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The Senate Education committee unanimously endorsed an amended SB 63 Thursday, paving the way for the state to make its application for federal Race to the Top funds.

Lawmakers stripped the provisions to allow local school boards to apply for charter schools, leaving only the portions that allow the State Board of Education to charter a single pilot school. As drafted, the state's chartering authority is conditional upon receiving the Race to the Top grant.

Education Secretary Tom Oster introduced the legislation, providing a brief overview of the state's plans to develop a residential secondary school offering instruction in grades 9-12 and two years of college. The school - which will focus on science, technology, engineering and mathematics instruction - would give enrollment preference to American Indian students, but would be open to all students.

The secretary told lawmakers that the state has a economic and moral imperative to improve educational outcomes for South Dakota's American Indian students, who have historically not performed as well on state assessments and are less likely to graduate from high school or college.

Keith Moore, chief diversity officer for the University of South Dakota, and Stacy Phelps, a member of the State Board of Education and Indian education pioneer, joined Oster in pitching the legislation.

"It's going to be a school of hope, a school of promise," said Keith Moore, the state's former Indian Education director, after assuring lawmakers that the non-traditional residential school would not conjure up images of boarding schools that have strained relationships with the state's tribal entities.

Phelps said the school would be based on the successes of South Dakota’s GEAR UP initiative, a state Indian education initiative that has proven to improve high school graduation rates and dramatically improved the number of American Indian students who have completed college.

Legislators were impressed by the application and gave it their full support.

Sen. Bob Gray, R-Pierre, briefly summed up his endorsement of the legislation.

“This could be the most significant thing we do this session,” he said.

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A challenging budget situation may have just gotten a lot worse.

Concerns about the governor's plan to freeze per-student funding may fade into the background now that the state's budget builders have cast doubt on whether they will provide funding for an unplanned increase in the state's K-12 enrollment.

The revelation came Tuesday during an unusually tense Department of Education budget briefing before the Joint Appropriations Committee.

Tami Darnall, the department's finance director, made news by telling lawmakers that there are 623 more students in the state's public schools than education department officials anticipated. Gov. Rounds built his budget assuming a 500-student increase, but enrollment jumped by 1,123 students this year. The spike in fall enrollment will require $3.7 million in addition to the governor's recommended budget, Darnall said.

Appropriators, some probing for answers and some looking to assign blame, demanded to know why the state's enrollment estimates were off. Lawmakers seemed vexed at the increase and irked that the sudden increase would further challenge the state's budget.

Rep. Jim Putnam, R-Armour, hinted that lawmakers may be hesitant to fund the increase. He said the figures disrupted the budget process and would set a precedent for other agencies to bring updated information to lawmakers to ask for additional funds.

“What's happened is we're jamming something into the process ... within a very short period of time,” Rep. Putnam said. “We have decisions to be made with amendments to the general bill and this is one that will probably be talked about.”

Education officials offered several explanations, attributing a part of the increase to the state's increase in the compulsory attendance age. They also tried to help lawmakers understand the potential for inaccuracy within the reporting system.

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A group of lawmakers are aiming to give school districts greater flexibility to manage general fund reserves, according to legislation filed in the House of Representatives

Under HB 1108, which is being offered by Rep. Bill Van Gerpen, R-Tyndall, the maximum allowable fund balance will be 40 percent through 2014. Under current law, the cap is set to drop to 25 percent in 2012.

Rep. Van Gerpen, a former school board member who now serves as Vice-Chair of the House Education Committee, has been an outspoken critic of fund balance restrictions and often criticized the state's policy that requires schools to spend down reserves. In a School Administrators of South Dakota podcast prior to session, he suggested he was bringing the measure to give school boards more flexibility during the difficult economy.

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Lawmakers have given initial approval to sweeping changes to South Dakota law that allows public employees to return to work after being retired.

