Time for Straight Talk on School Funding –

By Lance Melton, MTSBA Executive Director, May 15, 2007

With the ink not yet dry on the signatures for Senate Bill 2, legislators and others are already proclaiming the funding levels in the 2007 Regular/Special Session as “historic” or “heroic” (or both). Whether it is a Democratic representative’s guest editorial in the May 15 Great Falls Tribune, a Republican representative’s comments on the House Floor regarding “overspending” on K-12 public education or “institutionalized daycare” (in relation to fulltime kindergarten) or anyone else’s use of biennial computations to overstate the increase and mask the ugly reality for many schools in the coming two years, the general trend coming out of the special session seems to be focused on loudly proclaiming that all is well in our K-12 public schools and that a quality education can now be had by all served in our public schools as a result of the heroic efforts of the 2007 Legislature.

It is becoming such a mantra that one has to wonder who these people are attempting to convince – themselves or the public? One also has to wonder, if the funding was so great, why did member school boards find it necessary to run 167 levies on May 8? Why did voters find it necessary to support over 90% of those levies?

The fact is, the funding in the 2007 Legislative Session was insufficient – insufficient to address the constitutional inadequacies of our current formula, insufficient to allow school districts to preserve programs in the coming two years without budget cuts and tax increases like those passed on May 8, 2007 and most important, insufficient to provide a basic system of quality schools as defined by the state in 20-9-309, MCA, for the children served in our public schools.

Biennial Computations Mask the True Picture

The mad rush for finding and proclaiming the largest, roundest, biennial number possible has already begun and will start to appear in press reports in the coming day. Look for some variation of between $160 million and $200 million to be proclaimed as the increase in funding for K-12 public schools. The artifice of the $200 million biennial increase is derived by:

1. Comparing the funding proposed in the coming two years to the funding that schools had last year (in FY06) before the increases provided in FY07 that schools are spending today to provide current programs. This results in an overstatement of the real biennial increase by approximately $130 million by comparing proposed funding levels to last year rather than this year.
2. Counting one time only (OTO) money as though school districts could use it to pay for ongoing programs. The state of Montana rightly refuses to use one time only money to fund its ongoing programs in state agencies, but asks school districts to use one time only money to fund theirs. School districts cannot use one time only money to pay for ongoing programs without creating structurally imbalanced deficit spending.
3. Counting the same money again and again. The State’s more recent preoccupation with one time only (OTO) money introduces a new element of disguise to the funding picture. By simply calling money OTO, the state gets to count the money as an increase each time it is distributed or renewed from year to year. So, for example, the $30 million in OTO funds that the state granted to schools in Senate Bill 2 for FY08 is really the same $30 million in OTO funds that the state already granted to schools in FY07 through the May 2005 Special Session. It was already counted as part of the increase from FY06 to FY07 coming out of the May 2005 Special Session and is now counted again as part of the increase from FY06 to FY08 and FY09 in the May 2007 Special Session. Look for this to happen again next session when the $40.7 million tucked away in Senate Bill 2 for use in the 2009 Legislative Session (and counted in the “increase” in the coming biennium) will be included in the calculations of the “increase” proposed for FY10 and FY11 when the 2009 Session convenes. Remember, you read it here first.
4. Counting money tucked away for another day as though it were available to spend today. As referenced above, there is $40.7 million that will be put in a state account for the next two years to address possible facilities support that may be considered and passed by the 2009 Legislative Session. The money will not be distributed to schools at any time during the next two years, but the money is still included in the official claims as to the biennial increase passed for schools. So why is $40.7 million that schools will not receive at any time in the coming two years, included as part of the biennial increase for schools? This is a great question for your legislator the next time you sit down to discuss school funding.

Truth in School Funding

Biennial computations are useful as an artificial means of benchmarking funding for the coming two years, but they are not useful in providing the public with an understanding of what schools will receive or need to preserve existing programs in the coming two years. Perhaps it is time for a “Truth in School Funding” act that would require the state to compute and report the proposed increase in state funding on a year to year basis rather than on the basis of biennial computations described above. The public deserves to know the impact of its Legislature’s decisions on the quality of education in each community, and biennial comparisons do more to disguise than to disclose that impact to people relying on their local schools to educate their children. The year to year impact is relatively simple to compute:

1. In FY08, school district BASE budgets, including both increased state aid and under BASE tax increases, will grow by between $26.3 million (3.68%) and $42.6 million (5.98%), depending on how many school districts choose to implement fulltime kindergarten. The $26.3 million figure presumes no one offers fulltime kindergarten and the $42.6 million figure presumes everyone offers fulltime kindergarten. The reality will be somewhere in between.

2. In FY09, school district BASE budgets, including both increased state aid and under BASE tax increases, will grow by an additional $14 million (1.86%) over the FY08 appropriated levels. At nearly two percentage points below the projected inflation of 3.8%, look for a combination of budget cuts and tax increases in your school district next year, unless you are fortunate enough to be growing your enrollment. That will leave 113 school districts educating over 11,000 of our state’s children with actual reductions from FY08 Funding levels, and another 300 school districts, educating another 131,000 of our state’s children, with increases less than projected inflation of 3.8%.

The Struggle for Power Corrupts the Process

So, assuming a best case scenario, school district BASE budgets will grow by $42.6 million (5.98%) in FY08 while schools convert half day to fulltime kindergarten and will grow by an additional $14 million (1.86%) in FY09. Why this is so hard for legislators to admit has its basis in the struggle for power and the close division of power between the House and Senate, which has corrupted the message of Democrats and Republicans alike. Because the parties attack one another so regularly and vehemently, nearly everyone in each party gets into a “wagon circling” mentality that stifles not only independent thought but frankness and honesty as well. A Republican is no more likely to congratulate his or her Democratic colleagues on passing fulltime kindergarten (a truly monumental achievement) than a Democrat is likely to congratulate his or her Republican colleagues on gaining additional tax cuts over those proposed by Governor Schweitzer when the 2007 Regular Session began.

Caught in the Middle

Over-exuberant claims of increase require us to focus on disclaiming mischaracterizations of what happened rather than discussing and confirming the good things that did occur. There was progress made in the 2007 Legislative Session. Fulltime Kindergarten, tax relief through increased support of the guaranteed tax base program, progress on a solution to the public retirement deficits and allowing school districts to adopt the larger of their former year’s budget or the present year’s maximum are all examples of progress made by the 2007 Legislative Session, which we acknowledge and support. Masquerading incremental progress as a historic solution, however, serves no one’s interests other than those of the political parties that are jockeying for advantage in anticipation of the November 2008 elections.

The interests of public schools and the children they serve will continue to suffer as a result of the struggle for power between the Republican and Democratic parties without reform of the process used to fund our schools. The 2007 Regular and Special Sessions of the Montana Legislature serve as an unfortunate example of how to fund essential governmental services via the political method, based on power, politics and brinksmanship. What we need is a Legislature committed to funding K-12 public education rationally, based on facts, informed perspective and knowledge of consequence.

Without a significant shift in the way the Legislature functions at this time, we will continue to have a Legislature -- whether Republican or Democratic -- that serves its respective parties well, and the children of our state poorly.