What Milwaukee voters need to know about the MPS referendum

Milwaukee voters will face a critical decision on April 2nd, 2024, that could significantly impact the city’s education system and property taxes. The Milwaukee Public Schools (MPS) district is seeking approval for a $252 million referendum to maintain current programming and address a projected $200 million budget shortfall for the 2024-25 school year.

Background on the MPS Referendum

MPS, the largest school district in Wisconsin with nearly 70,000 students, has struggled with low proficiency rates for decades. In 2020, voters approved an $87 million referendum to help the district expand programming in art, music, libraries, physical education, and mental health support. However, the district faces a substantial budget shortfall due to state funding freezes, high inflation, and declining enrollment.

Proposed Referendum and Its Impact on Students

The proposed referendum would allow MPS to invest $140 million in 2024-25, $51 million in 2025-26, $47 million in 2026-27, and $14 million in 2027-28. These funds would be used to maintain smaller classes, retain art, music, libraries, and physical education programming, and keep high-quality teachers. Without the referendum, MPS warns that many programs, including advanced education classes and mental health supports, may face cuts.

Since the 2020 referendum, MPS has expanded art offerings at 56 schools, enhanced music programs at 90 schools, reaching an additional 27,000 students, increased library access through 48 new staff positions, and improved physical education and wellness activities in 57 schools. The district has also added support staff such as counselors, nurses, psychologists, and social workers to address student well-being.

Tax Implications for Milwaukee Property Owners

Property taxes would increase significantly if the referendum passed, especially in the first year. According to MPS, a $100,000 home would see an estimated tax increase of $216 in the first year, while a $200,000 property would face a $431 increase. After the first year, the tax rate related to the referendum would remain steady. Critics argue that the tax hike could make housing less affordable in Milwaukee and risk the city’s growth.

Factors Contributing to MPS’ Financial Challenges

MPS has faced financial challenges due to several factors, including declining enrollment, state funding freezes, and federal pandemic relief aid expiration. The district’s enrollment has dropped by 31.5% since 2004, reducing revenue under the state-imposed revenue limits. In 2021 and 2022, the state froze per-pupil funding for public schools, further straining MPS’ budget. Additionally, the district received $797 million in federal pandemic relief aid, which must be spent or obligated by September 30, 2024. As these temporary funds expire, MPS faces the challenge of maintaining positions and programs previously supported by the aid.

Arguments For and Against the Referendum

Supporters of the referendum, including Milwaukee Mayor Cavalier Johnson, County Executive David Crowley, and numerous state lawmakers, argue that the additional funding is necessary to provide Milwaukee students with the educational opportunities they deserve. They emphasize the importance of maintaining smaller class sizes, retaining programming, and keeping high-quality teachers.

Opponents, such as the Metropolitan Milwaukee Association of Commerce (MMAC), contend that the tax increase would make housing less affordable and jeopardize the city’s growth. They question whether MPS has done enough to reduce costs by closing underutilized schools and adjusting its workforce to accommodate declining enrollment. Critics also point out that, despite the 2020 referendum and the influx of federal pandemic relief aid, MPS has not provided a clear plan for improving educational outcomes.

Statewide Context and Comparison to Other Districts

School referendums have become increasingly common in Wisconsin, with 91 districts placing referendums on the April 2nd ballot. MPS’ $252 million request is the largest among these districts, more than the next two largest combined. However, when comparing MPS’s referendum to others, it is essential to consider MPS’s size and unique challenges.

MPS serves a higher percentage of economically disadvantaged students, students with disabilities, and English language learners than most other large districts in the state, which contributes to higher district costs. When examining per-pupil funding, MPS ranks in the middle among the ten largest districts in Wisconsin and the ten largest districts in the Milwaukee metro area. If the referendum passes, MPS will move to the top of these comparison groups regarding per-pupil funding.

The Importance of Voter Participation

As Milwaukee voters weigh the pros and cons of the MPS referendum, they must consider the long-term implications for the city’s education system and property taxpayers. The outcome of this referendum will have a lasting impact on the quality of education provided to Milwaukee’s children and the financial burden placed on property owners.

With school referendums becoming more frequent across Wisconsin, the MPS referendum serves as a case study for the challenges faced by large, urban school districts in the state. As voters in Milwaukee and throughout Wisconsin head to the polls on April 2nd, they must carefully consider the balance between supporting public education and managing the financial impact on their communities.

What does the Wisconsin Policy Forum say about the MPS Referendum?

