Montana’s school finance system was declared unconstitutional in November 2004. The Montana Supreme Court struck down the current system and gave the state legislature until Oct. 1, 2005, to come up with a new funding formula that is based on “educationally relevant factors.” The current system relies on a foundation formula that is based on different foundation levels for each grade level. To adjust for economies of scale, the first elementary student in the district receives the full foundation level; as district enrollment approaches 1,000 students, each additional student receives 20 to 50 cents less. After 1,000 students, each additional pupil receives the same amount as the 1,000th student. The same calculations are made for middle and high school students, but the foundation level is adjusted for up to 800 students. No other adjustments are included in the formula, and no minimum local effort is required. Montana has 12 categorical programs, totaling $130 million for fiscal 2004. Categorical aid provides support for special education, transportation, school facilities, technology, and teacher retirement.