Members of the Senate Retirement Laws Committee voted 3-2 Thursday evening to pass SB 18, legislation that will likely dramatically reduce a practice referred to “retire-rehire” by deterring public employers from hiring retirees and penalizing individuals who return to work following retirement.

Rob Wylie, executive director of the South Dakota Retirement System, asked lawmakers to adopt the changes. He told lawmakers that the proposal is designed to compensate for the costs associated with current return to work laws – a sum he estimated at $5 million annually. The changes are designed to prevent possible investigation by the IRS, Wylie said.

If the legislation passes, there would be a mandatory three-month waiting period before a retired employee can return to work. Individuals returning to work after three months would lose 15 percent of their anticipated benefit and future employer contributions – both would be paid to the South Dakota Retirement System.

ASBSD Chief Financial Officer Bill Lynch testified in opposition to the measure, arguing that the proposal infringes on a local school boards' ability to make hiring decisions. Lynch told lawmakers that current and future teacher shortages will challenge school districts, adding that school boards need all the tools available to keep qualified educators.

Joining in opposition were Jim Holbeck and Wayne Semmler, two superintendents who questioned the motives of the legislation. Both administrators argued that the changes were brought about under false pretenses and would drive educators out of state.

Two members of the committee – Gene Abdullah, R-Brandon, and Sandy Jerstad, D-Sioux Falls – were swayed by opponent testimony. But Tom Nelson, R-Spearfish Lead, Corey Brown, R-Gettysburg, and Kathy Miles, D-Sioux Falls, jointed to move the measure along. No legislators took time to explain their position on the vote.

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The deadline for state application for the federal Race to the Top passed this week. According to the U.S. Education Department, 40 states and the District of Columbia have applied.

Thursday's Argus Leader has some reaction to the state's application (read here).

Given three days and no opportunity to read the state's plan, apparently only 10 South Dakota schools signed on to support the effort. No local education association's lent their support.

State officials have been trumpeting the unique nature of South Dakota's application. Other states have adopted sweeping reforms based on U.S. DOE's priorities, but South Dakota's effort is narrowly defined to helping improve the success of the state's American Indian students.

… And now for some commentary …

For all the wrangling in Washington over hot-button issues, the Obama Administration has spurred significant education reform across the nation. States are signing on to merit pay proposals, promoting charter schools and strengthening monitoring systems (see EdWeek's report on state movements, premium access required). With states struggling to fill budget holes, Race to the Top incentives are being eyed by many as a way to keep local school budgets intact.

That said, the Race to the Top fund is exceeding expectations in ushering in the administration's education agenda. And they did it with incentives, not mandates. In fact, it's been so successful, the President will ask for an additional $1.3 billion to supplement the $4 billion already authorized.

The success may grease the wheels for the reauthorization of No Child Left Behind, which is rumored to be modeled after the Race to the Top qualifications. If states are already pushing reforms, it may tramp down opposition later.

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It took a little time for lawmakers to get their messaging straight, but members of House Education gave unanimous approval Wednesday to a proposal that would allow federal special education dollars to be used for capital purchases related to special education.

With the flexibility provided by HB 1021, schools will be able to use federal IDEA funds to make capital purchases – computers, interactive SMART boards and other equipment – as long as the purchase goes to support special education.

Tami Darnall, the education department's finance director, told lawmakers that federal law already gives schools the option, but state laws restrict the practice.

Committee members weren't opposed to legislation; they were just trying to fend off concerns raised Tuesday as the House debated HB 1020, a measure that would allow schools the opportunity to transfer some stimulus special education dollars to other funds.

During floor discussion Tuesday, lawmakers raised concerns that the legislation would set a dangerous precedent.

Rep. Nick Moser, R-Yankton, feared that schools may rely more on special education dollars to pay general fund expenses.

“I hope it's not a situation that we're doing that at the expense of some of our special education students,” Moser said.

