State Land Revenues Meant for Schools

By Beacon Staff

The recent news that state lands will generate an unexpected $127 million ($86 million in one-time-only bonus payments from the lease of state lands in the Otter Creek area in eastern Montana, coupled with the Montana Supreme Court’s recent ruling that Pennsylvania Power and Light (PPL) owes the state of Montana $41 million for rent of river beds on state lands) could not have come at a better time for the state of Montana and especially for the state’s public schools.

School districts of all sizes and in all parts of Montana are facing significant budget cuts, including staff layoffs and program eliminations – in many cases even if voters approve local mill levy increases. This bleak financial picture for the coming years is due to the drying up of the one-time-only stimulus funds from the federal government and an accompanying expected $40 million shortfall in state funding for schools in the next biennium compared to present spending levels.

State land revenues are Constitutionally dedicated to K-12 public education under Article X, Section 5 of the Montana Constitution, which specifies that 95 percent of such revenues shall be apportioned annually to public elementary and secondary school districts, with the other 5 percent going to the permanent trust. This law, however, has been interpreted by state policymakers in a way that makes the connection between state land revenues and schools virtually meaningless.

The problem is, under the current Constitutionally questionable system for distributing state land revenues, these increases in dedicated school revenues will not be used to specifically help school districts, but will rather be used to shore up the rest of state and local government spending. This is because, with increasing frequency, when the state gets an increase in state land revenues, it offsets that increase by reducing state general fund support for K-12 public education and spends that money elsewhere.

Nowhere is this better illustrated than in Gov, Brian Schweitzer’s numerous recent comments specifying his intent to use the bonus payments generated by state lands in the Otter Creek area to pay for both the Department of Public Health’s budget and local government construction projects.

The governor is not alone in his approach to the use of state land revenues, as legislators and staff from the Legislative Fiscal Division readily acknowledge that the net effect of the $86 million bonus payment for Otter Creek state land leases for schools will be zero dollars. It may be lawful to reduce state general fund support for and then supplant the cuts to K-12 public funding with state land revenues so that the general fund money can be diverted to other causes (though there is a significant legal question here that is not resolved), but in any case it is not right and violates the intent of the Constitutional framers when they first established a dedicated funding source for public schools more than 100 years ago.

The funding crunch facing all of government is significant and there are many important functions undertaken by government at all levels. In this specific instance, however, it is wrong to use money Constitutionally dedicated to Montana’s public schools to solve those funding problems while leaving schools to solve their problems through budget cuts, increased local taxes or both.

Lance Melton is the executive director of the Montana School Boards Association; Darrell Rud is executive director of the School Administrators of Montana; and Dave Puyear is the executive director of the Montana Rural Education Association

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