Article Summary –
Montana’s public school finance system uses a complex formula to determine how the cost of running a school district is divided between local (property taxes) and state funds. The state’s “Base Amount for School Equity” and a maximum line dictate the minimum and maximum amount of General Fund money a district must spend each year, respectively, with increasing a district’s budget above the base line typically requiring a local tax increase. The formula also accounts for factors such as student enrollment, entitlement payments, special education allocations, and state-funded programs.
Understanding Montana’s School Funding Framework
Educating the youth of Montana is a significant financial undertaking, mandated by the state Constitution. The complex intricacies of school budgeting, including where the funding comes from and how it’s allocated, often perplex Montanans.
Recent debates on school choice initiatives have highlighted the need for clarity. Critics argue that these initiatives could divert essential state funding from public schools to private enterprises. Plus, the “95 mill” property tax, designed to balance revenues, has drawn criticism in the broader debate over rising property taxes.
This article aims to help Montanans better understand the financial workings of the state’s public school system to contribute knowledgeably to policy debates.
Dissecting The School District Budget
Consider a fictional Montana elementary district, Big Rock Public Schools, serving 640 students. The budget, approved by the district’s elected school board, covers a range of costs. It’s akin to a cafeteria tray, with each compartment representing a different account, such as teacher retirement payments, school bus upkeep, and building upgrades.
The most substantial account is the district’s General Fund. It’s analogous to a household’s primary checking account, paying for teachers’ salaries, textbooks, extracurricular activities, and other necessary expenses like utilities and insurance.
During the 2022-2023 fiscal year, Montana school districts collectively spent $1.2 billion through their General Funds, accounting for nearly half of all K-12 school spending.
Montana School Funding Formula
The state’s school funding formula, established by the Legislature, specifies the minimum and maximum amounts a district must spend each year. For instance, the General Fund budget for our fictional Big Rock Schools is set at a minimum of $3.9 million and a maximum of $4.8 million. This budget depends largely on student enrollment.
The Legislature adjusts the rates for entitlement payments and other education programs biennially, often following a guidance statute suggesting increases of no more than 3% per year for inflation. However, as inflation rates recently hit 8.0% in 2022 and 4.1% in 2023, this approach has generated frustration among
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