The report, titled Where We Stand: The Past, Present and Future of Per-Student Funding in South Dakota, shows how the actual growth in per-student education funding compares to inflation over time. The study also examines the gap between actual and adequate per-student funding, providing estimates of the investment necessary to ensure schools can meet state-mandated student performance expectations. The full report can be found online at: http://www.asbsd.org/page174.aspx.

Historically, per-student funding tracked closely with the annual increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, an inflationary measure built into South Dakota’s education funding formula to ensure education funding at least keeps pace with inflation. However, the recent 8.6 percent cut to the per-student allocation has created a $54 million inflation gap that now means schools have much less purchasing power compared to when the state’s funding formula was fully implemented in 1998.

“In actual dollars, we already knew the dramatic cuts put schools back about five years,” said ASBSD Executive Director Wayne Lueders. “But in terms of purchasing power, schools are now far behind where they were 15 years ago.”

The report also concludes that South Dakota is now $233 million short of providing adequate per-student funding. The calculation was based on the $133 million gap identified in 2006, when a coalition of education groups released a research study that estimated the cost of educating a student in South Dakota.

According to Lueders, the state’s recent budget woes have continued to focus on education funding as a political question, rather than basing funding on what schools actually need to be successful.

“South Dakota is asking schools and students to meet high standards and expectations, but our lawmakers have yet to assess whether schools are given the resources to succeed,” Lueders said. “We need to start looking at education funding based on student needs.”

The inflation and adequacy gaps are projected to grow over the next 10 years if lawmakers don’t act to correct the trend. Estimates show the inflation gap growing to $72 million by 2022. Without action, the adequacy gap will grow to $309 million over the next 10 years.

Lueders believes the new report gives context to the historic cuts to public school funding by showing the impact on future school budgets.

“We believe it’s important that the public understands that the recent cuts to K-12 education will have a lasting impact on our public schools,” Lueders said. “If our state doesn’t act with urgency, we are in for another decade of annual school district budget cuts.”

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One of the most frustrating things about following the Legislature is hearing the multitude of talking-points and half-truths that are drummed-up by politicians. The statements run the gamut – some are remotely connected to facts, others are complete inventions.

For example, at some point during session, the House Republican Caucus took to attacking school administrator salaries, forwarding an outright distortion that administrator salaries rank 20th in the nation. The Sioux Falls School District documented at least two of the distortions, and then corrected the inaccuracies in a collection of fact-based data from reliable, cited sources.

The latest bogus talking point that is being floated by some legislators is that the cuts to K-12 education actually amount 3.6 percent reduction in total funding to schools. The talking point, forwarded first by Rep. David Lust, R-Rapid City, and later repeated by Rep. Jacqueline Sly, R- Rapid City, is based on a similar point raised by Gov. Dennis Daugaard his budget address last January. At the time, the governor said his proposed 10 percent cut was actually 5.4 percent.

The 5.4 percent blurb made its way into news coverage following the governor’s budget address, forcing school leaders across the state to refute the governor’s stats. This time, only reporter Bob Mercer, who covers state government for a handful of daily newspapers across the state, ran with the 3.6 percent number.

Open Forum would like to think that most reporters steered clear of the number because they’d been convinced that it’s bunk. But, on the off chance that the concept resurfaces, let’s spend some time talking about why it’s misleading.

THE ORIGIN OF THE TALKING POINT

The argument that the Legislature’s school funding compromise translates to a 3.6 percent cut is based partially in fact, but isn’t grounded in reality. This chart explains how the governor arrived at his 5.4 percent figure. When adjusted to reflect the 8.6 percent ongoing cut to schools, plus additional one-time money, the 5.4 percent is knocked down to 3.6 percent.

Essentially, the statistic only works if you fold-in all school district revenue sources, including restricted grants, federal money, special education dollars and capital outlay receipts. The problem with that calculation – and why Open Forum argues that it’s not reality-based – is that those sources of revenue are locked-down by federal and state law, and can’t be used to balance the district’s budget.

In his original calculations, the governor shows schools receiving more than $8,800 per-student in revenue in FY10. He included nearly $3,000 per-student in restricted funds, making his proposed cut to K-12 schools appear like less of a burden.

THE FALSEHOOD

When it comes time to pay teachers and fund student programs, schools rely on general fund revenue – not the restricted sources that the governor and legislators include in their calculations. What makes the talking point misleading is that it ignores the concepts of discretionary and restricted revenue sources.

The state aid formula, which is driven by the amount of per-student funding set by the Legislature, provides 84 percent of the average school district’s discretionary general fund revenue. That fact, combined with the fact that 81 percent of a district’s budget is used to pay staff salary and benefits, it’s easy to understand why cuts to the per-student allocation led to school leaders warning the public that cuts will result in staff layoffs and the elimination of programs.

Using the numbers the governor originally put forth in his budget address, Open Forum has adjusted revenue totals to account for the difference between discretionary and restricted. We’ve included state aid and other sources of discretionary revenue that schools receive, but excluded all money that schools can’t use to balance their general fund budget.

When put into an appropriate, reality-based context, the 3.6 percent talking point is lost. Even with the inclusion of other revenue sources that are expected to decrease significantly – such as the bank franchise tax – the 8.6 percent cut translates to a 7.1 percent cut to a district’s discretionary revenue. By adding a one-time allocation of $97 per-student, which isn’t guaranteed in the future, the 8.6 percent cut to the per-student allocation is reduced to a 5.4 percent.

