Real questions
Straight answers
Montana’s school funding formula is genuinely complicated, and the questions it raises are worth asking.
This page addresses the most common concerns directly, sticks to verifiable facts, and points toward the processes and people who are accountable for the answers.
Montana Loves Public Schools is a short-term, nonpartisan, grassroots campaign. Our one focus: helping Montanans understand and engage with the current review of Montana’s school funding formula before the 2027 Legislature acts on it. We don’t advocate for higher taxes, specific legislation, or any political party.
On background: How Montana schools are funded
Montana’s public schools are funded from three sources:
(Percentages are approximate and vary by district by year.)
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State (~42%): The Legislature sets a formula that calculates how much each district should receive, based mainly on enrollment. That formula is written into state law and caps how much school budgets can grow each year.
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Local (~36%): Property taxes collected locally. These flow to the state general fund first, where they are pooled and redistributed according to the state formula. Property taxes also fund voter-approved levies and bonds for operating and capital costs.
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Federal (~12% in normal years): Restricted grants for specific programs, including special education (IDEA), school nutrition, and support for low-income students (Title I). Federal funds cannot be freely spent; they carry strict rules about allowable uses.
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Other (~10%) Fund balances, miscellaneous grants, and other sources that vary by district and year.
The critical point: the state formula determines how much any district is allowed to spend, regardless of how much local property taxes generate or how much the community is willing to contribute. Levies and bonds can raise additional local money, but only up to a formula-defined ceiling.
Montana spends $13,656 per student annually.[3] The national average is $16,526 about 18% more per student than Montana (FY2023 for all 50 states). Wyoming, directly next door, spends $20,521(+50%) per student. North Dakota spends $17,102 (+25%).[3] That gap matters when we ask whether the current formula is delivering what the Montana Constitution requires.
Montana
Per pupil spending: $13,656
38th nationally (FY 2023)
North Dakota
Per pupil spending: $17,102
25% more per student than MT
National average
Per pupil spending: ~ $15,941
+$2,569 (+18%) per student more than MT (FY2023)*
Washington
Per pupil spending: $18,564
36% more per student than MT
Wyoming
Per pupil spending: $20,521
50% more per student than MT
Idaho
Per pupil spending: $11,506
-$2,600 (19% below MT, also underfunded)
*A note on the data: State per-pupil spending figures are from the U.S. Census Bureau's 2024 Annual Survey of School System Finances (preliminary, November 2025), which currently only includes reporting from 37 states. Montana's national ranking and the national average use the final FY2023 release (May 2025), which covers all 50 states and is the most recent complete dataset. To ensure a fair comparison, the national average gap is calculated using Montana's FY2023 figure ($13,957) against the FY2023 national average ($16,526). Final FY2024 data for all states is expected May 2026.[3]
Why this matters right now
Montana's Constitution requires the Legislature to provide a free, quality public education for every school-age child in the state. To ensure that obligation is actually being met, state law requires a formal review of the school funding formula every ten years.
That review is underway right now. The School Funding Interim Commission (SFIC) — a bipartisan legislative body — began its current cycle in June 2025 and will deliver recommendations to the 2027 Legislature. The SFIC's work is public, its meetings are open, and any Montanan can submit comment. This is Montana's once-in-a-decade window to shape how schools are funded for the next generation.
Funding and taxes
If my property taxes keep going up, why aren't schools getting more money?
This is the most common question we hear, and the honest answer takes a minute to explain. Montana residential
property taxes increased significantly from 2002 and 2018 — more than double the 40% rise in inflation over the same period.[5] Yet per-student school spending grew less than 40% over roughly those same two decades.[5] More taxes paid in. Not much more reaching schools.
Here's the basic relationship that should hold: when property taxes collected for schools go up — whether locally or at the state level — school district budgets should go up proportionally. That hasn't happened.
Here's why: When you pay property taxes, a portion goes toward school support, but a portion of those dollars don't flow directly to your local school. They flow to the state, where they’re pooled and redistributed through a formula that caps school budget growth at 3% per year, no matter what. When local property values rise and tax collections grow, property taxes collected for a public school general funds flow to other school funds supported by the state, such as the school retirement fund. The net result, in many years, is that schools receive no real increase even as taxpayers pay significantly more.
That 3% cap has consistently fallen short of what things actually cost. Over 20 years, it averages out to less than 2% of real purchasing power growth per year.[7] Over that same period, actual school operating costs, including energy, health insurance, construction, and special education, have risen far faster. A 28% electricity rate spike in a single year (2023) [6] alone can wipe out several years of formula-allowed increases. Montana's school funding has fallen an estimated $141 million behind inflation since 2020.[9] Legislative staff presented this gap directly to the SFIC in February 2026, showing that the real value of state school funding has stayed roughly flat since 2008, and dropped sharply after 2021.
