State suspends $26 million in aid to MPS over late finance reports

Yahoo

06-06-2025

With Milwaukee Public Schools running behind on filing financial reports for a second year in a row, state officials are now withholding a total of about $42 million in state aid owed to the school district.
The School District will be able to recoup the funds when it submits certain financial information and a creates a plan for meeting additional deadlines over the next year.
District officials, who were notified June 5, have said the funding suspension won't cause any issues for staff or students.
The total amount of funding being withheld includes a $16.6 million special education payment that has been withheld for a year because of the district's lack of progress on financial reporting. It also includes an additional two upcoming payments, newly announced to be withheld: about $17.4 in Special Education and School-Age Parents Aid, and about $8 million in Achievement Gap Reduction aid.
State officials need MPS' financial reports, including audited financial statements from the 2023-24 school year, to calculate by July 1 how much state aid they should send to MPS and every other Wisconsin school district. All other districts have submitted the needed information, Wisconsin Department of Public Instruction Spokesman Chris Bucher said previously.
Here's what to know.
When MPS' financial reports were severely late last year, leading to the resignations of top administrators, state officials put the district on a corrective action plan to overhaul its accounting infrastructure.
One of the root causes of MPS' failures: The district was using an accounting system that didn't align with the state's uniform financial accounting requirements. Inexperienced staff were using a homespun process to move data from MPS' system to the state's, causing delays and errors. And most of the positions responsible for financial reporting were vacant.
Since then, the district has had a rocky road playing catchup on its financial reporting while replacing key positions. It has missed many of the dates it outlined in its corrective action plan.
MPS' accounting system still doesn't align with the state's system. Staff are working to piece together accurate information from the district's faulty accounting systems, while also charting new systems to prevent the same issues in the future.
The district hired a new chief financial officer, former Milwaukee Comptroller Aycha Sawa, in September, and a new superintendent, Brenda Cassellius, who started in March.
Cassellius immediately faced multiple alarms, including a consultant's conclusion that the district urgently needed to restructure its central offices, and a spiraling lead-paint crisis with a facilities director who was under state investigation.
Cassellius told the Journal Sentinel her focus recently had been on overseeing the cleanup of lead paint hazards. She has since taken over management of the late financial reports.
As MPS approached a May 30 deadline to submit financial information to the state, Cassellius moved finance staff into her office suite to oversee their work completing the reports for DPI.
Staff from DPI have also been on site to help MPS. The district signed an agreement last year to pay DPI up to $260,000 for the department's assistance between last July and the end of this June.
Cassellius said she's been in contact with state officials daily and expects MPS to be able to submit the information DPI needs in time to calculate state aid payments. State Deputy State Superintendent Tom McCarthy has praised the district's progress under Cassellius' leadership.
Cassellius said her goal is for the district's 2025-26 accounting to be done in a system that's fully compliant with the state's uniform financial accounting requirements. She said she plans to recruit additional contractors to support the finance office, which said could include consultants and project management experts.
Cassellius, who recently published $1.549 billion budget plan envisioning a broad restructuring of the district's central office, also wants to add four staff positions to the finance office.
The Milwaukee School Board, which last month approved members of a new external committee to provide advice on overseeing the district's financial practices and audits, plans to hold public hearings on Cassellius' budget plan June 12, June 17 and June 24.
This story is developing and will update.
Contact Rory Linnane at [e-mail]. Follow her on X at @RoryLinnane.
This article originally appeared on Milwaukee Journal Sentinel: State suspends $26 million in aid to MPS over late finance reports