Montana should impose strict education-spending limits in wealthy communities as part of a broader plan to equalize expenditures among school districts, the state’s new Republican Governor has recommended.
In addition, said Gov. Stanley G. Stephens in his first State of the State Message, lawmakers should earmark lottery proceeds for teacher retirement, authorize a new statewide property tax for the same purpose, and allot the funds through the school-funding formula in a manner that would help close the gap between high- and low-spending districts.
The Governor and the legislature are expected to devote much of their time this year developing new a school-finance system. Last January, a state trial court declared the existing system unconstitutional and ordered the state to have a new, equitable funding scheme in place by Oct. 1.
The Montana supreme court is not expected to issue its ruling on the state’s appeal in the case until well into the legislative session. Key lawmakers, however, predict the high court will uphold the decision and therefore are assuming they will be forced to change the system this year.
Spending Levels Frozen
Mr. Stephens’s proposal to “cap the amount of money school districts spend to provide a basic education” would essentially freeze spending levels in districts with high property values, according to Ray Shackleford, the Governor’s budget director. Schools, he explained, would be categorized “by size and type,” and local school boards would be prohibited from spending above a specified amount per pupil in each category.
“This is a measure that has been talked about for some time,” said Robert Anderson, executive director of the Montana School Boards Association. The spending limits, he said, would force the state to significantly increase its share of school revenues, which has declined dramatically in recent years while reliance on local property-tax revenues as a funding source has increased.
Teacher Retirement
Mr. Stephens also proposed “to uncomplicate an arcane system of funding” by drastically revising the way the state finances its teacher-retirement program.
Under his plan, the retirement system would be incorporated into the state’s school-foundation program. Current county property taxes for retirement would be replaced with a uniform 20-mill state property tax, and those funds would be distributed on an equalized basis through the foundation formula.
The Governor also suggested that all lottery profits be dedicated for teacher retirement and distributed through the foundation formula. The lottery currently generates about $8 million a year, which is used to support retirement programs for both teachers and other state employees.
In a statement that won support from the school-boards association, Mr. Stephens said he would oppose legislation that would erode local control of education or require districts to consolidate.
That stance is significantly different from that of the former governor, Ted Schwinden, who had offered several consolidation proposals during his tenure, said Mr. Anderson.
“It’s the right move,” he added. “No savings are to be made by consolidating districts.”
Advisory Group’s Proposals
In addition to Mr. Stephens’s proposals, lawmakers are expected to consider a finance-reform plan prepared by the Public School Advisory Council, a group that was formed by Mr. Schwinden.
In a report issued late last year, the council suggested that the state increase its share of school revenues and limit the ability of districts to raise their property-tax rates above the state-mandated base rate.
Representative Ted Schye, chairman of the House education committee, said he supported Mr. Stephens’s plan to limit the growth of wealthy districts’ budgets.
“If you’re going to have equalization, you have to have caps or we’ll be in the same mess again in 10 years,” he said.
He added, however, that he does not think the Governor’s overall plan will fully satisfy the state court’s requirements.
Mr. Schye said several bills to revise the finance system will be introduced in coming weeks. In the meantime, he said, state officials are “working hard to get all the education players together to figure out what they can get a consensus on.”
