Montana in Fight Over School Funding Shifts

Last Updated: December 21, 2010

This article appeared in the December 2010 Rural Policy Matters.

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After Montana schools braced for deep cuts that could include eliminating teaching positions and money for full-day kindergarten, Governor Brian Schweitzer has proposed a budget that includes both tax cuts and increases to education funding. Schweitzer’s budget proposal, released earlier this month, also includes a controversial change in the distribution of oil and gas tax revenues across the state. In his public remarks about the budget, Schweitzer said state revenues were higher than expected, and he criticized the Legislative Finance Office, which had predicted the need for draconian cuts to schools in budget proposals it made this summer.

Currently, about 50% of the revenue generated by oil and gas production goes into the state’s general fund and the rest is distributed among the districts where the oil and gas is produced, mostly in eastern Montana. The Governor’s proposal would take 90% of the revenues and distribute them in every Montana district as a way to pay for the “quality educator allocation,” a formula for equalizing teacher funding that was developed after the Columbia Falls school finance decision in the state.

Property tax rates vary widely across the state. Districts that do not have revenue from oil and gas resources tax themselves at significantly higher rates to fund schools than do oil and gas producing districts. Oil and gas districts have significantly lower local property taxes, but say that if they lose oil and gas revenue they will be unable to make it up in property tax increases.

The Montana School Board Association (MTSBA) opposes this plan and notes that although the Governor’s biennial proposal increases funding, those increases occur mostly in 2013 and in 2012 districts will see a significant decrease in funding.

According to a recent poll commissioned by MTSBA and the Montana Rural Education Association, Montana citizens want their elected officials to support increased education funding and to prioritize education above other programs, despite the economic crisis. That poll also found that Montanans strongly oppose forced consolidation of schools and believe that local communities should have the authority for deciding when and if to close schools.

Read more:

Coverage of Schweitzer’s proposal and the oil and gas tax issues: Budget perspective from rural Park County schools (scroll down to the December 16th story, “Area Schools See Fewer Students…”): More on Schweitzer’s budget: Coverage on the MTSBA-MREA poll:

Read more from the December 2010 Rural Policy Matters.