SDC explains its participation in Emergency Assistance; ending participation in W-2

Written by admin   // December 31, 2012   // 0 Comments

The Social Development Commission (SDC) began administering the Emergency Assistance contract for W-2 in April of 2010. When SDC took over the program, it continued a subcontract with Community Advocates for the portion of program services that assists the homeless and families left homeless by fire or natural disaster. This was the part of the program that Community Advocates had provided for other W-2 agencies for several years prior to SDC’s involvement. Eventually, SDC decided it would be most efficient to operate the entire Emergency Assistance Program and ended the subcontract with Community Advocates.

Prior to and after SDC took over the entire program, Community Advocates did not communicate with SDC that they had further subcontracted a significant portion of their work with the American Red Cross in Southeastern Wisconsin.

Once the transition to SDC was completed, SDC became aware that Red Cross had been and was continuing to provide Emergency Assistance services to a number of Milwaukee County residents. This discovery was made despite the Red Cross not having submitted any bills for payment to SDC because they had not been informed by Community Advocates that their subcontract was now transferred to SDC.

SDC had several options upon learning this, including negating the contract. The agency chose to continue working with Red Cross while at the same time conducting an audit by W-2 Quality Assurance staff to ensure SDC would learn the breadth and scope of Red Cross’ involvement with the program. This close examination of the program was completed on the initiative of SDC.

The audit raised concerns on SDC’s part because Red Cross indicated their processes had been accepted by Community Advocates and the State of Wisconsin prior to April of 2010. Those processes did not meet the written procedural and paperwork standards SDC had established. SDC’s close scrutiny also provided signals that some individuals receiving the Emergency Assistance through the sub-contractor may have used some of the funds inappropriately.

Following its established procedures, SDC sends checks for rent payments or deposits directly to landlords rather than the client, something that was not being done in some cases prior to SDC taking on the administration of the program. A separate audit was conducted as part of the agency’s internal controls by SDC’s Quality Assurance Division to examine thousands of processed payments which confirmed our process was valid.

SDC and the Red Cross discussed this situation and mutually decided the most beneficial course of action was to end the contract at the close of 2011. During the time of the subcontract with SDC, Red Cross disbursed approximately $60,000 to residents. Since that time, SDC has processed all Emergency Assistance payments internally. SDC contacted the State to report their findings. The State recommendation was to conclude the audit, negotiate a payment with Red Cross, and move forward, precisely the action SDC has taken.

Since ending the Emergency Assistance contract on Dec 31, 2011, the Red Cross and SDC have continued to work together by referring clients to each other’s respective services. SDC has also maintained a productive working relationship with Community Advocates including a partnering relationship in the Energy Assistance Program.

In summary:

• SDC began to administer the Emergency Assistance contract in April of 2010 and initially continued the pre-existing subcontract with Community Advocates

• Upon taking on the administration of the entire program and ending the subcontract with Community Advocates, SDC learned on its own that Community Advocates subcontracted some of their work to Red Cross

• Red Cross continued to do the Emergency Assistance work after the contract changed hands, not having been notified of the change

• Through an audit conducted by SDC W-2 Quality Assurance personnel, it was discovered that Red Cross continued the same documentation process they had used in the past despite not seeming to meet State standards

• When given the request and opportunity to change those procedures, Red Cross chose not to and, by mutual decision, the two agencies ended the contract effective at the end of 2011

• SDC informed the State of the situation, received their input, and implemented the agreed-upon approach

•SDC’s Quality Assurance Division conducted a separate audit that reviewed thousands of payments to validate the payments SDC was issuing on behalf of clients

• SDC followed its procedures to send checks directly to the landlords and not the clients to assist with rent payments or deposits

In conclusion, SDC found itself in charge of a program with a subcontractor who had not been informed of the process and documentation requirements or that SDC had assumed the administration of the program. SDC’s plan to address the situation followed State recommendations and was approved as the proper approach. The plan included SDC and Red Cross mutually agreeing to terminate the subcontract and the agency directly taking on administration of the Emergency Assistance work.

It was the diligence of SDC staff that revealed the lack of communication and the potential problems it had caused. Since becoming aware of that problem, SDC has taken steps, in concert with the State, to correct the problems and keep the W-2 program operating in an efficient and effective manner that is fully compliant with all requirements.




Community Advocates


Emergency Assistance



natural disaster




Social Development Commission



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