A budget brief released today by the Milwaukee-based Public Policy Forum highlights the Milwaukee Public Schools’ ability in the 2016 proposed budget to “successfully navigate” a potential $12 million cut in state aids – and an even larger cut in federal aids – without significant impacts on existing staffing levels and services.

“While many other districts around the state have been preparing for possible state revenue reductions and identifying the kinds of programs and expenses they will have to cut in the coming year, MPS has proposed a budget with new initiatives and new positions,” says the report.

Citing a proposed 1.6% salary increase for most staff, 39 new school-based positions, increased funding for reading and math interventions and afterschool activities, and a new administrative unit for high schools, the budget brief adds that “while these do not represent the scope of investments that most school officials would desire to improve the district’s educational outcomes, they stand in stark contrast to the cuts proposed in many previous budgets.”

The report explains that MPS is able to temporarily meet its revenue challenges – which are likely to be ameliorated by recent amendments to the proposed state budget – by managing savings generated in the current fiscal year in a manner that provides sufficient cushion for 2016.

“The savings result from the transformation that has occurred in MPS’ finances, operations, and personnel over the past five years due to the restructuring of its fringe benefits,” says the report. “The district has reduced annual fringe benefit costs by more than $100 million since 2011, and has reaped additional financial gains from a turnover in staff from older to younger employees. Even going forward, total expenditures are not projected to rise beyond an inflationary amount despite the anticipated resumption of annual health care cost increases.”

All the news is not good for MPS on the financial front, however. The report warns that “the relatively tranquil nature of the 2016 budget should not mask the precarious nature of MPS’ overall fiscal outlook, and its continued heavy reliance on the State.” It cites MPS’ five-year forecast, which projects a deficit of $114 million in 2020 under a scenario in which current state- imposed revenue limits remain in place. This uncertainty shows that MPS officials may not have the ability to expand investments in successful programs and cushion aid cuts from other levels of government in future budgets.

“Overall, MPS’ fiscal outlook is far brighter than it has been in the past, and its ability to withstand reductions in state aids greatly enhanced, at least for the short term” the budget brief concludes. “But improved stability is one thing, and capacity to invest in needed and desired program initiatives is another. Whether MPS can maintain and achieve both stability and the capacity to make strategic programmatic investments still is questionable, and still is largely contingent upon decision-making at other levels of government.”

The budget brief can be downloaded from the Forum’s website: www.publicpolicyforum.org.

Milwaukee-based Public Policy Forum, established in 1913 as a local government watchdog, is a nonpartisan, nonprofit organization dedicated to enhancing the effectiveness of government and the development of southeastern Wisconsin through objective research of public policy issues.