THE APPLES-TO-APPLES COMPARISON

If legislators and the governor want to forward the 3.6 percent talking point, they should be willing to allow for an apples-to-apples comparison to the state budget.

While most politicians are talking about 10 percent across-the-board cuts, a breakdown of the FY11 and FY12 appropriations bills reveals that the state’s general fund budget only actually decreased by 3.6 percent. But the state’s other fund revenue – which many state officials argue is obligated and can’t be spent for general fund purposes – increased by 1.6 percent. Adding other revenue sources, the state budget only dropped 1.2 percent from FY11, a statistic that we probably won’t hear from either the governor’s office or legislators.

Another statistic that probably won’t be put out by politicians: When combining all sources of revenue - general, other and federal revenue - the state’s budget was cut 2.6 percent, compared to a 16.2 percent drop in K-12 aid.

THE BOTTOM LINE

Our state’s education funding formula hinges on the per-student allocation. In that context, the cuts enacted can’t be described as anything other than a $52 million ongoing cut to K-12 education, which represents an 8.6 reduction in the per-student allocation.

When looking at the cuts from the lens of state appropriations, the state will spend a total of $321 million through the state aid formula – an amount that knocks school funding back to the beginning of the Rounds Administration. In total, that represents a 10.5 percent cut from the $359 million appropriated in FY11 - that’s nearly triple the reduction to the overall state budget. The state budget excluding K-12 aid only fell 0.4 percent; with both K-12 and Medicaid excluded, the state budget fell 6.9 percent. With the passage of the FY12 budget, K-12 spending represents 28.7 percent of the state budget – the lowest since the state aid formula was fully implemented in 1998.

Cuts to K-12 education weren’t as drastic as they could have been, and Open Forum is thankful for that. But the budget does nothing to break the long-term trend in which the state balances its budget on the backs of public schools.

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Pierre is a magical place.

In the final week of Legislative session, state officials and lawmakers have found more than $24 million to soften cuts to K-12 education and Medicaid providers. Appropriators continued to find – and in some cases lose – money as they debated amendments to the general funding bill Thursday morning.

Open Forum isn’t complaining, but after hearing all session that the state simply didn’t have any money, now it seems that extra funding is suddenly appearing, like a white rabbit pulled from a magician’s hat.

The funds lawmakers found for K-12 education is the easiest to track. Appropriators felt the state’s strong sales tax collections for the current year will continue, creating nearly $14 million in new revenue. The recognition of the additional revenue enabled a $97 one-time payment to schools, which will offset the more drastic 8.6 percent cut.

Citing what they called a spike in collections resulting from the sale of farm equipment, legislators were not comfortable that the revenue would be there next year. So, they opted to provide $12 million in one-time funding to schools.

From there, it’s a little harder to discern the secrets behind the magic.

For example, in a House floor debate on an amendment to current year spending, lawmakers introduced an amendment to provide one-time money to Medicaid providers. According to legislators, the money became available because the state overestimated the number of people that would enroll in the federally subsidized healthcare program.

While that seems reasonable, the timing and the amount both raise questions about the many ways in which the state can suddenly make revenue available.

The decision came in the middle of the final week of session, after several months of talking about the increased burden Medicaid places on the state budget. Are we to assume that the state didn’t know about the falling Medicaid commitment before the final days of session? And, state officials found exactly $12.2 million in one-time money – the precise amount sent to schools for next year.

That’s a powerful coincidence. So odd, it leaves Open Forum wondering whether state officials simply backed into $12.2 million by just shuffling things around a bit. And that leaves Open Forum further wondering whether the state can do that on-demand, if someone powerful enough makes the request.

The presence or absence of state money throughout the vast network of funds and sub-funds has been at issue all session. It even flared-up at times during Thursday’s appropriations committee meeting.

Rep. Nick Moser, R-Yankton, offered an amendment to reinstate a program that compensates teachers for obtaining national certification. To pay for it, he suggested using money from one of the several sub-funds on the state’s books, a source that the legislative staff said was flush enough to cover the cost of the amendment. But state budget director Jason Dilges opposed the amendment, saying the money wasn’t available – which led Rep. Moser to seriously question why he would get different messages from the state and the legislative staff.

That’s more magic – this time a bit of a disappearing act.

Later in the budget-building session, Rep. Tad Perry, R-Pierre, offered a proposal to give state employees a merit-based raise. To fund the $2.4 million effort, he suggested using money from yet another sub-fund, the aeronautics fund, which he said contained more than $5 million in unobligated funds. The aeronautics sub-fund had been raided in the past for other non-aviation expenses, but this attempt failed.

The point: It’s becomingly increasingly challenging to track how much money South Dakota has on hand, and whether that money is obligated. Conflicting messages and magical allocations only add to that.

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ASBSD Executive Director Wayne Lueders issued the following statement today regarding the Legislature’s passage of SB 152 and HB 1110, two pieces of legislation that outline cuts to K-12 education.

“The cuts to South Dakota’s public schools aren’t as severe as they could have been, and we’re thankful for that. The inclusion of $97 per-student in one-time funding will help soften the immediate impact, but it’s important to recognize that schools still face a $52 million ongoing cut and that it may be five to eight years before school funding returns to current levels.

