The financial troubles at Minneapolis Public Schools have moved from an accounting problem to a public one. Minnesota's third-largest district is facing mounting criticism over weak financial oversight after a run of multimillion-dollar deficits and revelations of years of budgeting errors, and it has hired an outside consultant to get its books in order.
What the Investigation Found
A newly unredacted version of an investigative report, first made public in April and first reported in detail by the Minnesota Reformer, describes how a former controller began holding back funds meant to be transferred into a health insurance trust account without first getting written approval. A law firm the district hired, Greene Espel, concluded in a December 2025 report that the official did not appear to have meaningful oversight when she took those actions, though it alleged no criminal wrongdoing.
There is no evidence that money disappeared. The roughly $3 million involved was later restored to the account, and a former senior finance officer, Ibrahima Diop, told the Minneapolis Star Tribune that it was his decision to temporarily withhold and invest the funds, a move he said earned the district about $50,000 as interest rates rose. What auditors and investigators have flagged is not theft but a lack of controls, the kind of segregation of duties that keeps any single employee from having unchecked authority over large sums.
The Pileup of Problems
The IRS levied more than $5 million in penalties against the district, an auditor pointed to weak controls over how funds are disbursed, and a consultant described the finance division as being at a crisis point. Three finance officials departed, and the district awarded a yearlong $830,000 contract to a Minneapolis firm, the Center for Effective School Operations, to oversee finance operations and conduct a full review.
Not everyone is convinced spending is the fix. Catrin Wigfall, a policy fellow with the conservative Center of the American Experiment, argued the district should address root causes rather than hire firms to manage symptoms. "Should people have faith in the district to right the ship? Not yet." Others defended the departed officials. A district parent with a finance background said there is no evidence the money went missing and that longtime employees were unfairly tarnished, while a former board chair and a retired principal both spoke well of Diop, noting the district had earned solid audits and a high credit rating during his tenure, even as auditors repeatedly urged it to further separate financial duties.
The Enrollment Squeeze Underneath
What most coverage leaves out is the financial gravity pulling on all of this. A district's budget is only as steady as its enrollment, because state funding largely follows students, and Minneapolis has been shrinking. Our data shows Minneapolis Public Schools enrolled about 36,400 students in 2017-18 and roughly 29,900 by 2024-25, a loss of nearly 6,400 students, or about 18%, in seven years. That is part of a broader statewide and national enrollment decline.
Fewer students means less revenue, but the buildings, routes, and payroll do not shrink as quickly. A retired principal quoted in the reporting tied the finance division's problems partly to staffing cuts, which he linked to the district's failure to close a glut of underused school buildings. Diop, for his part, said insufficient internal controls are what happen when a department loses its people, noting that seventeen finance staff left after the 2022 educators' strike. A finance office managing close to $1 billion in transactions a year, with a thinning team and a shrinking student count, is exactly the setup in which errors compound quietly.
What It Means for Families
For a parent in the district, the useful signal is not the redactions or the dueling accounts of who decided what. It is the underlying condition every outside reviewer keeps naming: a district this large has not had financial controls to match its size, and it is trying to build them while enrollment and staffing fall. The district says it has added a four-stage review for wire transfers, recovered more than $10 million a year by fixing a special-education coding error, and expects to stop needing outside consultants when the contract ends in January. Whether that adds up to a real turnaround, rather than a patch, is the thing worth watching over the next year, because it is ultimately classroom dollars on the other end of the ledger.
Sources
allk12 analysis of NCES enrollment data for Minneapolis Public Schools, 2017-18 and 2024-25.
Minneapolis Star Tribune: Mounting concern over lack of financial oversight at Minneapolis Public Schools
