Superintendent Arntzen pitches a revenue redirect

Over the past month, state education officials have started talking about how Montana should utilize funding generated by educator licensing fees. The conversation is already primed to generate a legislative request from the Office of Public Instruction ahead of the 2023 legislative session.

The discussion initially surfaced during a June meeting of the Legislature’s Education Interim Budget Committee. At that meeting, OPI Chief Financial Officer Jay Phillips told lawmakers the agency was drafting a request to redirect licensing revenue to fund ongoing operation and maintenance of the state’s new educator licensing system, which went live June 1. Since 1987, Montana law has directed that revenue to the Board of Public Education and to a board-affiliated advisory council to fund research and operations, including legal costs stemming from the resolution of individual licensing disputes.

Phillips presented the request as a logical move toward supporting the new TeachMontana licensing system. OPI paid for development and implementation of the system using federal COVID-19 relief funds, but as Phillips told lawmakers last month, those funds will expire in fall 2024, requiring the agency to find new money to cover roughly $200,000 in annual maintenance expenses. According to a report compiled by the Legislative Fiscal Division, licensing fees typically generate about $160,000 per year, and Phillips assured the budget committee that OPI could cover the remainder with existing General Fund dollars.

In response to emailed questions this week, OPI spokesperson Brian O’Leary wrote that the agency is “in the process of drafting legislation which will be provided to the Legislative Services Division,” and that, once completed, the draft bill will be provided to the Education Interim Budget Committee for consideration.

The fee that Montana charges educators to obtain or renew their certification is the only professional fee that’s set and allocated within state law, and it’s remained fixed at $6 since legislators last raised it in 1991. A third of the money generated by the fee goes to the Board of Public Education to fund research that informs its decisions governing the K-12 education system. The remaining two-thirds go toward basic operations of the Certification Standards and Practices Advisory Council, a seven-member group that supports the board’s work on training, licensing and ethical standards for teachers, school administrators and other education professionals. The two bodies share a staff of two full-time employees and one part-time employee — one of the smallest agency staffs in state government — and operate on an annual budget of roughly $400,000, about 40% of which comes from educator licensing fees.

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The prospect of redirecting those fees has generated polite pushback from the Board of Public Education, which broached the subject with state Superintendent Elsie Arntzen during a meeting last week. Arntzen had submitted the proposal — which appeared to indicate the board’s support — along with other agenda materials, and explained to the board her belief that “if we’re going to maintain the system, that quite possibly it be user-based.” The board’s executive director, McCall Flynn, emphasized to Arntzen that neither Flynn nor the board had taken a position on redirecting the funds, and board Chair Tammy Lacey recommended that OPI remove language from its proposal that indicated the board’s support before passing it on to lawmakers.

Speaking with Montana Free Press this week, Lacey said she was “a little surprised” that the request came up in the June budget committee meeting, adding that it would have been less surprising if the board had received “just a heads-up” about OPI’s desired direction. The board had already been exploring its own legislative proposal to address ongoing audit issues related to how state law splits fee revenue between the board and the advisory council. Knowing earlier that OPI was considering a separate request “would have been nice,” Lacey said, but she said she intends to continue working with the agency to ensure that it, the board and the advisory council all have adequate and stable funding.

“That’s what’s really best for the state of Montana and for our students, and we’ll want to try to make sure that that happens,” she said.

Lacey added that if the revenue the board currently receives from licensing fees were replaced with General Fund dollars allocated by the Legislature, as OPI proposes, it could have an impact on funding stability. She acknowledged that there is already some inherent volatility in fee revenues. Findings from the Legislative Fiscal Division show that fee collections declined slightly between 2016 and 2021, a dip Flynn said was likely related to the five-year renewal cycle for educator licenses and to the effects of the COVID-19 pandemic. But Lacey said any fluctuations in fee revenue are small compared to the volatility associated with potential future budget shortfalls in the Legislature.

“Agencies are asked to make across-the-board cuts to their budgets when there’s a state General Fund shortfall, and that could be devastating to a small agency like the Board of Public Ed,” Lacey said. “Or there could just be, sometime, a lack of appetite in funding anything that has to do with public education, so there could be specific cuts that would be made.”

The Legislative Fiscal Division’s report also indicates that the board’s legal costs have more than doubled since 2014. Flynn said those costs are primarily related to the board’s role in resolving individual licensing disputes, one of the myriad ways it shares responsibility for licensing with OPI. Licensing issues account for between 40% and 60% of the board’s overall expenses, and Flynn said legal costs incurred in 2022 are already set to blow previous years “out of the water.”

“We are easily over 30 grand this year,” she said. “And so we are asking for additional funding in this next legislative session.”

Rep. David Bedey, the Republican from Hamilton who chairs the Education Interim Budget Committee, said he understands the concern about potential budgetary consequences stemming from redirected revenue, but doesn’t share the alarm. Repeating his own statement from the June meeting, he referred to the discussion as a “zero-sum game,” noting that lawmakers will ultimately have to tap the General Fund regardless, either to support OPI’s new licensing system or to backfill redirected revenue at the Board of Public Education.

For Bedey, the issue has already opened up a broader conversation about the future of educator licensing fees. As part of its examination, the Legislative Fiscal Division looked into how much Montana would have to raise its fees to fully sustain annual maintenance of OPI’s new licensing system, as well as how much they would have to increase to provide a whole and independent funding source for the Board of Public Education. In his email, OPI’s O’Leary restated Arntzen’s staunch opposition to increasing the fees. But Bedey anticipates that prospect will be a part of the debate as the 2023 session approaches, and a big reason the debate will continue to garner increased attention. Bedey said it comes down to the question of whether Montana should treat teachers the same as other professionals such as lawyers, accountants, architects and engineers, whose certification fees support their own licensing systems.

“I think a lot of entities will have and should have a strong interest in this,” Bedey said, “because at the end of the day, this is about the status of the teaching profession, making sure that that status is recognized and that the teaching profession truly is treated as and operates like the other professions that we have.”