State officials are admonishing Milwaukee Public Schools and threatening to suspend funding to the district after MPS officials have failed to provide key financial reports, some of which were due over eight months ago, according to a recent letter to MPS Superintendent Keith Posley released to the public Wednesday.
Following months of failures by MPS administrators to submit the required documents to the state Department of Public Instruction, Milwaukee School Board members are stepping in.
Jilly Gokalgandhi, vice president of the board, said board members are working with “subject matter experts” to chart a course forward, which could include adding staff, filling vacancies in the district’s finance department or bringing in outside help to produce the needed reports for state officials.
In a joint statement Wednesday, school board members said they are “committed to ensuring all requested information is submitted in a timely manner.”
“We take this matter seriously and we are confident that we will be able to course correct promptly,” the statement said.
To avoid the funding suspension, MPS must submit a corrective action plan to complete all of the missing reports and ensure the district meets future deadlines, according to DPI’s letter to Posley. DPI recommended MPS hire an external financial consultant as soon as possible to complete the plan.
“Not only are many required reports incredibly late, MPS has demonstrated a pattern of submitting incomplete data, as well as requesting data changes without having the required documentation for the request,” DPI Deputy State Superintendent John Johnson said in the letter.
In a media statement Wednesday, DPI Executive Director Sachin Chheda said DPI and Milwaukee School Board members are now “deeply engaged in a dialogue.”
“We believe they are committed to getting the district’s financial reporting back on course,” Chheda said in the statement.
Nicole Armendariz, communications director for MPS, didn’t answer questions Wednesday about why the district’s reports were overdue.
“The district is working with the board and working with our stakeholders to provide all the information as quickly as possible,” she said.
The news comes as Milwaukee School Board members are preparing for a possible vote on the district’s budget for the 2024-25 school year on Thursday.
It also comes shortly after federal officials suspended funding to MPS’ Head Start programs, finding the district has failed to correct problems after incidents of maltreatment.
MPS is late on financial reports due last September
According to the letter to Posley, DPI officials said MPS had failed to provide an annual report and audits for the 2022-23 school year, as well as certified budget data for the 2023-24 school year. The documents were due in September and December of last year.
In the letter, Johnson said MPS’ failure to provide financial data could impact every school district in the state, as DPI needs the information from MPS in order to estimate, by July 1, the amount of state funding that will go to each district for the 2024-25 school year.
Without that information, Johnson said DPI will be forced to use unaudited financial data for MPS in order to publish its funding estimates on time. He noted the “temporary measure in no way fulfills MPS’s legal obligations to submit audited data on set deadlines.”
Chheda said while it’s common for a few school districts to run late on their financial reports, MPS’ delay stands out for being “especially late.”
According to the letter to Posley, DPI staff have been meeting with MPS quarterly since April 2023, then monthly since this February, weekly since March 15, and daily this May.
State could withhold MPS’ special education funding and general aid
In the letter to Posley, DPI threatened to withhold MPS’ June payment for special education services. Last year, the district’s June payment amounted to $15.7 million, according to the letter.
DPI could also withhold future state aid payments to MPS if the district does not submit the required reports, the letter said, including a general state aid payment in June.
Chheda told the Journal Sentinel MPS will be able to fully recoup any suspended funds if it completes its reports.
“There is no intent to be punitive and MPS will be able to recoup the funds it is eligible for once the required financial data is provided,” Chheda said.
MPS could receive less state funds than expected due to past errors
Also in the letter, Johnson said MPS would likely see a “significant reduction” in state general aid payments in the 2024-25 school year because of MPS errors in reported costs for the 2022-23 school year.
Gokalgandhi said board members are working to learn more about what the errors were and the potential impact.
School board examines superintendent Keith Posley’s job performance
Board members held a closed session meeting Tuesday night to discuss Posley’s “employment, compensation, and performance evaluation data.” Board members haven’t said what happened in that meeting.
Board members are scheduled to continue discussing Posley’s employment at their meeting on Thursday, again in closed session. The topic was added to the Thursday agenda on Wednesday.
Previous audit of MPS found financial reporting issues
A previous audit of Milwaukee Public Schools, conducted by Baker Tilly for the 2021-22 school year, identified several weaknesses.
Auditors told board members in May 2023 that they had found MPS had not prepared financial statements “in conformity with generally accepted accounting principles” or in line with state and federal funding schedules.
In a December update to the school board, MPS Chief Financial Officer Martha Kreitzman said staff vacancies were part of the problem and the district had been working to fill those.
“Have you ever been faced with a challenge and didn’t know what direction to go?” Kreitzman said at the December meeting. “The challenge seemed impossible. That is what finance was faced with as we had essential position vacancies.”
Kreitzman said the district had worked with employment agency Robert Half to find more staff, and enlisted help from Protiviti financial consultants to address problems identified in the audit.
“The point isn’t the circumstances we found ourselves in, but how we responded,” Kreitzman said in December. “I knew that adversity has a way of motivating to move beyond complacency. We were going to use this moment to become better than before. You’ve heard the term, ‘build back better.'”
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