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					                     K-12 Budget Cut Proposals of LFD, June 10, 2010
                         Savings to the State and            Total State and Local Impact on
Item                     LFD Notes                           School Districts                        Additional Notes
1. Eliminate HB 124      $8.4 million biennial impact;       The total impact is similar to the
Block Grants to K-12     "Eliminating the block grants       state impact in this category. House
Funds other than the     to these funds will likely result   Bill 124 block grants are treated as
General Fund             in an increase in property          nonlevy revenue under law and to
                         taxes, although not in all          the extent that the revenue from
                         cases. For instance the             House Bill 124 Block grants dries up,
                         portion distributed to the          school district property taxes
                         flexibility fund will likely not    increase by a like amount.
                         result in a property tax
                         increase." 20-9-630 MCA
                         would need to be amended.


2. Eliminate HB 124      net savings to the State = $24 The total impact is as described by
Block Grants to K-12     million per year; $44 million in the LFD for this budget cut proposal.
District General Funds   block grants, increase of $20
                         million in GTB; increase of local
                         property taxes by $24 million;
                         20-9-630 MCA would need to
                         be amended.


3. Lower Direct State    net result for State = $62       The total impact is as described by        Reducing the state's share would
Aid to K-12 from 44.7%   million savings per year; local the LFD for this budget cut proposal.       directly contradict Judge
to 30%                   property taxes would rise by                                                Sherlock's last ruling in Columbia
                         same amount; "The district                                                  Falls v. State, where he noted
                         court's recent dismissal of the                                             that the decline in state's share
                         adequacy suit mentioned                                                     in FY09 was a "relapse" and that
                         favorably the state's share in                                              he expected the state's share in
                         funding school districts.                                                   future years to conform to the
                         Reducing the state's share of                                               state's progress in FY06 through
                         school district funding may risk                                            FY08.
                         another adequacy suit." 20-9-
                         306 MCA would need to be
                         amended.




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                     K-12 Budget Cut Proposals of LFD, June 10, 2010
                           Savings to the State and          Total State and Local Impact on
Item                       LFD Notes                         School Districts                         Additional Notes
4. Reduce Basic and $62 million per year impact;             The state savings are only part of the   This kind of a drastic reduction in
per-ANB entitlements to lower district general fund          story, as the state funds only around    current spending levels would
K-12 by 10%             budgets, most districts would        62% of general fund budgets with the     directly contradict Judge
                        require increased property           rest coming from local taxes.            Sherlock's last ruling in Columbia
                        taxes to regain prior year's         Statewide total general fund budgets     Falls v. State. The Judge listed a
                        budget, "although in most            in FY10 are approximately $946           number of issues that could
                        cases this would require a           million, with $865 million of that       result in him reconsidering his
                        vote"; Other Factors -- "The         total funded by the basic and per-       opinion that the state has
                        district court's recent dismissal    ANB entitlements. As such, the total     complied with its constitutional
                        of the adequacy suit                 projected general fund budget cuts       obligations for adequate funding
                        mentioned favorably the              that would be required under this        and this would almost certainly
                        state's share in funding school      proposal would be somewhere              generate a return to court.
                        districts. Reducing the state's      around $86.5 million annually. This
                        share of school district funding     cut, in turn, would be roughly
                        may risk another adequacy            equivalent to eliminating full time
                        suit." 20-9-306 MCA would            kindergarten and all new general
                        need to be amended.                  fund entitlements added as part of
                                                             the state's remedy in Columbia Falls
                                                             v. State.




5. Eliminate District      $10.8 million biennial impact;    The $10.8 million biennial impact        The impact of this cut would fall
GF HB 124 Block Grants     "Districts with oil and gas       would result in budget cuts in           disproportionately on a narrow
to the Extent of Oil and   revenue in excess of the          districts that use oil and gas revenue   range of school districts in the
Gas Revenue                amount of HB 124 block grants     to fund their budgets and budget         state that have and use oil and
                           money do not require these        amendments.                              gas revenues to fund their
                           block grants to fund their                                                 budgets.
                           budgets." This option partially
                           duplicates the other HB 124
                           block grant options in
                           education

6. Eliminate Deposit of    $20,389,752 million impact;       The impact here is prospective but       The most recent round of facility
Riverbed Rents in          starting in FY 2012 law           significant. The state touted its        grants showed the existing
Facility Account; put in   requires riverbed rent paid by    facility account and process as          revenue stream to be grossly
Guarantee Account          Avista and PPL be deposited in    satisfying its obligations for           insufficient, with school districts
                           the school facility and           addressing facilities under Sherlock's   submitting proposals for over
                           technology account; 77-4-208      order in Columbia Falls v. State. With   $70 million in deferred
                           MCA would need to be              this funding source gone, there will     maintenance for a program
                           amended                           be insufficient revenues available for   funded at only $12 million.
                                                             the state to address its
                                                             acknowledged $360 million backlog
                                                             in deferred maintenance in schools
                                                             statewide.




