I have been milling balsa wood with a 1/8" bit. The stock is 1/4".
I have been using 0.260 as stock thickness.
Selected top of stock.
Selected 0.0625 depth of cut, four passes and the part would be free of the stock.
Initialized cutter.
First cut was 0.190.
Second cut freed the part.
What’s up?
Another consideration is feeds and speeds and the nature of your endmill — balsa wood could easily be pulled up into the endmill if using one with upcut flutes.
Given that your first cut was WAY deeper than you specified, I suspect you’ve got some sort of WCS zero issue, or the material isn’t staying down firmly against wasteboard, or as Will points out, you’ve got a calibration issue. .25" balsa is fairly stiff, but it depends on how it is clamped as to what it will do.