Moser and other concerned lawmakers advocated for a sunset clause on HB 1020, similar to the language added to legislation adopted last year that granted additional capital outlay flexibility. That option wasn't supported, and the House passed HB 1020 Tuesday with only eight dissenting votes.

But Tuesday's debate obviously impacted education committee members during Wednesday's discussion on HB 1021.

Darnall had to assure lawmakers that appropriate checks are in place to protect special education students. She said expenses would be reviewed by special education and finance officials at the state level and that the department will consider how schools have used the new authority in the event a school applies to the special education extraordinary cost fund.

Once satisfied that the bill didn't divert dollars from special education, lawmakers added language to make the law effective once the governor signs the bill and then endorsed the measure.

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The plan, found in SB 24, was proposed by the South Dakota Department of Education.

Melody Schopp, state director of teacher quality, told lawmakers that creation of teaching performance standards would provide a pathway for teachers to improve throughout their career. Establishing the standards would provide teachers a way to evaluate their own performance and help provide administrators some guidance, Schopp said.

The teaching standards, including suggestions for mentoring new teachers, would be developed by a 17-member work group and eventually adopted by the state board of education. The same group will later develop a model teacher evaluation that districts may use, but aren't required to implement.

As drafted, the legislation mandated teacher evaluations each year.

ASBSD Executive Director Wayne Lueders asked lawmakers to modify the bill, providing districts with flexibility to provide more frequent evaluations during the first three years of employment. Lueders also asked that districts have more flexibility for more experienced teachers that may not need to be evaluated annually.

Lawmakers endorsed the changes, and then voted to support the measure.

The bill will eventually lead to a three-step teacher licensing procedure, Schopp said. The teaching standards would be used to create categories of teachers – beginning teachers, professional teachers and instructional leaders – and identify how teachers would move from one level to the next.

Unlike legislation in previous years, the bill does not tie the tiered licensure system to teacher compensation – something the Lueders said would be hard for the school board association to support.

“If you're going to mandate funding with the tiered licensure system, then we have some concerns about how that's going to work,” Lueders said.

When asked, Schopp offered little details about how the three-step licensing system would work, telling lawmakers that the outcome of the work group would determine how the professional pathway will work.

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The House Education committee on Friday unanimously endorsed legislation to allow school districts to transfer some federal special education funding to other funds. The bill (HB 1020) is being pitched by the Department of Education.

If the flexibility passes the state house, districts can transfer local SPED funds in an amount not greater than 50 percent of its annual increase in federal IDEA dollars to any other fund. The funds could be used to carry out any activities allowable under the Elementary and Secondary Education Act. Districts that use the flexibility lose the safety net of applying to the extraordinary cost fund.

Tami Darnall, finance director for the education department, told lawmakers the spending flexibility would be useful for districts who are tying to spend special education funds authorized by the American Recovery and Reinvestment Act. The funds have a 2011 use-it-or-lose it clause, she said.

The Department of Education talked last summer about making the change via administrative rule, but that plan was panned after critics said the Legislature should weigh-in on the matter.

The idea met little resistance Friday. After asking a few clarification questions, members of House Education passed the legislation on a 14-0 vote.

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It's South Dakota School Board Recognition Week, and that means we can take a moment to say thanks to the men and women who serve on locally elected school boards.

Turns out, lawmakers took note as well.

At the start of Thursday's Senate Education meeting, Chair Cooper Garnos, R-Presho, took a minute to show its appreciation.

“This week is school board recognition week. I think we, as legislators, know how hard [school board members] work for what very little pay they have. They are extremely important to the process of education and if it weren't for the people who serve on school boards we wouldn't have as good a system as we do,” Sen. Garnos said. “You're very important and we certainly appreciate you.”

On top of that, Lt. Gov. Dennis Daugaard, who serves as the presiding officer over the South Dakota Senate, took time to thank school board members. He read a portion of the executive proclamation at the beginning of Thursday's Senate floor debate.