See also: “Why do schools keep asking for levies?” (below) and “Why do we need to fix the funding formula?” for the full picture of how these pieces connect.
Hasn’t the state increased its contributions to schools quite a bit recently? What about the STARS Act?
Yes, and it’s worth understanding exactly what those investments do, and where the remaining open questions are.
Since about 2010, Montana’s Guaranteed Tax Base (GTB) ratio has risen noticeably—which means the state guarantees a higher level of funding per student and sends more equalization aid to property-poor districts. However, this policy shift often doesn’t feel significant to local taxpayers because it mainly changes how funding is distributed, not where the money comes from: the system still relies heavily on statewide and local property taxes (including the fixed 95-mill levy), and as property values increase, tax bills can rise regardless of GTB changes. In other words, the state is taking on a somewhat larger share on paper, but much of that money still originates from property taxes, so taxpayers don’t experience a clear reduction in their local tax burden.
Additionally, the 2025 Legislature passed the STARS Act (HB 252) with strong bipartisan support, directing $100 million toward raising starting teacher pay. Districts that certify compliance must set a base salary of at least $41,613 for the 2026 school year, increasing each year after that, and ensure new teachers earn at least 62% of their district’s average salary. Qualifying districts receive double the standard Quality Educator payment per position.[B]
Here’s the distinction that matters for the SFIC conversation: the STARS Act improves starting teacher pay through a targeted incentive program layered on top of the existing base formula. A district that qualifies for the STARS payments still operates under the same 3% annual budget growth cap. The state paying more for starting salaries and equalization through a specific program or ratio change is a different thing from the base formula keeping pace with actual operating costs. Both things can be true: the state has made meaningful targeted investments, and the underlying formula hasn’t been structurally updated since 2005.
The SFIC’s job right now, with public comment open, is to look at the whole picture and determine whether those targeted investments are sufficient, or whether the base formula itself also needs updating to reflect what Montana schools actually cost to run today. That’s not a settled question. It’s exactly what the process is for.
Source attribution: [B] STARS Act (HB 252), 2025 Montana Legislature; OPI, May 2025; Daily Montanan, September 2025. [C] 2025 Montana homestead property tax reform
Would fixing the formula mean higher taxes for Montanans?
That is exactly what the School Funding Interim Commission (SFIC) is working through right now.
The SFIC is studying multiple approaches, including student-centered funding models that reallocate existing dollars more efficiently. Several proposals being discussed would actually reduce reliance on local property taxes by increasing the state’s share of school funding through reallocation of existing state revenues, rather than new taxes.
There is also a structural reason why levy and tax requests have increased: the formula guarantees only 80% of a district’s operating budget. The can increases that 80% by up to 3%, but the effective overall budget increase is only about 2.4%, because the other 20% depends on local levy votes that are increasingly failing.[7] Fixing the formula’s structure could actually reduce the pressure for repeated local levy requests.
What any specific change would cost taxpayers is a question only the Legislature can answer, and that decision will be made in 2027 based on SFIC recommendations. Montanans can weigh in on those recommendations while the process is still open.
Why do schools keep asking for levies? Didn't we just approve one?
The formula guarantees only 80% of a district’s operating budget. The remaining 20% has to come from voter-approved levies. These levies aren’t funding extras — they fund teachers, counselors, arts programs, and bus routes that most Montanans consider basic.
Here is what has changed. In 2006, roughly 95% of Montana school levies were approved.[7a] Over time, that support has declined. In 2025, 56% of all school levy requests across the state failed [7b] — a historic low. The decline accelerated with rising property tax bills, which make voters more resistant to additional requests even when the school need is real.
The result is a gap between what schools are supposed to receive and what they actually get. The Legislature authorizes a 3% increase; the effective increase for many districts is closer to 2.4% once levy failures are factored in.[7a]
Communities often step up in other ways too with booster clubs, local business partnerships, and fundraisers providing some supplemental support for specific programs. But these efforts can't replace structural funding. They help pay for extras, but they don't cover teachers, heat, or mandated services. And they're not equally available to every community — a rural district with a small tax base also has a small donor base.
Montana’s population is growing. Shouldn’t enrollment and school funding be growing too?
It’s a reasonable assumption, but not how it plays out. Much of Montana’s population growth comes from adults relocating to the state, not from an increase in school-age children. Many districts, especially rural ones, have seen flat or declining enrollment for years even as the state’s overall population grows.
