Milwaukee Public Schools to lose $42.6 million as correction for past data mistakes

 

MILWAUKEE (CBS 58) -- State education officials' early aid estimates for the upcoming school year show Milwaukee Public Schools (MPS) will lose about $42.6 million to make up for a previous overpayment the district received due to inaccurate data it provided.

The Wisconsin Department of Public Instruction (DPI) cautioned the gap between Monday's July 1 estimate and the final aid figures, which come out Oct.15, could be considerably bigger than in years past.

A DPI spokesperson said in an email the adjustment number is $42,566,823.

It's because MPS still has not provided a final, audited version of last year's finances, which were due last September. The district's corrective action plan calls for those reports to be finished by this September.

"Due to previously reported delays in financial data reporting by Milwaukee Public Schools, the DPI anticipates greater than usual volatility in these estimates," a DPI statement read.

Altogether, the state estimates MPS will receive $81.1 million less than it did in the 2023-24 school year.

Essentially, the district should have received something closer to $595 million in state aid, but because of the bad data MPS provided for the 2023 fiscal year, it received $636 million.

For next year's estimate, the $42.6 million clawed back leaves MPS in line to receive a little more than $555 million. 

The second and third-biggest districts in southeastern Wisconsin, Kenosha and Racine, both project to see an increase in state aid next year.

Henry Leonard, one of the board's eight current directors, said making up that entire amount will be challenging, especially since MPS faced a deficit even after voters narrowly approved a $252 million referendum in April.

"I think it's gonna be difficult," he said. "I'll be very honest with you."

Jilly Gokalgandhi, vice president of the Milwaukee Board of School Directors, told CBS 58 last month she believed the district would be able to make up the budget gap without an additional property tax increase. Leonard said Monday he agreed.

"I don't, personally, want to even think about raising the tax levy," Leonard said. "I just find that to be- that this is not the route to go."

Milwaukee voters narrowly passed the $252 million referendum in April. One month later, DPI officials sent the district and board a letter stating MPS was jeopardizing state aid estimates for every Wisconsin district by not having provided audited financial reports.

The scandal has led to the resignations of Superintendent Keith Posley and Chief Financial Officer Martha Kreitzman. The district also fired Comptroller Alfredo Balmaseda, who has insisted the problem was a short staff and outdated financial reporting software.

Leonard said he was hopeful the district would be able to make up the $42.6 million by dipping into some of its savings and not replacing many of the staff who retired or resigned over the past year.

Administration officials told board members at last week's meeting of the Accountability, Finance and Personnel Committee that 371 classroom faculty members had retired or resigned since July 1, and there were 435 resignations and retirements among classified staff.

"My guess is that we'll be able to look at those numbers from that group also and see how much that will help us to circumvent those numbers," Leonard said.

The board last week approved 4.12% pay raises from employees ranging from administrators to teachers. Leonard said going back on any of those salary commitments was off the table.

"I know we're not gonna take that back," he said. "We're gonna do everything in our power to not disincentivize staff members and all of a sudden, say, 'Guess what? We're not gonna give you the raise.' That probably will not be the wisest choice of actions to take."

Todd Gray, the former Waukesha superintendent who MPS hired as a consultant and now is the district's acting chief financial officer, told CBS 58 last month he also agreed the biggest issues were unfilled vacancies in the district's financial office and the use of software that's not compatible with the DPI's reporting system, increasing the odds of errors as MPS staffers manually entered data for the state.

"It’s important to understand that the numbers shared today are still estimates, and a lot will change between now and October. In the meantime, MPS will use this information to evaluate strategies to make adjustments,” Gray said in a statement Monday. “I look forward to sharing these plans with the public once a final estimate is available in the fall.”

Leonard said Monday's estimate should increase the district's long-term urgency around ensuring its buildings footprint mirrors the declining enrollment MPS has seen over the last two decades.

The district is expected to share a set of recommendations this fall outlining its facilities plan for the years to come. Leonard said, realistically, that includes closing schools.

"In my mind, we're looking at a possibility of three or four buildings that are really low attendance and making sure we do the repairs and maintenance to fix up one of the buildings," he said. "And make sure we have space for those students."