800 clients who used the SDC to prepare their federal tax returns were left in the lurch.

An unknown number of contractors that provide services such as lead abatement and home weatherization reportedly haven’t been paid. And an unknown number of employees still haven’t received their last paychecks, according to media reports.

No criminality involved

Fulton, the SDC’s outside legal counsel, told the Badger Institute there’s no evidence of criminal wrongdoing by Kirsenlohr. But he called the misallocation of funds “dishonest,” noting it violated generally accepted accounting principles and grant-program requirements that mandate certain funds be allocated to certain accounts, Fulton said.

State Sen. Eric Wimberger (R-Green Bay), co-chair of the Joint Legislative Audit Committee, said he would look closely at the results of a DOA audit to determine whether any further action would be required.

“These accusations of fiscal mismanagement raise major questions regarding this and similar quasi-governmental entities,” he said in an emailed statement. “Strong oversight is critical to good governance and is more important than ever with the continued influx of taxpayer funds to state and local agencies.”

Sulton said the SDC has every intention of reopening and in the past several weeks received support for that reopening from the office of Gov. Tony Evers and the heads of several state agencies through which federal community action funding flows.

“We do expect SDC to reopen and to hit the ground running going forward,” Sulton said.

Mark Lisheron is the Managing Editor of the Badger Institute. Ken Wysocky is a Milwaukee-area freelance journalist and editor with more than 40 years of journalism experience. Permission to reprint is granted as long as the authors and Badger Institute are properly cited.

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