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Commission launches Phase 2 deep dive into Montana school funding formula
Summary
The School Funding Interim Commission began Phase 2 with staff and consultants walking commissioners through the district general‑fund formula, the five fully state‑funded components, recent policy changes including the STARS Act, and a new inflationary analysis that adjusts budgets to a 2008 constant dollar baseline.
Chair Beatty opened the meeting by saying the commission would move from Phase 1 overview work into “a very thorough and deep study of school funding.” Staff and newly hired consultants from APA Consulting joined the meeting and presented a detailed walkthrough of how the district general fund is built and funded.
Legislative Fiscal Division staff showed commissioners an interactive dashboard and budget data sheets that break district budgets into the blocks used by the formula. They traced the law’s evolution — from equity rulings such as Helena Elementary v. State (1989) through the Columbia Falls adequacy cases — and explained how court decisions and legislative changes created the current base and max budget architecture.
Pat (PADD) and Julia Patton of LFD explained the formula’s five fully state‑funded components (at‑risk, Indian Education for All, data for achievement, special‑education allowable cost allocations and the quality educator/qualified staff payment), and a sixth component (the Future Ready payment) scheduled to start in future years. Staff detailed how data inputs — spring/fall enrollment averages (A and B), Title I allocations, district general‑fund expenditures and counts of American Indian students — feed each payment.
Commissioners pressed staff on arithmetic and assumptions: how the A/B averaging and 7 PIR‑day adjustment were adopted, the rationale for the elementary vs. high‑school per‑pupil amounts, and whether incremental items (data for achievement, the future‑ready payment) still reflect their original policy goals. Staff noted some items are now routine practice and suggested those could be consolidated if the commission agreed the policy logic supported it.
The meeting included a technical session preview: preliminary budget data sheets will be distributed to commissioners for a hands‑on worksheet exercise, and staff promised follow‑up analyses for April on topics such as the decrement’s impact on large districts and the statewide cost of non‑reporting for Indian Education for All. The chair asked staff and consultants to model scenarios for the next meeting.
The meeting closed this topic by scheduling further work on the inflation analysis and cost drivers. Staff emphasized that the statutory inflation factor (a 3‑year average of the July CPI, capped at 3%) lags rapid inflation and that recent policy actions (including the STARS Act teacher incentives) have materially changed the size and mix of the state share going into the district base budget.
