by Baylor Spears, Wisconsin Examiner
August 30, 2024

The Wisconsin Legislature’s Joint Audit Committee ordered two audits on Thursday — one on how the state Department of Public Instruction’s analyses  school district financial data and another to look into financial losses in the Department of Natural Resources’ fish and wildlife account.

Both audits were authorized on party-line votes with only Republican support.

Republicans on the committee voted to launch the DPI audit in reaction to the financial crisis at Milwaukee Public Schools after the district neglected to submit required financial documents to DPI on time. The severity of the situation came to public attention after DPI warned the district in May that state funding would be withheld if the necessary financial documents weren’t received. 

Since then, the district has worked with DPI to develop a corrective action plan focused on getting the documents turned in and to address some of the potential causes of the problems. Gov. Tony Evers has also started two additional operational and instructional audits of the district that will be conducted by private auditors in addition to the ongoing financial audits. 

At the hearing, committee co-chair Sen. Eric Wimberger (R-Green Bay) said the incident led to systemic questions: “What did DPI know and when, was information held back from public view to affect a referendum, and how does DPI track things and use discretion?” He accused DPI of deciding to “not to treat the infection it knew about at MPS and letting it fester until it was too late.”

Wimberger questioned DPI Deputy Superintendent Tom McCarthy about the timing of the decision to send a May letter to MPS warning about the tardy documents. McCarthy said his decision to send the letter had nothing to do with the district’s $252 million referendum question that was approved in April. 

“I know that your brain says ‘Hey, this has got some nefarious reason that relates to their question and referenda,’” McCarthy said. “The real reason [is] we had to be certain with the information to run an aid formula that showed the rest of the districts what they can expect so that they can make 420 individualized decisions about how to handle their education system.” 

McCarthy also emphasized in his testimony that auditing is a “key function” of local school boards, while DPI’s job is to “take that audit information and run the school finance formula and run school finance law on top of it.” He said that lawmakers also need to consider, as they launch an audit, the cost constraints and challenges that school districts face when it comes to auditing. 

“There’s a shortage of qualified auditors, auditing expenses are going up and the finances of districts are not meeting that exact term of increase in inflation at this point in time,” McCarthy said. 

McCarthy said he wanted to remind lawmakers of those challenges as they consider the financial processes, especially as any resulting changes to processes would affect schools across the state. 

“Are we pushing the panic button because there is one situation that happened with the state’s largest school district where we had sort of a snowballing impact that caused a very big challenge?” McCarthy continued. “Are we pinching the other 420 districts in a way in which now we have a response system that is heightening alarm bells when in reality things are largely okay?”

Wimberger also said he is “suspicious” of Evers’ decision to not work with the Legislative Audit Bureau and instead engage private auditors. 

“Like all of our audits — and unlike the governor’s audit — we will give [Legislative Audit Bureau] some initial direction on what we want to investigate, and that’s it. They will follow the trail where it leads and not coordinate with us until after they’re done investigating, and they’ve prepared the report,” Wimberger said. “I hope we get a better understanding at the end of this regarding the validity of arguments that funding at DPI is too much, enough, or not enough.”

The committee motion instructs the audit bureau to analyze the timeliness with which school districts submit financial information to DPI; evaluate how the department monitors school districts’ audit findings and how it follows up on noncompliance issues reported by a school district auditor; whether DPI consistently follows its policies and procedures; and how much time DPI staff spend reviewing and following up on the school district financial reports the department receives as well as what actions DPI takes to obtain late information.

The audit was approved in a 5-4 vote. The Democrats on the committee — Sen. Bob Wirch (D-Pleasant Prairie), Sen. Tim Carpenter (D-Milwaukee), Rep. Ryan Clancy (D-Milwaukee) and Rep. Francesca Hong (D-Madison) — voted against it. 

Wirch said he would be voting against the audit because he thinks it’s a “fishing expedition.” 

“As we heard, the primary responsibility, of course, is with local government. I believe in local control and local responsibility. A lot of people have lost their jobs over what happened in Milwaukee,” Wirch said. 

Wirch added he thinks it is a duplication of services and effort as audits are already in process. “We should think of the taxpayers,” he said.