Milwaukee Board accepts FY2024 audit after auditors flag 10 material weaknesses and $205M city cash deficit

The Milwaukee Board of School Directors' Finance, Personnel and Accountability Committee on Thursday acknowledged receipt of and accepted the Milwaukee Public Schools (MPS) fiscal year 2024 audit after auditors described multiple material weaknesses and compliance findings.

Baker Tilly issued unmodified opinions on three financial-statement reports, including the district's annual comprehensive financial report, but detailed internal-control and federal- and state-compliance problems. "There are 10 material weaknesses," Wendy Unger, principal at Baker Tilly, told the committee. "Eight of those are carryovers from previous years." The board voted 5-0 to accept the audit reports.

The audit highlighted repeated issues in the district's close process, year-end accounts payable, journal-entry controls, budget reporting and timeliness of federal grant claims. Auditors reported several large adjustments during the review, including journal entries totaling roughly $18 million for unavailable revenue, another $18 million to record additional accounts payable, and about $16.6 million of accounts receivable tied to categorical aid.

A separate federal- and state-awards review found compliance findings for Title I, certain ESSER (Elementary and Secondary School Emergency Relief) funds and the Supporting Effective Instruction state grant, including late or untimely time-and-effort certifications. Auditors also flagged a Medicaid reporting error in quarterly claims.

The presentation included figures on the district's fund balances. Michelle Walter, senior manager at Baker Tilly, said governmental fund balances increased by about $118 million in 2024; the district's total fund balance at year end was about $185 million, with about $49.2 million in the general fund. At the same time, auditors warned of a large deficit-cash balance the district holds at City Hall: roughly $91 million at 06/30/2024 that, at the time the reporting-and-insights document was issued, had grown to about $205 million before later movement reduced it.

Superintendent Brenda Cassellius said the administration accepts the findings and has a plan to address them. "Our goal really is to rebuild and restore sound financial practices and a strong internal control environment," she said, laying out steps that include filling vacancies in finance, developing timelines and deliverables for each finding, improving training, and working with external vendors and consultants.

Auditors and administration described root causes that include untimely submission of federal grant claims, timing differences with City Hall cash management, and incomplete reconciliations. "If that filing of that claim for reimbursement is not done so in a timely manner, there is a period of time in which the district is using other resources," Unger said, citing prior ESSER claim delays as one contributor to the cash position.

Board members pressed for clearer timelines and regular public updates. Chief Financial Officer Aisha Sava said the administration will track each finding in a project-style spreadsheet and provide ongoing progress reports. The committee also directed administration to work with external auditors and DPI (the Wisconsin Department of Public Instruction) where appropriate.

The motion to acknowledge receipt and accept the FY2024 audit reports was made by Director Zombor and passed by roll call: Director Herndon — Aye; Director Jackson — Aye; Director Reza — Aye; Director Zombor — Aye; Chair Cheryl O'Halloran — Aye.

The administration said it will report progress on remediation at future meetings and provide quarterly audit status updates to the board.

Ending: The board accepted the audit reports and the administration began documenting a step-by-step remediation plan; the committee asked for recurring progress reports so the public and board can monitor closure of the audit findings.