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                    K-12 Budget Cut Proposals of LFD, June 10, 2010
                        Savings to the State and           Total State and Local Impact on
Item                    LFD Notes                          School Districts                         Additional Notes
7. Eliminate District   $41.7 million impact; "Districts   The impact here is prospective but
Flex Fund – Transfer    have been rapidly filling up       significant. We know anecdotally
Balances to State       their flex funds without using     that districts have used this account
                        them and the ending fund           as sort of a rainy day account and/or
                        balances have grown rapidly."      to hold funds intended for building
                        Eliminating the flex fund and      renovation or repair. All plans based
                        redirecting the balances to the    on funding in this fund would be put
                        state general fund would           on hold if those funds were taken by
                        result in a OTO infusion of        the state.
                        cash. 20-9-542, 543, 544,
                        MCA would need to be
                        amended


8. Eliminate Full-Time $36.8 million impact; 5400          The state savings are only part of the   The state used fulltime
Kindergarten; Restore  students in full time K; 580        story, as the state funds only around    kindergarten as the lynchpin of
Half-Day Kindergarten teachers employed; Other             62% of general fund budgets with the     its defense in terms of
                       Factors -- "The district court's    rest coming from local taxes. The        addressing the needs of at risk
                       recent dismissal of the             projected total cuts required to         students. Combined with the
                       adequacy suit mentioned             general fund budgets would be            elimination of at risk funding, the
                       favorably the state's funding of    around $30 million per year.             elimination of fulltime
                       full day kindergarten.                                                       kindergarten would put the state
                       Eliminating this feature of                                                  back in the position of having no
                       school funding may risk                                                      means of addressing
                       another adequacy suit." 20-9-                                                achievement gap or at risk issues
                       311 MCA would need to be                                                     in Montana's public schools.
                       amended

9. Eliminate Special  $2,467,528 impact; "This             The total impact on general fund     This action would result in a loss
Education Maintenance action may result in loss of a       budgets would be roughly $5 million, of federal funds, not much
of Effort             like amount of federal special       or double what the state cuts.       question about it.
                      education funds."




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                     K-12 Budget Cut Proposals of LFD, June 10, 2010
                         Savings to the State and          Total State and Local Impact on
Item                     LFD Notes                         School Districts                         Additional Notes
10. Continue the         $10 million impact; "The 2009     The impact is as stated in the LFD       The state used its at risk
Elimination of the At-   Legislature eliminated $10        Analysis. Once the OTO Title I funds     payment, along with fulltime
Risk Payment             million in general fund support   dry up there will be no replacement      kindergarten, as the lynchpin of
                         for the at-risk component of      revenue source to pay for the            its defense in terms of
                         the school funding formula        expenses previously paid for with at     addressing the needs of at risk
                         due to the $34.2 million          risk funds.                              students. Combined with the
                         increase in Title I funds, as                                              elimination of fulltime
                         both funding sources support                                               kindergarten, the permanent
                         similar programs. The                                                      elimination of at risk funding
                         legislature requested the                                                  would leave the state with no
                         general fund for the school                                                defense regarding how its
                         funding component to be                                                    formula addresses the needs of
                         considered by the 2011                                                     at risk children.
                         Legislature. While these
                         appropriations will not be part
                         of the base budget, the LFD
                         included it in the Big Picture
                         report in March due to its
                         ongoing nature and the
                         likelihood the legislature will
                         be asked to continue funding."




11. Reduce High School   $10.8 million impact; high        The state savings are only part of the
Basic Entitlement to     school basic entitlement will     story as the state funds only 62% of
$200,000 beginning in    be $253,468 in FY 2011 and        school district general fund budgets.
FY 2012                  beyond; the new basic             The total school district general fund
                         entitlement would be based        budget impact would be
                         on supplying a high school        approximately $17.4 million
                         with a minimum of 5 teachers
                         at a cost of $40,000 apiece.
                         Other factors -- "The district
                         court's recent dismissal of the
                         adequacy suit mentioned
                         favorably the state's funding
                         levels. Reducing the high
                         school basic entitlement risk
                         another adequacy suit."




