MPS misses final financial reporting deadline, DPI confirms it will withhold more money

MILWAUKEE (CBS 58) -- Milwaukee Public Schools (MPS) Superintendent Brenda Cassellius confirmed Monday the district still has some remaining financial data it has yet to provide the state. The Wisconsin Department of Public Instruction (DPI) had previously set last Friday as a final deadline, and officials there said last month MPS would face consequences for missing that May 30 deadline.

In a statement Tuesday, a DPI spokesperson confirmed the state will withhold more money from MPS. 

This is the second straight year MPS missed May deadlines for submitting financial reports that were already long overdue. 

Cassellius told CBS 58 in an interview the district has submitted most of the remaining reports, but it still has "about 40" Level 2 validations that it plans to clear up "in the next couple of days."

"Took a little bit longer; it's a snarl challenge that we're digging out from under," Cassellius said. "And so, [we] needed just a little bit more time, and I really wanna thank the state for working with us on that timeline."

MPS' financial data has a statewide impact. As Wisconsin's largest district, its finances affect the aid estimates the DPI provides every other district in the state.

DPI officials highlighted that last May when they blasted MPS for continuing to miss deadlines. That, combined with the discovery MPS had previously provided inaccurate information that led to overpayments, led to the ouster of former Superintendent Keith Posley.

Last month, Deputy State Superintendent Tom McCarthy said the state would withhold more money from MPS if it missed the May 30 deadline.

"Yes [we would withhold aid], and I think what we want to do, as the department, is help construct a document that lets them see, 'Here's what the department will do in response to something being late and here's what we can do to incentivize you hitting deadlines,'" McCarthy said in a May 23 interview.

Last summer, the state withheld $16.6 million in special education funding from MPS because of its failure to submit required financial reports. McCarthy said last month MPS still had not done enough to get that funding released.

In a statement Tuesday, McCarthy confirmed MPS will continue to have that $16.6 million withheld, and the state will now withhold more money as a result of Friday's missed deadline.

“Withholding funding is a last resort and comes after countless hours spent supporting MPS. We’ve seen real progress in recent months under the leadership of Dr. Brenda Cassellius, and we recognize and appreciate the hard work that has gone into those efforts," McCarthy said. "At this point, there are still some required priority actions which were needed by the May 16 and May 30 deadlines. Because of that, we will continue to withhold the $16.6 million from the prior year and begin withholding new aid for this year."

DPI said the exact amount of new aid being withheld and what MPS must do to release those dollars will be shared later this week in a direct message to the district

McCarthy said in May MPS would be able to eventually obtain any aid withheld last year or this year, but it had to first provide those audited financial reports.

"We have to make sure we're not hurting kids," McCarthy said in last month's interview. "But also get off this hamster wheel a little bit with this cycle now we've seen twice of the district saying, 'Hey, we got this,' then getting to the end of the line and not having it."

Cassellius said she has yet to be informed by the DPI whether it intended to withhold more money this year.

"No, they haven't told me that. I think that they have been really trying to work with us," she said. "They understand the nature of matching our codes up and how really challenging that is."

Cassellius said she was certain MPS won't find itself in this situation next year. District officials previously said they were doomed this year because it took until December to finalize the reporting that was supposed to be done last May. 

"Understandably, I'd be frustrated, too," Cassellius said when asked what she'd tell parents and taxpayers. "I can guarantee and share with the families that we have a plan in place to work with outside vendors who are going to- contractors who are going to work with us on project managing next time for [2025 fiscal year's] audit."

A proposed budget and hints at future cuts

Dollars and cents will continue to be the most closely watched topic at MPS for the next few weeks. Cassellius is set to unveil her proposed 2025-26 budget this week and will present it to the school board Thursday night.

Cassellius said one feature she'll want the public to notice is it'll be easier to digest. Posley's 2024-25 proposed budget was more than 1,000 pages long.

"I think they'll see that," she said. "I think they'll see that today when we release our budget, that we have distilled the budget down from, like, 16,000 lines of budget to really a 50-page document the public can understand."

As of Monday night, the 2024-25 proposed budget was still the most recent document on the district's financial services and budget planning web page.

Despite voters narrowly passing a $252 million referendum in the spring of 2024, Cassellius said the district was still facing tough fiscal times ahead.

"I do know that we are facing a pretty large shortfall for the upcoming school year because of the way we calculate our vacancies," she said. "And I want to be real transparent with the public that next year is gonna be a really hard year for us. We are gonna have to make budget cuts if, in fact, we don't see new revenues from the state Legislature that are keeping pace with what our students need."

Cassellius said the main drivers were costs related to special education, as well as the lingering effects of inflation raising costs across the board. She expressed hope the next state budget will come with increased state funding, particularly for special education reimbursement. 

She said she had an informal conversation Friday night with Gov. Tony Evers. Cassellius said she previously had a meeting set with Republican leaders, Assembly Speaker Robin Vos and Senate Majority Leader Devin LeMahieu, along with the two education committee chairs, Rep. Joel Kitchens and Sen. John Jagler.

However, Cassellius said that meeting with GOP leaders was cancelled because Republicans had to caucus that day, and she said the district was still working to reschedule that meeting.

Cassellius added she was also still looking to find ways MPS could also be more efficient in how the district spends the money it is receiving.

"Two truths can be the same," she said. "So we still have to also tighten our belt within the district and use every dollar efficiently and get it to the kids that need it the most."

Editor's Note: This story has been updated to include a statement DPI sent Tuesday confirming it will withhold additional aid from MPS.