CFC Analysis Brief: Our Assessment of the FY 2025 Proposed MPS Budget

At City Forward Collective, we believe that a healthy MPS is key to delivering Milwaukee students, families, and residents the high-quality school options they deserve and demand. Milwaukee can’t thrive without high-quality school options for all of our city’s students and families — and we all still need MPS, as the city’s single largest operator of schools, to deliver a thoughtful, ambitious plan that places the district’s schools on a path to dramatic academic gains and financial sustainability.

For the past few months, our city has been engaged in a spirited debate about increasing MPS’ revenues through a property tax increase. Milwaukee’s voters made their voices heard, narrowly approving the $252M referendum. But regardless of your position on the referendum, there’s still more work to be done to ensure that these funds have a positive impact for MPS’ students and schools.

Late last Friday evening, MPS officials released their draft budget for the next school year (FY 2025). The 978-page budget book — which would take a person reading at average speeds more than a full day (27 hours!) to complete — is replete with densely-packed text, charts, and tables. Our team has taken the time to review the district’s plans, and our key findings are included in this brief.

Even a review of the budget’s 36-page Executive Summary, however, leaves Milwaukeeans with more questions than answers. The budget provides little clarity about how MPS plans to use its resources not just to maintain an unacceptable status quo, but to change its trajectory and dramatically improve academic achievement and broader outcomes for the tens of thousands of students it serves.

Over the next three weeks, Milwaukee residents will have several opportunities to have their voices heard and impact these critical decisions during the School Board’s budget adoption process:

• Tuesday, May 7th — The initial meeting of the School Board’s budget committee
• Tuesday, May 14th — The required Statutory Public Hearing
• Thursday, May 16th & Tuesday, May 28th — Additional budget committee meetings
• Thursday, May 30th — The School Board’s regular monthly meeting, where the final budget will be taken up for approval

Each of these meetings is scheduled to begin at 5:30pm, and each meeting will be held at MPS Central Office, 5225 W. Vliet Street.

FY2025 MPS BUDGET OVERVIEW:

In total, MPS proposes just under $1.5 billion in spending next year, or $137M less than the current FY2024 budget. This decline is largely driven by two changes, both outside of the district’s primary school funding mechanism:

1. $190M in reduced federal revenues as ESSER (COVID recovery) funding expires; and
2. a $77M reduction in the district’s Extension Fund, which district officials have indicated is tied to a one-time funding bump for a MKE REC construction project..

The district’s School Operations budget, its largest fund and the one which includes most K12 school-related expenses, includes $1.16 billion in spending. This represents an increase of $119M from FY24, reflecting the narrow approval of the April 2024 MPS referendum by Milwaukee voters:

• MPS will receive an additional $140M in spending authority this year; it is not clear why the budgeted $119M increase differs from the voter-approved $140M revenue limit increase.
• MPS will see additional phased-in increases over the next three years to reach the full $252M per year increase beginning in 2027–28, and continuing annually thereafter.

CFC’S KEY TAKEAWAYS

1. Budgets Reflect Priorities — But What Are MPS’ Academic Goals?

Milwaukee’s students are in academic crisis, including those at MPS. It is not clear how MPS’ FY25 budget will allocate district resources to improve these outcomes.

• Fewer than 1 in 10 students at MPS district-operated schools are meeting state proficiency expectations in Math and ELA, while more than half are performing at the lowest level, Below Basic.
• Investments in the arts, music, PE, and libraries are all good, worthy, and important things — but they’re not substitutes for ensuring that MPS students are proficient in the basics, and that core academic learning is dramatically improved.

Data includes proficiency rates for MPS Traditional and Instrumentality Charter Schools. Schools were not required to administer tests in the 2019–20 school year.

