The bullet shell found near Kennedy Elementary School was brought on school grounds by a student, police say.
The casing was on top of fresh snow, according to a Madison Police Department incident report.
There have been no reports of shots being fired near the school. However, there have been past incidents where ammunition has been left on its grounds.
In December, police increased patrols near the school after students found live ammunition near a basketball court. In November 2011, bullets were found on the playground twice in a 10-day span.
"We're taking this very seriously. However, we also know that the school is not in any danger. The school is safe. I want to reassure the community, particularly the parents, that the children are safe," said Luis Yudice, security director for the Madison Metropolitan School District.
The principal is sending a letter home to parents about the latest discovery.
The Madison Metropolitan School District and the Madison Police Department continue to work in close partnership on these cases.