MPS officials knew about state aid reductions before referendum vote

MILWAUKEE (CBS 58) -- State education officials said Friday administrators for Milwaukee Public Schools (MPS) knew the district was facing a reduction in state aid as early as late March.

Those adjustments from the Department of Public Instruction (DPI), now estimated to be somewhere between $35 million and $50 million, will make up for overpayments MPS previously received as a result of bad data it provided the state.

Chris Bucher, a DPI spokesperson, told CBS 58 Friday the state first became aware in late March MPS may have submitted incorrect data that led to the state giving more money than it should have.

On April 2, Milwaukee voters narrowly approved a $252 million referendum for the district. 

Friday's release is the first public confirmation at least some officials at the highest levels of MPS knew they were facing a state aid reduction because of past mistakes, but voters were never informed of that before the April vote.

"The subject of an impact to aid first came up during a discussion in late March, although we cannot confirm an exact date," Bucher said in an email. "Because of problems with MPS data, we have been working since then to drill down and put more clarity on this number."

We wanted to ask two top district administrators what they knew at the time.

At recently retired Chief Financial Officer Martha Kreitzman's home, a person inside did not answer the door.

And no one answered at soon-to-be-resigned Superintendent Keith Posley's home.

When the crisis broke, board members pledged transparency. But instead, leaders have dodged questions about the district they lead and the community they serve.

Since we've had interview requests ignored, we again went to MPS headquarters Friday to try and speak with board Vice President Jilly Gokalgandhi.

We asked, "When are we able to do this? When are we able to talk? You talk about transparency, you talk about accountability." She said, "Yes, and I did give some interviews," referring to two interviews earlier that day with other outlets.

Our reporter said, "I've called you, we've tried to get interviews, you skipped out last night. Why no interviews on this?"

Gokalgandhi originally told us she would be a point person for board communication, but she has ducked questions and requests for interviews.

Gokalgandhi and other board members adjourned Thursday night's meeting behind closed doors, then left the premises before reporters were told.

So, we tried yet again to speak with her Friday about a host of issues plaguing the district.

We asked her, "What is your reaction to the recall?"

She said, "I'm working really hard and I'm going to work every day for our kids. Thank you."

And when we asked if she had "Any plans on resignation?" She replied, "I hope you have an awesome weekend."

DPI officials said in a May 24 letter to MPS, which included both Superintendent Keith Posley and the board of directors, the state began having monthly meetings with MPS on March 15 in an effort to get audited financial data from the district which, at that point, were six months overdue. 

By late May, state officials say they looped in the board because the missing data were jeopardizing the DPI's ability to provide accurate 2024-25 aid estimates for the each of Wisconsin's school districts. Board directors have said they didn't know about the overdue reports, let alone the previously inaccurate data submissions, until the May DPI letter.

The financial scandal has led to the departures of three key district officials. Posley resigned last week. The district filed resignation form for Chief Financial Officer Martha Kreitzman on Wednesday, and MPS announced on June 5 Comptroller Alfredo Balmaseda had been fired.

"The Milwaukee School Board of Directors is diligently seeking answers, and a thorough investigation is underway," MPS Spokesperson Nicole Armendariz said in a statement. "The district continues to work closely with DPI and our financial consultant."

The MPS board passed a $1.5 billion budget Thursday night in a 7-1 vote. Board members and Todd Gray, the former Waukesha superintendent brought in as a consultant to help get the district's finances in line, acknowledged the pending adjustment in state aid.

In order to make up for those dollars, the board could raise property taxes to offset the lost aid under the state's complex school funding formula. It could also close the gap by making deeper cuts. The budget passed this week eliminates nearly 300 positions, largely driving by cutting more than 100 teacher coach positions and moving those coaches back into classrooms to fill teacher vacancies.

DPI officials said they're working with Gray and the district to figure out exactly how much the district had been overpaid.

"We have continued to work to try and confirm what that correction amount will be," Bucher said. "I will keep you updated when we have additional information."

Editor's note: This story was updated to include a statement provided by Milwaukee Public Schools Friday evening.