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Legislative staff brief House committee on Montana K‑12 funding formula, GTB and budget limits
Summary
Legislative fiscal staff gave House Education Committee members a condensed training on Montana's K‑12 school funding formula, explaining budget limits, guaranteed tax base aid, and how inflation and local revenue vary statewide.
Legislative fiscal staff on Oct. 12 gave members of the Montana House Education Committee a condensed training on how the state’s K‑12 funding formula sets district budget limits and how the guaranteed tax base (GTB) equalizes differences in local property wealth.
The session, presented by Julia Patton of the Legislative Fiscal Division and Pat McCracken, deputy research director in the Legislative Research Office, outlined the formula’s two parts: drawing minimum (base) and maximum budget limits for each school district and the process used to “fill” those buckets with state aid, property taxes, fund balance and other revenues.
The training matters because Montana relies on a combination of state and local funding to meet the constitutional goal in Article 10 of providing “a system of education which will develop the full educational potential of each person,” presenters said. Changes to any component or to the GTB multiplier affect both state costs and local property tax rates.
Pat McCracken walked members through the formula’s building blocks and the distinction between the base and maximum budget limits. He explained that five components are fully state‑funded — including the quality educator payment and Indian Education for All — which draw equal base and max lines, while other components such as the basic entitlement and per ANB (average number belonging) drive the largest differences between base and max. “If there’s people in the room who think it’s way too complicated, guess who has the keys to the car. It’s the folks. It’s the 150 of you,” McCracken told the committee, referring to the legislature’s authority to change the formula.
The presenters used district examples and a Microsoft Power BI tool to show how districts differ: Ennis and Superior have similar enrollment but widely different taxable values (Patton cited roughly $330 million in Ennis versus about $7 million in Superior), which produces large differences in local mill levies and in GTB aid. In the example, Superior received about $800,000 in GTB while Ennis received none; local mills filling the GTB area were roughly 4 mills for Ennis versus about 36 mills for Superior.
Presenters also summarized other district funds (retirement, debt service, transportation, building reserve, technology, tuition and adult education funds) and noted which levies are voted versus permissive. They described special education funding as built on a higher base percentage (presenters said the base is built on 140% while the max is between 175% and 200%) and said that special education formulas intentionally create a state/local blend of support.
The briefing closed with a discussion of GTB mechanics: increasing the GTB multiplier makes more districts eligible for aid and lowers local property tax burdens but increases state outlays. Committee members asked whether the legislature sets the GTB line (answer: the legislature does) and how inflation adjustments in bills such as HB 15 affect the formula. Presenters said inflation adjustments raise the formula lines and therefore increase state costs as well as local budget targets.