“Make no mistake, the 8.6 percent reduction in per-student funding will severely strain already tight school budgets. When our citizen legislators return home to their local communities, they will come to better understand how difficult it will be for school board members and school administrators to avoid cuts that limit student opportunities.

“ASBSD was heartened by the broad public opposition to K-12 education cuts. We hope the individuals who wrote their legislators and attended public forums will now work with local school leaders to chart a course forward.”

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SCHOOL FUNDING

Yesterday lawmakers unveiled a two-tiered compromise on school funding. The proposal includes two pieces of legislation – SB 152 and HB 1110 – that will work together to provide both ongoing and one-time relief from the proposed 10 percent cuts. The compromise is outlined below, followed by a breakdown for each bill.

THE BOTTOM LINE

The proposed compromise will represent an ongoing 8.6 percent cut to the per-student allocation, which represents a $51.9 million cut to schools. If the one-time appropriation of $97 is included, the impact for FY12 is a 6.6% cut, or approximately $39.8 million to K-12 for next year.

SENATE BILL 152: PROPERTY TAX FREEZE

Senate Bill 152 has three main components: an adjustment to the per-student allocation, the establishment of new property tax levies, and a change in the percentage of state and local revenue used to fund the state aid formula. The House has passed the bill, but the Senate still needs to act. The bill:

• Establishes a new base per-student allocation of $4,389.95 for FY12 and beyond, which represents an 8.6 percent cut to K-12 schools.
• Holds commercial and owner-occupied school district general fund tax levies level for next property tax year, and decreases the agriculture tax levy in response to increase taxable valuations. Holding the levies steady allows the PSA to increase to $4,389.95, approximately $66 higher than the PSA proposed by Gov. Daugaard.
• Sets the state’s responsibility for funding the state aid formula at 53.8 percent for FY13 (the year AFTER next). While some claim that the ratio adjustment will lessen the 8.6 percent cut to 6.6 percent in future years, it’s important to remember that because the bill does not set the per-student allocation for FY13, future school funding decisions are not guaranteed and will still be at the discretion of the Legislature.

HOUSE BILL 1110: ONE-TIME MONEY

Today in the Senate, legislators amended HB 1110 to include $12.2 million in one-time money for schools. The special appropriation, which will be distributed outside the formula, amounts to approximately $97 per-student. The House still needs to act on the plan.

FUND BALANCES

Legislation to eliminate caps on fund balances was amended then passed in the House. Legislators added an emergency clause to the legislation, allowing it to take effect as soon as the governor signs the bill and helping to avoid any penalties that schools may receive this year. The legislation keeps one fund balance calculation intact – the 30 percent threshold that is used to qualify schools for sparsity funding.

TRANSPORTATION REIMBURSEMENT

During a Senate debate on HB 1208, lawmakers eliminated the mandate to provide parents with a transportation or room and board allowance if the district does not provide transportation for the student. As amended, the bill is permissive, allowing school boards the option to reimburse parents.

SPARSITY FUNDING

The House passed SB 133, which, in its amended form, will prorate sparsity funding if legislators don’t appropriate sufficient resources to fully fund the sparsity formula. The bill has a potential to reduce funding received by sparse schools, but it will ultimately depend on how much legislators appropriate and how many schools qualify to receive the additional funding.

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The Legislature's Joint Appropriations Committee met Monday to assemble their revenue projections for this year. Following the adoption of the revenue estimates, it appears there may be anywhere between $9 and $14 million available to send to schools in the form of one-time money.

FY11 PROJECTIONS

Legislators split the difference between their own economist’s projections and the state’s predictions for revenue in the current fiscal year. Legislators will work from a $1.16 billion revenue estimate including one-time receipts, which is approximately $9.8 million higher than the projections put forth by the Bureau of Finance and Management last week and nearly $14 million more than the estimate the governor released during his budget address in January.

During committee testimony this morning, Senate Majority Leader Russ Olsen, R-Madison, told the Senate State Affairs committee that HB 1110 would eventually be changed to reflect the amount of additional revenue that the state expects to collect, and that amount would be sent to schools in the form of one-time money.

According to Appropriations Chair Corey Brown, R-Gettysburg, the state’s acceptance of $26.5 million in federal assistance for Medicaid and education (EduJobs) prohibits the state from building state reserve accounts in FY11, which means the revenue received this year must be appropriated.

The $14 million in additional revenue makes-up for the $12 million one-time shortfall created by SB 152, which could explain why legislators and state officials are now saying that, through the passage of SB 152 and the appropriation of one-time money in HB 1110, the cut to schools may come closer to the 6.5 percent cut that was projected as SB 152 passed the Senate. But remember, any revenue appropriated through HB 1110 would be one-time money.

FY12 PROJECTIONS

For FY12, Legislators are using an estimate of $1.165 billion in revenue collections, which nearly mirrors the projections put forward by the governor’s staff. However, the committee’s projections start to get tricky after that. The Legislature’s projections outline expected ongoing revenue, but the estimate adopted today shows a one-time expense of $27 million as a “one-time refund” that is used to bring the total estimate down to $1.14 billion.

