Montana Legislators Approve Education-Finance Measure

By Julia Woltman — August 02, 1989 3 min read

Montana lawmakers have revamped the state’s school-finance system in an effort to comply with a ruling by the state supreme court, but lawyers for property-poor districts contend that the measure does not go far enough to equalize spending among schools.

Gov. Stanley Stephens had not acted on the bill as of late last week. Victor Bjornberg, his press secretary, said Mr. Stephens was “looking at it favorably” and would reach a decision on the measure after it had been fully analyzed by his budget office.

If the Governor signs the bill, said Mr. Bjornberg, he will “make it clear that this is only a first step” toward equalization.

Spokesmen for the 58 districts that successfully challenged the current funding method said their own review of the bill had left them disheartened.

“This is a small step in the right direction,” said Robert Anderson, executive director of the Montana School Boards Association. But, he said, the bill “still leaves equalization and the disparities in per-pupil expenditures on the agenda.”

James Goetz, the lawyer for the property-poor districts, said the measure “doesn’t infuse enough state money, doesn’t address equalization adequately, and doesn’t deal with equalizing retirement.” He4said his clients may go back to court if the Governor signs the bill.

Higher State Share

The legislation would increase the state’s share of local school costs from 56 percent to 82.5 percent, according to a preliminary analysis by the Governor’s office of budget and program planning.

The bill would provide districts with a guaranteed tax base for their general-fund and retirement costs. It also would raise the statewide property-tax levy from 45 to 95 mills, raising state revenues by $61 million.

To pay for the new system, lawmakers also imposed a 5 percent “education surcharge” on individual and corporate income taxes and raised the coal severance tax. In addition, the measure earmarks $4.6 million from the state lottery and $5.8 million in interest from the coal-tax trust fund for schools.

The legislature also authorized a study on ways to equalize districts’ transportation and capital costs.

Capping Costs

Most of the criticism of the bill has centered on a provision to “cap” the spending of affluent districts.

That provision, which was sought by Mr. Stephens, would prohibit districts’ budgets from increasing by more than 12 percent over the total of their general-fund and insurance expenditures for fiscal 1988. Districts that are already spending at or above the new limit would be granted a 4 percent increase for inflation.

According to Mr. Bjornborg, the provision ensures “that no district is being asked to spend less than it currently is.”

But Pat Melby, a lobbyist for the districts that sued the state, said the bill “continues to allow high-spending districts to spend more, and does not provide funds for the low-spending districts to rise up to a higher average.”

“There is basically no capping mechanism,” agreed Nancy Keenan, the state school superintendent. “The proposal just locks in the disparities.”

Prior Version Vetoed

Lawmakers have been under pressure to develop a new system since last February, when the supreme court ruled that the current method’s heavy reliance on local property taxes denied equal educational opportunity to students in poor communities.

After failing to resolve the issue during their regular session, lawmakers were summoned back to Helena on June 19, leaving legislators with 11 days in which to devise a funding scheme before the high court’s July 1 deadline.

In late June, despite Mr. Stephens’s warnings of a veto, lawmakers passed a bill that would have increased the state property-tax levy to 100 mills, frozen the budgets of higher-spending districts, and equalized districts’ teacher-retirement costs.

“That bill equalized,” said Ms. Keenan, noting that it had the full support of the state’s education community.

The Governor vetoed the bill as he had promised, prompting the supreme court to extend its deadline to July 17.

“Legislators have cobbled together the best plan they could under the circumstances,” said Mr. Melby. But, he noted, “the system which allowed for the per-pupil spending disparities in the past has not been significantly altered.”

“The mechanics are there to make it worse over time and it won’t be long before we are right back in the same place,” he argued.

The state’s high court has extended its deadline for approval of a new system to Aug. 19 to permit both sides in the legal dispute to consider the bill’s likely effects.

A version of this article appeared in the August 02, 1989 edition of Education Week as Montana Legislators Approve Education-Finance Measure