The Milwaukee Board of School Directors recently approved the 2020–2021 budget for the district. As the state’s largest school district with a budget over $1 billion and its minority students’ part of the nation’s largest racial achievement gap, the approved budget is an insight into the district’s priorities.
1. The recent referendum will not be enough to prevent serious fiscal issues in the next five years.
Milwaukee voters approved an $87 million annual operational referendumin April. Despite an existing annual budget of over $1 billion and the recent referendum, MPS (Milwaukee Public Schools) is still projected to have a $139.4 million annual deficit and $304 million in accumulated debt by 2024 in school operations alone.
The referendum dollars are already accounted for and will be going to approved salary increases (costing about $25 million) and nearly 230 new positions for teachers, librarians and counselors. However, the district’s existing budgets will continue to see increased costs due to new positions they have created and it is unclear where money for that will come from.
Further, as student enrollment declines for the district, MPS receives less in state funding. The state allocates most of its education funding based on district enrollment over a three-year rolling average calculation. Between 2009–2010 and 2019–2020, MPS enrollment has decreased by nearly 7,500 students.
This enrollment trend is likely to continue as the overall population of the City declines and existing families seek higher-quality and safer schools.
2. The district continues to spend on vacant and underutilized school buildings.
MPS continues to struggle to responsibly manage its facilities while experiencing declining enrollment. According to the district, 42 of its schools were significantly underutilized, meaning that the school is operating at less than 70% capacity. Another 42 MPS schools had efficiency ratings of more than 110%, which means they are overcrowded with too many students and not enough classroom space. Taken together, more than half of the district’s facilities are not being managed properly.
In addition to the poor management of occupied buildings, the district also has a long history of refusing to sell vacant facilities to interested private-and-public-charter-school buyers while continuing to force Milwaukee taxpayers to pay for utility costs to the tune of $10 million over the last 10 years.
The poor management of the district’s facilities has been a growing problem as buildings continue to age and deferred maintenance compounds costs. In fact, the independent analysis of the district’s facilities found over $280 million in deferred maintenance at occupied MPS schools across the city.
The facilities crisis can no longer be ignored as the district was forced to transfer $4 million from school operations to the construction fund for a projected total of over $6 million in 2020–2021. But the Superintendent’s budget forecasted “approximately $18 million of major maintenance annually based on the district’s capacity to complete quality repairs and improvements.”
The district’s historically-poor decision making with facilities will continue to haunt MPS as the buildings age and the budget deficit grows.
3. The board is expanding pension benefits amid financial uncertainty.
The board approved the extension of the district’s Early Retirement Window, which gives any employee of the district, both teachers and other district staff, hired before 2013 access to early retirement at age 55 if they have 20 years of service and at least 70% of sick time reserved.
This program was part of the district’s pension benefits to employees prior to the implementation of Act 10, but the program was eliminated in 2013. The board reinitiated the program in 2017. Between 2017 and 2019, 889 employees were eligible to utilize the Early Retirement Window, but only 31% actually retired.
However, this board not only voted to continue the program, they increased the number of employees who qualify by requiring less sick time. The Early Retirement Window program will cost the district about $7.5 million just next year and the program will not be fully funded until 2037.
With profound fiscal uncertainly and a bleak fiscal future forecasted for the district, it is concerning that the board has prioritized this program (and the $7.5 million impact on the budget) rather than prioritizing students.
4. Fiscal troubles are forcing transportation changes for MPS students.
The board voted to approve a change to busing services, resulting in a much-needed $3 million savings next year for the district. All MPS schools will have a time shift, although some will be affected more than others. The transportation plan establishes a three-tier system, with some schools starting earlier (7:20 am) and others starting later (9:00 am).
The board struggled to decide whether to change how to provide transportation to MPS students while balancing financial constraints and difficulty accessing the appropriate number of buses. Last year, the board considered eliminating busing for specialty schools in the district, but after community outcry, the plan was rejected. This three-tier plan received divided support from the MPS community.
Transportation costs are a growing challenge for the district. MPS received just over $2.2 million in state aid to transport 45,573 students during the 2018–2019 school year. However, according to the Superintendent’s budget, the district will spend $67 million for student transportation in the 2020–2021 school year.
Transportation costs are a ticking timebomb as school district revenues shrink and the district is forced to find additional savings.
5. Taxpayers and policymakers should be outraged by the district’s lack of fiscal transparency.
After securing an $87 million referendum and an annual budget over $1 billion, information about the district’s revenue and expenditures should be easy to access and understand. Unfortunately, this is not the case.
The Superintendent’s proposed budget is hundreds of pages long and yet, some information is completely excluded. For example, it is not possible to determine the overall pension and healthcare costs to the district for retired employees. Additionally, there is not a detailed budget per school building that provides information on how the district is funding each location and how much money is reaching the classroom.
The impact of the global pandemic and likely decreases in state revenue were not directly addressed in the superintendent’s budget nor by the board of directors during their meeting to approve the budget. While the board approved a transfer of $100,000 from the contingency fund for COVID emergency supplies, there was not a discussion about decreasing costs for the next school year if state funding is decreased, or if the pandemic forces school closures again in the fall.
Even the Wisconsin Policy Forum, an organization that does an annual deep dive into the proposed MPS budget, concluded that fiscal commitments by the board and its impact “is impossible to detect in the proposed budget.” With policy experts struggling to understand the district’s budget, it is nearly impossible for district employees, parents and Milwaukee taxpayers to do so.
A legislative proposal by State Senator Alberta Darling and State Representative Mary Felzkowski would require DPI to create more transparency in public school finances. This proposal would require all public schools to report revenue and costs at the building and district level. While this smart proposal makes its way through the legislative process, Milwaukee taxpayers and policymakers should be concerned with the lack of transparency regarding the district’s approved budget and what MPS’s poor fiscal projections will mean for them in the future.
Libby Sobic is the director and legal counsel for education policy at the Wisconsin Institute for Law & Liberty.