It’s easy to imagine a Lockwood high school while sitting around a lunch table at the Eileen Johnson Middle School.

Three eighth-grade girls, Karma Ludwig, Precious Bearcrane and Tailey Leatherberry, will all be attending different schools next year — Skyview, Senior and Central. They’re not pleased about splitting up, they said Thursday, and think a Lockwood high school would be a nice fix.

“You’re, like, with the same people, and you just kind of … ” said Bearcrane, trailing off.

“We would be kind of in the same area your entire life,” Leatherberry said. With the same friends.

It’s much harder to imagine a Lockwood high school outside the cafeteria, in the realm of adults and taxes and laws.

The idea would require overturning or amending a 1993 moratorium on new school districts in Montana passed by the Legislature. Lockwood, like many districts in Montana, is an elementary-only district. Some districts operate a K-8 and high school district, while others are classified as K-12. No new districts can be created at the elementary or high school level.

2015 bill to allow Lockwood, East Helena and Hellgate near Missoula to create their own districts narrowly failed, and Lockwood plans to lead another charge in 2017.

The School District 2 high school redistricting process inflamed tensions between Billings and Lockwood, as recommendations to be presented to and voted on by SD2 Trustees on Monday assign most Lockwood students to Skyview High. Lockwood advocates made a vocal push to maintain the area’s current choice between Skyview and Senior High.

“Billings has made our argument for us,” Lockwood Superintendent Tobin Novasio said at a recent public meeting. “This is why we need a local (high) school board.”

LARRY MAYER/Gazette Staff
Eileen Johnson Middle School principal Gordon Klasna addresses some of the 380 students in Lockwood for an assembly. Monday, March 14, 2016.

Lockwood advocates emphasize that the effort is about local control and having the option to choose to create a district. Also, years of research supports the academic benefits of small, locally based schools.

But changes could impact Montana’s entire funding system and siphon students and taxable value from existing school districts. New districts would likely be more expensive to run.

“There’s research that certainly says that small community schools are preferred if communities are willing to have those. That means funding them,” said School District 2 Superintendent Terry Bouck. “You have to ask, are taxpayers wiling to foot the bill?”

Even if the law is changed, “our taxpayers may say no” to a high school district, Novasio said.

'Premier' or 'bare bones'?

With a new district comes a new school. But what goes into a new school can vary widely — from simple classrooms to gyms, labs and other specific facilities.

Novasio has said that he would like to build a “premiere facility,” with top-of-the-line career and technical education and athletic facilities that would draw statewide competitions.

“(But) that would be a choice for the local taxpayers to make,” he said. “If the law gets changed, we would say, 'what do we want to see in a high school?'”

Using information published in “School Planning and Management” about schools constructed across the nation in 2014 and 2015, a lower-end high school, built to accommodate up to 600 students, could cost Lockwood about $25 million. On the higher end, it could push upwards of $40 million.

That could cost Lockwood taxpayers more than $110 per year on a $100,000 home, disregarding interest paid on bonds, in addition to higher taxes to support the general fund.

Almost all schools today are built with facilities like a library, computer labs and a gym and bleachers. But about only six percent had industrial technology facilities, and less than a quarter had vocational arts facilities, according to “School Planning and Management.”

Extensive athletic facilities are also less common; only about five percent of high schools had a field house, and about nine percent had a track. All are extra expenses that would push up the costs.

Montana school construction costs can be difficult to project, but they’re typically less than national averages. Billings is building a pair of new middle schools, designed for about 700 and 800 students, for just less than $30 million — both are below the national median for 2015 facilities in cost per square foot and cost per student. Huntley Project and Glacier High in Kalispell, both built during the last decade, fit that trend. Glacier, which now holds almost 1,300 students, was built for about $45.2 million, adjusted for inflation. Costs also vary by year for economic reasons.

There are also site costs. Novasio said that the district's current campus, which has separate elementary and middle school buildings, wouldn’t be able to accommodate a high school. The district would have to purchase land, which could require improvements like the extension of sewer and gas lines.

Lockwood also has other maintenance priorities. A building reserve levy is helping to patch up the roof on the elementary building, but eventually it will need to be replaced.

School districts can only borrow so much money based upon their tax bases and state funding. Using information from an East Helena projection created by a legislative analyst, a ballpark estimate for Lockwood's bonding capacity would be around $41 million.

Operating costs

Once a school is built, local taxes and state funding keep it running.

Lockwood has a lower resident-student ratio than SD2, and a relatively weak commercial tax base, excluding the ExxonMobil Billings Refinery. It’s generally more expensive to run smaller schools in Montana, and adding diverse courses and activities is often more expensive in a smaller school.

In Montana, funding is, in part, linked to students; districts are slated to get nearly $7,000 for each student for the upcoming school year, but that figure decreases 50 cents per student for a district's first 800 students. Payments of about $300,000 known as basic entitlement are distributed to each district, but districts with more than 800 students receive more money. Funding is also linked to special education, Native American students, teacher staffing and at-risk students.

Montana also offers funding for districts depending on the strength of their tax base. Gazette estimates place this figure around $850,000 for a Lockwood high school district, but could be significantly lower depending on non-levy revenue. That would leave local taxpayers on the hook for about $575,000 for the school’s BASE levy which, again, could be lower depending on non-levy revenue. Spread out across Lockwood’s tax base, that’s about 24.5 mills, or about $32 per year on a $100,000 home.

PRESTON STAHLEY/Gazette Staff
Local taxpayers pay annually to schools as a part of the general fund budget levy. School District 2 taxpayers paid about $63 this past year on a $100,000 home. Should Lockwood have its own high school, its per-household taxes would likely be higher than SD2's. Budgets, especially in districts with broad academic and activity offerings, tend to be closer to their maximum.