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                     K-12 Budget Cut Proposals of LFD, June 10, 2010
                            Savings to the State and            Total State and Local Impact on
Item                        LFD Notes                           School Districts                           Additional Notes
12. Require High            $3.4 million impact; "Requiring     The state savings are only part of the     Forced consolidation may be
Schools to Consolidate      high schools that have less         story as the state funds only 62% of       unconstitutional and would likely
under Conditions            than 40 students and that are       school district general fund budgets.      be tested in court. Additionally,
                            within 20 miles of another high     The total school district general fund     the forced consolidation will
                            school to consolidate would         budget impact would be                     likely result in increased costs for
                            save the basic entitlement."        approximately $5.5 million.                transportation, including
                                                                                                           unreasonably long trips to school
                                                                                                           for children living in rural areas.


13. Distribute Excess Oil   $16.4 million impact; this          The $16.4 million biennial impact          The impact of this cut would fall
and Gas Revenues in         option would require districts      would result in budget cuts in             disproportionately on a narrow
School Districts GF to      who receive more oil and gas        districts that use oil and gas revenue     range of school districts in the
State                       revenue than is needed to           to fund their budgets and budget           state that have and use oil and
                            fund the GTB and overbase           amendments.                                gas revenues to fund their
                            area of their budgets to send                                                  budgets.
                            any amount over this amount
                            to the state general fund. "If
                            districts chose to maintain
                            their prior budgets, they
                            would have to raise the money
                            by asking their voters to
                            approve property tax
                            increases." 17-36-332 would
                            need to be amended




14. Require School          $35 million impact; 10%             School districts occasionally have         This would change the dynamic
Districts to Send GF        district general fund reserves;     excess reserves that are allowed           on excess reserves and would,
Balances above the          "This proposal would require        under current law. Examples include        for example, require districts
minimum to the state        the district to send to the state   taxes received in the year from            that get funds from a tax protest
                            any amount in excess of the 10      delinquent and protested taxes that        settlement to send those local
                            percent."                           have since been resolved. The              revenues to the state. Since the
                                                                impact of this proposal would fall         other local taxpayers pick up the
                                                                disproportionately on districts with       slack with increased levies during
                                                                larger tax protests and would deprive      the pendency of a protest, this
                                                                school districts of their local tax base   proposal would also result in an
                                                                after years of protest already             indirect increase in local taxes for
                                                                depleted and negatively impacted           everyone else in the district.
                                                                the school district's ability to
                                                                generate sufficient revenues for its
                                                                budget.




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                       K-12 Budget Cut Proposals of LFD, June 10, 2010
                         Savings to the State and         Total State and Local Impact on
Item                     LFD Notes                        School Districts                        Additional Notes
15. Eliminate HB 124     $1,978,919 impact; annual        The total impact is as described by
Block Grant Growth       0.76% increase in the county     the LFD for this budget cut proposal.
                         transportation and school
                         district block grant would be
                         eliminated; the reduction
                         could result in increased
                         property taxes to support
                         services provided by local
                         districts; 20-9-630 and 632
                         would need to be amended

16. Eliminate Present    $57,139,236 impact; local        The state impact is only part of the    The inclusion of a present law
Law Adjustment for       districts would need to          story, because the state funds only     inflationary adjustment was one
Inflation                consider whether to reduce       62% of general fund budgets. School     of the key factors referenced by
                         the district's general fund or   districts already facing cuts because   Judge Sherlock in finding the
                         request property tax increases   of the way the budget was put           state had complied with its
                         to offset the difference; by     together last session would have to     responsibilities for adequate
                         statute the Superintendent       cut further with no inflationary        funding in Columbia Falls v.
                         includes annual inflation        increase in funding for the next two    State. The dismantling of this
                         adjustments for basic and Per    years.                                  key portion of the state's remedy
                         ANB entitlements                                                         would likely lead to renewed
                                                                                                  school finance litigation.


17. Eliminate OTO 2      $22.722,922 impact; OTO          The state impact is only part of the    If the state withdraws support it
Percent Inflationary     funding of the 2% in the first   story, because the state funds only     promised in the last session, it
Increase                 year; LFD included funding in    62% of general fund budgets. School     casts a whole new light on its
                         the Big Picture                  districts would have to cut their       efforts in terms of meeting the
                                                          funding by approximately $34 million    Court's order in Columbia Falls v.
                                                          over the coming biennium ($17           State. Judge Sherlock noted that
                                                          million per year) to make up for this   FY09 funding circumstances
                                                          reduction.                              were a "relapse" and that he
                                                                                                  expected the state's future
                                                                                                  efforts to conform to the
                                                                                                  progress it met from FY06 to
                                                                                                  FY08. If this and other related
                                                                                                  proposals are implemented, the
                                                                                                  state will have left itself
                                                                                                  completely exposed to further
                                                                                                  litigation over the adequacy of
                                                                                                  funding for Montana's public
                                                                                                  schools.




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