According to the Wisconsin Policy Forum, MPS can argue that it needs more money based on several factors. First, overall funding for MPS has lagged behind inflation, leaving the district with fewer dollars available to educate its students. In 2004, MPS received $1.31 billion in inflation-adjusted funding subject to revenue limits, 45.5% more than the $903.2 million projected for the 2024 school year. The decline in revenue limit dollars is attributed to state lawmakers’ decisions to reduce or freeze revenue limits and MPS’ loss of enrollment due to demographic shifts and competition from charter and voucher schools.

Funding Per Student

The picture is less alarming when analyzing MPS’ revenue on a per-pupil basis. The passage of the 2020 referendum has brought core per-pupil funding in the district to $13,366 in 2024, slightly higher than the inflation-adjusted $13,319 it received in 2004. However, it is essential to recognize that student need is a crucial consideration when comparing funding levels, as it costs more to serve students with greater needs. MPS serves the highest percentage of students from economically disadvantaged backgrounds, students with disabilities, and English learners among its peer districts.

What Has MPS Done to Decrease Its Workforce and Footprint?

Given MPS’ declining enrollment, it is reasonable to ask whether the district has taken appropriate steps to reduce spending by “right-sizing” its workforce and infrastructure. MPS has reduced its number of school buildings from a high of 178 in 2008 to 150 as of its 2022 financial report, a decrease of only 3.2% despite a much larger drop in enrollment. The district has also reduced its number of instructional staff, falling by 36.8% from 2004 to 2022, which is more than the enrollment decline in the same period.

However, MPS’ number of budgeted positions has not been falling as quickly in recent years, making it difficult to assess the state of the district’s workforce. As of February 2024, MPS had 639 vacant positions, including 292 teacher vacancies. While the district has seen an improved pupil-teacher ratio due to declining enrollment, there may be room to permanently eliminate some vacant positions without sacrificing the goal of maintaining appropriate numbers of teachers.

What About the Extra Money From the 2020 Referendum?

The extra $87 million MPS receives annually from the 2020 referendum was intended to address structural budget gaps caused by years of stagnant revenues and allow the district to fulfill educational objectives, such as enhancing its ability to attract and retain qualified educators and increasing the number of library, art, music, physical education, early childhood education, and career and technical education teachers. However, the surge in inflation reduced the purchasing power of the $87 million and led MPS to provide cost-of-living salary adjustments for staff. Additionally, state-imposed revenue limit freezes in 2022 and 2023 further reduced the financial benefits obtained from the referendum.

While MPS has budgeted a portion of the 2020 referendum monies for new staff positions in areas consistent with its promises to voters, the district has faced hiring challenges. As of the 2024 budget, only 74% of the referendum-related positions have been filled. These vacant positions have contributed to sizable operating budget surpluses in recent years, raising the question of why MPS requests such a large inflow of funds beginning in 2025.

What’s the Bottom Line for MPS’ Financial Future?

MPS officials project a $200 million budget shortfall in 2025, much higher than expected. The largest component of this projection is a $45.1 million reduction in the savings MPS expects from leaving vacant positions unfilled. Other major contributors include increases in employee benefit costs, the need to replace expiring federal pandemic grants, plans to invest in new textbooks, and a projected 4.12% cost-of-living adjustment for staff.

While conservative estimates on next year’s budget gap are justified, some context is needed for the key assumptions behind the projection. For example, given the current labor market, filling about 500 of the district’s over 600 vacant positions would be challenging, and it raises the question of whether MPS truly needs to fill that many positions considering its reduced student population.

What Would This Mean for the City of Milwaukee Property Taxpayers?

Although the referendum allows MPS to exceed revenue limits by up to $252 million, taxpayers would not be responsible for the full amount due to projected increases in state aid and other factors. However, the impact on property taxpayers would still be significant, especially in the first year. MPS estimates that the added levy in 2025 would result in a $432 property tax increase for a $200,000 property owner.

It is important to recognize that, on an inflation-adjusted basis, the gross MPS property tax levy has fallen over the past generation due to enrollment loss, state policy changes, and state aid increases. If the referendum is approved, the levy will increase to its highest inflation-adjusted level since 2015 but still far below the amounts levied in the early 1990s.

Conclusion

As Milwaukee voters consider the MPS referendum on April 2nd, they must weigh the potential benefits for students against the financial implications for property taxpayers and the city. The Wisconsin Policy Forum’s analysis provides valuable context for understanding the district’s financial challenges and the arguments for and against the referendum. Ultimately, Milwaukee voters will shape the future of their public school system and the city’s fiscal landscape.