K-12 school funding issues


What's at stake?

Montana's public schools stand out as some of the best in the nation and the world. They contribute enormously to Montana's economy and quality of life. Other states look up to us when it comes to academic achievement. Learn why .

Montana's excellent schools are starting to lose their edge. Although Montana's average test scores are still among the top in the nation, inadequate state funding has taken a toll. Our test scores have been slipping in the past five years. Other states have been catching up and passing us. We're beginning to fall behind. (Montana Office of Public Instruction).

Our best economic resource is at risk. With our tradition of educational excellence in danger, Montana is on the brink of throwing away our best economic resource. Our children's future and Montana's economic future are threatened. We can't afford not to invest in education.

There is still time to change directions and start funding public education at levels that will keep it strong!

What Montanans are saying: "Even if you don't have kids in or heading to school, there's reason to worry. Good schools are essential for vibrant communities and a prosperous economy. Troubled schools spell trouble for the entire state and our much-touted quality of life... Declining enrollment and chronic under-funding are taking Montana's schools in the wrong direction. That argues for a major course correction." ("Schools need more than incremental change, "Missoulian editorial, Dec. 21, 2001)

What happened to school funding?

Dramatic drop in state funding. The state's share of school funding has fallen by nearly 11.5% over the past 12 years – shifting more and more of the burden to local residential and small business property taxpayers.

Inflation. State funding for schools has fallen far short of the cost of inflation. Adjusted for inflation, state funding per student is 18% less today than in 1991.

Inadequate funding formula State funding for public schools -- based primarily on student enrollment -- severely and unfairly penalizes local schools suffering enrollment losses.

Federal mandates. Sweeping new unfunded federal mandates ("No Child Left Behind Act") will force Montana schools to spend millions on testing and bureaucratic reporting instead of educating children.


How has inadequate state funding affected
Montana schools & children?

Academic program cuts. Schools across Montana have been forced to cut or drastically reduce foreign language, advanced math courses, gifted and talented programs, career and technical education, computer and technology, music and art, physical education, advanced science, school counselors and psychologists, librarians, school supply budgets, field trip budgets, professional development for teachers, and more.

Because of program cuts and larger class sizes, over 100 Montana schools are unable to comply with minimal state accreditation standards. And the number is growing.

School closures. Communities large and small have had to close neighborhood schools.

Teacher shortage. Schools are having serious trouble hiring and keeping teachers because teacher salaries in Montana are so low (47th in the nation).

Schools need major repairs. Montana school buildings need major improvements. One-fifth of Montana schools have a building that needs extensive repair or should be replaced. More than one-half of all Montana schools are in unsatisfactory environmental condition (69%), and 21% have poor ventilation. One-fourth of Montana schools lack adequate power and wiring for classroom computers. (American Society of Civil Engineers, 2001 Report Card for America's Infrastructure)

It all means fewer opportunities for our children and our state's economy!

The teacher shortage issue

Montana is in the middle of a major teacher shortage. Consider these facts:

Teachers are retiring and leaving the state. Thirty percent of Montana teachers are eligible to retire within the next five years. That's a huge number of teachers who could leave the classroom at any time. Because of low pay and benefits, many of these "retirement eligible" teachers are now – unlike 10 years ago – ending their Montana careers, moving to other states to teach, or changing careers. Every year, 900 Montana teachers retire, change professions, or leave the state.

New teachers are leaving. Where will we find the new, motivated, skilled teachers to replace the 900 teachers we lose every year? Over 70 percent of Montana's new teachers now leave the state right after graduation for better salaries and benefits elsewhere.

Schools are having trouble finding teachers. The Office of Public Instruction Fall Report 1999-2000 survey of school districts showed many Montana schools are having considerable difficulty attracting and keeping certified teachers. Things have gotten worse since that report.

The teacher shortage affects all areas. Former Governor Marc Racicot's Task Force on Teacher Shortage/Teacher Salaries reported schools across Montana have had trouble finding teachers for math, science, music, special education, foreign language, library, vocational education, and art. Numbers of teachers in English, elementary math, business, vocational education, and science programs have been declining in recent years.

Applicants are decreasing. A recent survey by the Montana School Boards Association and Montana Rural Education Association found over 80% of responding administrators said school districts were having difficulty hiring certified staff and had seen a considerable decrease in the number of applicants. Respondents cited low salaries, lack of benefits, and undesirable locations as primary reasons.

Teacher salaries are nearly lowest in the nation. Montana teachers' average salaries rank 47th in the nation, almost last. Montana's average teacher salary lags behind every other state except North Dakota, South Dakota, and Mississippi.

Beginning salaries are even worse. On average, Montana's beginning teacher salaries are the lowest in the Rocky Mountain and Northwest regions. Montana's average starting teacher salary is just $23,062 per year.

