School money must be shared

The Legislature and Gov. Brian Schweitzer are justified and farsighted in figuring out how oil and gas tax revenues collected by Eastern Montana school districts can be equalized with other districts in the state.

It’s important for the state to be ahead of the curve, after all, if the Bakken oil field is developed in Montana to the extent that it has been in North Dakota. As it is now, only a handful of school districts have amassed huge reserves, mostly from oil and gas tax revenue. That could change if an oil boom spreads, which could happen if the Legislature takes action to cut workers’-compensation rates and to pass other legislation that would make it more economically viable for companies to drill in Montana.

But even now, the money at stake is substantial.Schweitzer is backing a bill that would tap an additional $36 million annually to be distributed to schools statewide. He rightly reasons that revenue from natural resources in other parts of the state, such as timber and state cabin-site rentals, goes to school trust funds that support schools across the state.

Schools in Eastern Montana should not be able to hoard reserves far in excess of what they need. But it’s a tricky issue. Currently, only about 10 out of 120 school districts have reserves that could be considered excessive, according to Sen. Llew Jones, R-Conrad.

And communities where an oil boom occurs are faced with widespread impacts. Most notably, school facilities, staffs and curriculums often must be retooled to accommodate a new population that will stay only as long as the oil is flowing.This is a costly challenge that oil revenue reserves can help address. So Jones is proposing a more targeted, negotiated approach that would allow school districts to continue collecting reserves up to a certain threshold, but with revenue beyond that mark being redistributed to schools statewide.

Some districts have been able to make impact investments and continue piling up hefty reserves.According to Jones, the school district in the town of Baker has reserves of about $42 million. He estimates that about 70 percent of that money came from oil and gas tax revenue, and that the reserve exceeds the district’s operating costs by several times.

Meanwhile, school districts in Flathead County currently face combined budget shortfalls of about $2 million, and districts in many other parts of the state are faced with chronic shortfalls. There needs to be a thoughtful, balanced remedy to this disparity before it becomes bigger than it is now, and we hope the Legislature and the governor can deliver one.