School officials from across eastern, rural Montana on Wednesday blasted Gov. Brian Schweitzer’s school-funding plan as “divisive” and unfair, saying its multimillion-dollar transfer of local oil-and-gas revenue to the state pits school district against school district over money.

“Right now we have schools turning against each other,” said Fred Hofman, principal at Poplar High School in northeastern Montana and a school board member in Culbertson. “It’s embarrassing. It’s hurtful. I’m ashamed at the schools that have sold out.

“You say this bill is about kids? Well, it is. A lot of kids are going to be hurt by this bill. I’m very upset with my governor right now.”

Hofman and dozens of other school officials from oil-and-gas-producing counties drove hundreds of miles to Helena testify before the House Education Committee, which held a three-hour hearing on House Bill 136, the governor’s school-funding plan.

The bill contains multiple elements to finance the state portion of public-school funding for the next two years, including a slight increase in state aid.

But the one aspect of the bill drawing the attention Wednesday was its two-year transfer to the state of $72 million in oil-and-gas revenue that otherwise would go to 130 school districts in petroleum-producing areas of Montana.

Those school districts can use the money to offset impacts from oil-and-gas development, such as increased enrollment or strains on their infrastructure. But they also use the money to offset local property taxes and sometimes build reserve funds that climb into the millions of dollars.

Under HB136, the $72 million would be redistributed to school districts all across the state, as a portion of their state aid.

Dan Villa, Schweitzer’s education policy adviser, said many districts receiving the oil-and-gas money have been underestimating their share of those funds in their budget, but that they get to keep any extra money.

“This chart clearly shows that the current funding mechanism does not equitably distribute state revenues,” he said, distributing a sheet showing which districts received the money. “To ensure that Montanans all over the state have equal access to resources, we should pass this bill.”

School officials from Billings and Bozeman testified in favor of HB136, saying they sympathized with the oil-and-gas school districts, but that the money should be distributed more widely.

Connie Wardell, a school trustee from Billings, also said that some families of oil-patch workers live in Billings while their bread-winner is living and working in far eastern Montana.

“I believe that it is fair that oil and gas resources, as well as the revenue from other resources, be used for all of the students in Montana,” she said. “We have a lot of those kids in our schools. We’re not getting any of the money.”

Yet school officials from Cut Bank to Sidney defended their need for and use of the oil-and-gas funds, and said that taking away 90 percent of that money — as HB136 does — will lead to huge property-tax increases for taxpayers in their districts.

“The tax consequences in my school district will be an increase of 224 mills,” said Donni Linn, a rancher from Saco, whose school district levies no local property-tax mills. “On my personal place, I already pay about $25,000 a year in property taxes. This will virtually double my property taxes. Talk about a job-killing thing for our area.”

Hofman said in Poplar, which is on the Fort Peck Indian Reservation, taking away its relatively small share of oil-and-gas money would mean budget cuts for the school. It cannot raise enough taxes to make up the difference, because much of its land on the reservation is nontaxable, he said.

Todd Hermanson, a school trustee in Sidney, said the district has used its oil-and-gas money primarily to fix infrastructure and equipment that needed repairs.

“Every dollar that we have spent in Sidney Public Schools since I’ve been a trustee has been well-spent,” he said. “Our school system is the center of the community out there. We don’t have a big university.”

Yet Rep. Sue Malek, D-Missoula, said she was “troubled” by how Sidney had underestimated its oil-and-gas revenue and received millions of extra dollars over the past several years.

“You’ve got a lot of money, and I feel cheated, living in a part of the state that is having difficulty with closing our schools,” she said.

Sidney Schools Superintendent Dan Farr said the district had faced cuts itself in the late 1990s, when the oil industry was declining, so he’s familiar with having to cut budgets. Like other officials, he said the money was being put to good use, on infrastructure needs.

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When western Montana was benefiting from the timber and mining industry did those counties shift any of their money over towards the eastern part of the state? Nope. But somehow western Montana officials expect to be bailed out when things start looking good in the oil patch. Montana's border does not end at Billings. There are stuggling communities throughout our state. So while western counties deal with budget cuts, eastern counties deal with: deteriorating infrastructure, a limited pool of qualified educators, housing shortages, not to mention an increased demand for already stressed natural resources (rural water for example). Oil revenues are used to address any one of those issues thus helping eastern Montana survive!

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