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This morning in House Appropriations, lawmakers amended SB 152 to address the governor’s concerns about the potential loss in $12 million in one-time revenue to the state. The amendment passed unanimously. The amendment sets the per-student allocation at $4,389.95 for FY12, amounting to approximately an 8.6 percent cut to the per-student allocation. The governor’s office has opposed SB 152 because, as drafted, it eliminates $12 million in one-time revenue to the state.

HOUSE BILL 1110

In Senate State Affairs this morning, legislators amended HB 1110 (formerly a property tax freeze bill) in an attempt to divert additional one-time money to K-12 schools. At this point, the amount isn’t known – but testimony today suggested that lawmakers will look to appropriate increased revenue resulting from the legislature’s adoption of revenue estimates that are in excess of what the governor had projected.

According to the revenue projections released last week (click here to see the revenue projections), the difference between the governor’s projections and the LRC estimates total approximately $25 million – about $15 million in the current fiscal year, and $10 million in next fiscal year. The appropriations committee will meet later today to officially adopt revenue estimates.

House Bill 1110 and SB 152 will likely work together – state budget director Jason Dilges said this morning that the combination of the two bills could “get us to” where SB 152 was when it left the Senate – which was a 6.5 percent cut to K-12 education. However, half of the money would be one-time money. The bill passed unanimously.

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The Legislature’s economic team believes lawmakers will have $10 million in additional state revenue next year, according to tax collection projections released Thursday. The Legislative Research Council expects the state to collect $1.17 billion in revenue next year, anchored by a projected upswing in sales tax collections.

The legislative projections are one of two sets of economic forecasts that legislators use to determine the revenue side of the state budget. The Daugaard Administration also released its estimates Thursday, but they are not substantially different than predictions the governor used in his budget address last January.

On Monday, members of the Joint Appropriations Committee will meet to adopt an official revenue projection. It’s unclear whether Legislators will adopt their own estimate, the governor’s estimate or a hybrid of the two.

The major difference between the two estimates is the expected loss of video lottery revenues. The Legislature’s fiscal experts don’t expect that revenue source to contribute less to the state, but the governor’s economists expect a $9 million drop-off.

For a look at the complete revenue projections, click here.

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The House Judiciary committee on Wednesday rejected a plan pushed by municipalities that would divert money away from K-12 schools to city governments. Lawmakers voted 8-5 to send SB 164 to the 41st Legislative Day, effectively killing the measure.

At issue was revenue generated from traffic citations issued on state highways that also run through a city. The South Dakota Municipal League wanted lawmakers to give cities the authority to enforce state traffic violations according to municipal ordinance, which would direct 65 percent of the fine proceeds to cities. Currently, cities must enforce those violations according to state law, which means 100 percent of the fine revenue is distributed to schools.

ASBSD Lobbyist Dick Tieszen opposed the measure, telling members of the committee that the push by the Municipal League was an attempt to circumvent the Constitution. If the bill passed, it would rob schools of revenue and lead to further litigation, he said.

Stay with Open Forum for more.

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The South Dakota House of Representatives offered a resounding endorsement Tuesday for extending local flexibility to spend capital outlay revenue, passing SB 111 on a 61-8 vote. The bill now heads to the governor, who is expected to sign the measure.

With the passage of SB 111, schools will be able to use up to 45 percent of their capital outlay revenue to pay for some insurance, energy, fuel and transportation costs. The flexibility was extended two years ago, but is set to expire June 30, 2012. If signed by the governor, it will allow those expenditures through FY14.

Supporters asked lawmakers to give schools another tool to make it through difficult financial times. The few who opposed the measure did so in protest against shifting more of the burden for K-12 funding onto local property tax payers.

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The House Appropriations Committee reopened testimony on SB 152 Wednesday, allowing education advocates attending Stand Up for Education Day to voice support for the plan that would lessen proposed cuts to public schools.

Community members, teachers and administrators all stepped-up to outline their opposition to K-12 cuts and ask lawmakers to support the proposal to freeze local property taxes to reduce the proposed cuts from 10 percent to 6.5 percent.

During committee testimony, the bill’s prime sponsor, Sen. Larry Rhoden, R-Union Center, asked lawmakers to defer action until an amendment is prepared. Rumors around the capitol suggest that the amendment may result in an 8.5 percent cut for schools.

Stay tuned to Open Forum for more.

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Members of Senate Education Tuesday scaled back then passed a proposed law to remove some education mandates that lawmakers argue place undue financial burdens on schools.

As amended, the bill allows the Department of Education to draft rules to make bus driving training less costly. It also permits to schools to communicate with parents via email, rather than by postal mail. Legislators endorsed HB 1208 on a 6-1 vote.

The concept of reducing education mandates has been trumpeted by the GOP leadership as a one piece of their plan to help ease education cuts. As drafted, its unknown how much elimination of these mandates will save schools.

The Senate will consider the full measure next.

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A day after the South Dakota House of Representatives voted to kill the Daugaard Administration’s plan to reduce funding for sparse schools, state budget chief Jason Dilges returned to House Appropriations to revive the concept.

Representatives knocked back SB 186 Tuesday on a 40-26 vote. The proposed law allows the state to prorate payments to schools if legislative appropriations aren’t sufficient to fully fund the sparsity formula. If, for example, the sparsity formula requires the state to distribute $1.5 million to sparse schools, but the Legislature only appropriates $1 million, each school that qualifies for disbursement would receive a reduced amount. If the bill fails, appropriators would be required to fully fund the sparsity formula.

