The Martz Education Compromise

Remarks of Governor Judy Martz
The Martz Education Compromise
“Trust Education”
March 14, 2001
Governor’s Reception Room/ State Capitol

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When I asked the people of Montana to place their trust in me, I made the commitment that I would always work to protect children and grandchildren by making certain that our schools remain world-class institutions and we would work to build a better economic future with better jobs and stronger families. I remain firmly committed to those principles.

I also remain firmly committed to keeping my promise not to ask Montanans to pay any more taxes than they already do.

That is why, in response to the funding challenges facing our schools brought about by a tight budget, declining enrollments and increasing energy costs, I supported a proposal that would have invested $40 million from the coal trust fund for our schools over the next biennium. Some people thought this was a political move. They are wrong. I believe it offered a short-term solution until our administration had the time to recommend to the next legislature reforms to our school funding mechanism to make it fairer, while also promoting accountability in our schools.

We will get that job done. But in the meantime, we would like to provide more funding for schools, in addition to the more than $13 million increase I have provided in my executive budget.

So, today, because we are all committed to putting our children first, I am proposing a compromise that allows Democrats and our administration to adhere to our principles.

I thank the Democratic leadership for respecting my pledge against tax increases. For me, it is a bedrock principle of this administration. I want the Democrats to know that I respect their bedrock principle not to utilize monies already invested in the coal tax trust fund.

I propose a compromise to invest the coal tax revenue that we will receive over the next two years in education, rather than placing it in the permanent trust fund. Over the next biennium Montana will collect approximately $34 million in coal tax revenues. We are obligated to keep $600,000 per year for debt service on bonds.

My proposal then would invest $32 million dollars in public education before those revenues enter the coal tax trust fund. I will allocate $21.8 million to elementary and secondary education, of which $15.8 million will into the current funding formula for school entitlements and the remaining $6 million will go to district block grants. This funding will be in addition to the more than $13 million I already have allocated in my executive budget.

The other $10 million will be allocated to the university system for equipment, deferred maintenance, the increasing energy costs and 2-year college new program development. My proposal will cost the general fund roughly $2 million over the biennium.

My compromise proposal will require a ¾ vote of the House and Senate.

My proposal will not touch the trust fund -- it will continue to grow with interest. Over $600 million dollars of invested money in the trust will continue to generate millions of dollars of interest that will also remain in the fund. My proposal will not raise taxes. Thus, we all stand firm on our principles and we meet in the middle for the best interest of our children.

In the coming days, I am going to ask Montanans of all walks of life to support my proposal and to “Trust Education.” I am contacting parents, teachers, administrators and concerned citizens all across this state to get their support. I will travel to key legislative districts to explain my compromise solution that will invest over $32 million more dollars in our children over the next 2 years.

This short-term solution will work. It will give my administration the necessary time to work with the leaders of both parties who are just as committed as I am to reforming our school funding mechanism, while meeting our obligations today.

If we are truly interested in improving the quality of the education we provide our children we must put our money where our mouths are. We must set aside partisan rhetoric and do what is right for every student across Montana.

Thank you for being here today -- now let’s work together for education.

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The Martz Education Compromise “Trust Education”

The Proposal

In the 2003 biennium, $33.8 million of coal tax revenue is currently scheduled to flow into the coal trust. After the bonding requirements are subtracted, nearly $33 million will be deposited into the TSEP and Water trusts within the trust. Rather, we propose utilizing that revenue as a one-time source for education funding.

The allocation of the revenue will be:

$15.8 million for school entitlements
$6 - $7 million for school district block grants
$10 million to the Montana University System

K- 12 School Districts

Move the 3% increase currently contemplated in HB 121 plus special education for FY 2003 into FY 2002. Continue this same level for FY 03.

Add the remaining $6-$7 million to the pool of money available for block grants to districts distributed based on AND of the district and deposited in the miscellaneous programs fund.

Montana University System

Provide $10.0 million on the biennium for equipment, deferred maintenance, increasing electrical costs and 2-year college new program development. The MUS requested $1.4 million in new IT equipment. The legislative auditor has documented at least $89 million of deferred maintenance at the MUS. The anticipated electricity cost spike is $3.3 million. The Governor’s budget requested $.8 million for new 2-year program development to address specific economic development issues and the dental hygiene program at Great Falls.