Hired MPS financial consultant says two key problems led to financial crisis

 

MILWAUKEE (CBS 58) -- Nearly three weeks into his job of guiding Milwaukee Public Schools (MPS) through a financial crisis, Todd Gray says two issues, more than anything else, led to the mess that could cost the district as much as $50 million in state aid.

Gray, a former Waukesha superintendent, was hired by the Milwaukee Board of School Directors on June 3, the same day MPS Superintendent Keith Posley resigned. Since then, Comptroller Alfredo Balmaseda was fired, and Chief Financial Officer Martha Kreitzman retired. Gray has assumed the responsibility of overseeing MPS' finances on a day-to-day basis.

In an interview Thursday with CBS 58, Gray said his review of what went wrong begins with the district's use of financial reporting software that doesn't fit with the system used by the state Department of Financial Instruction (DPI). 

While other districts have transitioned to newer software that allows those districts to feed financial data directly to the DPI, Gray said MPS' software requires financial staffers to plug numbers into a spreadsheet, then re-enter them into the DPI's system.

"When information goes on a spreadsheet, all it takes is one calculation to throw the whole thing off," Gray said.

Gray said one of his final suggestions for MPS will be updating its internal software to a system that better aligns with what the state uses. Even then, Gray said that transition could take two years to complete, and it'll be especially arduous for MPS because those updates will affect the more than 100 schools across Wisconsin's biggest district.

Beyond the reporting system, Gray said staffing is the other major challenge. MPS' corrective action plan noted the district hopes to have another 12 staffers in its finance office than it currently has.

MPS had been trying to address the shortage. Through an open records request, CBS 58 obtained a contract MPS reached in November 2022 with Delaware-based staffing firm, Robert Half International. 

The contract's scope of services listed help in providing temporary financial and human resources staffing between November 2022 and November 2025. MPS agreed to pay the firm $500,000.

"And that maybe wasn't quite as effective as it could've been," Gray said of the temporary staffing solutions.

Gray said because MPS had an unusual and inefficient process for reporting data to the DPI, it would be challenging to get new employees or temporary staffers up to speed on how to avoid mistakes.

As for the overriding question of who knew what and when, Gray said he didn't know enough to provide those answers. A DPI spokesperson told CBS 58 last Friday at least some people in MPS knew by late March there could be an "impact to state aid" in response to a question asking when the state knew MPS would be losing money to account for past overpayments caused be erroneous reporting.

The spokesperson then clarified this week the state did not know whether the "impact to aid" would likely be a loss of state funding until mid-April at the earliest. 

"I don't wanna, I guess, guess that someone should have or said something to the board at a particular time because I just don't know what that is," Gray said.

While there has been conversation in recent weeks about whether MPS needs a new form of governance, Gray said he believed a part-time elected board could capably oversee a $1.5 billion budget as long as the administration was up front about the district's finances.

"I don't see a problem with the board," Gray said. "I think you need a solid CFO, you need a solid comptroller, you need solid financial managers. I mean, this district did very, very well for years under the current governance system."

Gray's contract currently runs through July 31. The district is paying him up to $48,000 for those two months of work. When asked if he plans to sign another contract with MPS since the district currently is looking for an interim superintendent, a CFO and a comptroller, Gray said "there's a likelihood" he will stay with the district deeper into the summer.