What does MPS referendum mean for Milwaukee? What voters need to know. | Opinion

The Wisconsin Policy Forum is a nonpartisan think tank that has followed the finances of the Milwaukee Public Schools (MPS) for decades. Here, we provide insights on some key financial questions swirling around the April 2 referendum, that asks Milwaukee voters to exceed state revenue limits by up to $252 million over four years. The Forum’s more detailed analysis can be found here. at wispolicyforum.org

On what basis can Milwaukee Public Schools argue it needs more money? Its main sources of revenue, state general aid and local property taxes, are capped by state limits that have lagged inflation substantially over the past two decades. In 2004, MPS received $793.5 million in funding subject to revenue limits. If those dollars had grown at the rate of inflation, MPS would have received $1.31 billion in 2024 – 45.5% more than the $903.2 million actually projected for this year, even after including a state per pupil aid payment outside the revenue limit.

The revenue limit dollars comprise about 80% of MPS’ roughly $1 billion budget for school operations, which means the district today has far fewer total dollars in real terms than it did two decades ago to educate its students. When phased in over four years, the extra $252 million from the referendum would reverse the decline but still leave the district well short of its 2004 purchasing power. Because of the way the state’s school funding formula works, these additional dollars would not come solely from residents’ increased property taxes but also from additional state aid. 

Why does MPS receive less revenue today than 20 years ago?

The single biggest reason for MPS’ revenue decline has been the district’s drop in enrollment, which is a key factor in the revenue limit formula. In 2004, MPS counted 98,663 students toward its revenue limit. In 2024, enrollment stands at 67,577, a reduction of 31.5%.

Consequently, when viewed on a per pupil basis, MPS’ revenue history is not as alarming. The passage of a previous referendum in 2020 brought core per pupil funding to $13,366 in 2024. That amount is slightly higher than the inflation-adjusted $13,319 the district received in 2004. (These totals also include per pupil state aid.)

Whatever the lens for assessing MPS’ revenue picture, student need also must be considered, since it costs more to serve students with greater needs. The district serves the second-highest percentage of students from economically disadvantaged backgrounds of any public school district in Wisconsin – 82.5% in 2023. Among the state’s 10 largest districts, it also serves the highest percentage of students with disabilities (19.1%).

Has MPS reduced its spending to account for its loss of students?

A school district that has lost 31.5% of its students since 2004 should be able to shrink its workforce and close some school buildings. However, certain fixed costs cannot be reduced proportionally. MPS leaders also must consider the impact of school closures on the community and the loss of teaching positions on class sizes and offerings.

After reaching a high of 178 in 2008, the number of MPS school buildings dropped to 150, according to the district’s 2022 financial report. Despite this recent decline, however, the number of school buildings in 2022 was only 3.2% lower than three decades ago despite a much larger drop in enrollment over that period.

Lower quality. Higher prices.Board hasn't made case for MPS referendum.

MPS’ financial statements also show it reduced instructional staff – including teachers, principals, guidance counselors, librarians, and supervisors – from 7,266 in 2004 to 4,594 in 2022. That decrease of 36.8% is more than the enrollment decline in the same period.

The district currently has more than 600 vacant positions, however, including almost 300 teacher vacancies. In fact, the 2024 budget contains a $70 million savings from an assumption that the bulk of those positions will remain vacant this year. Unfilled positions also fueled large operating budget surpluses in 2022 and 2023.  

Large numbers of vacancies are somewhat understandable given today’s tight labor market. However, for MPS leaders to convincingly argue that they need more funding despite declining enrollment, it will be imperative to show how they are adjusting permanent staffing levels to respond to their reduced student body.

How big are the school system's immediate financial challenges?

MPS officials say they face a $200 million budget shortfall in 2025. It is not surprising that they project a sizable deficit given the expiration of federal pandemic relief dollars, impacts of inflation, and pressure on MPS’ major revenues.

The $200 million figure is much higher than we expected, however. The largest component – at $45.1 million – assumes that MPS will fill up to 500 vacant positions next year. That not only would be a very tall task in light of today’s labor market challenges, but it also raises the question of whether the district needs to fill all those positions after living without them for several years.

The projection also assumes that $32.2 million will be allocated from general funds to support staff positions previously funded by federal pandemic relief aid.

These two items account for 39% of the projected gap, but it is difficult to assess the true need for them without a district staffing plan that accounts for reduced enrollment and the current labor market.

These unknowns also complicate efforts to assess the impact if the referendum does not pass. Would a failed referendum require MPS to make $200 million of cuts, forgo $200 million of hoped-for service expansions, or a combination of those actions?

What would passage mean for Milwaukee property taxpayers?

Taxpayers would not be responsible for the referendum’s full $252 million revenue boost, as a portion would come from increased state aid resulting from the district’s higher spending levels. According to MPS projections, after rising by $97.4 million in 2025 (at an additional cost of $432 that year for the owner of a $200,000 property), its levy would increase by an estimated $10 million each year in 2026, 2027, and 2028, for a total estimated $127.4 million in additional property taxes. 

Taxpayers also should be aware that the district’s 2024 property tax levy includes a one-time $77.7 million increase that will fund improvements to district-owned recreational facilities as well as a new recreation and aquatic center on the city’s north side. This additional amount will not be repeated next year but adds substantially to the MPS levy this year.

What’s the bottom line for voters, students, and families?

Both sides can make compelling arguments. Supporters justify MPS’ request by citing the unique needs of its students, its workforce pressures, and the near-certain fall in its inflation-adjusted revenues if the referendum is not approved.

Yet opponents have asked how well district leaders have set the stage for such a big ask from voters. Indeed, a huge unanswered question is whether the referendum amount is predicated on plans to continue expanding educational offerings to students; whether it is the estimated amount needed to maintain the status quo; or whether it already accounts for right sizing plans.

In the end, voters have a lot to consider, and MPS leaders may wish to consider ways to better answer some of these lingering questions before the polls open.

Rob Henken is President, Jason Stein is Vice President/Research Director, and Sara Shaw is Senior Education Researcher for the Wisconsin Policy Forum, a nonprofit that conducts nonpartisan, independent research on state and local public policy.