House Education Chair Tom Brunner, R-Nisland, asked legislators to vote against the measure, telling lawmakers that the bill would result in yet another cut for schools serving sparsely populated areas.

“I think we need to fund the sparse schools properly,” Rep. Brunner said. “Let’s start by defeating this bill.”

But Wednesday morning in the House Appropriations Committee, state budget director Jason Dilges asked appropriators to revive the concept. According to Dilges, the bill is necessary to give the state the flexibility is a tight budget year. At Dilges’ urging, members of the committee took bill that had been previously killed, SB 133, and changed completely to include the proration language.

In an attempt to avert another defeat on the House floor, Dilges told committee members that the plan wouldn’t require a cut to schools. The actual cut will come through the appropriations process, he said.

The committee passed SB 133 unanimously. The House will likely consider the measure next week.

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Members of Senate Education voted 4-3 yesterday to kill legislation to eliminate the state’s forced consolidation law, rebuffing a key component of Gov. Dennis Daugaard’s agenda to return more local control to K-12 schools.

House Bill 1229 eliminates the 100-student minimum enrollment threshold that was enacted in the 2007 legislative session. ASBSD, the governor’s office and the Department of Education testified in support of the legislation.

Sen. Bob Gray, R-Pierre, led the charge against HB 1229, telling lawmakers that it’s a mistake to “hold on to these districts” that he called inefficient. “Sometimes [local school boards] need a push because they won’t do the right thing,” Sen. Gray said. “As legislators and taxpayers, we need to say enough is enough.”

The final vote represented a divide between legislators representing small and large schools. Senators Jim Bradford, D-Pine Ridge, Cooper Garnos, R-Presho, and Tim Rave, R-Baltic, all voted in support of the plan.

The measure passed the House on a 57-12 vote. It’s unknown whether there will be an attempt to revive the legislation through legislative procedure.

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The Daugaard Administration lined up in opposition Monday to a plan to allow property taxes collected by K-12 schools to remain level next year.

During testimony on SB 152, a plan put forward by Sen. Larry Rhoden, R-Union Center, state budget director Jason Dilges told lawmakers that the governor’s office is shifting their position on the bill because the legislation now has a one-time $12 million cost to the state’s general fund.

“When it starts costing money to the state’s general fund, that’s where we have to get involved,” Dilges said.

The one-time windfall is created because property tax levies are adjusted in the middle of the state’s fiscal year. If the governor’s 10 percent reduction is enacted, levies would stay at their current levels for the rest of 2011, which reduces by $12 million the amount the state has to contribute through the state aid formula.

Dilges also warned legislators that reducing the cut to K-12 education means lawmakers will be asked to do to the same for state agencies and groups impacted by Medicaid cuts.

“This just starts a tear in the bag,” Dilges said. “If you do this, we’ll never be able to get the structural deficit in-line.”

Lawmakers pushed back against aspects of Dilges’ testimony, which some legislators called disappointing.

Sen. Rhoden challenged Dilges’ contention that the bill would impact the structural deficit. He told lawmakers that because the bill doesn’t create an ongoing expense to the state, it won’t have an impact on the structural deficit. To fill that one-time hole, Sen. Rhoden suggested that the state use part of the $26 million in EduJobs money sent to the state earlier this year.

Rep. Dan Dryden, R-Rapid City, told lawmakers that he’s disappointed that the governor’s office has chosen to go beyond their proposal for a 10 percent cut and is now seeking an additional $12 million dollars in one-time money that could benefit schools.

The committee did not take action on the bill. It was deferred to a later date.

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Sen. Cooper Garnos asked lawmakers Monday to shelve a plan to shift state aid payments by a few days. The plan was designed to help stall education cuts, but Sen. Garnos told legislators that the he is now convinced the plan wouldn’t work.

Lawmakers voted to table SB 133 on a unanimous 9-0 vote, but not before asking a state official to explain the bill’s flaws.

According to Colin Keeler, a representative of the Bureau of Finance and Management, the bill as drafted requires schools to credit revenue from one year into the previous year – an accounting move he says is not possible.

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Recent comments from the Daugaard Administration seem to cast doubt on how the governor will react to a proposal to freeze property tax levies with the intent of softening cuts to K-12 education.

The Senate passed SB 152, a proposal brought forward by Sen. Larry Rhoden, R-Union Center, with a veto-proof majority. At a Friday press briefing, GOP leadership gave a resounding endorsement of the bill, saying its proof how the Republican Party is working to provide extra dollars to K-12 schools.

But, what will the governor do?

In the past, the governor has said he wouldn’t sand in the way of the bill. Lt. Gov. Matt Michels, standing in for Gov. Daugaard at a weekly press briefing, addressed the bill. According to the Associated Press, the state’s second-in-command gave high praise to SB 152. The story was published under the headline that read: “Lt. Gov. Michels lauds property tax freeze.”

Later in the day, another member of the Daugaard administration hesitated when asked whether the governor supports the bill.

Senior policy advisor Tony Venhuizen told the Rapid City Journal during a live chat that the governor hasn’t embraced the idea because “it now has a cost to the state.” As written, the Rhoden proposal would eliminate $13 million in one-time state revenue (for more on why it costs the state some one-time money, see the story here). According to Venhuizen, that component of the bill may be a stumbling block.

