Montana Considers School Choice Bill

Montana Considers School Choice Bill
April 1, 2009

Montana families may soon have more than just government-mandated public schools to choose from.

On February 5 the state Senate Tax Committee heard SB 342, sponsored by state Sen. Jeff Essman (R-Billings). At press time the bill was pending another hearing in April.

If signed into law, the bill would allow individuals and corporations to receive credit on their state income taxes for donations made to scholarship-granting organizations that help low-income and foster children attend the public or private school of their family’s choice.

Under the proposed legislation, the scholarship organizations must be nonprofit and allocate 90 percent of their revenue to scholarships. The average scholarship granted would be $2,500 or the price of tuition.

SB 342 caps the total tax credit at $10.3 million per year.

Voters Like It

A poll released in February 2009 by the Friedman Foundation for Educational Choice, a national advocacy group based in Indianapolis, found 64 percent of Montana residents support the idea of a tax credit scholarship program.

Essman said students would be able to use the scholarship for transportation fees if they choose another public school. This is especially important in rural Montana, given the vast distance between schools.

The Montana Educators Association and Montana Federation for Teachers are lobbying against the bill.

The unions note Article 10, Section 6 of the state constitution prohibits the state from making direct or indirect payments to religious schools, and they say that means tax credit scholarships are unconstitutional.

The measure’s proponents counter the scholarships would be given directly to students, not to the schools.

Net Gains for Districts

The unions say tax credit scholarships hurt public school funding, but that is unlikely to be true.

According to Education Week’s most recent figures on state spending, Montana spends $11,660 per pupil per year. Friedman Foundation Senior Fellow Brian Gottlob calculates that for every student who uses a tax credit scholarship to leave his or her public school, the public school would gain $2,756 to spend on those who stay.

Moreover, because Montana education finance laws allow districts to report combined enrollment figures over the two most recent years, a decline in student enrollment would not affect school funding until two years later.


Evelyn B. Stacey (estacey@pacificresearch.org) is a policy fellow for education studies at the Pacific Research Institute, a free-market think tank in Sacramento.

For more information ...

Montana SB 342: http://data.opi.mt.gov/bills/2009/billhtml/SB0342.htm

“The Fiscal Impact of Tax-Credit Scholarships in Montana,” by Brian J. Gottlob, Friedman Foundation for Educational Choice, February 5, 2009: http://www.friedmanfoundation.org/friedman/research/Show
ResearchItem.do?id=10105

“Quality Counts 2009,” Education Week: http://www.edweek.org/apps/qc2009/state_compare.html