The Good, the Bad, and the Unknown: MPS Crisis Update

What’s abundantly clear two months into the MPS financial crisis is that the issues at MPS run deeper than any single person, and it will take much longer than one month to resolve them.

The district’s Corrective Action Plan states that the FY23 audit results may not be completed until September, a year behind schedule. In addition, MPS has not shared a preliminary timeline for completing its FY24 audits and financial reports, and it appears that the district may not yet have an audit firm in place to begin this work. Rebuilding the district’s finance team and transitioning from outdated and malfunctioning internal financial systems may take a year or longer.

The district has yet to clarify its plan for addressing the widespread community outrage and crisis of confidence it is currently facing. Additionally, it is unclear how the district will tackle its biggest problem: the decades-long history of academic underperformance, particularly for Black and Hispanic students, in the midst of the financial crisis.

Where do we stand one month in, and where are we likely headed next? Here’s CFC’s assessment of the good, the bad, and what’s still unknown:

THE GOOD

Audit: Governor Evers’ actions to launch both financial/operational and academic audits of MPS, as well as the Legislature’s decision to initiate a separate audit through the nonpartisan Legislative Audit Bureau, are necessary and appropriate steps to get to the bottom of the current mess.

Corrective Action Plan: After some initial stumbles, the School Board and DPI appear to have put together a reasonable Corrective Action Plan and brought in a credible leader for the internal clean-up effort in Todd Gray.

Superintendent Search: Multiple School Board members have publicly committed that the district will conduct a national search process for a permanent leader and have set a reasonable expectation that this may require a year-long process.

THE BAD

DPI & School Board Timeline: We continue to receive incomplete statements and partial timelines from state and local leaders — and in particular, no one has stepped up to explain why information was withheld from the public during the referendum campaign.

• We’ve seen multiple officials defend NOT telling the truth about these audit issues and deny that this would have been relevant information for voters

Urgency for Reform: While we’ve seen bold calls from individual elected officials, we’ve yet to see an overall effort emerge to address the deep, generational, and structural dysfunction at Milwaukee Public Schools.

• Even more troubling, we’re already beginning to see attempts to dismiss and discredit those leading grassroots calls for change, to defer and delay action with misleading distractions, and to defend and retrench around the status quo that led to these failures.

THE UNKNOWN

Electoral Accountability: As Mayor Johnson has repeatedly alluded to, it will ultimately be up to Milwaukee’s citizens to hold MPS to account through the electoral process.

• Recall petitions have been filed against four MPS School Board members; if successful, these recall elections are likely to occur around the same time as the November elections for President, US Senate, and state legislative seats.
• Separately, four MPS School Board members and the State Superintendent of Public Instruction each face impending reelection campaigns in early 2025, during the upcoming school year.

Financial Impacts: We’ve gotten mixed and inconsistent signals from School Board members on two key issues, which will ultimately not be resolved until October: 1) how will they address the clawback of $35–50M in overpayments MPS received because of inaccurate reports, and 2) will they make any changes to the $252M referendum that was narrowly approved by voters in April, in light of subsequent revelations.

• The School Board could elect to set the MPS property tax levy at the full amount permitted under state revenue limits — including both the full 30 percent MPS tax levy increase permitted by the April 2024 referendum, AND the recouping of any loss of state funding due to the district’s inaccurate reports for prior years
• The School Board could elect to set the MPS property tax levy at some lower amount, either to avoid making Milwaukee taxpayers pay for the district’s financial mistakes, or given public outrage with the decisions that led to withholding of the financial reporting issues until after the vote was completed.
• If the School Board does elect to levy less than the full revenue limit, it will also need to determine what additional cuts will be made and how will this impact the final FY25 MPS budget, which will also be adopted in October.

Governance: There have been efforts to rule out a full Mayoral takeover, but both city and state leaders have been notably noncommittal on other potential governance reforms.

• Mayor Johnson has floated changes to the timing of School Board elections to increase public engagement.
• Governor Evers has emphasized that he must review the results of the audits he requested before considering any changes to MPS.
• Members of the Legislature have made clear that, in light of the statewide implications of overpayments and referendum, they see the MPS turmoil as a statewide issue, not just a Milwaukee one.
• State Superintendent Jill Underly mentioned other urban districts that could serve as models for MPS, and pointed to two cities where governance model changes have been a key component of broader school reform efforts: Baltimore has a School Board composed of both elected and appointed members, and Houston is currently under a state-led receivership due to academic performance.

WHAT LIES AHEAD

We’ve reached the end of the opening stages of a saga that will continue to unfold in multiple chapters through the upcoming months. While the breakneck pace of the past month may slow, there are still a number of milestones ahead:

• We anticipate that the School Board will name an interim superintendent in July. This person will likely serve through most of the upcoming school year as the search for a permanent superintendent is underway.
• We will know the outcome of the grassroots recall efforts by mid-August; if successful, School Board members will face fall elections to retain their seats.
• By mid-September, we expect to see the district’s FY23 audited financials and the initial batch of late reports.
• Around the same time, we should also receive the final numbers from DPI for the FY23 overpayments to MPS, which will be clawed back from the district’s state aid payments.
• In October, the School Board will make critical decisions about the final FY25 budget, and the 2025 property tax levy — including both the first year of the $252M referendum, and if the clawed back funds will be recovered from Milwaukee taxpayers
• By the end of the year, the three state audits (finance/operations, academic, and Legislative Audit Bureau) should be completed.

As we approach the beginning of July, we are only a few weeks away from the beginning of another school year for the half of Milwaukee’s students who attend schools operated by MPS. For these students and their families, the challenges in MPS — including leadership issues, financial difficulties, and operational problems — are more than just topics in the news. This is the reality they are dealing with as they prepare for the next step in their educational journey. It’s important for all of us to see the work ahead through the lens of these challenges.

We at CFC are advocates for high-quality schools for ALL of Milwaukee’s students — and that includes those who attend MPS district-operated schools. We’re committed to continuing to inform, engage, and advocate for the deep and catalytic changes needed to improve academic outcomes at MPS and for all of our city’s students and schools. Rest assured that even as this story recedes from the crisis stages, we will continue to be bold, unapologetic, and tireless in seeking to advance the changes needed to deliver the schools MPS students deserve.