Montana’s school funding formula is tied primarily to enrollment (Average Number Belonging or ANB). So when enrollment is flat or falling, formula revenue is flat or falling too — even as the costs of operating those buildings, running those buses, and providing those legally required services do not fall proportionally.
If enrollment is going down, shouldn't school costs go down?
It’s a reasonable assumption, but many school costs are fixed regardless of how many students are enrolled.
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Buildings need heat, maintenance, and safety upgrades whether they hold 200 students or 100
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Buses run the same routes
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Special education services are legally required regardless of enrollment levels
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Core staff remain necessary to meet accreditation standards
When enrollment falls, per-student costs often rise because those fixed costs are now shared among fewer students. This is especially acute in Montana’s rural and small districts, many of which have been losing students for decades while their buildings, buses, and legal obligations haven’t shrunk proportionally.
What about marijuana taxes, lottery money, and timber revenue? Don't those fund schools?
A small portion of those revenues touches education, but not the general operating budgets that pay for teachers, counselors, and programs.
Lottery revenues are no longer earmarked for education. Marijuana tax revenues flow into Montana’s general fund with restricted purposes. Public land revenues (timber royalties, mineral leases) support the School Trust Fund, which generates income for basic state aid, but that fund’s contribution is modest relative to total school budgets.
Federal funding is worth noting separately. During the COVID relief years, federal funds covered about 19% of Montana school budgets. That funding has now expired and returned to the pre-pandemic baseline of about 12%[2]— a 7-percentage-point drop that school districts have had to absorb with no corresponding increase in state or local support.
Why do we need to fix the funding formula?
The formula hasn’t been structurally updated since 2005 — more than 20 years ago.[8]
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The 3% annual cap has failed to keep pace with actual cost increases in energy, insurance, construction, and special education
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The formula doesn’t account for costs that didn’t exist in 2005: cybersecurity, broadband infrastructure, modern CTE equipment, or AI-ready digital learning environments
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Levy passage rates are at historic lows, meaning the “20%” local share the formula depends on is increasingly unavailable[7]
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Montana’s schools have fallen an estimated $141 million behind inflation since 2020, according to the Montana School Boards Association[9]
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Montana spends $13,656 per student annually. This is 50% less than Wyoming and 18% less than the national average.
Montana’s Constitution requires the Legislature to ensure schools are adequately and equitably funded.[8] The SFIC was created by law to review whether the formula still meets that constitutional obligation and to recommend changes for the 2027 Legislature.
Accountability and how schools spend money
Isn’t the real problem too much administration and not enough classroom?
Let's address the real concern directly: are schools spending public money on unnecessary administration instead of kids? The answer, backed by public data, is “no,” but it's worth explaining why costs feel out of control anyway.
Schools are fundamentally people-driven organizations, and the budget reflects that. About 80% of Montana school budgets pay for the people who serve students every day[10] — teachers, counselors, bus drivers, librarians, school nurses, and paraeducators. Less than 5% goes to district-level administration. The remaining ~15% covers buildings, utilities, technology, and transportation. These numbers are public record, audited annually, and overseen by locally elected school board trustees your neighbors voted for.
So, why are programs being cut if money isn't being wasted? Because the costs schools are legally required to cover have been rising far faster than the formula's 3% annual cap allows, and those obligations aren't optional. Special education is mandated by federal law. Buildings must be heated and maintained. Staff must meet accreditation minimums. When a boiler fails, the district pays immediately, whether it has budget room or not. The result is a structural squeeze: fixed obligations growing faster than capped revenue. Programs disappear not because someone made a bad decision, but because legally required costs consumed the available growth before discretionary spending ever got a turn. (See "Why are schools cutting programs when taxes keep rising?" for the main cost drivers.)
Montana pays some of the lowest school staff salaries in the country — which matters here, because low pay isn't a sign of generosity to administration. It's evidence of the same squeeze. Montana's average starting teacher salary was $34,476 in 2024, nearly the lowest of all 50 states.[11] Average teacher pay ranks 42nd nationally at $55,909,[11] nearly $8,000 below the national average.[12] These salary levels make recruiting and retaining teachers genuinely difficult, especially in rural districts competing with employers who offer far more. Nearly a third of first-year teachers leave within their first year.[13]
Giving raises isn't straightforward either. Salaries are negotiated district by district through collective bargaining, based on what the formula allows. When the 3% cap is the ceiling and a significant portion goes to rising utilities, insurance, and special education costs, there is often nothing left to increase pay — even when a district desperately wants to retain someone.
Montana's administrators are hired by locally elected school board trustees. Salaries and budgets are public record. If your district's spending priorities concern you, the school board is the right forum, and those meetings are open to everyone.
