How MPS' failure to report finances could impact funding for all schools

MADISON, Wis. (CBS 58) -- Milwaukee Public Schools' failure to report their finances to state education officials not only puts them at risk of losing millions of dollars, but it could impact every school district in the state.

That's one scenario the Department of Public Instruction warned MPS in a letter Friday, which was made public Wednesday.

Without knowing how much money MPS spent and "multiple errors" in reporting during the 2022-2023 school year, DPI said it "jeopardizes the timing of aid reports, negatively impacting every Wisconsin school district."

"If the largest school district in the state doesn't have accurate data or audited financials, the impact on the rest of the state is -- we are not sure we're giving them the right amount of money," said Sachin Chheda, executive director of DPI.

At stake, $15.7 million in special education funding could be withheld from MPS, a figure DPI said they estimated based on the most recent data. That's in addition to a likely "significant reduction" in general state aid payments for MPS in the 2024-2025 school year, according to DPI's letter.

Milwaukee schools missed a series of financial deadlines, some dating back to September.

Since April of last year, DPI said they've been meeting with MPS to try and import accurate calculations of their cash flow. Those meetings ramped up in February, then became weekly as of March.

CBS 58 asked DPI why they did not disclose these financial problems earlier and before MPS asked voters to approve a $252 million referendum.

"I think that's a fair question," Chheda said. "I don't think in March, as you said leading up to the referendum, it was clear they were behind as they were."

Chheda added, "It's not fair to suggest DPI knew the scale of the problem is what it is, you know two months ago."

Sen. Chris Larson, a Milwaukee Democrat, questioned why it took MPS more than eight months to submit proper financial data to the state.

"The fact they did not disclose they were working through this or trying to work through, is concerning," he said. "This was not something they frankly could have resolved months ago."

Milwaukee’s school board issued a statement yesterday saying board members were made aware of the funding threat Friday and are working to avoid any financial hits.

“We are committed to ensuring all requested information is submitted in a timely manner," the statement said. "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.”

Larson said his biggest concern is how the GOP-controlled Legislature may use this against MPS when crafting the next state budget.

"Every dollar counts and so it's concerning," Larson said. "Hopefully they'll be able to address this because obviously they've been a target of the ire of Republicans for the last decade plus."