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Low-Wealth Districts Sue Montana; Claim Financial Inequities

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A coalition of 39 low-wealth Montana school districts and a handful of individual taxpayers have filed suit against the state claiming that its system of financing public education is inadequate and inequitable.

The plaintiffs allege that the legislature has historically set districts' budget authority at inadequate levels, forcing them to raise more than a third of their operating expenses through voter-approved property-tax levies that heighten the inequities between property-poor and affluent districts.

See related story on page 5.

Like the school-finance suits that have been successfully litigated on constitutional grounds by districts in California, Washington, Connecticut, West Virginia, Wyoming, Arkansas, and New Jersey, the Montana case hinges on the premise that the quality of a child's education should not be a function of the property wealth of his community. Similar lawsuits have failed in seven states.

"We've seen this in other states," said Mike Bowman, superintendent of schools in Missoula County. "Montana is just due for it."

A State Function

Named as co-defendants in the suit are the State of Montana, the Montana Board of Public Education, and the Montana Superintendent of Public Instruction.

According to the complaint, the increasing reliance on property taxes to pay for public education is unconstitutional because education is a state function and property-tax yields vary greatly from district to district.

"It basically stems from the fact that some districts have much more wealth per student than others," said James H. Goetz, the plaintiffs' attorney. "With a fairly modest tax effort, the wealthy districts can afford an expensive education for students. The less-wealthy districts can make a great tax effort and still not finance education adequately."

According to the lawsuit, filed in mid-April in the district court of Lewis and Clark County, the wealthiest district in Montana has over 50 times the taxable valuation per student that the poorest school district has.

The disparities in the amount of money spent per pupil from district general funds are "as large as 6 to 1 and more commonly 4 to 1 between wealthy and less wealthy school districts," the suit states.

It concludes that the inequities in the property-tax-based funding3structure, coupled with an inadequate state role in funding, mean the state is failing to live up to its constitutional responsibility to provide for a "basic system of free, quality public elementary and secondary schools."

Cumbersome System

Central to the dispute is the legislature's funding for the state's foundation program, which, according to a 1982 report to the legislature, was instituted in 1949 to ensure equal opportunity for all students by providing equal funding per child according to school size and type; to ensure that basic-education costs are fairly distributed among the state's taxpayers; and to relieve pressure on local property taxation by providing state funds for schools' general-fund budgets.

"I feel mechanically it's a good program," said Robert Stockton, director of state equalization, "but funding has not kept pace with cost."

The plaintiffs charge that the state has arbitrarily held the state-aid formula below the level necessary to provide adequate education to every child and that the legislature has not funded the equalization plan adequately.

An illustration of the problem is the comparison between Troy High School and Powder River County District High School in Broadus, which enroll about 180 students each, according to Richard J. Hill, the superintendent of schools in Troy School District No. 1. He noted that Troy, a low-wealth mining and timber community, has a taxable valuation per student of $38,000, while Powder River, which is in the wealthy coal, oil, and gas region of the state, has a taxable valuation of about $490,000 per student.

Yet, he added, "we receive the same X amount of dollars from the state because we're the same size."

Mr. Hill was instrumental in organizing the grassroots movement that resulted in the lawsuit.

He said letters were sent to all districts throughout the state inviting them to participate in the suit and asking them to help pay the cost. As of last week, $26,000 of the estimated $30,000 to $40,000 in legal costs had been raised, he said.

Final Blow

Although concern over state financing of education has been growing over the years, the final blow for school officials, he noted, was the legislature's treatment of a guaranteed-tax-base proposal that would have equalized tax rates across the state and narrowed spending disparities.

The measure, he said, was introduced in the last legislative session, two years ago, but did not get out of committee.

"Eighty-five percent of our kids in the state are in low-wealth districts," Mr. Hill noted. "You just don't see the support necessary to get the ball moving. No one in the legislature is banging the table for education."

"We're named as a defendant," said Mr. Stockton of the state superintendent's office, "but I think our feeling is that this will clear the air. Perhaps now the court will say there is a problem. We've apparently never been able to convince the legislature."

"I'm sympathetic with their concerns," said Edward F. Argenbright, state superintendent of public instruction, "and I feel it's a shame that the legislature has not been able to address the funding of the current foundation program appropriately. I believe this suit is a reaction to the actions of legislatures for a long time now to use the school-foundation program as a budget balancer."

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