State says Milwaukee Public Schools could lose funding over late finance reports

Wisconsin’s Department of Public Instruction is threatening to withhold funding from Milwaukee Public Schools after the district failed to submit required financial data, according to a letter released this week by the state agency.

But, in a statement Thursday evening, district officials said they’re working to resolve the issue, so that funding isn’t suspended.

Administrators and Milwaukee’s school board plan to hire an external consultant to oversee the process of submitting the required information, the statement says.

District vows to hire consultant, avoid suspension of funding

“The Department of Public Instruction has confirmed with MPS that the district will be able to fully recoup any delayed funds when reports are complete,” district spokesperson Nicole Armendariz wrote in an email. “This issue will not have any impact on current staffing, hiring, or other district operations.

In the letter dated May 24 to MPS Superintendent Keith Posley, DPI officials said they were still missing reports that are mandated by law, including two that are more than eight months overdue.

Until the agency has the information it needs, DPI may withhold a special education payment to MPS for the month of June, the letter warns. In June of last year, that payment totaled $15.7 million.

The letter references “errors” in shared costs reported by the Milwaukee district for the 2022-23 school year, which could result in a “significant reduction” in general state aid to MPS in the 2024-25 school year.

It says a lack of updated and accurate data from MPS makes it difficult to calculate state aid payment for districts across the state.

“In order for DPI to complete its June 2024 final aid report for all Wisconsin school districts, DPI will be forced to use what it considers is the most accurate 2022-2023 financial data submitted by MPS,” the letter says. “Using this unaudited data is a temporary measure necessary to avoid disrupting DPl’s obligations to calculate final 2023-2024 General School Aids. However, this temporary measure in no way fulfills MPS’s legal obligations to submit audited data on set deadlines.”

Department of Public Instruction orders corrective action plan

Going forward, state officials said any financial data submitted by MPS must be reviewed by an external auditor and DPI.

In order to avoid the suspension of funding, MPS will be required to submit a corrective action plan, detailing how the district will complete past-due reports and meet its deadlines in the future. The agency “strongly” urged the district to hire an external financial consultant to oversee the plan.

A Milwaukee school board meeting is scheduled for Thursday night. As of mid-day Thursday, the agenda included discussion and a possible vote on the superintendent’s proposed $1.47 billion budget for the next school year.

The agenda also includes a closed-door discussion related to the superintendent’s job performance and employment.

Milwaukee’s Board of School Directors released a joint statement earlier this week, promising that members are working with “DPI and multiple stakeholders to resolve the situation as quickly as possible.”

Duties of the elected school board include approving the budget and other policies governing Wisconsin’s largest school district. The board can also hire and fire the superintendent who manages day-to-day operations.

“We are committed to ensuring all requested information is submitted in a timely manner,” the board’s statement says. “The Board remains committed to its obligations to our students, their families, and the people of Milwaukee. We take this matter seriously and we are confident that we will be able to course correct promptly.”

In an interview with WPR, Milwaukee School Board Vice President Jilly Gokalgandhi said the board responded with urgency after getting DPI’s letter last Friday.

She said members are working to learn more about why the reports were late and how the matter escalated.

“The board is taking urgent action on this matter,” Gokalgandhi said. We are providing oversight and ensuring that we have the correct subject matter (experts) at the table to help us resolve this issue quickly.”

Asked Thursday afternoon whether the board might take action to fire the superintendent, Gokalgandhi said she couldn’t comment on personnel matters.

DPI Executive Director Sachin Chheda said in a statement this week that improving outcomes for Milwaukee’s children is a priority.

“We have been in very regular communication with the MPS superintendent, and the MPS Board of School Directors is also now deeply engaged in a dialogue with the DPI,” the statement said. “We believe they are committed to getting the district’s financial reporting back on course.”

The letter from DPI comes in the same month when the federal government suspended funding for 30 days to Milwaukee Public School’s Head Start, an early education and nutrition program for low-income children. Federal officials cited “deficiencies” such as failure to supervise children at all times.