2. Where’s the (Rightsizing) Plan?

We’ve shared our belief that MPS put the proverbial cart before the horse in pursuing a quarter-billion dollar per year increase in revenues before presenting its right-sizing plans. The district still faces the same set of long-term, citywide demographic challenges — fewer students, a challenging market for hiring educators, increasing costs — and still hasn’t provided Milwaukee residents with a plan.

• This year’s budget looks a lot like every other year’s budget — meaning the district is continuing to spread its now-increased (but still limited) resources too thin.
• Over the past month, MPS has sporadically released only limited information about its future plans. We’ve seen one-off resolutions that would leave hundreds of MPS students and families without a school building, and unexplained staffing reductions that disproportionately impact a single board district.
• Taken together, these actions reinforce our concerns that School Board politicians will take a piecemeal, fragmented and ideologically-driven approach, rather than comprehensively addressing MPS’ challenges.

3. Improved Financial Picture — But Hard Choices Remain

Even with the additional $252M per year in referendum funding, MPS still faces a $20–25M annual structural budget gap — a reality that district officials have acknowledged will require further action.

• This budget again fails to provide concrete, sustainable solutions to the district’s budget gap and leaves key questions unanswered.
• Instead, it kicks the can down the road by referencing future “efficiencies” to be found in Central Office, and promising answers to facilities questions in October.
• Meanwhile, Superintendent Posley has forthrightly acknowledged that school consolidations “absolutely” need to be part of the district’s rightsizing discussion, while MTEA union leadership has buried its head in the sand and flatly refused to face this reality.

4. 70% of Spending Controlled By Central Office

Despite some misleading messaging on district fact sheets and in its press release statements, the budget shows that the vast majority of MPS’ spending decisions continue to be made by Central Office bureaucrats, and not by teachers and principals in schools.

• MPS’ budget presentation and the timing of state funding projections makes it difficult to calculate “core” revenues using CFC’s preferred approach, which would include all state and local funds allocated to MPS on a per-pupil basis.
• Using a simplified and conservative approach, we can divide the district’s budgeted $974.2M in funding to be collected under revenue limits (includes just local property taxes and state equalization aids) by the projected 2024–25 enrollment of 66,388 students, yielding a low-end estimate of $14,676 in per-pupil “revenue limit” funding.
• In its FY25 budget, MPS has maintained allocations to individual schools at the FY24 level of just $4446 per pupil — or just 30% of the funding generated by each student.
• This means that 70% of district per-pupil revenues — including the lion’s share of the additional funding generated as a result of last month’s referendum — will be controlled by and allocated from Central Office.

5. Some Students Still Left Out

MPS still fails to provide fair and equal funding to the 7,152 students enrolled in public charter schools authorized by the district.

• MPS receives the same amount of per-pupil revenues for these students, as it does for those in its district-operated schools.
• The district allocates $11,729 per pupil, or just 80 percent of the per-pupil revenue limit MPS generates, to students in charter schools it authorizes. This includes none of the proceeds from either the 2020 or 2024 referenda.
• This means that for every child attending an MPS-authorized public charter school, Central Office will pocket a $3000 per pupil funding differential — more than $21M in additional funding in total.

6. Big Questions Remain Unanswered

Across the nearly thousand pages of MPS budget materials, there are still a number of areas where the district’s approach is unclear:

• This year’s budget continues to project hundreds of additional hires for long-unfilled positions, even while it modestly reduces the use of “vacancy adjustments”. And, despite public messaging around staff reductions, the budget increases spending on salaries and benefits by nearly $50M.
  What is MPS’ true level of additional staffing needed, if any, and could its asserted challenges with large class sizes be solved without requiring new hiring?
• The budget for the School Operations fund appears to have ended FY23 with a $500M surplus, and the district’s new five-year budget projections for this fund include cumulative surpluses of $500–550M over each of the next five years.
  Does this reflect a continuation of the district’s inability to spend all the proceeds from its two recent referenda, and if so, how does this align with the district’s threats of double-digit cuts to school budgets had the most recent referendum not passed?