Who holds schools accountable for how they spend money?
Multiple layers of accountability already exist, starting at the local level:
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Locally elected school board trustees set budgets, approve expenditures, and hold public meetings. They are elected by community members and can be replaced by them.
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The Montana Board of Public Education sets accreditation standards every school must meet to operate.
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The Office of Public Instruction (OPI) distributes funds, collects financial data from every district, and publishes it publicly through the MAEFAIRS system.
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The Montana Legislative Audit Division conducts independent financial audits of state education programs.
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Federal audit requirements apply to any district receiving federal funds.
Parents can participate directly: attend school board meetings, review your district’s budget online, join the PTA, or run for a board position.
Are Montana schools actually getting results? What do the test scores show?
Yes — and that context matters for this conversation.
How Montana stacks up nationally: According to WalletHub's composite ranking of all 50 states — using NAEP test scores, graduation rates, ACT scores, and student-to-teacher ratios — Montana ranks 19th overall and 12th for education quality. That puts Montana solidly in the upper third of states. On the federally administered NAEP (the national "report card" used to compare states), Montana 4th and 8th graders consistently score near or slightly above the national average in reading and math.
Montana’s graduation rate in 2024 was 85.6%, slightly below the national average of 87.4%.[13] Montana also performs above many states on college enrollment and dual-enrollment participation, with 47% of dual-enrollment students taking at least one CTE course.[16]
What rankings are based on: The most reliable state comparisons use NAEP scores (grades 4 and 8, math and reading), high school graduation rates, and college readiness indicators. Montana's 85.6% graduation rate (2024) sits slightly below the national average of 87.4%, and MAST state assessment scores (43% reading proficiency, 37% math in grades 3–8) reflect post-pandemic declines seen in nearly every state.
The spending-outcomes connection: Spending and school quality track in the same general direction nationally, but the relationship isn't simple — adequate per-pupil spending is a necessary ingredient, not a sufficient one. What's clear in Montana's case: the districts with the fewest resources — particularly those serving American Indian students on reservations, where reading proficiency runs around 20% — show the widest gaps.
What the SFIC found: The SFIC’s Phase I Innovation and Excellence in Education Working Group (IEEWG) report examined this directly. Its conclusion: outcomes and funding are connected, and the formula needs to support the right investments, not simply more money without accountability.[13]
The bottom line: Montana's schools are doing reasonably well despite a funding formula that hasn't kept pace with costs. The question the SFIC is asking is: what could they do with a formula that actually reflects reality?
Buildings and facilities
Why are schools cutting programs when taxes keep rising?
The formula guarantees only so much growth (3%), and costs have outpaced it for years. The gap has been building quietly and is now large enough that cuts are unavoidable in many districts. Here's what's been driving it:
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Electricity rates spiked 28% in a single year (2023)[6] in NorthWestern Energy’s service area, which covers most of the state
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Employee health insurance has become the fastest-growing budget item in many districts — significant enough that the Legislature created a statewide health insurance trust in 2023[17]
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School construction costs have risen more than 60% since 2015, nationally[18]
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Special education costs have grown substantially as the state’s share fell from 82% in 1990 to 33% today[19]
When fixed costs rise and the formula’s cap doesn’t keep pace, districts face a structural deficit. The options are to cut programs, shorten the school day, or return to voters for a levy that may well fail.
How are school buildings funded in Montana?
Montana is one of the only states in the country where the state government provides almost no direct funding for school construction, repairs, or major maintenance.[20] Over the ten years from 2014 to 2023, the state paid for just 1.3% of all school construction and capital outlay — compared to a national average of 21%. Local taxpayers funded 95% of the total.[21]
The average Montana public school building is 53 years old. More than two-thirds were built before 1970.[22] When a roof leaks or a boiler fails, districts must pay immediately, often by redirecting funds originally intended for classrooms and programs.
According to the 2025 Public Education Infrastructure Profile for Montana (21st Century School Fund / National Council on School Facilities), Montana schools face two separate annual shortfalls:
Maintenance and Operations
Annual Shortfall
$103 million/year
$685 per student; districts spend $216M vs. the $319M standard (3% of CRV)
Capital Investment
Annual Shortfall
$158 million/year
$1,052 per student; districts spend $268M vs. the $426M standard (4% of CRV)
Montana communities also paid $53 million in interest on long-term school debt in FY 2023 — $10,425 per student, above the national average of $8,953.[21]
Students, programs and opportunity
Why are art, music, counseling, and CTE always the first things cut?
