Navigating the Financial Reporting Challenges of Milwaukee Public Schools

Milwaukee Public Schools (MPS) is facing yet another deadline for submitting its required financial documents to the Wisconsin Department of Public Instruction (DPI). The district now expects to have these materials ready by Thanksgiving, a deadline that is weeks after the one set in the "corrective action plan" agreed upon by the state and MPS, and roughly a year after the original financial reporting deadline. This ongoing struggle with financial reporting has led to significant financial consequences for the district, as the state has previously withheld and recouped millions in funding due to reporting errors.

Uncovering the Complexities Behind MPS's Financial Reporting Challenges

Missed Deadlines and Delayed Reporting

The latest deadline for MPS to submit its financial documents is Thanksgiving, a significant delay from the original deadline. State Superintendent Dr. Jill Underly acknowledged that this is not a "hard and fast" deadline, but the DPI remains cautiously optimistic that the district can meet this target. The financial reporting for the 2023 fiscal year is expected to be roughly a year late, and the district has indicated that the 2024 documents may also be turned in late, though they will be submitted earlier than in the past. The DPI expects the 2025 financial documents to be on schedule.

Financial Consequences and Funding Adjustments

The state DPI previously withheld $42.6 million from MPS due to financial reporting errors made by the district. This amount has since been recouped, and the district will also receive roughly another $40 million less in state aid to correct the payment amount. Assistant State Superintendent Tricia Collins explained that the $42.6 million was deducted from the district's September equalization aid payment. The DPI has stated that it expects no further significant adjustments to the newly certified state aid amounts, which are expected to be released on Tuesday.

Addressing the Root Causes

New interim MPS Superintendent Eduardo Galvan has attributed the district's financial reporting challenges to outdated software, a lack of staffing, and inadequate training, rather than any instances of misspent or missing funds. Galvan and the district's new Chief Financial Officer, Aycha Sawa, have stated that they are working to address these issues by hiring new staff, utilizing contracted personnel, and conducting software testing. Galvan has expressed his understanding of the public's frustration and has made it his goal to ensure that such problems do not occur again in the future.

Ongoing Efforts to Strengthen Financial Management

Despite the progress made, the district is still working to fill positions in the finance department, including the comptroller role. Galvan and Sawa did not provide specifics on the number of open positions within the department. The district and the DPI have acknowledged that the financial reporting for the 2023 and 2024 fiscal years will be late, but they are committed to ensuring that the 2025 documents are submitted on schedule.

Navigating the Path Forward

The financial reporting challenges faced by MPS have had significant consequences, both in terms of lost funding and the erosion of public trust. However, the district's new leadership team, including Superintendent Galvan and Chief Financial Officer Sawa, have expressed a commitment to addressing the root causes and ensuring that such issues do not arise again in the future. As the district works to catch up on its financial reporting and strengthen its financial management practices, it will be crucial for MPS to maintain transparency and communication with the DPI and the broader community to rebuild confidence and secure the necessary resources to support student success.