Montana's School Funding Commission Just Finalized Its Recommendations. What Should Districts Do Before January?

After 15 months of study, roadshows, and public comment, Montana's School Funding Interim Commission closed out its work in Helena on August 13, approving a package of recommendations and 10 bill drafts headed to the 2027 Legislature. The drafts would rework how the state funds special education, Indian Education for All, at-risk students, and building renovations. The centerpiece is a plan to simplify the school budget formula itself.

Lawmakers will take up the recommendations when the session convenes in January. That gives Montana district leaders roughly five months to understand what is coming, model the impact locally, and decide whether to engage before the bills are drafted into final form.

Why this matters to every district in the state

Montana's funding formula is not an abstraction. It sets your BASE budget, your maximum general fund budget, the size of the levy you can run, and how much of your budget arrives as state aid versus local property tax. Change the weights inside that formula and you change what every district in Montana can spend next year.

The commission's chair, Rep. David Bedey of Hamilton, has been candid that the package is a partial fix. He described the recommendations as a patchwork and told reporters that <a href="https://www.mtpr.org/montana-news/2026-08-17/schools-commission-wraps-up-work-on-budget-recommendations">"I think we probably have consensus that we need to completely overhaul the funding formula."</a> Speaking with MTN before the final vote, he framed the commission's output as a foundation for deeper analysis rather than a finished product.

Superintendent of Public Instruction Susie Hedalen has echoed the complexity concern, arguing that a simpler system would let instructional leaders spend less time on paperwork and more time with students, families, and staff.

Not everyone on the commission signed off happily. Three Republican members published a guest opinion in the Daily Inter Lake the weekend before the final report was released, arguing the commission had fallen short of the tasks assigned to it under House Bill 153 and describing the approved changes as improvements at the margins. Expect that disagreement to resurface in committee hearings in January.

What is actually in the package

The final report is being published ahead of the statutory deadline in September, and the bill drafts are still in draft form. Based on the commission's own materials and its members' public updates through the summer, the recommendations cluster into a few areas:

Special education. Two drafts would raise the special education allowable cost payment to better reflect inflation and the actual growth in students receiving services, and would create an extraordinary cost fund so that a single high-need student cannot destabilize a small district's budget.

At-risk students. This was the largest single item on the commission's August agenda. A draft would tie the at-risk payment more closely to actual family income and improve how those students are counted, so the payment keeps pace without periodic catch-up appropriations that land on local property taxpayers.

Indian Education for All and building renovation aid. Both funding models are targeted for revision in the approved drafts.

Formula simplification. The commission's headline recommendation is structural: reduce the complexity of the budget formula and the fund structure districts have to work within.

A shorter review cycle. Montana currently studies its school funding formula once a decade. One draft would move that review to a four-to-six-year cycle so the state is not waiting ten years to correct known problems.

For context on the pressure behind all of this, an analysis presented to the commission in February by the Montana School Boards Association found that levy passage rates, once above 90 percent, have dropped sharply, even as fewer districts put requests on the ballot. Districts are leaning on a formula that many say has not kept up, while the local backstop for that formula gets harder to use.

What this means for your FY27 and FY28 planning

If you are a superintendent, business manager, or board chair, the practical implication is that your out-year budget assumptions are now uncertain in a specific, modelable way. A few things worth doing now:

Pull the drafts and read the weights. Focus first on the special education and at-risk provisions. Those are the two areas most likely to change the dollar amount your district receives, and they affect small and rural districts very differently than they affect Billings or Missoula.
Model two or three scenarios, not one. Build a version of your FY28 general fund under current law, under the commission's package as drafted, and under a scenario where the package passes partially. Boards make better decisions when they can see the spread.
Identify what breaks in each scenario. Staffing is the obvious one. Multi-year commitments are the quiet one, including technology refresh cycles, connectivity contracts, security camera and access control projects, and any capital work tied to building reserve or major maintenance aid.
Decide whether you are going to testify. Committee hearings in January move fast. Districts that show up with a specific number from a specific district are far more persuasive than districts that show up with a position.
Get your board aligned before the session, not during it. A one-page brief in September is worth more than an emergency discussion in February.

The technology line item is more exposed than it looks

Districts tend to treat technology as a flexible cost, which makes it an easy target when the formula shifts. In practice it is one of the least flexible parts of a K-12 budget. Devices age on a fixed cycle whether the funding arrives or not. Cybersecurity insurance carriers now require controls that cost real money. E-Rate covers connectivity and internal connections but not staffing, endpoints, or most of the equipment districts actually worry about, and it operates on its own filing calendar that does not wait for the Legislature.

If a restructured formula changes your general fund by even a few percentage points, the question is not whether you can defer a refresh for a year. It is what that deferral does to your risk profile, your support load, and your total cost over the following three years. That is a modelable question, and it is worth answering before someone asks it in a board meeting.

How K12 Montana can help

K12 Montana works exclusively with Montana school districts and nonprofits, so the funding formula is not background noise to us. We can help your team:

Model what the proposed formula changes would mean for your technology and infrastructure budget across FY27 and FY28
Build the multi-year device, network, and security refresh picture your board needs to see alongside the funding scenarios
Align E-Rate filings and vendor commitments so a legislative outcome does not strand a project mid-cycle
Prepare the technology portion of board communication or legislative testimony with real numbers from your district

If your leadership team is starting this work now, get in touch. The window to influence these bills closes when the gavel drops in January.

Sources

Montana Public Radio, "Schools commission wraps up work on budget recommendations" (Aug. 17, 2026)
MTN News / KBZK, "State commission wrapping up report on Montana public school funding" (Aug. 12, 2026)
Montana Free Press, "Montana schools are struggling to pass funding levies" (Feb. 12, 2026)
Flathead Beacon, "Education advocates pitch altered school funding formula" (Apr. 10, 2026)
Rep. Brad Barker, "Decision Time for School Funding", Montana House District 55 Update (Aug. 2026)
Daily Inter Lake, "Guest opinion: School Funding Commission falls short" (Aug. 16, 2026)
Montana State Legislature, School Funding Interim Commission materials, 2025-2026 interim