2025-26 Budget Process

The pro forma financial projections provide an estimate of the future financial performance of Minneapolis Public Schools (MPS) if the district maintains the status quo. This tool helps in understanding the financial trajectory and making necessary adjustments to maintain financial stability.

The pro forma includes estimated revenues, expenses, and other financial metrics based on previous budget allocations and other assumptions.

The pro forma is not a budget or a budget proposal. It is a financial statement that projects future finances based on current revenue, expenditures and assumptions.

Every year, MPS goes through an external audit. This audit will confirm revenue, expenses and any anticipated budget gaps. Once we receive the audit, we then use that information to prepare school and department budgets which are reviewed and approved by the board at the end of the school year.

The primary causes include chronic underfunding of public education, multiple years of declining enrollment, increased costs of operations, and the loss of federal COVID-19 emergency funding.

MPS spends 80% or more of its annual budget on employee wages and benefits. While MPS reduced positions last year, salary resulted  in a 1% increase to the total cost of wages and benefits due to new contract settlements. Without the reduction in staff, this increase would be higher.

MPS is utilizing multiple strategies to address financial challenges including: 

• Increasing student enrollment
• Reducing expenses and finding operational efficiencies 
• Making adjustments and changes to increase reserves and support a transformational period, helping to support financial sustainability and improved student outcomes 
• Adding the Nov. 2024 tech levy ballot question to ask voters to consider an increase in the amount of dedicated technology funding by about $20 million
• Continued advocacy with the state and federal governments for additional funding

MPS has multiple funding sources that serve different functions. Most of those funding sources are restricted meaning they can only be used for certain expenses.

• The only unrestricted funding source is the general fund (Fund 1) which covers expenses for schools and departments that are not covered by other funds.
• The restricted general fund dollars are to be used for environmental health and safety and code compliance for buildings.
• Food service (Fund 2) is restricted and covers culinary and wellness services.
• Community Ed (Fund 4) is restricted and covers community education, early childhood and adult education.
• Capital (Fund 6) is used to record all operations of a district's building construction program that are funded by the sale of bonds, capital loans, or major capital projects.
• Debt Service (Fund 7) is used to record revenues and expenditures for a school district's outstanding bonded indebtedness, whether for building construction or operating capital, and whether for initial or refunding bonds.

The projected change in the fund balance for the 2025-26 school year is a decrease of $55 million. Updated information will be available once the audit is complete which will identify any difference between revenue and expenses for the 2023-24 school year.

The pro forma projections are updated annually.

Budget decisions are made through a collaborative process involving various stakeholders, including the School Board, district and building administrators, families and community members. The process includes reviewing enrollment projections, funding sources, and expenditure needs.

MPS receives funding from multiple sources, including state and federal government allocations, local property taxes, and grants. Each source plays a crucial role in supporting our educational programs and services.

The fund balance is the district's reserve account. This reserve fund is reflective of the financial health of an organization. It allows the district to continue to function in times of government shutdown or extraordinary events. The school board has a policy identifying the amount that must be in the district’s fund balance.

To address budget shortfalls, MPS explores various strategies such as cost-saving measures, reallocating resources, and seeking additional funding including the tech levy. Our goal is to minimize the impact on students and maintain the quality of education.

Learn more about the tech levy

Community members are encouraged to participate in the budget process by attending School Board meetings, parent advisory groups (school budgets) and providing feedback during school based engagement opportunities. Your input is valuable in shaping our financial decisions.

We are in the early stages of the school transformation process which includes fulfilling the directives outlined in the school board’s transformation resolution. As directed by the board, we will be utilizing a priority-based budgeting process in order to identify central office efficiencies by transparently categorizing spending and ensuring funds are prioritized in alignment with the strategic plan.

Detailed budget documents, including the pro forma and other financial reports, are available on the MPS Budget Documents page.

View budget documents and information