If you've celebrated School Board Recognition Week, drop ASBSD a note and let us know how it worked out.

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The Senate Retirement Laws Committee has scheduled a hearing for Jan. 21 to consider a collection of legislative proposals that will reshape return-to-work rules, limit the cost-of-living adjustments for retirees and eliminate the optional spouse protection provision.

The package – found in SB 18, SB 19 and SB 20 – was endorsed last November by the South Dakota Retirement System (SDRS) Board of Directors. According to SDRS, the changes are necessary to improve the long-term stability of the system.

Changes to the return-to-work provisions, also known as retire-rehire, are certain to draw the most attention.

The return-to-work changes (SB 18), create a mandatory three-month break in service for anyone who retires and then is rehired into any employer that pays into SDRS. The bill also contains several punitive provisions related to retire-rehire, including an SDRS surcharge to employers for allowing a retire-rehire.

SDRS officials have said the limitations to retire-rehire will make the system IRS audit-proof and save money. ASBSD supports the employment decisions of local school boards and opposes the changes to retire-rehire policies.

The package (SB 20) also includes revisions to the cost-of-living adjustment for retirees. Currently, benefit payments increase at 3.1 percent annually due to the adjustment, also referred to as COLA. If the legislation passes, COLA increases will be 2.1 to 3.1 percent each year, depending on CPI-W.

The final piece (SB 19) prohibits new enrollments in a program that allows SDRS members to purchase an optional spouse protection plan. For individuals who currently buy into the program, the contribution will increase to 1.5 percent.

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Gov. Rounds' proposal to freeze per-student funding won't change the “3 percent or less” law that governs annual per-student increases.

The legislation that aims to enact the governor's proposal – filed as HB 1050 – instead changes the number by which the index factor is applied. The measure simply sets the per-student allocation at $4,804.60 for FY11, the same amount as the current year.

Under currently law, the per-student allocation would be $4,862.26, which would be an increase of $57.66. The governor has said the state can't afford the $3.8 million necessary to provide the increase required by law.

Though he's pushing the freeze, the governor won't seek to permanently eliminate the “3 percent or less” index factor language, a law that he has historically championed as evidence that the state considers education funding a top priority.

In the past, the governor has characterized the law as the only guaranteed funding increase contained in state law. This year, the governor has not made reference to the law as a guarantee.

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Legislative leadership took to the airwaves Thursday night to lay claim to their positions on Gov. Rounds' proposal to freeze K-12 education funding.

The early-session hand-tipping came during a legislative preview that aired on South Dakota Public Broadcasting. While much of the conversation centered on the state's budgetary issues, four influential lawmakers gave some insight into how the education funding debate will develop this session.

Speaker of the House Tim Rave, R-Baltic, represented the “share the pain” perspective, offering modest support for the governor's proposal.

“I think that is on the table, and I think, personally, that needs to be on the table,” said Rep. Rave.

He fell short of offering a full-throated endorsement of the funding freeze, but did say he has talked to some superintendents who admit that K-12 education should shoulder its share of the state's budget woes.

Senate Majority Leader Dave Knudson, R-Sioux Falls, laid claim to the “brighter day” platform. He supports freezing per-student state aid, but plans to tether that to a change in the state's index factor that will offer increased education aid when the state's economy rebounds.

“As we share this pain of this deep recession, I think we need to give schools promise of a brighter day,” he said.

Democratic leaders Bernie Hunhoff, D-Yankton, and Scott Heidepriem, D-Sioux Falls, resisted the governor's proposal. As they articulated their “safety net” stance, the minority party leaders said their aim is to find the $3.8 million needed to provide the mandatory inflationary increase to K-12 education.

“I think it's affordable,” Rep. Hunhoff said of the 1.2 percent per-student increase. “We have never over-funded education, but at least we've given the school boards some kind of predictability.”

