The Milwaukee Public School District, the nation’s second largest school district, will not be able in the next fiscal year to pay its principals a salary, a source familiar with the matter told Business Insider.

The decision to cut school staff by 1,000 was the result of the district’s financial situation, and not the result the district made during the 2016 legislative session, the source said.

School districts across the country are facing unprecedented budget deficits, with schools like Milwaukee’s facing the biggest in state history.

It’s been more than five years since the state Legislature passed a budget that made cuts to state education funding, and many school districts are still struggling to find funding. 

The budget, which passed with bipartisan support in the state legislature in 2017, was designed to make Wisconsin the first state in the country to make its public schools more efficient and to cut down on school overcrowding.

The budget was intended to boost the school district’s cash reserves by $1.8 billion over five years, but the district has already announced that it will miss that target.

School board members and other elected officials have said the district is facing huge financial challenges and are trying to find savings in other ways.

Some schools are closing and some principals have already quit.

In December, the Milwaukee Journal Sentinel reported that the district was in the red after a state audit revealed the district had a $3 million budget hole, and in March, it announced that the school board had failed to meet its own budget goals for fiscal 2018.

It’s unclear why the district decided to stop paying its principals.

A spokesperson for the district said in a statement that the decision is a result of a variety of factors. 

“It is clear that the financial situation of the Milwaukee district has worsened due to the impact of the recent legislative session on state revenues and the cost of school construction,” the statement said.

“The district is committed to working with the Legislature to identify additional funding sources to be used to provide the necessary relief to maintain the district as a viable public school district.”

The district said it would work with legislators to address its funding challenges.

The district’s finances have been in the black for years. 

Last year, state lawmakers slashed state education aid by $900 million in the 2017-19 budget and eliminated funding for charter schools and home schooling.

The budget also eliminated funding from the state’s $25 million fund for the Children’s Hospital and Health Center, which is used to assist children who have severe mental illness.

In February, the state Department of Human Services said it was delaying the start of a grant program that would help students who have been involuntarily committed to mental health treatment.

In April, a new state audit showed the district did not provide adequate support for the families of students who had been arrested and charged with crimes.

That audit found the district failed to provide adequate mental health services for the children.

In June, the board voted to eliminate the school funding program and instead increase the school’s funding by $8 million.