Committee hears sponsor: updating 21-year-old bus reimbursement rates would shift about $16 million into pupil transportation and lower district property levies

House Bill 405 seeks to raise on-schedule reimbursement rates for pupil transportation (referenced in testimony as the rates in 20-10-141) for the first time in roughly 21 years. Sponsor Mark Thain told the House Appropriations Committee that the state contribution to pupil transportation has not increased since 2004 while diesel and other costs have risen substantially.

Thain said implementing the bill’s new rates would require roughly $8 million in additional state funding and would compel approximately $8 million in county-level permissive mills, producing an aggregate infusion of about $16 million into pupil transportation. The sponsor said the net effect would be about an $8 million reduction in property taxes at the local school district level because the state portion of funding would replace some local levies.

Larry Crowder, executive director of the Montana Rural Education Association (representing multiple school associations), testified in support and described on-schedule increases of 66–70% for route buses. Paul Taylor of the Office of Public Instruction appeared as an informational witness to answer questions about trends and the fiscal note. Taylor said rates in the statute are expressed per chassis size and multiplied by capacity, miles and days; because the statutory rates have been unchanged, rising costs have been borne by districts and permissive levies.

Committee members questioned whether the change merely shifts costs between local entities (district vs. county) and how the county permissive levy mechanism worked. Sponsor Thain and Mr. Taylor explained that the state increase would trigger matching county permissive mills and that the state funds would come from general fund dollars rather than property taxes; the combined effect would be an overall reduction of local property tax burden for many districts, the sponsor said. Taylor noted there is no statutory cap on the permissive levy that funds transportation; a self-correcting mechanism exists because districts cannot keep excessive over-levied fund balances without scrutiny.

Members also asked about trends in ridership, driver shortages, the rise of “e-type” buses and whether the fiscal note accounted for inflation and benefit cost trends. Taylor said typical variables (miles, days, chassis size) were used in the fiscal assumptions and that the schedule portion of the payment is static in law, which is why local burdens have grown.

No vote on House Bill 405 is recorded in the transcript. The sponsor closed urging a Do Pass on a bill he said would update reimbursement after 21 years and provide property tax relief in the aggregate.

Why it matters: School transportation costs have risen since the rates were set two decades ago; the bill seeks to rebalance funding across state, county and district levels and may relieve some local property tax pressure while increasing county permissive mills.