School funding proposals could add more than $200M to Montana education budget

The commission didn’t, however, propose how the state should redesign and simplify the existing complicated funding formula, which was a hope many had for the commission to achieve.

A commission-funded study found there was a $433 million difference in guaranteed state funding for districts and the total budget needed for Montana schools to be successful.

For districts who are able to levy their tax base to get their funding to 100%, the study found there was still a $213 million shortfall.

If all the proposed appropriations in the commission’s bill drafts pass as they are outlined currently, there will be an estimated $215 million influx of funds in the first fiscal year after the legislative session and nearly $300 million in the fiscal year after that.

The ball is now in the 2027 Legislature’s court, and it’s unclear whether the 10 proposed bills will make it through the legislative process with all of their proposed funding, or at all.

Montana’s Constitution requires each student receive an equal opportunity for a quality education. In 2005, the Legislature required lawmakers to study the costs behind education and potentially modify the funding formula every 10 years to keep the state in line with that constitutional requirement.

The 20 members of the commission met for the last 15 months to understand how the education system works in Montana, identify challenges schools may be facing and learn how successful school districts operate to make recommendations for bills that should be passed. Reports on these topics were assembled by two consultants, the National Center on Education and the Economy, as well as Augenblick, Palaich and Associates.

Investing in English learners, special needs and at-risk youth

The commission found Montana is the only state which provides no supplemental state funding for English language learners, and with more students learning English in classrooms, districts need funding for resources like bilingual textbooks.

Schools are required under federal law to identify and provide support for English language learners and the state receives $500,000 in Title III funds to do so, $350,000 of which is distributed to more than 4,000 students, meaning districts get about $80 per student. The commission found the administrative burden was so high to access so little funds some districts didn’t do it.

The commission proposed a bill that would increase the payment to more than $2,100 per student to go into a district’s general fund based on the number of English learners identified, costing a total of about $10 million.

Another draft bill would create a special education high cost funding pool, where qualifying districts can apply to access funds to educate a high-needs child. The draft outlines the pool would receive an allocation of $20 million in the first year of the biennium.

Under another draft bill, the state would adjust how it distributes at-risk student payments to schools. Districts identify students considered “at-risk” by cross-referencing children of families who utilize benefits like SNAP or TANF, and the new proposal would increase funding on a per-student basis allocated to districts to about $70 million in fiscal year 2028 and a total of $165 million in fiscal year 2029.

Montana currently is among the lowest paying states for at-risk youth in the U.S., the commission’s study found.

The report said Montana has no idea what our true achievement gap is for economically disadvantaged students.

“This is not something we would tolerate for any other subgroup of students,” a draft of the final report said. “To be fair, Montana is not the only state struggling with this issue.”

The commission also proposed a bill that would allocate an estimated additional $50,000 to Indian Education for All — moving the minimum payment to districts from $100 to $1,000 — to ensure districts get the needed support to implement constitutionally required Native American education programming.

However, a proposal to increase the American Indian Achievement Gap payment from around $250 to $750 per identified Native student failed on an 11-9 vote. It was the only funding proposal to fail.

Some on the commission said this investment may already be covered in the proposed increase for at-risk students.

School funding commissioner and Rep. Becky Beard, R-Elliston, said she thought the proposed bill would be “redundant.”

“I think that all at-risk students in the state of Montana should be treated equally,” she said.

The commission also proposed additional funding for facilities, about $7 million, and as part of that draft bill, school districts would report the status of their buildings so the state has an understanding of whether the current funding is sufficient.

Another approximately $20 million would go toward increasing the per pupil payment for sixth-graders to count them as high school students, like seventh- and eighth-graders are.

And another $5 million was allocated toward high-quality instructional materials and accompanying professional development.

No new formula, yet

One draft bill the 2027 Legislature will consider is whether another school funding commission, which could potentially include current members, could meet again following the upcoming legislative session to continue the work started by the current commission to redesign the formula.

But, as Chairman Rep. David Bedey, R-Hamilton, said during discussion of the draft bill, “you don’t get something for nothing.” The bill draft appropriates $300,000 to reconvene another School Funding Interim Commission after the upcoming session ends.

School funding commissioner and Republican representative from Elliston Becky Beard expressed her frustration at the group not being able to make the formula easier to understand.

“We're looking at another $300,000 to meet next interim to address the one major concern that I had to deal with talking to constituents coming into the last session,” she said. “Our taxes are out of control, our schools cost too much, and our kids aren't learning enough.”

State Superintendent Susie Hedalen said she was hoping the commission could have produced a more transparent and usable funding formula, saying it’s a challenge for school business officials across the state to understand.

Bozeman Business Director and Commissioner Mike Waterman said, “everyone hates the current school funding formula.” But, also said it would be a “shame” to lose the investment in getting everyone on the commission up to speed about the formula and its challenges.

“Our work here is not done,” he said.

Bedey defended the work of the commission, saying there was not enough time to both study the current formula and develop a new one, and without understanding the defects in the formula, the commission would not have been able to reform it.

“I stand by the work that this commission has done,” Bedey said.

What also looms over the discussion of developing a new formula is the threat of legal action if done improperly, with many of the changes to the existing formula stemming from court decisions.

Vice Chairman Rep. Eric Matthews, D-Bozeman, said during a prior meeting he'd like to move forward on a track that doesn’t set the commission up to do a bad job and then have “another lawsuit telling us how to fund [education.]”

Upper Seven Law had been shopping around to school districts in Montana the idea of suing the state over school funding, and the Missoula County Public Schools Board of Trustees voted to join if it were filed. The law firm hasn't filed yet, its executive director Rylee Sommers-Flanagan told the Missoulian on Tuesday.

How did Montana get so far behind in education funding?

Part of the problem is schools haven’t been able to keep up with rising inflation. The state caps adjusting education spending to account for inflation at 3%.

Rep. Luke Muszkiewicz, D-Helena, said during the meeting Thursday that while the governor and state superintendent of public instruction can request funding over the 3% cap and the Legislature has the power to appropriate more than the 3% cap, they never have.

He said the state would fall behind if the Legislature doesn’t “fix the fundamental flaw” of the 3% cap.

“It’s like trading up and getting a newer car, and then deciding you’re not going to change the oil,” he said. “It just doesn’t make sense.”

The commission proposed a bill that would eliminate the 3% cap, which Hedalen, the state superintendent and a commission member, said she didn’t support.

“I think we just need to do a better job of adjusting it,” Hedalen said. “But I don't think it should be wide open.”

Several lawmakers underscored that the bill drafts coming out of the commission are a “starting-off point” and understand they will likely change as they move through committees and chambers during the upcoming legislative session.

The commission voted 13-7 to approve the report as a whole.

The final report will be published by the commission’s Sept. 1 deadline.