X.5 Public School Fund Revenue
Montana Constitution Article X, Section 5
Section 5. Public School Fund Revenue.
(1) Ninety-five percent of all the interest received on the public school fund and ninety-five percent of all rent received from the leasing of school lands and all other income from the public school fund shall be equitably apportioned annually to public elementary and secondary school districts as provided by law.
(2) The remaining five percent of all interest received on the public school fund, and the remaining five percent of all rent received from leasing of school lands and all other income from the public school fund shall annually be added to the public school fund and become and forever remain as inseparable and inviolable part thereof.
Mont. Const. Art. X, sec. 5 (1972).
History
Pre-Constitutional Convention of 1972
Post-Constitutional Convention of 1972
Drafting
Montana Constitution of 1889
Montana Constitution Article XI, Section 5 (1889)
Original. Section 5. The interest on all invested school funds of the State, and all rents accruing from leasing of any school lands, shall be apportioned to the several school districts of the State in proportion to the number of children and youths between the ages of six and twenty-one years, residing therein respectively, but no district shall be entitled to such distributive share that does not maintain a public free school for at least three months during the year for which distributions shall be made.
Mont. Const. Art. XI. sec. 5 (1989).
Montana Constitution of 1972
Amended. Montana Constitution Article X, Section 2 (1972)
Section 5. Public School Fund Revenue.
(1) Ninety-five percent of all the interest received on the public school fund and ninety-five percent of all rent received from the leasing of school lands and all other income from the public school fund shall be equitably apportioned annually to public elementary and secondary school districts as provided by law.
(2) The remaining five percent of all interest received on the public school fund, and the remaining five percent of all rent received from leasing of school lands and all other income from the public school fund shall annually be added to the public school fund and become and forever remain as inseparable and inviolable part thereof.
Mont. Const. Art. X, sec. 5 (1972).
Montana Constitutional Convention of 1972
Delegate Commentary
Delegate Harrington: "The proposed Section 5 is a shortened and revised version of Section 5 of the present Constitution. The intent of the provision is to constitutionally protect the interest and income of the public school fund... However, in the particular restrictions as its distributions to the schools are considered obsolete in light of present conditions. The language concerning the portions of the distributed and which is to be reinvested remains the same as in the present Constitution. The methods of distribution previously specified are replaced by a general phrase, 'shall be equitably apportioned annually to elementary and secondary schools as provided by law.'"
"The replacement language provides the desired flexibility to the Legislature to develop the school financing programs in tune with current necessities. Particularly relevant to the change is the trend across the nation, in accordance with recent court decisions under equal protection doctrine, to provide more equitable school financing systems..."
"The new language allows the Legislature to determine the type of distribution which will attain this goal. Restrictions in the form of specified districts, age, and school terms which may have been applicable at the time of writing the 1889 Constitution are no longer meaningful."
"Rather than attempt to apply new restrictions more in keeping with the contemporary school system, the committee's determined that it's preferable to allow for changing needs as interpreted by the Legislature by designating only a broad standard; namely, 'equitably apportioned as provided by law.'"
"A further element in the distribution system authorized by the existing provision is the specification that the interest and income money is distributed to the several school districts. This has been interpreted in the past to mean that funds deriving from this source be granted only to elementary schools, presumably because elementary schools are the only public schools in existence at the time when the provision was written."
"In keeping with this intention to expand legislative possibilities in educational finance... the committee has replaced the phrase 'several school districts' with 'public elementary and secondary' schools. This would change the existing distribution system to include high schools and recipients of interest and income money."
"The immediate results is anticipated by the office of Superintendent of Public Instruction to result in a net saving of the administrative costs to the state. We have felt through this change that we have made a much more equitable section to the constitution."
Montana Constitutional Convention 1971-1972, Verbatim Transcript (Mar. 9, 1972 -- Mar. 16, 1972) Vol. No. VI 1825, 2006-07 (1981).
Delegate Blaylock: "I had a delegate proposal in on this section. The committee has incorporated the in different language, but the idea is there. I commend the Education committee for changing this so that we get away from the old distribution formula to where it was distributed to the students or the children of a district between the ages of 6 and 21. This really didn't work out in these later years. It... might have been good for 1889, it certainly is no longer reasonable to have such language in. And I think that this is a great improvement and will give a great deal more flexibility on the distribution of... income from these school lands. I support the Education Committee on this."
Verbatim Transcript Vol. No. VI at 2007.
Clerk Hanson: "I move to amend Section 5... of the Education and Public Lands Committee Proposal... as follows: at line 5, page 17, by adding, between the word 'to' and the word 'public', the following words, quote-- 'the several school districts of the state for' -- end quote."
Chairman Graybill: "The phrase to add is 'the several school districts of the state... for--... So the sense of the sentence reads, the money will be distributed equitably apportioned annually to the several school districts of the state for public elementary and secondary school districts."
Following this suggested amendment, the delegates discussed the sources of revenue for school district general fund and respective levies. Delegate Martin elaborated on the school districts' agency in financing education and affirmed his support for retaining the amendment.
Delegate Champoux pointed out the problematic use of the word 'several' and the resultant inequality in funding. Delegate Champoux emphasized potential interpretation issues with the word:
"When we use this term 'several districts'... If you lawyers can convince me that the courts will say that does not mean every district, I will accept the word 'several'. However, if it can be open to contention, then we're in trouble. I will agree to the school districts any day."