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Senators voted 21-14 Wednesday to allow cities to issue municipal citations for traffic violations committed on state highways, a move that opponents contend will siphon money away from schools and could cause a loss of federal highway money.

Sen. Mark Johnston, R-Sioux Falls, led the charge on SB 164. He asked legislators to approve the bill as a corrective measure following a Supreme Court decision that said city governments didn’t have the authority to write citations under municipal ordinance if the violation occurred on a state highway.

At issue is the fine money generated from the violation. When a municipal ordinance is used, 65 percent of the money goes back to municipal governments. If the ticket is written as a violation of state law, 100 percent of the money goes to schools. The South Dakota Supreme Court ruled last October that municipalities were improperly directing money to their own budgets and away from schools.

Sen. Joni Cutler, R-Sioux Falls, tried to convince lawmakers that the bill wouldn’t work as intended. She argued that since the state, not city governments, set the speed limits for state highways, fine money is directed by the South Dakota constitution to go to schools. If the measure passed as drafted, it would result in another lawsuit with the same result, Cutler said.

Sen. Eldon Nygaard, R-Vermillion, suggested the bill could be amended in the House to give municipalities the authority to set speed limits on state highways. Sen. Cutler challenged that notion, saying that giving municipalities that power would result in a loss of highway funding and would cause disputes over whether the state or the municipality would be responsible for maintain the road.

If passed, it would shift an estimated $1 million annually away from schools to city governments. The South Dakota Municipal League, an organization representing city governments, is pushing the legislation. ASBSD opposes the measure.

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A quickly-developing proposal that would use a one-time accounting maneuver to free-up money for K-12 schools won approval from the Senate Wednesday. Lawmakers endorsed SB 133 on a 26-9 vote, even as they admitted that the bill would need to be changed in the future.

Sen. Cooper Garnos, R-Presho, introduced the plan Tuesday in the Senate Education committee, at the urging of Parkston Superintendent Shayne McIntosh. The intent of the legislation is to allow schools to receive the equivalent of 13 state aid payments next year - a move that would hold schools nearly harmless from budget cuts next year.

If the bill works as intended, it will move state aid payments from the end to the beginning of the month, making it possible to shift one state aid payment into a future state fiscal year. Schools would receive just 11 state aid payments in FY12. The twelfth payment would be delivered to schools in the state’s FY13 budget year, but schools would receive it as FY12 revenue. The accounting trick would technically save the state approximately $26 million in the FY12 – money that Sen. Garnos wants to redistribute back to schools outside the funding formula.

The legislation doesn’t create money, but the accounting move has the potential of preventing K-12 cuts for another year. The one-time money that results from the shift wouldn’t be available in FY13, which means schools would feel the hit then if state revenue hasn’t picked up.

The fate of the proposal is unclear, but it is scheduled for a hearing in House Appropriations next week.

Lt. Gov. Matt Michaels told members of the media today that the Daugaard Administration is opposed to the plan. He called it an accounting gimmick and said it wouldn’t help schools at all.

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The South Dakota Senate approved a measure Wednesday that will reduce the governor’s proposed 10 percent cut to the per-student allocation to 6.4 percent. Lawmakers passed SB 152 on a 27-8 vote, putting in motion a plan to freeze property tax levies for next school year.

To kick-off floor debate, the bill’s prime sponsor, Sen. Larry Rhoden, R-Union Center, introduced a long-awaited amendment that fleshed-out the plan he’s been pushing since the beginning of the session. The change established a per-student allocation of $4,494.28 for FY12 and lowered the percentage the state contributes to schools through the state aid formula.

Prior to Wednesday’s debate, lawmakers claimed the bill would reduce the proposed cuts to 5.6 percent. According to Sen. Rhoden, the proposal didn’t reach that threshold because valuations for commercial and owner-occupied property remained flat this year. Shaving $40 per-student from the proposal prevented a property tax increase on businesses and homeowners, Rhoden explained.

Opponents of the plan argued the bill shifts too much onto local property tax payers and leaves a hole in the state budget.

Sen. Al Novstrup, R-Aberdeen, urged lawmakers to vote against a plan he says will transfer $9 million to local property tax payers. “This is just going in the wrong direction,” he said.

THE $13 MILLION HOLE

Sen. Jeff Haverly, R-Rapid City, was more concerned that the bill leads to a losss of $13 million in one-time state revenue. He cautioned lawmakers about making the state’s deficit worse by passing SB 152.

The $13 million one-time windfall is created because the state budget year conflicts with the way property taxes are collected. The state budget runs on a fiscal year from July through June, and property taxes are collected on a calendar year. That means property tax levies are adjusted in the middle of the state’s fiscal year.

The governor’s budget is based on passage of his 10 percent cut to the per-student allocation, including a reduction in local property tax levies. If the governor’s plan is enacted, levies would stay at their current levels for the rest of 2011 and then drop significantly at the beginning of next year. The overlap lessens the amount the state has to contribute through the state aid formula for half the year, creating a one-time $13 million windfall for the state.

Supporters of SB 152 acknowledged the loss of money to the state, but stressed that the one-time revenue bump couldn’t be budgeted for ongoing state expenses.

APPROPRIATOR OPPOSITION

Republican members of the Senate Appropriations voted in bloc against SB 152. The Senate’s budget-makers seemed most concerned about having to find $13 million to help the state’s budget this year.

