Montana school levies put spotlight on budget shortfalls, pocketbooks, funding formulas

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Montanans this week rejected half of the school levies tracked by the state’s largest union, including all five requests in Helena, even as large districts face multimillion dollar shortfalls.

The outcome leaves some students and teachers in a lurch, raises the specter of a sales tax for some educators, and spotlights concerns about property taxes and school funding formulas.

And Jessi Bennion, a political analyst at Montana State University, said public safety levies are up next.

“There’s more coming on people’s primary ballots. These were just the school (levies),” Bennion said.

Inflation has left public schools in Montana short by $141 million, or roughly 10% of their general fund budgets, according to the Montana School Boards Association.

At the same time, federal Covid-19 dollars — which paid for some of the safety measures schools requested in levies — is drying up.

Bennion said she believes legislators understand a fix is needed, but the solution will depend on who gets elected to the Montana Legislature and how much change lawmakers want to make.

“Absolutely the state legislature has to figure this out,” said Bennion, a faculty member in political science and liberal studies. “It’s becoming not only a political liability, it’s just unworkable.”

Levies pass, fail

Missoula said no to a high school safety levy, but approved a couple of elementary levies and a high school general levy.

Bozeman said yes to high school and elementary levies, but Belgrade said no to a bond.

Colstrip also said yes to both elementary and high school levies.

In Billings, however, elementary and high school levies failed, and voters rejected all of the levies in Helena.

Amanda Curtis, president of the Montana Federation of Public Employees, said the results for schools look different than they have in the past despite polling that shows Montanans continue to support public schools.

She said national polling shows voters support local schools, they want counselors and quality teachers in schools, and they want students to have things like computers.

In Montana, a recent poll by Middle Fork Strategies found that 60% of Montanans believe the state’s public schools are inadequately funded.

“We know that Montanans love and cherish their local schools, and we know that Montanans trust their teachers,” Curtis said. “And we know the only circumstance in which we see just such a massive failure would be if folks honestly couldn’t afford it.”

She said the reason Montanans can’t afford it is a failure that falls on the state, but the result hurts students: “When schools cut back, kids lose.”

Funding gap, fixing it

Curtis said the state has created a gap in funding by capping inflation at 3%, so school districts have shortfalls. At the same time, she said, it has given tax breaks to utilities, telecommunications and hard rock mines, and in a “seismic shift,” placed that exact burden on residents, now reluctant to pay more.

Usually, she said, communities can rally around a proposal to fund a project where the state hasn’t picked up the full tab. But this time, she said, residents are receiving “a double property tax bill” even as they’re seeing a lack of affordable housing for employees who live in a school district.

“So it’s just such a perfect storm, right?” Curtis said.

Curtis also said she fears the pressure on schools is by design to elicit support for a sales tax, but she said she hopes that legislators and politicians will be committed to rebalancing the school funding formula in the 2025 legislative session.

“I really sincerely hope … the folks who are going to be there … are not just squeezing us all so dry that we have no will left to fight back against a sales tax,” Curtis said.

In the meantime, however, school districts will have to figure out what to cut, she said, and doing so butts up against their obligation to Montanans: “The legislature and the state have a constitutional commitment to provide a system of free quality public education, and the state is not providing that.”

Sales tax not needed with formula update

Lance Melton, head of the Montana School Boards Association, said “harm and pain” for students were on the ballot with the levies.

He said levy elections are dealing less and less with whether communities want to support “extras” and dealing more and more with whether public schools can comply with their constitutional obligations of a quality education.

“The bigger picture –to me — is the significance of what was hanging in the balance,” Melton said.

But Melton said changes to the school funding formula can be made that adequately fund schools even in the face of drying Covid-19 money, don’t increase burdens on resident property taxpayers, and don’t involve a sales tax either.

For starters, he said, the 3% cap on inflationary funding for schools seemed like a good idea to some legislators and a judge many years ago when inflation had been pretty steadily at that rate or below it.

Following the pandemic and soaring inflation recently, public schools in Montana have fallen behind on inflation 11.2%, or $141 million since 2020, he said. Until this year, federal ESSER money, or the Elementary and Secondary School Emergency Relief Fund, filled the gap.

Although schools are restricted by the inflation cap, since 2019, they have been able to ask voters for money that supports safety, for “hard and soft goods” such as school counselors, metal detectors, threat assessments, and IT improvements.

Those needs happened to align with the ones funded by Covid money, so schools put related levy requests on ballots. But voters rejected some of them, although Melton said in many cases, people’s tax bills didn’t increase and even decreased, and property taxpayers also received $675 rebates that more than made up for median increases in values.

Regardless, though, Melton said he wants to be respectful of people’s pocketbooks, and clearly, the situation needs scrutiny.

“It’s time for us to take a look at the last five years and take stock of it and recognize that the signs are there that the system is stressed, and that we’ve got districts who want to continue to serve kids in the way that they have done for the last two or three or four years and who won’t be able to as a result of the failure of those levies,” Melton said.

Moving ahead

Melton said he applauds the state for the legislation that allows schools to ask voters for safety support through levies, and he also believes the legislature funded schools as the law allows. But he also said they had to use a formula that doesn’t work anymore.

“The formula was designed at a time when there was a very stable rate of inflation for decades,” Melton said.

Relatively speaking, he said, the formula is in better shape than it was years ago. However, Melton said he also has a proposal to update it in a way that would equalize the amounts property taxpayers pay.

Discussions are preliminary and will be vetted by members and partners in June, he said. However, as drafted, the proposal would cushion school districts from swings in revenue because the formula now is weighted heavily on individual numbers of students, and it would also boost the weight of funding districts receive for “quality educators.”

Melton said the change would be a lift at the legislature — school funding isn’t simple, for one thing. But he also said that if Montana funded public schools on a per capita basis compared to neighboring rural states such as North Dakota and Wyoming, Montana would put an additional $347 million or $760 million a year, relatively, into public schools (or $315 million compared to the national average per student).

He said he’s excited to bring the formula changes forward given the stakes: “I don’t like the interests of kids hanging in the balance.”

Montanans ‘not feeling great’

Bennion, the political analyst, said data isn’t available that’s specific to the recent levies, but she said generally, public opinion polling shows people’s mood about the direction of the state and the country is at “an all-time low.”

“Montanans aren’t feeling great about the direction of government,” Bennion said. “A lot of times, when people don’t feel good about government, that makes them act politically in lots of different ways.”

They might vote a newcomer into office or reject a request for funding, she said. Sometimes, she said, people don’t know who to blame for their dissatisfaction, or whether to place responsibility on local or state or national government.

“Sometimes, they just start showing their dissatisfaction in ways like not voting for higher taxes,” Bennion said.

The narratives following recent outcomes are in some ways predictable, Bennion said; one side is criticizing the state for chronically underfunding schools, and the other side is likely questioning the management of school funds.

Like it or not, she said, Montana is “between a rock and hard place” because it has just property and income taxes, but no sales tax, unpopular but still a revenue stream.

If anything, the recent levy results show the issue that’s still tops for many voters.

“The most important issue for many people, still to this day, is taxes,” Bennion said. “Those kitchen table issues — how do we afford things? — are powerful.”

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