Sen. Scott Heidepriem criticized the governor's plan, which he said has provided schools with a “safety net” by establishing a minimum per-student increase. He also left the door open to supporting Sen. Knudson's index factor legislation. The worse scenario, he said, would be freezing funding without the promise of a “brighter day.”

“That, to me, would be a double-whammy for education,” Sen. Heidepriem said.

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Education Secretary Tom Oster told lawmakers Wednesday that education service agencies are important to the state's education system and cautioned lawmakers against further cuts to the program.

His comments came during a 90-minute briefing before the House Education committee. The overview, which is a standard first-day fare in the education committee, allows the state's top education official a chance to bring lawmakers up to speed about new or innovative programs and preview any forthcoming legislation.

During the wide-ranging discussion, Oster praised the state's education service agencies and the teacher preparation services they provide. The support comes a year after lawmakers stripped more than $1.7 million in state funding for the program.

“It is a vital service. ” Oster said. “If that program goes away, the chances of it coming back are slim.”

He told lawmakers that school districts chipped-in to keep ESAs afloat following the budget cut. According to Oster, local schools used $900,000 in stimulus funds to displace lost state funding.

According to state budget documents, the Department of Education requested $1 million in state funds to help pay for the ESAs in FY11. That's twice the amount legislators were willing to give last year, but still $1.2 million less than the $2.2 million that lawmakers guaranteed when they officially created the agencies in 2007.

The governor didn't support the secretary's full request, opting instead to carry forward the $500,000 authorized for the current year.

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Gov. Rounds briefly mentioned the possibility during his state of the state address that a second federal stimulus package may ease the state's budget woes.

The governor said an amendment to pending federal health care legislation may provide states with more cash to fulfill the state's Medicare and Medicaid obligations. The passing mention didn't include any estimated numbers, but Gov. Rounds did say that the state can't count on relief from Congress.

In December, the U.S. House of Representatives passed a $174 billion measure, titled the Jobs for Main Street Act, which features several streams of aid to local and state governments, including $23 billion to prevent cuts to K-12 and higher education. The money would come as an extension to the State Fiscal Stabilization Fund created under the American Recovery and Reinvestment Act of 2009. The U.S. Senate is expected to consider the legislation in the coming weeks.

Gov. Rounds didn't mention the Jobs for Main Street Act specifically, but referred to Congress' efforts to create “Stimulus II.”

Much like he did last year, the governor cautioned lawmakers on relying on federal stimulus dollars to balance the state's budget. Instead, he called on legislators to “maximize the recovery” by passing a balanced budget with little reliance on the state's two reserve accounts.

If federal relief did come, Gov. Rounds said, the state would likely use the money instead of spending down the state's reserves.

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In his final state of the state address, Gov. Mike Rounds opted for less controversy and more harmony.

His hour-long message generally steered clear of the budgetary issues the state is facing and concentrated instead on the two-term governor's accomplishments in his eight years in office. Most of his points centered around one of the governor's often-referenced goals: creating more opportunities for young South Dakotans to stay and make a living in their home state.

Gov. Rounds touched on a number of the state's most high profile wins – the Sanford Lab, the Lewis and Clark Pipeline, saving Ellsworth Air Force Base – as he marched through successes stemming from the far-reaching 2010 initiative he developed during the early years of his administration.

When he mentioned K-12 education, he struck a positive tone.

Using assessment scores and other evidence as the backdrop, the governor spoke highly of the progress the state's students and public schools are making. He also mentioned a number of policy shifts – compulsory attendance, mandatory kindergarten, virtual education, improved technology and stronger graduation requirements – as evidence of the attention he's given the state's public schools.

The governor didn't mention the success of his 2010 Education Initiative, a plan that contains a host of unaccomplished goals. He credited the state's universities and technical schools for their advancements in workforce development, but was silent on the role K-12 has in driving the state's economic engine.

When it was time to talk school funding, the governor didn't wade into troubled waters. Instead, he said the state devoted “extra money” to K-12 when it was available.

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