Employee Self-Insurance Trust Update

To keep our community informed about district matters, MPS is providing the update below.

• Since 2017, MPS has had a self-insurance trust (known as “VEBA” or “Voluntary Employee’s Beneficiary Association”) that funds health insurance costs for MPS employees.
• This trust is funded by contributions deducted from employees’ paychecks and district contributions, both of which are then transferred to the trust. The amounts and rates needed to fund the trust adequately are determined annually by an actuary based on employee health care expenses and estimates.  
• In August 2025, MPS discovered that 5% of the amount intended for the trust had been withheld and was not transferred to the trust between November 2024 and August 2025, which is not permissible in the manner it was done.
• During the time period that the withholding occurred (approximately 10 months), a total of $2,955,755.03 was not transferred to the trust that should have been. 
• Following an initial internal review of the rationale for the decision to withhold these funds, involved staff were directed to immediately discontinue the practice of withholding the 5% and return to the prior practice of transferring 100% of the intended amount to the trust moving forward.
• Additionally, MPS initiated an independent investigation of this matter, which was conducted by a law firm with the assistance of a forensic accountant.
• The findings of the independent investigation informed our response and identified additional related issues, which we are working to address. 
• The amount withheld, plus the interest that would have been earned by it, was transferred back to the trust.
• We do not have any information indicating that the money withheld from the trust was spent inappropriately or that it ever left district accounts. There are three main ways that funds leave district accounts: wire transfers, checks, and ACH transfers (essentially an electronic bank transfer between accounts). We have been able to confirm that all wire transfers during the relevant time period were legitimate MPS expenses. MPS does have controls in place to prevent ACH and check payments to occur without appropriate supporting documentation and proper authorization. We are working to identify a process that would allow us to confirm that all ACH and check payments during that period were proper.
• Because the withholding was swiftly discontinued and, ultimately, the trust was made whole, there was no impact to employees’ health insurance. 
• MPS has implemented controls to prevent this from happening again.
• We have also contracted with a third-party organization, the Center for Effective School Operations or CESO, to provide technical support to our finance division and conduct a comprehensive review of our financial processes.  
• All appropriate policies and processes were followed in response to this matter. All indicated actions were taken in accordance with applicable laws, policies, and applicable employment agreements.
• Over the past two years, we’ve worked diligently to strengthen our systems and address challenges, so we can keep our focus where it belongs—on educating and supporting our students.
• Although it cannot all be done at once, we are engaged in an ongoing process for systematically reviewing the entire organization to ensure that our students have what they deserve.
• This has already resulted in changes to improve processes and services and adjustments to organizational structure to ensure alignment and efficient operations.