Shrinking revenue collections are scaling back spending in the state budget resulting in schools not receiving an increase in state aid for next school year.
“Money is tight this year,” Gov. Kristi Noem told legislators during her Fiscal Year 2021 budget address. “I will not be able to recommend inflationary increases.”
Gov. Noem said the FY21 budget would account for an estimated student enrollment increase of 1,000 students, as well as the rebasing of the allocation amounts for special education, resulting in an increase of $8.8 million in the state budget for schools.
“We understand and empathize with the constraints the stagnant revenue collections have placed on Gov. Noem’s budget and are appreciative of her investment in special education for the upcoming year,” ASBSD Executive Director Wade Pogany said.
“Our charge is to ensure our K-12 public schools receive the inflationary increase that is required by state law.”
State law requires schools to receive an annual increase in funding of three percent or inflation, whichever is less. On Tuesday, Gov. Noem said estimates for inflation over the next two years somewhere between 1.9 and 2.1 percent.
Gov. Noem projected revenue collections for the current Fiscal Year, 2020, would need to be reduced by nearly $6 million. In addition, the loss of $20 million in the state’s Sales Tax – due to the federal government’s Internet Tax Freedom Act going into effect in the state – would hold back revenue collection in FY21.
Revenue collections for FY21 are expected to eclipse those in FY20 by $28 million, but the $6 million decrease in this fiscal year’s projected revenue collections leave $22.7 million available to cover ongoing cost increases for next fiscal year.
Following the budget address, Sen. John Wiik – who served as the Chair of the Joint Appropriations Committee during the 2019 legislative session – noted “we’re going to have three more months” of revenue collection information before projections for FY21 need to be finalized for the budget.
“We know that it’s going to change,” Sen. Ryan Maher said in an interview following the budget address. “Just bear with us as we work through the process.”
In her press conference following the budget address, Gov. Noem noted “a one percent increase is $16 million” and added that she has had “conversations with legislators on how they are going to try to find ways to do more” in terms of funding increases.
Pogany reasserted ASBSD’s focus during the budgeting process.
“This is the starting point and the development of the state’s FY21 budget will play out over the next few months,” Pogany said.
“During that time we will advocate for schools to receive their statutorily required increase in state aid.”
The 2020 legislative session begins on Tuesday, January 14 with the main run of session concluding on Thursday, March 12. In between that time, the Joint Appropriations Committee will adopt revenue projections for FY21 on Thursday, February 13.
For updates on state aid, the FY21 budget and legislative session, check the ASBSD Blog.