A legislative committee restored millions of dollars in funding for Montana schools on Tuesday, but only did so by draining a different pool of school payments — potentially triggering a significant non-voted tax raise for school districts across the state that legislators didn't discuss.
The Senate Finance and Claims committee iced School District Block Grants for the next two years, pulling $108 million. The committee backfilled funding through a tax-base equalization payment increase, but it will take years to catch up; over the next two, schools will lose out on $40 million from the grant program.
“K through 12 will actually have less dollars than prior to our work today," said Sen. Llew Jones, a Conrad Republican who proposed the amendment axing the grants during the committee's Tuesday hearing. But the committee didn't broach the topic of domino-effect local tax increases.
In Billings, School District 2 got about $6 million from the grant program this school year; back-filled funding is only slated to replace about half of that next year.
For now, it would be up to local taxpayers to make up the difference, and neither they nor schools get a say. The cuts don't decrease the state-mandated budget floor for schools, but they do decrease the money available from the state to pay for the minimum budget; the state funding formula automatically raises non-voted local school taxes to make up the difference.
"I feel like we, as public school districts, have no control," SD2 superintendent Terry Bouck said Friday. "It's very difficult when we have to worry about our legislators making cuts to the money they provide and expecting local citizens to pick it up."
Superintendent of Public Instruction Elsie Arntzen cheered the budget changes in a press release Tuesday.
"As a former legislator, I know that the budget process is fluid," she said in the statement. "I want to thank the Senate Committee for agreeing to put Montana students first today and recognizing the state's responsibility to equitably fund schools."
The release doesn't mention the grant program cuts, backfill funding or potential tax raises. Arntzen, a Republican, has alternately praised and criticized legislative funding proposals but largely hasn't weighed in on education bills.
Other restored payments affect a patchwork of areas:
- Funding for the Montana Digital Academy was effectively restored to last biennium's levels after the online class program faced major cuts in earlier proposals.
- $1.2 million for two years was added to special education funding.
- $1 million was added for career and technical education over two years; that's still lower than the additional $1 million per year that was added by an SD2-pushed bill that passed in 2015. That funding was only for the current and previous school year.
- The Data for Achievement payment, which is allocated to help schools cover the cost of required testing and data collection, was restored at $6.3 million.
- About $220,000 was added to general BASE aid, which pays for school's day-to-day operating expenses.
- $2.4 million for next school year and $4.1 million the year after was added to help compensate for the elimination of the Natural Resources Development payment, filling a negative fund balance. Elimination of the payment costs schools about $10 million over two years. That money goes into the state general fund instead.
- $5.8 million was added for school facility support; companion legislation introduces a funding program that lets schools automatically raise non-voted local tax money for facilities and get some matching state money.
- $3.4 million was added to mitigate tax-based cuts of school districts that depend on coal plants. The amendment was sponsored by Sen. Duane Ankney, who represents Colstrip, where a coal plant is likely to shut down over the next several years. The money would be narrowly distributed and not affect most schools.
In total, about $20 million was added to accounts that all schools benefit from.
The backfilled payments would replace the grant money by the 2020-21 school year, Jones said.
The changes will hit some schools harder than others; Scobey schools get a large grant payment — almost $400,000 for this school year — because they have a large proportion of state land in their tax base.
That hole is equivalent to about 54 mills before accounting for the extra tax-base equalization payments, Scobey superintendent Dan Schmidt said.
"For us, we're gonna feel it a lot," he said. The district is waiting until the budget process wraps up, and if significant tax changes are likely, it will probably send out a letter explaining the differences to taxpayers.
In Lockwood, where the K-8 school district gets about $470,000 in grant money, officials are worried about the impact a non-voted increase could have on other tax decisions.
"It makes it more difficult to pass local levies," Lockwood superintendent Tobin Novasio said. The district is offering a levy this May.
"It's frustrating," said Novasio, who's also the president-elect for the Montana Association of School Superintendents. "I understand that they've got the budget issues in Helena, but it kind of balances it on the backs of the schools."
Assuming payments catch up in the 2020-21 school year, the changes actually would help create of more equitable funding system in Montana. The block grant payments use a 2001 funding formula that can reinforce tax base differences; the replacement payments would further level the playing field for schools with weak tax bases. The current tax-equalization payments only partially make up the gap for schools with weak tax bases.