Montana’s High Court Orders New Aid System

By Julia Woltman — February 15, 1989 7 min read

In a unanimous decision, the Montana Supreme Court has ruled that the state’s system of funding public schools is unconstitutional because it fails to ensure equality of educational opportunity.

The ruling, which came only two weeks after the court heard oral arguments in the case, took lawmakers, the education community, and the governor by surprise.

Chief Justice Jean A. Turnage, in what is believed to be an unprecedented gesture, announced the court’s decision during a joint session of the legislature on Feb. 1.

The justice’s inclusion of the announcement in his biennial State of the Judiciary Message was widely interpreted as a signal to lawmakers of the importance the court places on finding a resolution to the school-funding problem during this legislative session.

“If legislators needed a sense of urgency, they surely have it now,’' observed Victor Bjornberg, press secretary for Gov. Stanley Stephens.

The decision upholds a lower-court ruling that Montana’s foundation program for schools forces so heavy a reliance on locally approved property-tax levies that students in poorer districts are denied equal educational opportunity.

But the higher court based its decision on narrower grounds than those cited by District Judge Henry Loble in his opinion.

Judge Loble had recognized education as a fundamental right guaranteed by the state constitution’s equal-protection clause and said the disparities in funding were an abridgement of that right.

The supreme court justices agreed with Judge Loble that the disparities violated students’ right to “equality of educational opportunity” under the constitution’s education provision. But having made that finding, they added, it was unnecessary for Judge Loble to decide the equal-protection issue.

The high-court decision also shortened the timeframe within which lawmakers must devise a new school-funding formula. The lower court had set an Oct. 1 deadline; the new ruling moves that up to July 1.

The court reviewed evidence of funding inequities that had been presented, during a six-week trial in 1987, by 68 of the state’s 546 school districts.

‘Into Laps of Legislature’

“We conclude,” wrote Justice Fred Weber for the court, “that as a result of the failure to adequately fund the foundation program, forcing an excessive reliance on permissive and voted levies, the state has failed to provide a system of quality public education granting to each student the equality of educational opportunity” guaranteed under the state constitution.

Though the ruling’s timing and manner of disclosure caught many officials off guard, its substance did not.

“I’m not surprised by or unprepared for what the supreme court did,’' said State Superintendent of Schools Nancy Keenan, who added that she was “glad and delighted” that the case “was decided so expeditiously and that [the ruling] put the issue in the laps of the legislature.”

After working on the problem for the past two years, Ms. Keenan said, the education community has begun to reach a consensus on what needs to be done to equalize funding.

But the superintendent and others expressed concern over Governor Stephens’ continued failure to present a comprehensive plan to address the funding problem.

“Clearly, the Governor was caught off balance,” said Eric Feaver, president of the Montana Education Association. “There is no other reason why he would not have made some more substantive proposals.”

Mr. Feaver characterized the Governor’s action to date--a plan to8equalize retirement funding and cap the amount that the state’s more affluent school districts can spend--as “completely short of the mark.”

‘No Leadership’

The timing of the decision did catch the Governor off guard, his press secretary, Mr. Bjornberg, acknowledged. But he said that Mr. Stephens had been meeting in recent days with members of the House and Senate select committees on education, as well as with representatives from education associations, to “reach a consensus on how revenue should be developed to finance a new system.”

But Ted Schye, chairman of the House education committee, which met with the Governor last week, complained that “we’re not getting much out of the Governor’s office.”

“The Governor has provided no leadership or guidance,” Mr. Schye said. “Instead, he appears to be holding back to see what the legislature will do. And I’m just a little disappointed by that.”

“It’s as though the Governor feels this is something new,” said Superintendent Keenan, noting that Mr. Stephens seemed to be continuing to look for answers at a time when the education community thinks it has found them.

Addressed in Two Bills

Many lawmakers and education officials suggested last week that two bills already introduced respond in varying degrees to the issues raised by the court ruling.

A bill introduced by Representative Mike Kadas, which embraces most of the recommendations made by former Gov. Ted Schwinden’s Public School Finance Advisory Council, is considered to be the more comprehensive of the two measures. It addresses not only the equalization issue but also the increase in revenues needed to bring about a substantial revision of the current school-funding mechanism.

It is the latter issue, said Mr. Schye, that will be the most difficult to resolve. “Equalization will be the easy part,” he predicted. ''It’s on the question of where the revenues will come from that the battles will take place.”

Said James Goetz, the lawyer who represented the plaintiffs in the suit: “The problem now is that any new plan is going to cost money, and this is a financially difficult period for Montana.”

But he added that the plaintiffs are “pretty happy” with the approach taken by former Governor Schwinden’s advisory council and reflected in Mr. Kadas’s bill.

A second bill, introduced by Senator Dennis Nathe, has been described as a pared-down version of Mr. Kadas’s bill. It takes a step toward meeting the requirements for equalization but does not address the issue of raising revenue. There are similarities in the two bills, said Ms. Keenan, and the education community is in the process of suggesting amendments to both.

Revenue-Raising Options

Among the suggestions for raising the needed revenue is a proposal to increase the mandatory statewide levy from 45 mills to 140 or 160 mills, while eliminating or capping locally voted levies. Other proposals would increase income taxes or impose a sales tax.

According to Representative Ray Peck, chairman of the House select committee on education funding, it has been difficult to get from Governor Stephens a sense of what “sort of plan would not fall under his veto pen.” But the Governor, Mr. Peck said, “seemed to imply that placing the entire burden on property taxes would not be acceptable.”

Others added that, given the fact that Montana has never had a sales tax, it is unlikely one would be politically acceptable now.

In its ruling, however, the supreme court stated that “fiscal difficulties in no way justify perpetuating inequities.”

That warning has led many observers to predict that the needed revenue will probably have to be raised through a combination of tax measures.

Clarification Sought

The court’s imposition of a tighter deadline for resolution of the funding issue has also caused confusion among some lawmakers.

The ruling states that, as of July 1, “the holdings of this opinion shall become fully in effect for all school terms commencing after that date.”

But Mr. Peck, noting the impossibility of having a completely revised school-funding program in operation by that time, said the state attorney general would ask the court for a clarification of the terms of the deadline. The hope, he said, is that “the court means that a new plan be in a statute by that date,” but not necessarily in operation.

The plaintiffs are amenable to starting the equalization process in the second year of the biennium, said Mr. Schye, provided that some minor changes in the program take effect immediately and more money is allocated.

Though devising a new school-funding system has been a preoccupation of policymakers over the past year, the state high court’s decision has given the task the impetus needed for action, officials said last week.

“Many legislators were waiting for a decision before acting,” said the mea’s Mr. Feaver, “but now the legislature has a rededicated purpose.”

Most lawmakers and education lobbyists agreed last week, however, that reaching a consensus on the new program would probably be an “11th-hour” development.

A version of this article appeared in the February 15, 1989 edition of Education Week as Montana’s High Court Orders New Aid System