Milwaukee Public Schools’ chief financial officer, Martha Kreitzman, will likely be fired as the depth of the district’s accounting problems become clear, according to a proposed plan district leaders submitted to state regulators on Tuesday.
of draft The plan, released by the state Education Department in response to a records request, shows how staff vacancies and turnover in the district’s finance office and a lack of training on key software led to confusion and errors.
The draft plan lays out solutions that MPS officials hope will convince state officials to release funds that have been withheld because of late financial reporting by the district, including replacing the chief financial officer, hiring 12 finance staff members and reinstating the chief audit executive.
MPS is nearly nine months late in submitting its audited financial statements for the 2022-23 school year, and since the issue was made public last month, MPS Superintendent Keith Posley has resigned, the district’s auditor has been fired and community members are calling for more accountability.
Milwaukee school board members said they are focused on completing the district’s corrective action plan as a first step.
“We are committed to resolving the issues surrounding the delays in submitting financial data,” Milwaukee School Board Chair Marva Herndon said in a statement. “In addition to submitting a corrective action plan to DPI, we are actively analyzing the root causes of this situation and are committed to keeping families, staff and the public informed of our progress.”
DPI spokesman Chris Butcher said the draft plan is expected to be finalized and approved by DPI by the end of the week.
Meanwhile, school board members are scheduled to vote on the district’s budget for the upcoming school year at their Thursday meeting. Also at that meeting, board members are scheduled to consider candidates for the district’s interim superintendent before the board launches a nationwide search.
Most of MPS’s key financial reporting roles are vacant or filled by temporary staff, the draft plan says.
The finance department’s problems stemmed from a specialized accounting system that relied on a series of spreadsheets that became increasingly unsustainable as it was handed over to new staff who had no experience or training in how to use it.
The situation described in the draft mirrors what former district auditor Alfredo Balmaceda told the Journal Sentinel after he was fired, saying he had difficulty preserving details about the system in a data set to prepare the report and that he wasn’t told how it had been operated in the past.
More than half of the positions typically involved in financial reporting at MPS are vacant or filled by temporary staff, but the proposed plan calls for hiring staff to fill at least 12 vacant positions in the finance department.
The lack of systematic knowledge and documented procedures makes the system prone to errors, according to the draft plan, and the financial reporting team staff have less than three years of experience in their roles, it noted.
“MPS finance staff has relied almost entirely on the institutional knowledge and experience of financial reporting staff who have been performing this work, in some cases for decades,” the plan states. “Over the years, these staff have moved on and this knowledge and experience has disappeared with them. In addition, few formal documents of internal accounting policies exist and cannot be used for reference or guidance.”
The district’s software, PowerSchool BusinessPlus, can create reports that are compatible with the state system, but district officials decided to “build something on their own” to translate the data from the BusinessPlus software into the state system, said Matthew Chaisson, the district’s senior director of accountability and efficiency. Chaisson is working with the district on a corrective action plan.
“They were all new staff and had no training on what the system could do, so they just went with what they were used to doing,” Chaisson said. “Everybody knows how to use Excel.”
That gave them room to make mistakes, Chaisson said.
“It requires spreadsheet after spreadsheet, which is an inefficient and ineffective way to get the data that DPI expects,” Chason told the Journal Sentinel. “It doesn’t leverage the capabilities of the financial system, and it ends up being a Band-Aid, and then another Band-Aid on top of that.”
The extent of the errors in financial reporting is not yet clear.
The school board knew MPS was behind on the audit but didn’t know about the meeting with DPI, officials say
According to the proposed plan, the district’s auditor, Baker Tilley, was unable to complete the report by the deadline because MPS repeatedly missed deadlines to provide accurate information.
Chaisson said board members were informed about the missed deadline, but other important information was omitted.
Problems with the district’s financial reporting have been apparent for more than a year: Baker Tilly’s last audit, covering the 2021-22 school year, wasn’t submitted to the board until March 2023, despite the school being required to provide the audit report to DPI the previous September.
After the district struggled with the audit, Kreitzman told the board: It was a challenge Vacancies and turnover among key staff in the finance department made it impossible to complete the audit. The audit itself noted that MPS’s financial statements did not comply with “generally accepted accounting principles.”
Chaisson said he was temporarily blocked from accessing the district’s financial information after MPS again missed its most recent audit deadline late last year. This came after a recording of a conversation between Chaisson and former school board member Aisha Carr was made public, in which Chaisson explained to Carr that he felt administrators had engaged in questionable budget manipulation. Chaisson said he did not consent to the conversation being recorded.
Chaisson said he then re-accessed the district’s system and was informed that MPS staff had not submitted the information required for the Baker Tilly audit, a deadline he said he informed school board members in a memo in March.
Chaisson said Posley sent a response to his memo to executives that “gave the impression that the matter was going to be resolved.”
Chaisson said at the time, that wasn’t unusual at all, considering MPS didn’t turn in its audit results for the previous year until March. Chaisson said he wasn’t informed about MPS’s frequent meetings with DPI, which is why Chaisson couldn’t report those meetings to the school board, he said. He said administrators should have reported them to him and board members.
“We can only help with what we know is going on,” Chaisson said.
According to DPI, department officials met with MPS monthly since February, weekly since March 15 and daily in May.
Chaisson was surprised when DPI sent a letter to the school board on May 24 informing them not only that DPI had been meeting frequently with MPS administrators but also that DPI was prepared to withhold funding from the district because the audit had not yet been completed.
School board vice chair Gillie Gokalgandi acknowledged that board members had been informed about the audit deadline but not about the meeting with DPI, which she said should have been notified.
The proposed plan calls for establishing an audit committee, and they note the district may need a new outside auditor.
In addition to increasing staffing in district finance offices, the draft plan calls for creating an independent audit committee and chief audit executive. Cut From the 2010 district budget. These positions and committees are: Recommendation It has been recognized as a best practice by the Council of Great City Schools, an association of the nation’s largest urban public school systems.
The committee, which will advise the board on external and internal audits, is expected to be made up of five members, including one school board member and four “external audit experts” appointed by the school board with input from the mayor’s office.
The proposed plan also notes that the district may need a new auditor after the current audit is completed because Baker Tilly “may not continue the audit.” The district’s next audit is scheduled for the end of the year.