The Milwaukee Public Schools (MPS) Neighborhood Schools Initiative (NSI) appears to be making incremental progress towards its twin goals of increasing neighborhood capacity and reducing busing, although results are mixed in this 2002-2003 report, the third year of NSI implementation. Reported findings include: (1) Thirty-nine percent of all elementary and K-8 students attending schools with defined neighborhoods attend the school in their neighborhood, up from 31 percent before NSI; (2) In the neighborhoods of the schools with the capacity to enroll all their students, 55 percent of students attend their neighborhood school or the school in the adjacent neighborhood; (3) Prior to NSI, there were 15 schools enrolling more than 60 percent of their students from the neighborhood; in 2002-2003, there are 10 such schools; (4) Prior to NSI, there were 41 schools with the capacity to enroll all the children living in the school's neighborhood; this has dropped to 34 in 2002-2003; (5) The percent of schools classified as racially balanced has increased from 23 to 25 percent since NSI; and (6) Student mobility rates in the NSI target schools have decreased from an average rate of 14 to 12 percent, a decrease comparable to the overall district average mobility rates.