House leadership has referred the bill to House Appropriations, which typically isn’t a good sign for education funding measures because the committee works closely with state budget director Jason Dilges, who has proven to be a formidable defender of the state’s interests. If members of the House Appropriations committee take a similar stance as their Senate counterparts, the bill may have a difficult path in the House.

The governor’s office has yet to comment on the lost revenue resulting from the measure, but Gov. Daugaard has gone on record saying he wouldn’t oppose the measure.

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Yesterday marked the critical “crossover day” deadline for the South Dakota Legislature. Several key education bills were delayed until this important deadline. Here’s what happened.

SENATE BILL 152 – THE “RHODEN” BILL

The Senate amended then passed SB 152, legislation that aims to keep local property taxes level to blunt the impact of the proposed 10 percent cut to the per-student allocation. It passed on a 28-7 vote. Though the bill had been advertised conceptually to reduce the cut to 5.6 percent, today’s amendment shows that the 10 percent cut will be reduced to a 6.4 percent cut. Today’s amendment included the following components:

• It sets the per-student allocation for FY12 at $4494.28, a cut of $310 per-student but $170 per-student higher than Gov. Daugaard’s recommendation.
• It changes a ratio in state law that establishes the percentage share of state and local revenue delivered through the state aid formula. Currently, on a statewide basis the state is responsible for 56.5 percent and local property taxes contribute 43.5 percent. Under this bill, the new ratio will be 53.8 percent state and 46.2 percent local.
• It also establishes levies for the various classes of property.

According to floor debate today, the bill did not reach the 5.6 percent threshold because moving that far would have produced a property tax increase on commercial property. Sponsors were clear that they didn’t want taxes to increase. Two other House bills that address levies – HB 1243 and HB 1110 – also passed the House.

SENATE BILL 133 – DELAY STATE AID PAYMENTS

The Senate passed SB 133 on a 26-9 vote. The bill, which was hoghoused earlier this week, would shift state aid payments from the end of the month to the beginning of the month, freeing up one state aid payment in FY12. The bill is still a work in progress, but it has potential to soften cuts to K-12 education, provided the bill is amended properly.

SENATE BILL 185 – THE GOVERNOR’S 10 PERCENT CUT

Even though the Senate voted to establish the per-student allocation in SB 152, they kept the governor’s bill alive as a “vehicle bill.” They amended it so the bill so it doesn’t function properly with the intention of sorting-out school funding in a conference committee.

SENATE BILL 149 – CONCUSSIONS

The Senate passed SB 149 on a 31-4 vote. In its amended version, the new concussion education programs and return-to-play guidelines only apply to school sports and do not extend to other youth activity groups. The bill requires concussion education programs for coaches, athletes and parents. It requires athletes to be removed from sports if they exhibit concussion symptoms and says the player can’t return to play until he or she has been cleared by a medical professional. Also provides liability protection for schools.

SENATE BILL 164 – DISTRIBUTION OF TRAFFIC VIOLATION FUNDS

The Senate passed SB 164 on a 21-14 vote. The bill would divert fine money away from schools and to municipal governments.

SENATE BILL 126 – THE “JOHNSTON” BILL

A proposal to keep the per-student allocation level (while banning opt-outs for two years) failed in the Senate on a 11-24 vote.

SENATE BILL 77 – BUSSING AGREEMENTS

A proposed law that requires schools to agree on transportation pick-up points for open-enrolled students passed the Senate on a 23-12 vote.

HOUSE BILL 1229 – FORCED CONSOLIDATION REPEAL

The House voted 57-12 to remove the requirement that schools with enrollments below 100 must reorganize.

HB 1203 – CAPITAL OUTLAY FLEXIBILITY

The House voted to table HB 1203, a bill that would have allowed schools to recover lost state aid by transferring money from the capital outlay fund. Another bill, SB 111, that extends current capital outlay flexibility is still alive.

HB 1250 – OPPORTUNITY SCHOLARSHIP

A governor’s bill to change the requirements for the opportunity scholarship was tabled in House Appropriations.

HB 1208 – ELIMINATING EDUCATION MANDATES

A proposal aimed at saving schools money by eliminating mandates passed the House 51-18. It was amended on the floor to include the elimination of three mandates: Schools would no longer be able to reimburse potential employees for the cost of background checks; the requirement for annual bus driver training would be changed to require bus drivers to undergo – and pay for themselves – appropriate training once every five years; and it allows schools to send notifications or correspondence to parents via e-mail, rather than postal mail, as long as the parent opts-in.

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• The Senate is currently debating has killed SB 126, a measure to leave the per-student allocation the same. Needed a two-thirds majority, lost 11-24.
  
• The House is debating has tabled HB 1203, a capital outlay flexibility bill. 
• The Senate is debating has passed SB 152 on a 28-7 vote. Changes to the bill - no longer 5.6 percent, more like 6.4 percent cut to K-12. Sets new PSA at $4494.28 for FY 12.
  

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• Members of Senate Education passed SB 149, a bill that would require concussion education programs and institute return-to-play guidelines for student athletes. The Department of Education testified in opposition the bill.
  
• House Appropriations passed HB 1243, the governor's plan to reduce property tax levies commensurate with a 10 percent cut to K-12 education.
  
• House Appropriations tabled HB 1250, the governor's proposal to change requirements of the opportunity scholarship.
  
