State officials are reprimanding the Milwaukee Public Schools district and threatening to cut off funding to the district after district officials failed to submit important financial reports, some of which were due more than eight months ago, according to a recent letter to Milwaukee Public Schools Superintendent Keith Posley made public Wednesday.
After months of MPS administrators failing to submit required paperwork to the state education department, members of the Milwaukee School Board intervened.
Giri Gokhalgandhi, vice chair of the commission, said committee members were working with “experts in the field” to chart a way forward, which could include hiring more staff, filling vacancies in district finance departments or bringing in outside help to prepare needed reports for state officials.
School board members said in a joint statement Wednesday that they are “committed to ensuring all requested information is submitted in a timely manner.”
“We are taking this matter seriously and are confident that we will be able to course correct quickly,” the statement said.
To avoid a funding cut, MPS must complete all missing reports and submit a corrective action plan to help the district meet upcoming deadlines, according to a letter DPI sent to Posley. DPI recommended that MPS hire an outside financial consultant as soon as possible to complete the plan.
“Not only are many required reports incredibly delayed, but MPS has a tendency to submit incomplete data and also request changes to data without the necessary documentation to accompany the requests,” DPI Deputy State Superintendent John Johnson said in the letter.
DPI Executive Director Sachin Chheda said in a media statement Wednesday that DPI and members of the Milwaukee School Board are currently “deeply engaged in dialogue.”
“I believe they are committed to getting the district's financial reporting back on the right track,” Chheda said in a statement.
MPS communications director Nicole Armendariz did not respond to questions Wednesday about why the district's report was delayed.
“The district is working with the board and stakeholders to provide all information as quickly as possible,” she said.
The news comes as Milwaukee School Board members prepare to vote Thursday on the district's budget for the 2024-25 school year.
The move also came shortly after federal officials cut funding to MPS' Head Start program after the district failed to correct problems after the abuse allegations.
MPS is late in submitting its financial report, which was due to be submitted in September last year.
In the letter to Posley, DPI officials said MPS has not submitted its annual report and audit for fiscal year 2022-23 and certified budget data for fiscal year 2023-24. Those documents were due in September and December of last year.
In his letter, Johnson said MPS's failure to provide financial data could affect every school district in the state, and DPI needs the information from MPS by July 1 to estimate how much state funding each district will receive for the 2024-25 school year.
Mr Johnson said that without that information, DPI would be forced to use unaudited financial data to publish MPS budget estimates on time. He noted that “this interim measure does nothing to satisfy MPS's legal obligation to provide audited data within the established deadlines.”
Chheda said it's common for some school districts to experience delays in financial reporting, but MPS' delay stands out as being “particularly slow.”
According to the letter to Posley, DPI staff have been meeting with MPS quarterly since April 2023, monthly since February of this year, weekly since March 15 and daily in May of this year.
The state could withhold MPS' special education funding and general aid.
In its letter to Posley, DPI threatened to withhold MPS's June payments for special education services. Last year, the district's June payments totaled $15.7 million, according to the letter.
According to the letter, if the district does not submit the required reports, DPI may withhold future state aid payments to MPS, including the June general state aid payment.
Chheda told the Journal Sentinel that once MPS completes its report, the withheld funds will be recovered in full.
“There is no intention to take any punitive action and once the necessary financial data is provided, MPS will be able to recover any funds to which it is entitled,” Chheda said.
MPS may receive less state funding than expected due to past errors
Johnson also said in his letter that MPS' errors in reporting expenses for 2022-23 will likely result in a “significant reduction” in state general aid payments for 2024-25.
Gokhalgandhi said board members are working to learn more about the error and its potential impact.
School Board to investigate Superintendent Keith Posley's performance
The board met in closed session Tuesday night to discuss Possley's “employment, compensation and performance evaluation data.” The board has not commented on the content of the meeting.
Board members are expected to continue discussing Posley's hiring behind closed doors at Thursday's meeting. The item was added to Thursday's agenda on Wednesday.
MPS's previous audit uncovered problems with financial reporting
The 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 they found MPS had not prepared financial statements “in accordance with generally accepted accounting principles” or in line with state and federal funding schedules.
In a December report to the school board, MPS Chief Financial Officer Martha Kreitzman said staff vacancies were part of the problem and that the district was working to fill vacancies.
“Have you ever been faced with a challenge and not known which direction to go in?,” Kreitzman said during the December meeting. “The challenge seemed impossible. That's exactly what our finance department was facing because we had vacancies in key positions.”
Kreitzman said the district has worked with staffing firm Robert Half to secure more staff and has enlisted financial consultants from Protiviti to address issues identified in the audit.
“It's not about the situation we were put in, it's about how we responded to it,” Kreitzman said in December. “I knew that adversity is a motivator to move forward and not settle for the status quo. We were going to use this moment to be better than we were before. You've heard the phrase, 'build back better.'”
