Budget Brief

2025 Proposed Budget Madison Metropolitan School District

June 2024


With the arrival of a new superintendent, a potential shortfall of $39 million, and the likelihood of two sizable referenda votes in November, the 2025 budget is weighted with great significance for the future of the Madison Metropolitan School District (MMSD).

As with our annual reviews of MMSD’s finances going back to 2020, this analysis seeks to offer impartial insights into the district’s proposed budget, as well as its $100 million potential operating referendum and up to $507 million capital referendum. As we approach the start of the 2024-25 year (referred to here as 2025), MMSD can no longer rely on two previous financial lifelines: federal pandemic aid and the 2020 referendum. After four years in which both measures served as growing sources of revenue for the district’s budget, neither will provide any added funds in 2025.

While the recently passed state budget provides some additional support, it did not catch districts up from a freeze in state revenue caps in the previous two-year budget. The state will not revisit school funding for at least another year and even then may not provide the funds that MMSD seeks.

The district, therefore, will have to address its budget challenges on its own. In one bright spot, MMSD’s previously declining enrollment appears to have stabilized at least for now, though it is unclear if it might soon return to its recent downward trend.

In the current 2024 school year, MMSD used the expiring federal funds to pay nearly 111 educators and dipped into its reserves to provide an 8% increase in base wages to teachers and other staff. Both of those decisions and proposed new positions would add to the difficulties in 2025, which district officials would seek to address partly through a potential operating referendum. If that measure is not approved by voters, then the district could seek to bridge the gap through a variety of other moves, including cutting or freezing spending and significantly drawing down its fund balances.

Over the past 25 years, Madison voters have approved seven referenda to increase the district’s operating budget and rejected only one, making it a tool that district leaders are likely to use to help close the gap while protecting students and staff. Yet the rippling consequences of another operating referendum would also affect property taxpayers and could put downward pressure on state aid in future years. So far, MMSD leaders have not put forward a comprehensive strategy to work with Madison lawmakers and other legislators to try to change state law to blunt the impact of referenda on the district’s state aid.

MMSD also has an aging portfolio of middle and elementary school buildings that it will likely seek to update and improve through a second referendum seeking capital funding. These steps could help the district better serve and compete for students, but will add to its debt and to local property tax bills. Combined with a potential fall referendum from city government as well, home and business owners could be in for a surprise when they examine their November ballots and December tax bills.

Difficult decisions lie ahead for MMSD, its students, and the broader Madison community. This brief does not advocate for or against any of them. Instead, our report aims to lay out what is known about the proposed budget and potential referenda and what still needs to be explained so the district’s board and voters can make an informed decision about how to address these challenges.