'We were always assured': MPS board leaders discuss financial scandal, suggest additional tax hike off the table

 

MILWAUKEE (CBS 58) -- The president and vice president of the Milwaukee Board of School Directors said in an interview Tuesday they did not realize the extent of problems facing the financial office at Milwaukee Public Schools (MPS) until after state officials notified them the district was eight months late on reporting mandatory data, and before that, had provided inaccurate numbers that will now cost MPS tens of millions of dollars.

Board leaders accepted responsibility for their role in the financial scandal, saying they should have pushed back more when top district administrators assured them any delays would soon be resolved.

Board President Marva Herndon said she did not realize just how many vacancies the district had in its finance office. A third draft of a corrective action plan sent by the district to the state Department of Public Instruction (DPI) said MPS needs to hire another 12 people to help straighten out the district's finances.

The district's first two drafts were rejected and publicly criticized by the DPI.

"Yes, it did, but not as serious as it turned out to be," Herndon said when asked if the board realized the finance office was struggling. "In other words, we were always assured when we got these messages, we were always assured it was being handled."

"I think the entire board takes a degree of responsibility for not pushing harder, demanding more detailed information, so, yes, absolutely. We know how to do that going forward, for sure."

Herndon and board Vice President Jilly Gokalgandhi said they're in talks with the DPI daily as the state and district scramble to get an accurate picture of MPS' finances. The delay jeopardizes the July 1 early aid estimates for every Wisconsin school district since the aid formula is largely shaped by the state's biggest district.

MPS has already learned it's likely to lose between $35 million and $50 million in state aid for the upcoming school year; that's the amount the district received in overpayments as a result of inaccurate data it reported to the state.

"Upon reflection, could we have dug a little deeper and asked a little harder? Absolutely," Gokalgandhi said.

The district could also lose as much as $10 million it was banking on in federal aid for the Head Start pre-K program. That funding is now in jeopardy over a series of incidents in which toddlers were put at risk by either abusive or inattentive staff.

In order to close the new budget gap, MPS will have to either make deeper cuts, dip into district savings or raise property taxes even more. Gokalgandhi suggested an additional tax increase is off the table.

"I anticipate that our school leaders, our administration and the help that we've brought in are going to look for solutions, that we can keep this problem contained," she said.

DPI officials have also confirmed at least some state and MPS officials first discussed the possibility of the district's state aid being affected by data errors back in late March. Knowing voters didn't have that information ahead of a $252 million referendum that barely passed in April, Gokalgandhi said she understood voters' anger, but defended the referendum.

"I can see their point of view and why they feel that way," she said. "People want smaller class sizes. They want more art, music and gym. They want their kids to have every opportunity, and so, to do that, we need money to do that. And so, that referendum kept us from being in even more of a dire financial situation."

When asked if they felt misled by top MPS administrators, including former Superintendent Keith Posley and former Chief Financial Officer Martha Kreitzman, both Herndon and Gokalgandhi were careful not to criticize the former leaders. Instead, they pointed to the dozens of other districts that went to referendum in April.

84 other school districts across Wisconsin put 91 other referendum questions on ballots across the state last spring, according to the Wisconsin Association of School Boards.

Changes to board structure, latest on superintendent search

Once news of the district's financial mess broke, critics called for changes to how MPS is governed. Gokalgandhi said she welcomed having Mayor Cavalier Johnson sit in on interviews with superintendent candidates.

However, she insisted on keeping the structure of an elected board overseeing the district, as opposed to having board members appointed by the mayor or anyone else.

"What I want to hold strong on is this is a democratically-elected school board. That is a necessary function for our democracy," she said. "To keep public schools public and publicly governed is very important."

Gokalgandhi declined to say whether state law should be changed to require the DPI to notify the board and public once a district, particularly MPS, has fallen way behind on its financial reporting.

State Rep. LaKeshia Myers (D-Milwaukee) has said she plans to draft such legislation next year, but Gokalgandhi said her focus is on improving the district's communication from within.

"Once we can get our house in order, I think we can better advise our collaborators, our legislative collaborators, on what we think would better strengthen our public school system," she said.

As for the search for an interim superintendent, and eventually a permanent leader, Gokalgandhi said the district hopes to have an interim leader in place by the start of the 2024-25 school year.

For the time being, the board voted Monday night to name Southwest Regional Superintendent Eduardo Galvan the district's acting superintendent. The vote gave Galvan the authority to make key hires, including the vacancies in the finance office.

She confirmed it could take between nine months and a year to hire a permanent superintendent. Gokalgandhi said she was not concerned the district's financial mess would deter potential candidates. She added once there is a list of candidates for the permanent role, there will be interviews open to the community, similar to the process Madison conducted earlier this year.

"I think we want to, again, get to that point as quickly as possible," she said. "But going back to involving our stakeholders, our parents, our students and our community is really at the forefront of that process."

Editor's Note: This story originally said MPS and DPI officials knew in late March the district would likely lose state aid because of data errors. DPI later clarified they first discussed in March a possible "impact" to state aid but did not know until "between mid-April and early May" the impact would likely be a significant aid reduction.