Subcommittee reviews OPI 'Program 9' budget; Indian-language immersion, K‑12 base aid and tax-account shifts draw attention

The Joint Appropriations Subcommittee on Education spent the bulk of its hearing reviewing the Office of Public Instruction’s local education activities budget (Program 9), including present-law adjustments and new proposals that would affect K‑12 base aid, retirement equalization payments, and Indian-language programs.

OPI Chief Financial Officer April Grady outlined the agency’s present-law adjustment requests and new proposals, saying she would “run through these pretty quickly” because much had been covered the prior day. Grady identified a set of decision packages (DPs) that include inflationary increases for K‑12 base aid (DP 904), new federal grant authority (DP 911), a request to expand the Indian-language immersion program (DP 923), and other adjustments such as matching funds for the summer EBT program and PowerSchool subscription costs. The governor’s budget packages generally track OPI’s requests, Grady said.

Why it matters: The program distributes the bulk of Montana’s K‑12 funding and contains multiple line items (base aid, special payments, major maintenance, school nutrition and others). Changes to the base aid calculation, statutory appropriations (the guarantee account), or the distribution of non‑levy revenue tied to the 95 school mills could shift tens of millions of dollars between general fund and state special revenue and alter local property-tax outcomes.

Key figures and proposals described during the hearing include:

- K‑12 base aid: OPI staff and legislative analysts showed the base aid budget at roughly $973 million for the FY2025 base; DP 904 requests a capped inflationary increase of 3% in both fiscal 2026 and 2027 (the cap is statutory) resulting in an estimated general‑fund increase included in the governor’s budget of roughly $9 million for FY2026 and $43 million for FY2027 (figures provided by the agency and LFD staff). The decision package relies on statutory inflation formulas (cited by staff) and is contingent on passage of related legislation (House Bill 15).

- Guarantee account and SCEPTER: Legislative fiscal staff explained that guarantee‑account revenue (statutory appropriation from common-school trust revenues) and the SCEPTER account (the School Equalization and Property Tax Reduction Account, which receives revenue from the 95 mills) interact with general‑fund appropriations. The executive’s DPs include adjustments to both the guarantee account (DP 917) and the SCEPTER account (DP 918). LFD noted those DPs use the executive revenue forecast and would need further adjustment to align with the HJ2 revenue estimate adopted by the Revenue Interim Committee in November; staff quantified potential changes in the low millions if the HJ2 estimate is used instead of the executive estimate.

- House Bill 587 effects (county retirement, major maintenance, debt service): Committee discussion noted that HB 587’s trigger mechanism redirects 95‑mill revenue flows and increases county retirement GTB in FY2027 under current projections. OPI and budget staff warned that preliminary calculations may “cap out” available equalization dials and that further recalculation would be needed before final action.

- Indian-language programs: The committee sought clarity on two separate programs. Staff and OPI Superintendent Susie Hedlund confirmed the Montana Indian Language Preservation Program (state level, Program 6) is funded at $750,000 per year; the Indian‑language immersion program (local education activities, Program 9) was funded at about $96,970 per year in the FY2024/25 base and the governor’s request increases it to roughly $264,970 per year to cover prorating issues and to expand participation. Paul Taylor of OPI provided a one‑page history explaining the immersion program’s statutory definition and distribution formula (programs must provide at least 50% instruction in an Indian language and teachers must be proficient in the language). Senator Windy Boy pressed for clarity about curriculum materials and program use; OPI staff said funds are distributed to districts and that districts determine how grant funds are spent, though the committee discussed whether preservation funds should be linked to curriculum development.

- Other items: The subcommittee heard about the TEACH Act and teacher-pay proposals (DP 922), a proposed grant to help districts restrict student cell‑phone use (DP 916), a proposed fund shift for workforce‑innovation grants to the Department of Labor and Industry (DP 914), and an OPI request for $10 million additional federal grant authority per year (DP 911). Staff also described school nutrition match requests, PowerSchool subscription costs previously covered by ESSER, and match funding for the summer EBT program.

Committee questions focused on implementation details: Representative Kio and Representative Matthews asked whether quality-educator payments decline because of fewer filled positions (OPI staff said the payments reflect positions actually filled and that counts used for budgeting are taken during the preceding fall). Senator Windy Boy asked how many districts currently run immersion programs and whether curriculum materials and qualified class‑7 instructors are available; OPI said the immersion program distributes formula funds to districts that meet the statutory program definition and noted that only a small number of districts have previously received immersion grants.

Public‑assistance and statutory context: LFD and OPI staff repeatedly referenced statutory citations and formula mechanics (for example, statutory references to K‑12 inflation, the guarantee account, and the NRD major‑maintenance payment). Multiple DPs were described as contingent upon pending legislation (house bills and LCs referenced in the transcript) and several committee members asked staff to return with recalculated numbers and legislation‑DP mapping before executive action.

Ending: OPI Superintendent Susie Hedlund thanked the committee and said she and OPI staff would return for more detailed follow‑up. The subcommittee recessed for a short break and scheduled a deeper “deep dive” on K‑12 base aid for the next hearing, asking the agency and budget analysts to provide recalculations and documentation before executive action.