School Funding Bill for 2013 Concepts
Senator Llew Jones
Overall Plan: Weave together school funding issues into a single bill that will create sufficient state wide
education and legislative buy in at a level where the 26,51,1 rule can be achieved. Key factors to
address:
1. This funding plan will focus on enhancing individual student opportunity by being directly
linked to both OPI and Montana Schools continuing their progress towards a data driven
transparent statewide longitudinal database that will provide teachers, school administrators,
decision-makers, parents, and student’s real time beneficial student information. This has
been referred to as the “Pathway to Excellence” in some of our previous discussions. This
system will enhance student opportunity by providing empirical data that facilitates indivulized
instruction potential, provides a mechanism for rapidly identifying evolving problem areas, and
leverages current tools that provide information on individualized average yearly progress and
growth.
a. There may need to be some funding directed to OPI here to help with completion of
their database. They currently are utilizing a 5 million dollar grant to get the basic
system online.
b. There will be additional funding directed to schools to help them get fully online and
up to speed here (no unfunded mandates). I would submit that it should be a
component of, and linked to, an increase in state base entitlement funding.
2. This funding plan will address some of the key major impact issues being experience by schools
in explosive growth areas of the state, currently very apparent in some areas of Eastern
Montana. In particular, the goal is to mitigate the challenges experienced by the “border
districts” that currently experience huge development impacts with little to no mitigating
revenue available.
a. In order to address possible court concerns, the Quality Education “Educationally
Relevant Factors” definition will need to be expand to include a general concept of
justification for funding beyond the “125%” that is linked to the “mitigation of
significant unfunded impacts.”
i. While not directly in this definition, there would need to be a frame work
setup that broadly defined acceptable impacts. This should not just be for
O&G, but statewide.
b. A new methodology would be created, or perhaps a hybrid one that works hand in
hand with what has already been established by SB329, with the primary purpose of
mitigating development impacts. The funding source for this fund would be the
dollars that are currently flowing out of the O&G School Districts that currently have
revenue streams that they are forwarding to the state as from O&G revenues beyond
the 130%,
c. Eventually linked to an “impact” trigger, this system would designate the sharing of
these O&G revenues such that they flowed first within a District first, then within a
County, and then ultimately within an impact area prior to continuing on toward the
state or to another impact fund. For example, using the Sidney High School District,
once the trigger is reached, the dollars beyond a given schools 130% would
automatically share within the District before flowing out. Perhaps we simple make
the “within District” share automatic, whereas the county and larger area share would
requires an impact area designation. The initial trigger would be the passage of this bill
for the timeframe the bill is authorized to be effective in any county that contains or
directly borders a county that has had a Bakken type well drilled in the last 10 years. To
get reauthorized when this initially designation period expired, the county would need
to establish that it met certain measurement “triggers” that would be fully defined in
rule during this interim period.
d. The existing formula design for O&G communities would be modified slightly.
i. The current incremental increase (25%-65%) in the O&G dollars that must be
committed to the School General Fund and thus not available to meet impacts
would be locked at 25% for the timeframe this bill is extended to. Currently
SB329 had a 5 year sunset, thus 3 are left. I would propose re-extending this
to 7 years, thus these changes would hold for this term. In addition, only 50%
of the amount placed in the General fund would have to go-to the under-base.
For example, if 25% O&G, then a min of 12.5% would have go to offset
permissive mills, with the rest allowed to go either to the permissive (underbase) or voted (over-base).
ii. In addition, those schools that receive less than 105% of their General Fund
Revenue in O&G revenue would not be subject to any GF requirement. From
105% to 130%, the 25% amount would ratchet in on a direct basis..i.e at 106%,
the GF gets 1%, at 107% the GF gets 2%.... This allows those areas that are just
beginning to experience impacts the flexibility to create reserve funds to deal
with them.
iii. Those schools with max general fund budgets of less than 1 million dollars
would not be required to place any money in the General Fund.
iv. Schools with O&G revenue would be able to leverage 40% of their previous 3
years total revenue stream towards establishing bonding.
e. The current rule that allows for student growth beyond 6% to be an allowable factor
for applying for additional funding will be adjusted to be more responsive. 1)The
trigger would potentially be lowered to 4%, 2) Upon reaching the 4%, the entire
amount would be funded, not just the amount beyond 4%, and , 3) there would be
allowances made to make adjustments up to 3 times per year.