But the BASE budget only represents a required floor for school funding. Additional local levies can push funding higher to the over-BASE budget, or state-set maximum. If Lockwood were to reach its ceiling, the tax impact could be as high as $77 on a $100,000 home.

For this school year, SD2’s high school district levied 48.14 general fund mills; about $63 per year on a $100,000 home. Budgets, especially in districts with broad academic and activity offerings, tend to be closer to their maximum.

Abrupt budget effects in SD2 would be partially smoothed over because the state uses three-year enrollment averages to determine funding; during the first two years of an exodus, Billings could actually receive extra money for students they weren’t educating. Additional funding mechanisms could help ease a change, but any legislation could introduce new variables into transitions. And caps on how much money Montana districts can put in reserves would limit the district’s ability to save any unusually robust funding for leaner times.

After that, Billings would be left with fewer students to educate and proportionally fewer resources to educate them with. That could mean painful cuts for staffing and programs.

LARRY MAYER/Gazette Staff
Kim Pollock teaches social studies at the Eileen Johnson Middle School in Lockwood. Monday, March 14, 2016.

“We would have to work to make adjustments as necessary,” Bouck said. “(But) it’s really speculation. ... You don’t know how many students will opt to continue in Billings Public Schools.”

Gazette estimates show that the tax impact is likely to be small for Billings taxpayers once Lockwood students are removed from the budgeting process three years after the creation of a new district. Lockwood’s tax base, currently around $23 million, has the refinery but also has residential areas with relatively low property values. Taxes might go up a little, but, roughly, things even out.

State projections prepared for the first two years of a district split under SB 107 rules show that taxes would increase four mills for SD2 during the first year — roughly $5 on a $100,000 home each year — and 2.7 mills during the second year — about $3.50 per year on a $100,000 home.

Projections don't include permissive levies, which are automatically charged for areas like transportation, adult education and tuition. All categories could be affected by a district split.

Bouck and SD2 officials declined to specifically comment on projections created by The Gazette about how the removal of Lockwood students and the Lockwood tax base would affect SD2’s budget.

“There are so many hypotheticals,” Bouck said.

Novasio largely agreed with the projections, acknowledging that there were subjective categories that could change, like non-levy revenue.

LARRY MAYER/Gazette Staff
Eric Karls teaches science at the Eileen Johnson Middle School in Lockwood. Monday, March 14, 2016.

Gathering support

A major sticking point between Billings and Lockwood is whether Billings voters should have a say in the creation of a new district.

With SB 107, “there was no opportunity for our taxpayers to voice their opinion,” Bouck said. The district opposed the bill.

Novasio disagrees that Billings should have a vote.

“Our taxpayers are deciding to tax themselves,” he said.

Lockwood would drop a controversial asset sharing provision that would have required SD2 to somehow turn over about 10 percent of their assets to a new Lockwood high school district.

“We wanted them to acknowledge that we’ve paid for 10 percent of each of the high schools,” Novasio said at the public meeting in Lockwood in early March, referring to previous taxes. “We’ll walk away from that. It’s not an elaborate scam to scam Billings out of some taxpayer money.”

That’s contingent on Billings maintaining open borders with Lockwood, something that Bouck said the district is open to. Students from Lockwood would be able to enroll in SD2 high schools like other out-of-district students, and SD2 students could enroll in Lockwood if they chose.

“We value our Lockwood students and we want to provide the best education we can for all students,” Bouck said.

It’s still unclear how an expansion process would work, but SD2 officials said they’re focused on planning for current realities.

“The kids are in the buildings, right now,” said SD2 Bond Manager Lew Jones. “They’re about to come across the doors for the high schools, and we have to plan right now.”

The moratorium on new school districts could be challenged in the courts as well, which could have a larger effect than a bill with narrow enrollment parameters. The Montana Rural Education Association plans to make the district moratorium a “major agenda item” at their June meeting. The group recently hired a new executive director, slated to begin in July.

Outgoing executive director Dave Puyear stopped short of saying a legal challenge was a lock.

“We have huge concerns about that moratorium,” he said. “Our state constitution is one of the strongest in the entire United States when it comes to this issue of local control.”

It’s unclear how a successful legal challenge would affect the moratorium, but the mass proliferation of districts in Montana – which has more rural districts classified as “remote” than any other state in the country – would pose challenges for the state’s funding formula.

“It would be a huge shift,” said SD2 Chief Financial Officer Patricia Hubbard, who also sits on a state School Funding Interim Commission.

“We realize that there has to be a limit,” Novasio said.

The unknown

If the law changes, it would still be several years before a district could become a reality, even with a swift "yes" vote. Novasio estimated that it would take 5-10 years to establish an operating district — five years being optimistic. SD2 officials anticipate a process would take at least that long.

The three girls eating lunch at the middle school Thursday wouldn’t have the opportunity to attend a Lockwood high school even if it happens, but they think their parents, and other residents without children in school, would still support it.

LARRY MAYER/Gazette Staff
Buses line up at the end of the school day in Lockwood. Monday, March 14, 2016.

Lockwood overwhelmingly passed a bond levy in 2006 to build a new middle school and update existing facilities. Since then, of eight levies put up for a vote, a building reserve levy in 2013 and a technology levy in 2012 passed. Bond levies for a sewer system failed four times before passing.

“It takes a while for a community to decide to raise their taxes,” said Republican state Senator Taylor Brown, who represents Lockwood.

Part of the opposition to lifting the moratorium is conceptual, Novasio said.

“There’s a fear of the unknown.”

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