Those programs sit above the minimum accreditation floor, which means they are not protected by the formula. When budgets fall short, districts reduce what is legally optional before touching what is legally required.
This framing understates what’s actually lost. CTE programs connect students directly to careers in Montana’s core industries. And school counselors are the front line of student mental health support in communities where no other mental health provider is accessible within 30 miles.
Montana’s youth suicide rate is among the highest in the nation.[19] Suicide is the leading cause of preventable death for Montana children ages 10–14.[20] Montana’s state-mandated maximum counselor ratio is 400 students per counselor[21] — 60% above the 250:1 ratio recommended by the American School Counselor Association.[22] Montana’s average across the state runs closer to 300:1, still well above national recommendations.[21]
47% of Montana dual enrollment students are already taking at least one CTE course.[23] The demand is there. Schools can't always afford to meet it..
How is special education funded? Is it enough?
Special education (SPED) is a legal requirement, not an optional program. Montana’s public schools must serve every student with a disability, regardless of cost.
How the costs are currently split:
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Federal IDEA funding covers about 13% of actual costs[15]
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State funding covers about 33% (down from 82% in 1990)[15]
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Local districts absorb the remaining 54%[15]
Much of local share comes from the same budget that is capped at 3% annual growth. The federal government promised to cover 40% of SPED costs when it passed the Individuals with Disabilities Education Act. It has never come close to that figure.[15]
The consequence is that every dollar a district spends filling the SPED gap is a dollar it cannot spend on teachers, counselors, or programs for every other student in the building.
Schools, communities and public education
Who do public schools serve?
Montana’s public schools are legally required to serve every child, including those with disabilities, behavioral or mental health needs, language barriers, gifted learning needs, and poverty-related challenges.
89% of Montana K–12 students attend public schools.[27] For most Montana families, public school isn’t one option among several, it is the only option. Many communities have no private school within 30–60 miles.
As for alternatives:
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Most families can’t homeschool around full-time work schedules. And homeschool programs that rely primarily or partially on digital learning don’t work for most kids. Research from NBER found that moving students from fully in-person instruction to hybrid or virtual learning reduced combined math and English pass rates by 2.9 to 10.3 percentage points, with the largest impacts on younger students and those from lower-income households.[28] For students with learning disabilities who depend on direct instruction and in-person support, digital-only schooling carries particular risks.
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Private schools are not required to serve all students. A private school can decline to admit a child with a disability, a student with behavioral challenges, or a student whose family can’t afford tuition — even after a voucher.
Are schools using public money to push political agendas or teach controversial content?
This concern comes up regularly and it deserves a direct answer.
What state law requires: Montana public schools are legally required to be politically neutral in instruction. Schools cannot promote any political party, ideology, or partisan agenda. All curriculum must align with Board of Public Education academic standards.
What accountability exists: Locally elected school board trustees oversee curriculum and operations, with all meetings open to the public. Parents have the right to review instructional materials and must opt-in for any instruction on gender identity or sexual orientation.
The formula question and the curriculum question are separate. Fixing the formula doesn’t change what schools teach or how they’re governed. It changes whether they have enough money to fulfill their constitutional obligation.
The SFIC process: what's happening right now
What is the SFIC and what does it matter?
The School Funding Interim Commission (SFIC) is a bipartisan legislative committee that studies Montana’s school funding formula between legislative sessions. By law, this review happens every ten years.[8]
This cycle began in June 2025 and will bring recommendations to the 2027 Legislature. The SFIC is examining whether Montana’s formula still meets its constitutional obligation to provide adequate and equitable public schools, and what changes are needed.
All SFIC meetings are public. Any Montanan can submit a written comment. All SFIC meeting materials, reports, and funding proposals from advocacy organizations are published publicly.
What will “fixing the formula” actually mean?
That depends on what the SFIC recommends and what the 2027 Legislature enacts. No final proposal has been made.
The SFIC’s Phase I work (completed January 2026) examined high-performing education systems globally and produced recommendations around aligning funding with educational outcomes, digital learning, and career readiness.[13] Phase II, now underway, focuses directly on the formula and funding structure.
Approaches being studied include: student-centered funding models, adjustments to the inflation cap, increased state support for facilities, and rebalancing the state/local funding split to reduce levy reliance. Each would have different implications for taxpayers and districts.
An important note: the Constitution requires the review, but it does not require any specific reform. The Legislature can implement SFIC recommendations minimally, partially, or not at all. The Governor can veto legislation. Formula changes can also be structured in ways that benefit some districts more than others, or that pair formula fixes with other policy changes. This is why public participation in the SFIC process matters: it shapes which reforms are politically viable and which are not.