Crushing college loans. Because inadequate state funding for higher education has caused soaring college tuition for Montana students, the average college student loan debt is now $21,000. How can a beginning teacher with that kind of debt possibly stay and teach in Montana?

Economic development depends on good teachers. Income levels in Montana are too low in general. If we want economic development and better-paying jobs, we must have high-quality schools and colleges. Good education doesn't happen without good teachers. We can't wait until the economy gets better to invest in education.

What Montanans are saying: "…Great Falls Public Schools will lose more than 1,000 years of teaching and administrative experience to retirement. It's a happy thing for the retirees, but it's a growing problem for the school district, because replacements are getting harder and harder to find. …Better pay isn't the only way to improve education, but it would be delusional to think that pay isn't a big part of the answer. The outside world is not going to get less competitive anytime soon." ("Difficulty filling school slots a symptom of bigger ills," Great Falls Tribune editorial, Apr. 3, 2002)


Problems with enrollment-based funding

Montana's state funding formula for schools is based on enrollment. More students equal more money from the state. Unfortunately, that formula simply doesn't work. Here is why:

Fewer students don't mean less cost. Montana's elementary and secondary (K-12) school enrollment has declined in recent years, following a nationwide trend. You might think school districts would save money when enrollments decline, but it doesn't work that way.

When a local school system loses students, most often it's a couple of students from one grade in one school, a handful of students from another grade in another school, and so on. Imagine a classroom of 25 students. If two of those students leave, can the school do without the teacher? Will it be able to save any expenses in heating, lighting, or other fixed costs? No.

Nevertheless, Montana's state funding formula requires the school district to reduce its budget by nearly $4,031 for every elementary student and nearly $5,371 for every middle school and high school student who leaves the district. That's a lot of money for a district to lose!

The budget cap. Suppose a school district loses 25 students, let's say 15 from elementary grades and 10 from high school. The state funding formula requires the district to reduce its budget by $114,175, even though the cost of educating the remaining students remains the same. If the district is at or near the state-imposed budget cap,* it is left with very few options except to cut.

(*As of the 2002-03 school year, more than half of Montana's students were enrolled in the 220 small, medium, and large school districts across the state where district budgets are within 2% of their maximum budget or already capped by law.)

Painful cuts. After seven years of declining enrollments, the state funding formula has taken a big toll on Montana schools across the state. Many districts have been forced to eliminate courses, reduce staff, increase class sizes, and even close neighborhood schools. None of these options are good for Montana's kids.

What Montanans are saying: "A system that forces closing of elementary schools across the state, teaching staff reductions, and larger class sizes isn't adequate. A system that actually reduces the dollars going to schools despite increases in salary and utility costs isn't adequate." ("State must adequately invest in schools," Billings Gazette editorial, Jan. 9, 2002)


What solutions are available?

A number of Montana's education groups have offered the following solutions to Montana's school funding problems:

Fund fixed costs of classrooms. The legislature could address chronic school funding problems of declining enrollment and inflation by providing direct state funding for every certified teacher and the classrooms in which they teach.

Eliminate per pupil disparity.  Montana may be the only state in the union that provides less funding for elementary students than for high school students. The legislature could adjust elementary per pupil funding upward to at least match high school per pupil funding.

Concentrate on recruiting and retaining quality classroom teachers.   Investing more dollars generally in public schools will help. In addition, the legislature could significantly encourage more new and experienced teachers to begin their careers and stay in Montana by funding the following: educational loan repayment for teachers taking high demand/low supply classroom positions, new teacher mentoring programs, and an increased benefit for retired teachers who devote at least 30 years to Montana's school children.   

Provide an enrollment cushion. To cushion the financial impact suffered by school districts when student enrollments decline, the state could base its funding allocation on a three-year enrollment average rather than the current single-year count.

Demand that Congress pay for its mandates. The federal government has correctly insisted that Montana and all other states provide special educational opportunities for special needs students, and that they “leave no child behind.”  But Congress has never come close to funding its mandates even when it has promised to do so. Montana should join with other states and insist that Congress pay its fair share of funding its own mandates. 

Create a mandatory school employee health insurance pool.  Montana now has over 230 school employee health care plans attempting to insure about 16,000 school employees and dependents. None of these plans has sustainable economies of scale and ability to control costs and maintain benefits over time. Therefore, the rising cost of health insurance has had a hugely negative impact on school district budgets and school employee salaries.

If all school districts and employees pooled into one statewide health insurance plan, the state, school districts, and local taxpayers would save millions of dollars. This money could then be spent on children's education. Also, a statewide plan would provide all school employees and their dependents better quality health care -- making it easier to attract quality teachers.

