A fear among many in the Victor Public School District came true this year after the state approved a tax change which led to an increase on local residents – to the tune of $300,000 — to pay tuition for students who left to attend school in other districts.
But recent changes in property taxes could have the potential to soften the blow this year. And next year those tuition impacts will largely disappear after a countywide system is implemented.
And not all small districts suffered under the tuition bill change, with a few bringing in more students than they lost. But Victor lost the most students of any school in the Bitterroot Valley, while also having the lowest total enrollment.
Victor has about 240 students total, and Superintendent Scott Stiegler said it’s hard to compete with bigger schools, especially High Schools, and they’re paying the price for it.
“Hopefully, this year’s tuition fund increase is an anomaly that was fixed by the 2025 legislature and doesn’t persist down the road,” said Stiegler.
Why do students leave?
This is the first year Montana has collected data around students leaving their local school districts. But the reasons behind those decisions are not currently being evaluated as part of that data gathering process. Sen. Sue Vinton, R-Billings, would like to see analysis moving forward.
“I do find it very interesting to see some very large disparities in numbers,” she said during the Education Interim Committee meeting earlier this month.
OPI’s School Finance Manager Paul Taylor said going forward the department can use the data it’s already collected for analysis.
For now, he said, the state can only speculate on what that answer might be – be it logistics of parents working in another district or a smaller district neighboring a bigger district with different sports and educational opportunities, among other reasons.
In Victor, Stiegler said, families choose to leave for a variety of reasons but, “their decision often comes down to course variety and programming at the high school level.”
“Smaller schools are not usually able to offer the variety of courses and programs that larger schools do, and most of the time the small schools struggle to compete with the big schools,” Stiegler said.
“Families choose small schools because of the atmosphere of the small school setting, like a lower student-to-staff ratio,” he said. “Small schools must be creative to offer programs and still live within their means.”
Stiegler said Victor wants to compete, and wants the kids in the district to attend school in Victor.
“If our community can get behind this and support developing and building the programs that suit the needs of our community, we can keep our students right here in Victor,” he said. “We can do this while retaining the small-school feeling that so many people desire, without becoming a big school.”
Different impacts at different schools
At least one smaller school district benefitted from the tuition bill change: the Target Range School District in Missoula.
Target Range, a K-8 school just a few blocks west of Missoula’s city limits, has a total of 539 students– 207 of whom are from out of district. That doesn’t mean the school gets that money to spend, rather the Missoula County residents as part of that tax base will get relief for paying for those students.
Business Manager for Target Range Robbi Ludemann said the district will receive nearly $360,000 in tuition revenue for students attending other districts and will be paying nearly $11,000 to other districts, where Target Range resident students are attending.
“That’s going to be a huge savings to our taxpayers,” Ludemann said during an August School Board meeting. “We get to see the benefit of that bill, which is great.”
How did we get here?
Several smaller school districts, like Victor, predicted these increases in estimates last year in preparing for the implementation of House Bill 203 from the 2023 legislative session.
Rep. David Bedey, R-Hamilton, sponsored the legislation and said the intent of the bill signed into law in 2023 was “taxpayer equity,” with the district where a student lives being responsible for paying for their public education– Whether they stay in the district, or choose to leave it.
When a child leaves the district to receive an education elsewhere the statewide money that comes along with their enrollment goes with them to the new district. But without the 2023 law the new district pays more in local taxes because of the higher enrollment to cover their education.
In a district like Victor, which lost 190 students and gained 54 in the 2024-25 school year, it has to issue a non-voted levy to its tax base to cover the cost of educating those students who leave.
Districts like Upper West Shore School District in Dayton predicted they would owe other districts a total of $63,000 and feared it could close the school.
Chairwoman of the Interim Education Committee Rep. Linda Reksten, R-Polson, said the issue facing Dayton was one which needed to be addressed at the statewide level, and hopes for the process to be streamlined.
“Our Dayton school feeds right into Polson High School, Polson Middle School, and they’re having to come up with almost $100,000 in tuition,” Reksten said during their September meeting. “That’s a concern. I’d sure like to see us alleviate some of those problems.”
Reksten said the point of House Bill 156, sponsored by Bedey in the 2025 legislative session, was to “equalize the tax burden across the county, wherever you were in the county.”
HB 156 is expected to help neutralize the impact of HB 203 to adjust it from being a district-to-district exchange of funding for tuition to county-to-county. So districts within the same county will be able to have students enroll in schools outside their district of residence, but the tax impact would be countywide, as opposed to one district.
“This change [in HB 156] significantly reduces, and in many cases eliminates, the tax equity payments set forth in HB 203,” Bedey said in an email to the Ravalli Republic.
The exception to this will be children with special needs, and bills to educate those students may be tens of thousands of dollars depending on what’s needed to educate them.
HB 156 doesn’t go into effect until 2026, so districts like Victor will need to pay for each out-of-district student this year.
Will changes to property taxes help?
As with most questions about the impact of tax changes, the answer is: it depends. But leaders and experts think it’s possible.
In order to address the impact of rising property taxes on Montanans, the legislature switched from a flat property tax of 1.35% to a progressive tax which starts at .76% for houses worth $400,000 or less– which is expected to bring savings for many across the state.
In an example provided by the Montana Department of Revenue, a $243,533 house which saw a 25% increase in its market value in 2025 will likely pay approximately $200-$250 less this year as compared to 2024, largely because of the changes the legislature made.
That property owner would have to pay about $103 towards a tuition levy because of HB 203 this year– that’s up from about $29 in 2024. But this home owner is paying about $6 less in school taxes from the prior year.
However, the school district is collecting 24% more in taxes this year, or nearly $300,000, the same amount the district had to levy to cover students getting their education out of the district.
That’s one example.
Taxes are complicated, as is school funding, and many of the lawmakers overseeing the education system agree. There’s a bipartisan hope the current commission examining school funding in Montana will make it more transparent and easier to understand, but any recommended changes would need to be enacted by the legislature in 2027.
Victor’s School Board of Trustees approved the Tuition Fund at more than $500,000– which includes other tuition fund expenses like special education costs– and marked 12.8% of their total budget. Last year their tuition fund was 3% of their adopted budget.
School districts run on shoe string budgets, and often don’t have the money in their general fund to pay these six figure tuition bills– which is why they have to turn to their tax base to cover these required costs.
While changes from this past legislature will kick in next year will help, they still have to pay these costs this year.
Nicole Girten is the education reporter for the Ravalli Republic.
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Nicole Girten
Education reporter for the Ravalli Republic & Missoulian
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