Budget Update: Special Education Revenue

MPS leaders announce that ongoing work to review and improve financial processes leads to increased revenue and a reduced budget gap for next year. 

• Our efforts to correct issues are yielding tangible results that will have a positive impact on our current year budget and the projected budget for next year, and will directly benefit our students, staff and community.
• Knowing she was coming into a challenging financial situation, one of Superintendent Dr. Lisa Sayles-Adams's top priorities and commitments was to ensure that MPS was maximizing all revenue to meet student needs. 
• A focus on the special education finances began following her first 100 days tour with a review commissioned by Dr. Sayles-Adams, that was conducted by the Council of Great City Schools (CGCS), a national association of urban school districts.
• The CGCS review recommended, among other things, organizational changes and additional reviews to ensure expense coding and billing were being done appropriately to maximize special education-related reimbursements and revenue.
• Following the CGCS review, steps were taken to correct expense coding and billing issues and an Associate Superintendent of Special Education & Student Support Services was hired. 
• Since January 2026 the expense coding and revenue projection work has been supported by the Center for Effective School Operations (CESO), the firm contracted by MPS to provide technical and leadership finance support, and done in close partnership with MPS finance and special education staff.
• Their analysis has revealed a pattern, dating back at least several years, where state special education revenue was likely not maximized due primarily to miscategorized expenses and the underutilization of available reimbursement mechanisms.
• Now that the work has been done to correctly code and categorize expenses in the current year, which is used to determine the next year’s revenue, MPS expects to receive significantly more state special education revenue both in the current year and for next year.
• The result of this review and improvement work is that MPS expects to receive the following net additional state special education funding:
  • Approximately $10.7 million more in the current year (2025-26) than what was budgeted
  • Approximately $10.8 million more for next year (2026-27) than the projected amount used to develop the budget to this point
• This means that our budget gap for 2026-27 will be revised to $39.7 million and we will be able to restore some of the previously planned reductions as we can now reduce the amount of general funds needed to offset unfunded special education expenses.
• To maximize the impact of the projected revenue in the 2026-27 budget, we are developing a set of recommendations focused on direct student supports and Board priorities. Given the upcoming staffing cycles and the complexity of operationalizing these changes, we will provide a comprehensive update on our progress and the next steps in the near future.
• As our ongoing process for systematically reviewing our finances, we do expect to identify additional issues that will need to be addressed, and we are committed to providing updates to our MPS community on this work as we are able to.
• While we cannot change past decisions or correct issues in the past, we can recognize the harm that these issues have caused our students, families and staff who have lost their jobs due to budget cuts as MPS likely did not capture all of the state special education revenue possible for at least several years.
• We are committed to doing everything possible moving forward to ensure that our students have what they deserve.
• As previously shared, CESO is in the process of conducting a comprehensive assessment of all MPS financial processes to ensure best practices and systems are in place.