Redesign the "basic entitlement ."  Every Montana elementary and high school district -- whether it has five students or 500 -- receives the same basic amount of money (called "basic entitlement") from the state. Without reducing the existing amount for any district, the legislature could redesign the basic entitlement to provide more funding for districts with more students.

Any one of the above actions would help.  All of them together would substantially address, if not eliminate, school funding problems in Montana. All require gubernatorial leadership and legislative action.   


Where will the money come from?

We need to invest in education. It's clear that Montana needs to make major investments in education just to get us back to where we were a decade ago in terms of the state's share of funding.

Revenue is available. The Stand Up For Education coalition has not, as a group, taken a position on revenue sources. However, individual organizations within the coalition have proposed the following revenue options:

End the decades-long tax cutting binge. Over just the past six years, the legislature has approved $450 million in tax cuts that disproportionately benefit out-of-state and even international corporations and contribute to recent state budget deficits. These cuts have not delivered the economic development gains that were promised.

Institute a general sales tax to provide homeowner and corporate property tax relief and new revenue. 

Consider new or increased taxes on goods and services that are now relatively under-taxed compared to surrounding states. These might include tourist, cigarette, lodging, and alcohol taxes, for example.

Montanans are willing. Recent polling shows that most Montanans voters are willing to increase state taxes to provide better funding for public education. The poll shows overwhelming receptivity (77%) to a tobacco tax increase to provide more state funding for education. Solid majorities of Montana voters also support increases in alcohol and tourist taxes, according to the poll. (Harstad Strategic Research for MEA-MFT, December 2001)


Education & economic development

Montana business leaders call for better state funding. Many Montana business leaders recognize the importance of a quality education system as the foundation to economic development in Montana.

The following are excerpts from an article about business leaders and education funding (“Quality education system is the key to Montana's long-term financial success,” Great Falls Tribune, Feb. 3, 2002):

"…it's our belief that a quality educational system is the foundation to economic development," said Tom Scott, president and CEO of First Interstate BancSystem in Billings…

Education from preschool to post-graduate study is just one of many ingredients that need to be blended together for successful economic development, said John Kramer, executive director of High Plains Development in Great Falls. A direct connection exists between low education levels and low wages, he said.

The quality of the state's education system is key for businesses, said George Carlson, the director of the McLaughlin Research Institute.

"You'll never get any business if there aren't decent public schools, and if those start to decline, it's all over," Carlson said. "Education is economic development, especially at the university level. It supplies a pool of talented people who have the capabilities of starting businesses and going to work."

Research performed at the state's universities is economic activity that brings in outside money, he added. Carlson is worried, however, that support for education has declined since he arrived in Montana in 1989.

"They say they support education, but in dollar terms support has declined since I've been here," Carlson said of state leaders. "By standing still you will be behind. Montana's traditionally had very good schools, but I think other places are trying to get better and investing funds in it."

In the group's discussion draft of a paper titled "Invest in Education: Observations and Recommendations to Expand Montana Jobs and Income Levels," Montana's educational funding and economic growth are compared to several states, including North Dakota. During fiscal year 2002, North Dakota will invest $318 per capita on higher education, while Montana invests $166.

"In 2000, North Dakota posted the nation's second highest growth rate in per capita income, at 7.5 percent," the report states. "North Dakota's average per capita income now exceeds Montana's by more than $2,200, or 10 percent. If our income levels were even equal to those of the average North Dakotan (as they were 10 years ago), the total personal income in this state would be $2 billion greater than it is."

For Ian Davidson [in Great Falls], chairman of Davidson Companies, educating Montanans about the importance of education as an economic development tool is a top priority.

"Education is an investment, not an expense," Davidson said. "It's a major factor in how you'll develop the economy."


Montana teacher salaries. "Average Rankings and Estimates, A Report of School Statistics," National Education Association, Oct. 2003. US Department of Labor. "Survey of Teacher Salary Trends, 2002," American Federation of Teachers. "Montana's K-12 Certified Staff and Salary Annual Report," MEA-MFT, 2003.

K-12 school funding trends. "Montana Statewide Education Profile," Montana Office of Public Instruction, Sept. 2003. "School Budget and Expenditure Report," MEA-MFT, April 2003.

Montana's K-12 teacher shortage. "Who Will Teach Montana's Children: A Study for the Certification Standards and Practices Advisory Council (CSPAC) of the Montana Board of Public Education," Feb. 2001, by Dori Burns Nielson, Ed.D., and 2002 Follow-Up Study, July 2002. "Final Report," Governor Racicot's Task Force on Teacher Shortage/Teacher Salaries, Sept. 11, 2000. Office of Public Instruction 1999-2000 fall report. Survey by Montana School Boards Association and Montana Rural Education Association. Teacher Retirement System data.

Stand Up For Education
1232 E. Sixth Avenue
Helena, Montana 59601
(406) 442-4250