MPS finance scandal: Board puts off budget vote as state threatens to withhold money over late, inaccurate data reporting

 

MILWAUKEE (CBS 58) -- In a twist Thursday night, the board for Milwaukee Public Schools (MPS) opted to delay a vote on approving a new budget for the district.

The sudden motion came two hours into a meeting that included numerous crowd disruptions. At multiple points, board President Marva Herndon summoned police to remove attendees who repeatedly booed and interrupted Superintendent Keith Posley and the district's financial officers.

The crowd's anger stemmed from news this week state education officials are threatening to withhold aid from MPS because the district still has not provided an audited accounting of its 2023 budget.

The Department of Public Instruction (DPI) sent a letter Friday to Posley and the MPS board outlining how the district's 2023 financial data was now eight months overdue, and the delay was making it impossible for the state to calculate early aid estimates for every Wisconsin school district ahead of the upcoming school year.

The letter noted DPI staff, going back to February and March, went from monthly meetings to weekly meetings with MPS officials to address the problem. As of this month, those meetings are now happening daily, according to the letter.

Without the 2023 numbers, DPI is threatening to withhold MPS' June special education funding. Last year, that amount was $15.7 million.

While DPI officials expect MPS to eventually get that money, even if it's delayed as the wait goes on, another concern is the most recent data the district has provided is inaccurate.

Because of those errors from 2022-23, the letter warned "there is likely to be a significant reduction" in general state aid for the 2024-25 budget.

In such a scenario, either the district or taxpayers would end up suffering. MPS board members could make cuts to make up for those losses or they could raise property taxes, assuming there's no change to the state funding formula.

Milwaukee voters narrowly approved a $252 million referendum in April, and the DPI letter illustrated how MPS administrators knew they were in hot water over late, inaccurate data reporting but kept that information from the public ahead of the spring election.

About 20 parents and MPS employees at Thursday's meeting were furious, citing the referendum and calling for Posley's removal.

"Like they say, cut the virus out. The virus is Posley and his administration," Jamel Harris, a parent of two MPS students, said. "We can start there."

Amid pressure from the audience, board Director Xela Garcia made a motion to hold off on approving the budget. Her motion passed on a 6-0 vote; two members were excused from the meeting, and one seat remains vacant after Aisha Carr's resignation.

The meeting then moved into closed session to discuss litigation; Posley did not answer questions reporters shouted as he went back into the private meeting space.

What did board members know, and when did they know it?

MPS Board Vice President Jilly Gokalgandhi said she could not attend Thursday's meeting because of travel plans. She agreed to do a virtual interview ahead of the meeting.

Gokalgandhi said she learned about the financial reporting problems from the DPI letter Friday.

When a CBS 58 reporter asked if she had learned of any reporting issues prior to the letter, Gokalgandhi asked to go off-the-record. The reporter declined the request.

"So, again, the board was informed about this issue on Friday," Gokalgandhi replied.

During Thursday's meeting, board Director Darryl Jackson told the audience he, too, felt the administration had left him in the dark.

"When it comes to certain information, I will say I don't know, and somebody said, 'Director Jackson, you shouldn't say that.' It's the damn truth!" Jackson said. "I don't!"

However, the district's money mess is not a complete mystery. The nonpartisan Wisconsin Policy Forum flagged the lack of recent, audited data when it put together a brief on MPS' proposed budget earlier this month.

"We were left to try to analyze requested revenues and expenditures in the proposed budget without knowing what actual expenditures and revenues looked like for 2023," the forum's president, Rob Henken, said in an interview Thursday.

Henken said it was difficult to say how much general aid MPS could lose because it's not yet known how far off the district's 2022-23 numbers were.

Eventually, the board will vote in the fall on a final district budget once state and federal aid figures are finalized.

"What we can't assess is just how large that swing might be," Henken said.

What is certain is a special public hearing to discuss the financial data reporting problems is scheduled for Monday night. During one of the Thursday's many disruptions, Harris vowed Monday's hearing "will be lit."