• Senate Education hoghoused SB 133, turning it into a bill that would defer state aid payments by a few days. More on this bill later.
  
• Senate Appropriations passed SB 185, the governor's plan to reduce state aid by 10 percent.
  

• The Senate passed SB 77, legislation requiring schools to agree upon pick-up points for the transportation of open-enrolled students. They added an amendment to exempt sparse schools from the requirement. 
• The House passed HB 1208, a bill aimed at lifting unfunded mandates placed on K-12 education.
  
• The House passed HB 1110, a counter measure to the governor's proposal to reduce property tax levies commensurate with a 10 percent cut in the per-student allocation.
  
• The House passed HB 1229, legislation aimed at eliminating the 100-student minimum.
  

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The South Dakota House of Representatives has proven that lawmakers have the courage to raise revenue to provide for essential government services. Unfortunately, their decision was not focused on raising revenue for K-12 education.

Legislators voted 53-13 on Wednesday to increase vehicle registration fees by nearly $30 million to help counties and townships make repairs to the state’s roads and bridges. Legislators speaking in favor of the bill continually stressed the dire need to increase funding for the state’s road system.

The move is in stark contrast to the Legislature’s posture on raising revenue to prevent cuts to K-12 education. Several bills to raise the state sales tax to fund K-12 education have met their demise at the committee level. The lone option remaining - SB 174 – would raise $50 million for education and Medicaid by increasing sales taxes during the summer months.

Though most bills to raise revenue for K-12 have failed, Sen. Tim Rave, R-Baltic, told members of the media Thursday that the GOP leadership is keeping “all options on the table.” The Republican caucus has formed a working group to look at ways to increase revenue. According to ASBSD lobbyists, discussions are picking-up surrounding a ballot initiative to raise the state’s sales tax by 1 cent to help fund education and Medicaid.

Gov. Dennis Daugaard told members of the media Thursday that he opposes the effort to raise $30 million for roads. He hinted that he’d veto the bill, even though he recognizes the House passed the measure with a veto-proof majority. When asked whether he’d oppose an initiated measure to raise the state’s sales tax, the governor said he wouldn’t stand in the way of the effort.

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A grassroots movement is building to encourage South Dakotans to travel to Pierre on March 2 to support public education and to stand against proposed cuts for K-12 education.

Jenn Gustafson, a member of the Langford School Board, is part of a group of public school advocates organizing Stand up for Education Day. ASBSD and the South Dakota Education Association are helping sponsor the event.

According to Gustafson, the event is meant to rally education supporters from all size school districts. She has planned a full day of activities, including time to meet with legislators about the proposed cuts to K-12 education. View the agenda here, download and print a poster here, and for Facebook users, you can access event details here.

Some education advocates plan to use the day to deliver a petition aimed at increasing the state’s sales tax to help fund K-12 education and Medicaid. Marylynne Fields, a former Milbank school board member who also served on the ASBDS Board of Directors, is collecting signatures and has spread petitions across the Northeast area of the state.

KELO caught up with Marylynne on Thursday, you can read the story here, and check out the video below.

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It could be 2021 before per-student education funding returns to current levels, according to a new analysis from the state school board association.

ASBSD projected future funding increases based on trends in the CPI-W, the inflationary factor that typically governs increases per-student funding. Using two different projections models, ASBSD concluded that it would take six to nine years to for the per-student allocation to grow past the current level of $4804. The projection starts with base funding of $4324 per student, the amount that schools would be provided if Gov. Dennis Daugaard’s proposed cuts are implemented.

Estimates are based on two different annual adjustments. The first uses an average rate of 1.25 percent per year, which mirrors the post-recession growth in the CPI-W. The second uses annual growth of 2 percent, which is the average growth in the CPI-W over the past 10 years.

To see the projections, click here.

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Members of House Education took the first step Wednesday to scrapping the state’s policy that forces schools to close if district enrollment drops below 100 students. Lawmakers endorsed HB 1229 by a 10-3 vote, sending the governor-backed bill to the House floor.

The minimum district size was established in 2007 as part of a large package of education reforms that included revisions to the state aid formula and an adjustment to fund balance limitations. Since then, there have been several failed attempts to raise the enrollment threshold.

House Education Chair Rep. Thomas Brunner, R-Nisland, gave up his gavel to act as the lone opponent of the legislation. He asked committee members to reject the bill, arguing the need to keep the 2007 reforms intact. According to Rep. Brunner, establishing a minimum district size was the piece of the 2007 reform package that prevented large schools from opposing the omnibus legislation. Keeping the law in place, he argued, is a “matter of fairness.”

Gov. Daugaard dispatched senior policy advisor Tony Venhuizen to testify in support of the measure. He told lawmakers that repealing the minimum size would give local education leaders the respect they deserve. Venhuizen also challenged the notion that large schools benefit from forced consolidation.

“I don’t think you make your own candle brighter by blowing out someone else’s,” Venhuizen said.

ASBSD Executive Director Wayne Lueders also testified in support of the bill. He told committee members that ASBSD believes reorganization should be voluntary and initiated by the voters in small communities. Lueders also said eliminating the minimum size rids our state of the “fear factor” that arises as district enrollment starts to dwindle – a situation he said sometimes forces schools to seek students through open enrollment just to keep the school doors open.