3. This funding plan will address school inflation in a manner that satisfies the overall school
funding plan as “suggested” in the law.
a. Once the inflation calculation is presented by OPI, it would be fully funded. The
funding model increase would be a combination of the current methodology (A&B
dollars) plus an amount that represents approximately 50% of the base entitlement
increase formula. The other 50% of the base entitlement increase formula would be
reserved for an actual increase beyond inflation to schools that directed toward
encouraging the completion of their “Pathway to Excellence” plans via a methodology
that links output performance to input flexibility and to help defray the costs of
nationwide accreditation. (Every school gets the dollars, but performance earns
flexibility). In this manner we are paying in a flexible manner (more flexible to those
that have earned the right via performance) for the data “mandate”.
4. This funding plan will look to a formula to address both some of the smaller and larger school
issues via increasing the initial base entitlement and adding subsequent base entitlements for
larger population schools. This factor would fund approximately 50% of the inflation above,
with the additional 50% tied to the “Pathway to Excellence” in a manner where school output
performance earns input flexibility.
a. The base entitlement for all size schools would increase. This is the MTSBA model that
I am good with, albeit we may need to “step” into it over a couple years:
i. . First entitlement would be:
ii.
* $50,000 per elementary
iii.
* $100,000 per middle school
iv.
* $300,000 per high school
v. 2. Second and subsequent entitlement would be:
vi.
* $25,000 per elementary group of 250 pupils (prorated in tenths)
vii.
* $50,000 per middle school group of 450 pupils (prorated in tenths)
viii.
* $150,000 per high school group of 800 pupils (prorated in tenths)
ix. 3. All school districts get at least one entitlement per applicable grade levels
served, no matter how small the district is (this is basically "opening the door"
money)
b.
Schools that had adequate performance as defined by a matrix like the one in SB403
would be given flexibility with the dollars (Flex fund) whereas others may need to have
some/all of these funds directed toward problem areas. I would submit that this
approach rewards those schools that, through local control, perform well while
providing a framework to help those that are challenged.
5. This funding plan will provide some statewide property tax relief by directing the
approximately 53% of current Oil and Gas revenue received by the state directly into the State
School General Fund formula permissive mill area. This will serve to reduce local property tax
burden state wide while directly forming a link between oil and gas production and K-12
education.
a. I would submit that there are two possibilities here, and that both need to be
considered. My current preferred option, subject to reviewing the data, would be to
allocate 50% of the amount of oil and gas the state receives directly to the permissive
levy section of the schools general funds. The other option would be to direct these
funds into the school general funds area between the 44.7 and 80% level. (I do want to
make sure that this plan reduces property taxes statewide and makes a clear link
between natural resources and K-12 education while not causing equity concerns
through impacting the GTB). This would need to be done in a manner where the
permissive mill could automatically adjust if the O&G were to drop significantly as has
occurred previously with volatile resources. Potentially we would budget in 50% of last
3-year’s number just to provide a reasonable margin for volatility.
b. I would further suggest that some of the balance beyond the above, in particular above
the 130% obligations if the flow exceeds the District First, County next, then area
concept, be directed towards an “oil impact/trust” fund (essentially fix up the current
poorly designed one) that could be tapped by for school or other projects (Again like
the coal trust or perhaps to just better define what was attempted in 329). This may
need to be a different bill if it becomes a reality as it is a whole different discussion.
Perhaps a board such as referenced above would be the key here.
6. This funding plan will further reserve 50% of any unexpected increase in state trust land
income to be placed “above the line” into the school guarantee account that will then be
directed to schools via quality educator payment that are deposited in the Flex fund clearly
defined as one time only thus allowing schools maximum local control. The 50% lock level
was chosen as it provided for the other 50% to offset the general fund permissive tax payer
area so that the Montana property tax payer would get direct property tax relief for their
school funding obligations. This could also be done via an adjustment to the GTB multiplicative
factor as well. In this manner both schools and taxpayers benefit from state land development.
a. This will begin a process where a portion of lease dollars such as the 80 million from
Otter Creek would go directly in a flexible manner to schools and the other 50% would
directly reduce local school property taxes (In many areas the percentage of local
property taxes that goes to schools is 70%)
It would be my contention that the above plan would: 1) Provide increased educational opportunity
statewide, 2) have support from all school sizes, 3) provide school property tax relief while maintaining
or enhancing statewide student equity thus mitigating court risk, 4) mitigate explosive growth impacts
in a court defensible manner, 5) more closely link state trust revenues to schools, and 6) provide for
increased measurement and transparency concerns in the area of education that are commonly voiced
statewide. The broad appeal of this bill should provide it a support base that is up to the 26,51,1
challenge.
Llew Jones