MILWAUKEE— Money misuse at The Housing Authority of the City of Milwaukee (HACM) has been detailed in an internal letter that’s now public. The letter, written by Chief Financial Officer Brad Leak, was confirmed at a special HACM Board meeting on Friday, Jan. 31.
It said since 2019, HACM took $2.8 million from its Section 8 Voucher Program to pay administrative costs, including staff salaries.
HACM’s roughly $42 million Section 8 Voucher Program assists low-income individuals with housing and is the entity’s largest program.
A 2022 audit from U.S. Housing and Urban Development (HUD) found the program to be a fraud risk and ordered HACM to bring in a third-party to manage it. HUD also found a roughly $2.5 million discrepancy in financial reports for that program. A reason for that discrepancy had not been explained.
Spectrum News has been reporting on issues within HACM since 2023, after residents began voicing health and safety concerns, primarily at HACM’s public housing buildings.
HACM’s Jan. 31 board meeting focused on a newly entered agreement with HUD to get the agency back on track. Leak, in his letter, said HACM could go bankrupt within 45 days.
At the board meeting, Leak clarified to Spectrum News that if HACM had not acted, bankruptcy was imminent. Entering into this agreement with HUD mitigates that risk.
HUD’s seven-page agreement includes a list of requirements and deadlines that HACM must adhere to. That included submitting overdue financial statements from 2023, submitting progress reports to HUD every 60 days and HUD-required inspections on all public housing properties.
The agreement comes after an October HUD report detailed inaccurate financial reporting, insufficient management of leadership by the HACM board, a lack of high-quality public housing and inadequate property management.
HACM acknowledged the HUD agreement and parts of Leak’s letter in a statement Friday. It said, in part:
“HACM notified officials that previous fiscal management deficiencies and accounting errors had allowed restricted federal funds to be used incorrectly for some administrative costs and staff salaries.”
“The board also is in the process of identifying a potential independent, third‐party professional to conduct a forensic audit and help examine some past financial management issues.”
“Specifically, the HUD‐HACM agreement requires agency staff to follow a defined timeline and take distinct action steps to address a range of issues, including fiscal management, tenant services, housing conditions, facility operations, and related matters.”
The financial woes come as HACM confirmed it laid off 20 employees on Thursday. A spokesperson said in a statement:
“The Housing Authority of the City of Milwaukee (HACM) has made the difficult decision to reduce our 238-person workforce by 20 employees as part of a necessary effort to manage costs. We understand the profound impact this has on our employees, their families, and our entire HACM community. This decision was not made lightly, but it is a step we must take to strengthen the agency’s financial stability, fulfill the requirements of the HUD Recovery Agreement, and work toward emerging from our HUD-designated troubled status.
Our priority is to minimize the impact on residents, voucher holders, and partners. To do so, we are realigning staff while also implementing additional financial measures, including reducing nonessential expenditures and instituting a hiring freeze.”
Read the Recovery Agreement below:
Read the sustainability plan below:
