Chairman and superintendent explain new school’s funding, rationale

Last Tuesday the Montana Office of Public Instruction issued a letter to Madison County deputy attorney Chris McConnell concerning the funding of the new school building in Ennis and the Ennis School District’s appropriation of funds for the project.

The letter was a response to a request made by McConnell, on behalf of Madison County Treasurer Shelly Burke, that the OPI do a special audit of Ennis School District’s budget, said Dennis Parman, Montana Deputy School Superintendent and author of the letter.

(To read the letter from Parman, click here.)

The thrust of Parman’s letter to McConnell was really to explain that a special audit wasn’t warranted and the school district was legal in their funding plan for the new building. However, the letter also cautioned the school district to continue to communicate with constituents about their plans for the use of the building and funding of new programs, Parman said.

“To make sure those constituents understand their decisions, the rationale behind those decisions, the hope and purpose of what those decisions were about,” he said. “It really is the responsibility of the trustees to do more than say we did what we were supposed to do.”

The Ennis School District began building a new grade school and junior high this summer. The roughly $9 million, two-year project is going to be funded completely by money the school district has been able to save during the last several years. Besides serving as a school, a big portion of the new building is going to also serve as an adult education and community center, said superintendent Doug Walsh.

About half of the money to fund the building comes from the district’s adult education fund.

This has raised questions among citizens and other county officials.

Shelly Burke is the Madison County Treasurer and about three years ago she became concerned with how much money the Ennis School District was putting into their adult education fund.

The adult education fund is supposed to be used for adult education, Burke said.

“They had millions of dollars in that fund, so it just didn’t make sense to me why they were doing that,” she said.

Her concern led her to contact the Madison County Attorney’s office to ask them to inquire with OPI about the fund.

“It’s my job as an elected official that if I see something I don’t think is right to question it,” Burke said.

The rationale behind the funding strategy for the new school was pretty logical, said Ennis School Board chairman Marc Glines.

The school board has known for years that something needed to be done about the old elementary school. By about 2004 the board knew something was going to have to be done sooner than later, Glines said.

The school was built prior to the 1959 earthquake, which damaged several buildings around the area. It became clear from a couple of structural analysis, that the building needed to either be fixed or be replaced, he said.

For a while the board thought the best place to build a new school was on property the school district bought just north of town, Walsh said.

However, the public didn’t seem interested in having an elementary school outside of town, so then the school board looked at the options of either tearing down the old school and building a new one in its place or just remodeling the existing building, he said.

This discussion took several years and many public meetings, Walsh said.

The public meetings began in July of 2007 and continued into this year, he said. They involved facilitated meetings with the public and the school district’s architects, as well as Walsh going to civic groups to explain the plans and options.

While the school board was deliberating on what to do with the building, the Ennis School District found itself in a unique budget situation.

Beginning about six years ago, property values in the Big Sky area, which is in the Ennis School District, began to increase dramatically.

Property values in Big Sky had already been on the rise, but the housing boom had a large impact on the area and the Ennis School District, along with Madison County, stood to gain from a property tax standpoint.

In 2004, the taxable valuation in the Ennis School District was about $24.5 million. This year it is $60.2 million. What this increase meant is the school district didn’t have to raise mill levies to see a dramatic increase in tax revenue.

In Montana, school funding is a very complex issue. But basically each district has 10 budgeted funds. These are funds that are supported in part by local mill levies.

For several years, the Ennis School Board tried to keep the number of mills they levied at about 92.2 mills.

In every school district’s budget, the general fund level is set by the state and is, in part, determined by your school attendance, said Denise Ulberg, budget specialist with OPI in Helena.

“The amount they can adopt for a budget in the general fund is limited by the state,” Ulberg said.

When the amount of property taxes being received by the school district began to increase, the school board decreased the number of mills in the general fund and redistributed them elsewhere in the budget, primarily to the adult education fund, Walsh explained.

