Montana's largest school districts facing financial challenges

Superintendents Meeting
Superintendents Meeting
Posted at 7:20 PM, Mar 05, 2024

HELENA — Across Montana, a number of school districts have reported facing millions of dollars in potential budget shortfalls – and some leaders say they’re worried the school funding system is reaching a tipping point.

“We were a $4.1 million reduction last year, we're looking at $3 million probably we need to reduce next year, and I don't see that changing,” said Casey Bertram, superintendent of Bozeman Public Schools. “And so it just begins to chip away at what you're providing for families.”

Bertram recently joined leaders from three other large Montana school districts in Helena, to talk to reporters about what they called a “perfect storm” of factors that have led to these budget challenges.

Leaders said most of the “AA districts” – the eight largest districts in the state – have faced similar challenges, though they’re not limited to large schools. They identified three key issues.

First, in Montana, base school funding is determined by enrollment numbers, through a measurement called “Average Number Belonging,” or ANB. That number is used in calculating the base aid districts will receive from the state, as well as their maximum general fund budget.

Leaders said the system works well as long as enrollment keeps growing, but when it stays flat or decreases, it puts districts in difficult positions. They acknowledged it makes sense to reduce staffing if enrollment is down but said a lower number of students doesn’t necessarily mean they can cut a position without having an impact on students.

“If we are decreasing in our budget, that then tells us what our staffing level will be, so we'll always be in that range,” said Helena Public Schools Superintendent Rex Weltz. “What it ends up being at the end of the day is that we may not have as many programs for students and/or class sizes fill up.”

The Montana Office of Public Instruction has reported increases in public school enrollment the last two years, after a drop during COVID. However, district leaders said, in many areas, they’ve seen the growth in student numbers slow down or stop – especially at the elementary school level. They said increases in homeschool and private school numbers haven’t accounted for the whole difference.

Their second main concern is inflation. State law allows districts a budget increase to account for inflation, but it’s capped at 3% – and leaders said costs have gone up far faster. Districts often have 80% to 90% of their budgets allocated to salaries, and they’ve had to increase wages and benefits to attract staff. Leaders said other fixed costs have spiked dramatically.

“You have to have electricity, you have to have sewer service, you’ve got to have garbage service, you've got to keep the lights on, you’ve got to pay the heat bill,” said Micah Hill, Missoula County Public Schools superintendent. “It's those kind of things that are the must-haves, so when you have property liability insurance or utilities that go up $190,000 in just the high school district alone, where's that money going to come from?”

Finally, school districts saw an influx of federal funding during the COVID pandemic, particularly through the Elementary and Secondary School Emergency Relief Fund, or ESSER. Those funds are now starting to expire.

District leaders said they knew the money was one-time-only and they tried to use it responsibly based on that. In many cases, they invested in academic and mental health supports for students during the pandemic – but they said those needs aren’t going away.

“I think the parents are feeling – and that's what you're hearing – that we had these supports and need these supports, but the money is going away to allocate them,” said Weltz.

Brian Patrick, director of business operations for Great Falls Public Schools, said many districts have already made cuts, and future reductions are likely to have a deeper impact on students.

“The easy stuff gets done first, and after that it gets extremely more difficult – you get to core programs,” he said.

The leaders said they’re hoping the state takes another look at whether their formula for basic school funding to see whether it’s continuing to serve everyone’s needs. Bertram said Bozeman’s school board backed a resolution, calling for the definition of a basic free public education to be updated.

“If we only offered what was in the definition, we would be fine,” he said. “But that means we wouldn't have extracurricular activities. That means K-3 students would only go 720 hours. That means that – all those lists of things: we wouldn't employ nurses, we wouldn't have school resource officers, we wouldn't have mental health supports, we wouldn't have sixth graders in comprehensive middle schools, any of those things.”

“It's operating the way it's intended to operate,” he added. “We have community expectations of what it takes to operate high-quality public schools in Montana, and the funding formula is not keeping up with that.”

State law requires the Legislature to put together an interim committee to study the funding formula every ten years, and that cycle is scheduled to come around again after the 2025 legislative session.

Weltz said districts don’t want to put all the blame on the state, and they’re working to be proactive in fixing their own budget problems – but he said they don’t see the overall situation improving without broader changes.

“Unless something changes in 2025, we're going to be faced with change in our environment for our students,” he said. “We're going to have to reduce in places that our community is uncomfortable reducing.”