Wisconsin Department of Justice Sues SDC

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 that 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 (District 6), State Sen. Dora Drake (District 4) and State Rep. Kalan Haywood (District 16) sent a letter to SDC’s Board of Commissioners, asking the agency to voluntarily de-designate.

In the letter, the state legislators said that 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 that 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 does not have the 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.

This article first appeared on Milwaukee Neighborhood News Service and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.