In the budget for 2004/2005 the school district’s budget had 41.97 mills in the general fund and 6.99 mills in the adult education fund.

The following year, the budget had 35.99 mills in the general fund and 12 in the adult education fund.

The mill amounts in the adult education fund peaked with the 2008/2009 budget with 36.37 mills. That same year the budget had 22.54 mills in the general fund and 24.39 mills in the transportation fund. Those three funds were by far the largest in the budget.

Another aspect of both the transportation and adult education funds within the school district’s budget is both are supported by discretionary levies. This means the school board can raise the levy amounts within the two funds without going to the voters.

By keeping the total mills in the budget at about 92.2, the school district was able to put money away to address the issues with the elementary and junior high school buildings, Walsh said.

In fact, because the property values in Big Sky were increasing so dramatically, taxpayers in Ennis actually saw a decrease in their school taxes, he said.

In 2001, less than half of the tax revenue in the Ennis School District came from the Big Sky area. Now more than 75 percent of the tax revenue comes from the Big Sky area.

This is not only a benefit to the school district, Walsh said, but to the entire county.

So while the school district was trying to figure out how to proceed with the old elementary and junior high, they found themselves with a budget more than flush with money.

The school board never set out to intentionally save enough money to build the new school without passing a bond or levy, Glines said.

“We never knew for sure if we weren’t going to have to float a bond,” he said.

The way the school board saw it, keeping the mill amounts stable through the housing boom kept the board’s option open as to how to approach a new building.

In the meantime, the school board continued to hear from the public that they wanted any new school or remodel project to be used as a community center, Glines said.

“The number one thing they wanted was a community facility,” he said.

Along with that came adult education, Glines said.

The OPI letter clearly states the Ennis School District, because of its use of adult education funds in the building project, has an obligation to expand their adult education program with the completion of the new building.

“Further, it is the understanding of OPI that Ennis Public Schools has not had an adult education program of substance in the past which has contributed to the concerns surrounding the unusual level of taxes levied for building purposes for pending or proposed programming,” wrote Parman. “If, in the future, the district does not hold to its intended plan to provide expanded adult education opportunities to the community, as provided by statute, in this new facility, there will be an issue of significant concern at that time.”

Expanding the adult education program is a high priority for both Walsh and Glines.

“We’re developing curriculum right now,” Walsh said.

The adult education program expansion would likely involve hiring another employee, Glines said.

“I would like to see us at least have a part-time adult education coordinator,” he said.

In the coming year Walsh and the school board are planning to meet with the community and find out what the needs are for adult education, Glines said.

“We’ll try to develop what’s wanted and what’s needed and go from there,” he said. “We should have the premiere adult education program.”

The way it stands now, the school is constantly used by community groups, Walsh said. It is used for things like emergency responder trainings, community meetings as well as classes.

“We have a ton of things that happen in this school each year and folks know that,” he said.

Currently, the school district’s budget has about $4.9 million in the adult education fund. The majority of that money is going toward the new school building. The district is also planning on spending some money from the transportation fund, which has about $2.1 million, on the project for things like parking lots. Other money from the project will come from the flexibility fund, which contains about $2.5 million, Walsh said.

The building reserve fund, which is funded by a voter-approved levy that passed this May, is going to be used mainly for maintenance, he said.

This year’s budget is about $16.7 million, but the amount of mills levied in the budget has dropped to 74.21 mills. This amount will decrease in the coming years.

“As the building is finished we’re going to see a relief in our taxes,” Walsh said.

Glines doesn’t take Parman’s letter as an admonishment or a letter of praise. It simply says that the school district didn’t do anything wrong in how they funded the new building.

“We’ve never tried to hide anything,” he said. “We’ve had many meetings trying to include the public.”

However, he does think the board needs to do more to communicate with the public about what is happening with the school, particularly the positive things.

“There’s so many good things that have gone on and we need to expose the great things that have happened in the Ennis School District over the last 10 to 15 years,” Glines said.