A $51 million revenue infusion, made possible by voter approval of a 2024 referendum, has substantially brightened the short-term fiscal outlook for the Milwaukee Public Schools (MPS). Despite continued structural challenges, the proposal for the district’s next budget largely avoids staffing cuts and makes new investments in areas including lead paint stabilization and other facilities maintenance.
Approval of the referendum authorized the district to exceed state revenue limits, including by increasing property taxes if necessary, resulting in $51 million in additional revenue authority above state-imposed caps in 2026 alone. Yet MPS anticipates only a modest increase to its property tax levy next year because of increased state aid, the Wisconsin Policy Forum’s 2026 MPS budget brief finds.
Still, we found that this apparent fiscal stability does not tell the full story. The district faces many impending fiscal challenges, including potential federal funding cuts, continued reliance on savings from hundreds of vacant positions to balance the budget, and a growing structural budget deficit that could reach $57 million by 2030 as the referendum is fully phased in and no longer delivers additional revenue.
“The lack of considerable budget pain in 2026… should not mask the severity of MPS’ longer-term fiscal challenges, which are likely to emerge with greater intensity as soon as 2027,” the report finds.
Indeed, the brief notes that MPS’ new superintendent Brenda Cassellius inherits a daunting array of challenges. Chief among them: improving student outcomes in a district where test scores reveal alarmingly low levels of proficiency in math and reading, and lag most other large urban districts nationally. Another is an ineffective administrative infrastructure that, according to a state-ordered operational review, “hinder(s) the district’s ability to drive student success.”
District must confront vacancies
The budget proposes a $61.7 million (4.1%) increase in total expenditures. Slightly more than half of that is linked to increases in salary and wage expenditures, including a proposed 2.95% cost-of-living adjustment (COLA) for all staff as well as a salary step increase for all employees. The budget also includes a reorganization of certain central offices and adds staff for certain centrally supported school supports.
A key feature of the 2026 proposed budget, as in the previous two years, is that it finds considerable savings through adjustments for vacant positions. In the 2026 proposal, savings of $75.9 million are budgeted for vacancy and turnover — an increase of $1.6 million from the so-called “vacancy adjustment” in the 2025 budget. While use of this practice is commonplace among local governments in Milwaukee, MPS has used it more extensively.
In future budgets, the Forum finds, “It will be a difficult but critical task for (Cassellius) and her management team to determine a more reasonable vacancy adjustment that is based on the number and types of positions the district genuinely needs considering its reduced student population, and what it can afford given its future revenue challenges.”
State aid increase helps limit property tax hikes
The proposed budget shows a $61.9 million (4.2%) increase year-over-year in total revenues, most of which are due to revenues the district can take in due to the 2024 referendum. MPS’ total proposed property tax levy for 2026 increases by $9.8 million (2.4%), from $414.3 million in 2025 to $424.0 million in the proposed budget. Notably, the district’s school operations levy would actually decline slightly. But the levy would more than double (from $18.9 million to $38.4 million) for the district’s extension fund, which primarily supports citywide recreation services and is exempt from state revenue limits.
The district’s annual property tax levy is influenced heavily by the aid amount it receives from the state, and this year, an estimated $72.5 million increase in state general school aids helps limit the district’s property tax levy increase. Given the significant amount of new revenue authority from the referendum – and other recent tax increases imposed on Milwaukeeans — this relatively modest overall levy increase will be welcome news for many taxpayers. The projection and the proposed levy also may change, however, when the district receives its final state aid amounts in the fall from the Department of Public Instruction.
While the 2024 referendum significantly eased pressure on next year’s MPS budget, the district’s five-year budget forecast confirms its structural challenges will still build over time. Following the expiration of the four-year phase-in period for the referendum, the district’s structural budget gap between revenues and expenditures is expected to increase to $57 million by 2030.
The threat of federal funding cuts, as well as the still unfinished state budget, also leave considerable uncertainty about the next two years for the district. And in the years to follow, the district’s structural deficit is almost certain to grow without much more extensive fiscal and organizational change, our budget brief finds.
“Such changes,” the brief concludes, “will have to be implemented as the district pursues its foremost priority: to improve academic achievement and enhance the quality of educational services in classrooms.”
Click here to read the report.
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