MPS Audit Reveals Careless Financial Management

By Christian D’Andrea-MacIver Institute Education Policy Analyst

Not only are Milwaukee’s Public Schools running their operating budgets into steep deficits, but they’re also fraught with high-risk accounting problems, according to recent MPS audits.

The district recently commissioned a series of examinations of the daily transactions in some of Milwaukee’s schools. These reports found disturbing trends within the halls of some of the city’s largest institutions. All but three of the 26 schools observed in 2010 audits had at least seven high-risk non-compliance problems in their schools, suggesting that safeguard measures had been routinely ignored and in some instances, school resources had been mismanaged.

Sixteen of these non-compliant institutions had operating debts in 2009-2010 that ranged from $5,175 up to $751,422. As a whole, their over-budgeting cost taxpayers over $2.68 million in additional costs, tempered only by 10 schools who were able to post surpluses over the same period. However, not all the news was bad in Milwaukee. Schools like Longfellow and South Division created a combined surplus of nearly $200,000 thanks to careful spending in their institutions. The entire breakdown can be found in Figure 1 below.

These issues ranged from the documentation of employee payroll and overtime pay to the care and responsibility for valuable assets in the classroom to teacher funds for student activities and events. Schools often were irresponsible with their spending as well as the management of everyday items needed in their classrooms. Expensive items such as computers, televisions, and security equipment were often poorly documented across schools, leading to problems when it came to their regulation and management. 

Without the proper documentation, these assets were not properly tracked and controlled. As a result, classroom tools like laptops and other costly items were at a greater risk of turning up missing or being the target of thefts. When these items disappeared from their schools, it was often the district that ended up paying for their replacement.

Overtime was another problem for schools. Overtime errors were found in schools such as Keefe Avenue, Dover Street, and Hamilton during the 2010 audit sessions. Infractions ranged from principals failing to sign off on approved payroll overages and allowing teachers to call their own overtime schedules without clearance to nearly 100 hours of working time paid for by the district but not documented by school staff.

In many schools, principals across Milwaukee were not familiar with MPS’s overtime pay procedures or they simply chose to ignore these procedures. For example, the procedure for approving overtime at Dover Street school had become so effortless and unscrutinized that the school’s principal merely rubber-stamped his approval of payroll documentation rather than undertake the careful review that MPS standards require (his stamp has since been removed).

This was better than instances in other schools where administrators weren’t even that dedicated. Custer High School was cited for failing to review their overtime staffing reports at all. Bradley Tech High School was cited for incomplete documentation of their staff overtime scheduling and payroll as well. Both lapses allowed for teachers to rack up big overtime costs in situations where overtime staffing may not have been needed or even worked.

Custer and Bradley Tech combined for 27 high-risk non-compliances against the backdrop of MPS regulations in 2009-2010. In this same period, these two schools were responsible for nearly $1 million in budgeting deficits, burning through funding at an alarming rate. These schools have proven to be inefficiently run financially, and the problems don’t stop there. 

Unfortunately, they aren’t the only examples of mismanagement in MPS. Double-digit violations of high-risk procedures are the norm in Milwaukee schools. Running at a school-wide deficit has become almost equally regular. While advocates will lobby for greater funding in these schools, it may be a lost cause if the money going in can’t be properly managed.

Milwaukee’s public schools are facing examinations to measure their efficiency when it comes to spending – and they are failing. This inability of schools to operate within their budgets is unacceptable – and some of these problems may stem from how financial procedures are currently handled. Correcting the issues brought to light by these audits is just one small step in figuring out the district’s budgeting quagmire. Until this web of irresponsibility can be untangled, the schools, districts, and the students will suffer for it.

Fig 1: Audited Milwaukee schools, their total high risk non-compliances, and their operating costs.