Following this discussion, Delegate Martin withdrew his amendment and Section 5 was adopted.
Verbatim Transcript Vol. No. VI at 2008.
Post-1972 Amendment
The Loble Decision
"In 1985, a coalition of 64 school districts filed a lawsuit in Helena District Court claiming that the funding of the education system in Montana, guaranteed under the Montana Constitution, was unconstitutional. On January 13, 1988, the 'Loble Decision' was handed down."
"The decision, which was challenged by the state of Montana and subsequently upheld by the Montana Supreme Court, confirmed that the State of Montana 'has failed to provide a system of quality public education granting to each student the equality of education opportunity guaranteed under Article X, Section 1 of Montana's Constitution.'"
Understanding Montana School Finance and School District Budgets, Montana Office of Public Instruction School Finance Division (June 2018), 25. (Understanding Montana School Finance).
House Bill 28, 1989
"In June of 1989, a special session was called to address the problem. During that session, House Bill 28 was passed to solve the equity problem. HB 28 increased funding and instituted a Guaranteed Tax Base System (a mechanism designed to assist low wealth districts by subsidizing their tax base through state assistance)."
"However, the under-funded coalition did not feel that this solved the equity problem and the funding disparity issue ended up back in District Court. The result was two additional equity lawsuits filed in 1991."
Understanding Montana School Finance and School District Budgets, Montana Office of Public Instruction School Finance Division (June 2018), 25. (Understanding Montana School Finance).
Legislation 1991 - 2001
"Subsequent legislative action passed by HB 667 established the current method of school funding for all public school districts in the state. It established a formula that created maximum and minimum general fund budget levels for all school districts. Each school district was required to be within that range on or before 1998."
"Senate Bill 460 (1999) and Senate Bill 390 (2001) expanded the capacity of districts to adopt budgets that exceed the "maximum" level."
Understanding Montana School Finance and School District Budgets, Montana Office of Public Instruction School Finance Division (June 2018), 25. (Understanding Montana School Finance).
Columbia Falls v. Montana, 2004
"In April 2004, the Sherlock decision in Columbia Falls v. Montana found the state share of school district spending inadequate and found that Montana's funding formula is not reasonably related to the costs of providing a basic system of free quality public elementary and secondary schools. The State appealed the decision to the Montana Supreme Court and the Court upheld the Sherlock decision."
Understanding Montana School Finance and School District Budgets, Montana Office of Public Instruction School Finance Division (June 2018), 25. (Understanding Montana School Finance).
2005 Legislative Session
"The Legislature adopted a definition of quality education and appointed a committee to study the formula and propose changes that would align with the new definition. Also, schools received additionally funding for fiscal year 2007 from several new funding components, some which expanded the district general fund and some which were deposited as One-Time-Only payments in the district miscellaneous programs fund."
Understanding Montana School Finance and School District Budgets, Montana Office of Public Instruction School Finance Division (June 2018), 25. (Understanding Montana School Finance).
2007 Legislative Session
"The legislature provided additional funding which further expanded the district general fund and state one-time-only payments in the miscellaneous programs fund."
Understanding Montana School Finance and School District Budgets, Montana Office of Public Instruction School Finance Division (June 2018), 25. (Understanding Montana School Finance).
2009 Legislative Session
"Federal Funds allocated to Montana in the American Recovery and Reinvestment Act were appropriated to support K-12 BASE aid in the district general fund and for federal grants to school districts for existing programs administered by the US Department of Education in the miscellaneous programs fund. School districts and special education cooperatives received state one-time-only payments in the miscellaneous programs fund in support of deferred maintenance and energy efficiency expenditures."
Understanding Montana School Finance and School District Budgets, Montana Office of Public Instruction School Finance Division (June 2018), 25. (Understanding Montana School Finance).
2011 Legislative Session
"The session... authorized the creation of multi-district cooperatives, in addition to establishing new mechanisms for the distribution of oil and natural gas production taxes."
Understanding Montana School Finance and School District Budgets, Montana Office of Public Instruction School Finance Division (June 2018), 26. (Understanding Montana School Finance).
2013 Legislative Session
"Senate Bill 175 redesigned the Basic Entitlement to provide additional resources for larger school districts. A new general fund budget component, the Data for Achievement component, was added. The Natural Resource Development Funding payment was established to provide a payment to each district in proportion to the district's direct state aid and to reduce local property taxes in support of general funds. Oil and gas production taxes were required to be remitted to the state when amounts exceeded thresholds of budget authority, and amounts were redistributed among districts with oil and natural gas production within their boundaries or which border on districts with the revenues. In some cases, depending on the size of district budgets, oil and gas revenues were not required to be anticipated to fund the general fund and could instead be redirected to the general fund from other budgeted funds to make up revenue shortfalls. In general funds, districts could transfer unused levy authority from other budgeted funds to the Flexible Non-voted Levy for the general fund over-BASE. The law established a third annual enrollment for determining funding. Schools gained authority to established voted revenue bonds to be repaid using oil and gas production taxes."
Understanding Montana School Finance and School District Budgets, Montana Office of Public Instruction School Finance Division (June 2018), 26. (Understanding Montana School Finance).