Wonky Word Wednesdays: Concentric Circles

Sep 24, 2014

Today is the last in our series of back-to-school wonky words. We really geeked out last week with GTB, but hold onto your hats, this week we bring you concentric circles. This idea came to us from Kristen Cates of the Great Falls Tribune! The 2013 Legislature passed Senate Bill 175 (SB175) which added a new term to school funding - concentric circles. Concentric circles are designed to share oil and natural gas revenue among districts that are in the areas impacted by development but without the originating source of revenues from oil and gas in their districts. An example is that exploration may be happening in Sidney, but people nearby in Richey are seeing increased enrollment and changes to school population. Here is how it works: Starting in fiscal year 2014, school districts with oil and gas development will get to keep up to 130% of their maximum general fund budgets. School districts with a maximum general fund budget of less than $1.5 million may retain those revenues up to 150% in FY 2014-2016. However, for those districts that are seeing big increases in enrollment, there is an exception and they are allowed to retain more of those funds. After a school district reaches its cap, remaining revenues flow to a neighboring district in this order:
  1. Any school district that is part of the same unified school system with the district from which the revenue originates (e.g. Sidney Elementary sharing with Sidney High)
  2. Any school district that is immediately adjacent to the district from which the revenue originates
  3. Any school district that is within the same county as the district from which the revenue originates
  4. Any school district that is in an immediately adjacent county from the district in which the revenue originates
  5. If anything is left (not applicable currently), 70% to the guarantee account, 5% to the state school oil and gas account and 25% to the county school oil and natural gas impact fund.
You can see the current distribution for concentric circles here. It is important to note that this was a complicated issue during the last session. Adequately funding education across the state is important to our economy, but is difficult with the range of schools we have in Montana. Districts with lower taxable values struggle for revenue, and districts that receive oil and gas revenues must deal with additional pressures from the oil boom. I am sure this will be part of an ongoing discussion about education as the state continues to look at the best ways to provide a quality and equitable education to the all students of this state. I hope you enjoyed our back-to-school series. Soon we start on a series on property taxes! Aren’t you excited?
Montana Budget & Policy Center

Shaping policy for a stronger Montana.

MBPC is a nonprofit organization focused on providing credible and timely research and analysis on budget, tax, and economic issues that impact low- and moderate-income Montana families.