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HELENA — A compromise school-funding proposal emerged on Monday to fund annual, inflationary increases in state money for public schools the next two years — and use oil-and-gas revenue from northeastern Montana school districts to help fund that increase.

But House Republicans on a key committee said they’re not wild about it because schools shouldn’t get a bigger increase when most other state agencies are getting cut.

“We think all of us have to share the pain, and education is no different,” said Rep. John Esp, R-Big Timber. “That is one of the big issues that we have to work through the next few days.”

House Majority Leader Tom McGillvray, R-Billings, another member of the House-Senate conference committee on Senate Bill 329, also said he’d like to see stronger language in the bill to authorize controversial “charter schools.”

The six-member committee, charged with hammering out a compromise bill on $1.5 billion in state funding of public schools for the next two years, met briefly Monday morning but took no action.

Sen. Ryan Zinke, R-Whitefish and chair of the panel, said he hoped to meet with House Republicans by Tuesday to find out where some middle ground can be reached in these final days of the 2011 Legislature. The panel may start voting on proposals on Tuesday.

Just seven working days remain in the session, and SB329 is a key part of the budget puzzle that lawmakers and Gov. Brian Schweitzer are trying to piece together before the Legislature adjourns.

The proposal, floated Monday and drafted over the weekend with the help of the Montana School Boards Association and other education officials, is generally supported by Zinke and the other Senate Republican on the House-Senate panel, Sen. Llew Jones of Conrad.

Yet, if the bill is to emerge from the committee, it needs support from at least two committee members from each house. The panel has two Republicans and one Democrat from each house.

Legislative staffers were drafting other possible amendments to the plan on Monday.

The proposal supported by Zinke and Jones would increase state funding for schools by 1.9 percent this year and 1.53 percent the next year - the same amount proposed by Schweitzer, a Democrat, in his budget.

The net result would be a 2 percent increase of state money for schools over the next two years, in part because the first-year increase starts from a base that’s below current-year spending.

House Republicans have been supporting a proposal that would increase state funding for schools about 1 percent over the next two years.

Mark Lambrecht, executive director of the Montana Quality Education Coalition, a group that organized a successful 2003 lawsuit that said state funding for schools was unconstitutionally low, said Monday that court rulings have dictated that state funding for schools should at least match inflation.

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“We hope (the Legislature) can find some sort of agreement that represents inflationary funding for K-12 schools,” he said. “We’re disappointed to see that there is such a wide gulf between the conferees.”

The Monday proposal also would take about $23 million in oil-and-gas funds that now go to a handful of petroleum-producing districts and redistribute that money statewide for all schools the next two years.

Affected districts include Baker, Sidney, Lambert, Saco, Westby and Plevna — all of which would still receive substantial oil-and-gas funds under the proposal.

The plan would limit oil-and-gas money for any district to 120 percent of its respective annual general-fund budget.

Zinke said Monday that he thinks the Legislature can find an agreement on a bill that will fund public schools for the next two years.

“My position is to fully fund (schools) according to the statute (on inflationary increases),” he said. “What’s in, what’s out is open for discussion, as well as the funding. I feel confident that, at the end of the day, we’ll figure it out.”

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