Developments show McKinsey & Co. audit of MPS not a dragonslayer

by folkbum

I was asked last night about whether there really seemed to be a lot of "consternation" about the McKinsey & Co. audit completed last month of the finances of the Milwaukee Public Schools, and I suggested that no, in fact, there wasn't. There were some documentable errors in the report, for example, and the report seemed to be a bit out if date, in that some of the things it suggested MPS do are things MPS is already working on--like selling unused properties, implementing "performance-based" budgeting and re-centralizing of purchasing functions.

And it may well be that I don't really have my finger on the pulse of community or institutional sentiment about the report, and so I'm missing a flurry of something somewhere; or it may be that the swine flu hysteria has overshadowed hysteria over the audit.

But the MPS Board of Directors' Strategic Planning and Budget Committee meeting last night suggests that I'm right:

A financial audit of Milwaukee Public Schools released last month that pointed to waste in the system and calls for reform from state and city leaders failed to produce the same kind of urgency Tuesday night at a School Board committee meeting.

An overview of the report was the topic of the meeting, but missing from the discussion were Milwaukee Mayor Tom Barrett, Gov. Jim Doyle and state Superintendent of Public Instruction Elizabeth Burmaster, all of whom Terry Falk, the chair of the Committee on Strategic Planning and Budget, had invited to talk to committee members. [. . .]

According to David Guran, one of the few residents who showed up to testify about the audit, the mayor's office said Tuesday that no meeting had yet been set for the MPS Innovation and Improvement Advisory Council that was supposed to form last month.

Not that I necessarily expect the governor himself to show up to an MPS board meeting, but the meeting was called specifically to discuss the audit (here's the agenda in .pdf form, including Terry Falk's letter to Doyle et al.) and you'd think that the people who demanded the audit would at least send a contingent to make their views and recommendations known to the board. But the fact that no one was there, and the fact that the big committee that is supposed to act in a non-binding oversight capacity on the MPS budget to ensure compliance with the audit's recommendations hasn't formed or met yet, just reinforces my belief that the audit was not the dragonslayer Doyle and Barrett hoped it would be.

First, the audit's findings were not so bad that Doyle and Barrett had reason to immediately call for a takeover of the district (see my earlier post here). The audit was able to cobble together $100 million a year in potential savings. That sounds like a lot of money--and it is!--but it is less than 10% of the overall MPS budget and a significant part of that savings came from foisting MPS workers onto the state dole for health care, which is not exactly the kind of thing that will save the state any money. If the audit had identified a larger number, or if it had identified $100m in pure waste as opposed to family-supporting wages and beniefits, then the report might well have given Doyle and Barrett impetus to act more forcefully and more quickly.

Second, perhaps more importantly, the audit is incredibly sympathetic toward MPS. The authors of the report make it clear that MPS faces tremendous budget pressures from many different directions--rapidly declining enrollment, a screwed-up state funding formula, an expensive health-care market in Southeast Wisconsin, and more--and that even if the audit's full recommendations are followed, MPS will still face significant budget crunches not very far down the road. While the audit does suggest that MPS needs an attitude adjustment when it comes to finances and reform, it also is pretty clear that reality will overtake the district whether administration gets ruthless (in some cases, heartless) in budgeting and collective bargaining or not.

In other words, even if Doyle or Barrett or the Milwaukee Common Council or some other institution takes over MPS, there still have to be significant changes external to MPS to make the district's finances viable long-term. Whoever is running MPS in two years will find themselves making the same arguments and facing the same difficult choices that the current board does now. I imagine that it's that reality that is keeping Doyle and Barrett far away, at least in public, from putting their own names on the line over MPS finances.

(NOTE: Thursday night, May 7, is the regular MPS Strategic Planning and Budget Committee meeting. The committee will consider the superintendent's proposed budget for the 2009-2010 school year. See the SPB agenda here (.pdf); find the budget documents here. If you have comments you want to make, this is your big chance.)