Commission wrestles with Montana's formula design and whether "decrement" and entitlements should change

In a daylong session on the state's school funding formula, outside consultants and legislative staff walked commissioners through how Montana's per-A/B and basic-entitlement design differs from a more traditional foundation formula and what would happen if key pieces were removed.

The commission's consultant presenters said most states calculate a single foundation (the per-student base) and then adjust that amount with student and district characteristics such as special education, economically disadvantaged students and district size. "We think of first the identification of how much is needed and then second who pays for it," a presenter explained while outlining national practice.

Consultants and staff pointed out that Montana distributes funding through several interlaced pieces: categorical programs (for things like Indian education), a per-A/B entitlement, and a basic-entitlement floor with increments for multiple budget units. Those increments, together with the per-A/B decrement, create a marked pro-small-district floor and higher per-pupil funding for certain small, isolated budget units.

Legislative staff modeled eliminating the per-A/B decrement and the basic-entitlement increments together. Using FY26 maximum-budget figures, the exercise showed a net increase to statewide maximum funding of about $10.8 million and to the base budget limit of roughly $8.6 million. "Almost every district would see a base-budget increase if both the increment and decrement were removed," staff said, while noting two very small districts would register minimal declines (about $260 and $144 in the example).

Commissioners pressed on distributional effects. Several members emphasized that while the largest districts would see the biggest dollar increases under the modeled change, the majority of districts (265 of roughly 389) would experience very small base-budget changes (under $3,000). "Removing these elements simplifies the picture but shifts dollars toward larger enrollment centers," one commissioner observed. Others warned that changing entrenched elements such as the decrement could alter incentives for small or geographically isolated schools and for local levies.

The presenters warned commissioners that any funding redesign entails trade-offs: removing the decrement and increments could make the formula easier to explain and move more money to per-A/B funding, but it would also alter how the system compensates for grade-span differences, small-school fixed costs and the existing 'floor' funding for some remote budget units. The consultants recommended commissioners weigh simplification against policy goals such as preserving stable funding for isolated communities and protecting equity across different types of districts.

The commission said staff would refine the models and present follow-up analyses showing which students and geographies would gain or lose under specific formula changes. The body plans additional briefings before any legislative recommendations are finalized.