Category: State Aid

Conference committee recommends zero percent
Posted Thursday, March 11, 2010

The House and Senate have agreed on language that freezes education funding for FY11.

The decision came Thursday during a conference committee hearing on SB 22. Both chambers must pass the bill.


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House to take critical votes Tuesday
Posted Tuesday, March 9, 2010

The House continues to stall action on school funding decisions, but will likely take action tomorrow. Lawmakers continue to hold their intentions close, so House votes tomorrow on SB 124 and SB 22 will provide the first formal direction we’ve had from the House this session. At this point in the session, the two issues on the table are per-student funding and changes to the index factor.

Per-student funding:

Both pieces of legislation the House will consider tomorrow contain a per-student funding freeze for FY11. The governor’s plan to freeze per-student funding is alive in SB 22. The bill, which originally had to due with the birth-to-three program, was changed completely by the House Appropriations Committee and approved to be a “bargaining chip” for ongoing negotiations with the Senate. Senate Bill 124 also contains a per-student funding freeze, but also includes changes to the index factor. We know there are several legislators from both parties who are committed to reinstating the 1.2 percent increase, but the idea has not caught on with the legislative leadership and has been voted down twice in the Senate.

Index factor:

Senate Bill 124 seeks to change the index factor, the law that determines annual increases in per-student funding. The measure the House will consider tomorrow was changed in the House Education committee earlier in February – in its current form, it changes the “3 percent or the CPI-W, whichever is less” language in state law to “2 percent or the CPI-W, whichever is greater.” In its Senate-approved form, it changed the index factor language to “4 percent or CPI-W, whichever is greater” with some limitations that tie per-student increases to state continuing receipts.

ASBSD will continue to advocate for the Senate-passed SB 124, which contains “4 percent or greater” language. We will also support amendments to restore the 1.2 percent for FY11.

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Bill to deliver on-time funding passes Senate
Posted Friday, March 5, 2010

Legislation to provide growing enrollment districts funding in the same year they serve students is likely to become law.

The Senate gave a unanimous endorsement Wednesday to HB 1248. The upper chamber modified the legislation slightly, opting to make the legislation effective next year instead of delaying until the 2013-14 school year.

Sen. Sandy Jerstad, D-Sioux Falls, praised the Senate’s vote. She has attempted to move the legislation in previous years, but support for the idea never materialized.

The sudden change in sentiment is a credit to the bill’s supporters, who were able to convince lawmakers that the bill would save the state $3.5 million per year while meeting the needs of rapidly growing districts.

Education Secretary Tom Oster lobbied diligently for the change. He persuaded lawmakers that the measure eliminates a hiccup in state law that makes the state pay for a semester of education that students don’t receive.

Harrisburg Superintendent Jim Holbeck also gave reasoned supporting testimony. He pointed out that the change would bring fairness into the school funding process and allow Harrisburg to hire staff necessary to handle booming enrollment.

If approved, a growing district’s state aid would be based on the current year’s fall enrollment. If a district is losing students, formula revenue is determined by averaging the previous two year’s fall enrollment.

Because the Senate changed the bill, the House must concur with the change before it can move onto the governor.

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Senate panel dismisses open enrollment funding tweak
Posted Friday, March 5, 2010

A proposed law aiming to trim the amount of small school funding that follows students who open-enroll from larger to smaller districts was dismissed Tuesday by the Senate Education Committee. Lawmakers rejected the bill on a 6-1 vote.

House Bill 1150 creates a new mechanism to calculate state aid for students who open enroll, basing per-student funding on the fall enrollment of the larger of two schools involved in the transfer.

The bill has been one of the more controversial measures of the legislative session.

It has been characterized as a battle between large schools and small schools and has drawn fierce opposition from Education Secretary Tom Oster. Lawmakers even ramped up the rhetoric during debate – supporters tagged it as taxpayer abuse and opponents characterized it as the end of small schools.

Superintendents from both large and small school districts traveled to Pierre to air their respective opinions on HB 1150.

Joe Graves, superintendent of Mitchell School District, told lawmakers that debate over the legislation had drifted off course. He said the legislation was about fairness and equity, not about limiting choice or ending small school aid. Graves also challenged the notion that the bill had driven a wedge between small and large districts.

“We can have a civil discussion about legislation without it splitting up schools in the state,” he said.

Other supporters, including superintendents from Huron and Madison, told lawmakers that it is difficult for taxpayers to understand why buses from several districts travel into their district to pick up students.

Britton-Helca Superintendent Don Kirkegaard testified against the legislation. He said approving the legislation would limit choice, particularly for low-income students whose parents may not have resources to transport their children.

“You can't have open enrollment for minorities, for the economically depressed, unless you have transportation,” he said.

Administrators from Florence, Elkton and Gayville-Volin joined lobbyists and education department officials in opposition to the bill. They called the measure bad public policy and said it would represent a financial double-hit against the state's smaller schools.

Nearly every member of the committee voted against the legislation. But several lawmakers only did so after issuing a word of caution for the future.

Sen. Dave Knudson, R-Sioux Falls, suggested the issue will persist as long as schools don't work out busing issues at the local level.

“As long as we have districts running busses into a neighboring district, this is going to be a source of significant irritation,” he said. “We're going to be back year after year after year with this issue.”

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Updated: Committe backs funding freeze, changes index factor legislation
Posted Monday, March 1, 2010

The political posturing over education funding is officially underway.

In an unusual year in which an economic recession looms large and talk of closing a $40 million budget gap has dominated discussions, the end-game on education funding became a little clearer during a hearing in House Education.

For public education advocates, it wasn’t a good morning.

Following an hour-long hearing on SB 124, only one section of the bill’s original intent survived – the part that freezes education funding for next year. In the Senate-approved form, the measure enacted a funding freeze for next year while promising 4 percent per-student increases once the state’s economy rebounds.

Nearly every education advocacy group, including ASBSD, testified in support of the measure.

The bill’s main sponsor, Sen. Dave Knudson, R-Sioux Falls, invoked often-used vocabulary to describe the legislation, telling committee members that the bill balances “the bitter pill” of a per-student funding freeze with a “promise of a brighter day” when the state’s economy recovers.

His plan hinges on a change to the index factor, the part of the education funding formula that governs per-student increases to education. Under current law, funding is slated to increase each year at the rate of inflation or 3 percent, whichever is less.

As passed by the Senate, the bill alters the index factor to say the per-student allocation will increase by 4 percent or the rate of inflation, whichever is greater. The proposed law also contains provisions to protect the state’s budget during tough economic times and to boost state aid in years of significant inflation.

The bill’s limitations weren’t enough to convince the governor’s office. Jim Terwillger, an official with the state’s budget department, testified in opposition to the bill, characterizing the legislation as costly and a strain on the state’s budget.

Diana Miller, a lobbyist representing a group of the state’s larger schools, was the only other opponent. Miller argued that, though she has supported increased funding in the past, changing the index factor isn’t a good idea in uncertain economic times.

“We were very fortunate last year to get an increase in education while other entities did not,” Miller said. “I don’t think you all have that crystal ball that says this is the way we want to put in stone for the future.”

Sen. Knudson vigorously defended Senate Bill 124, taking aim squarely at the plan’s critics.

“Listening to the opposition testimony, I wondered if we were hearing from two representatives of the administration or just one,” said Sen. Knudson, directing a barb toward Miller, a paid lobbyist for both the governor’s office and a coalition of large schools.

The Senate Majority Leader called it a “sad fact” that the legislature can’t afford a per-student increase this year. Failing to change the index factor to provide greater education increases in the future would be a mistake, he warned.

“I feel like the large school districts in South Dakota are recommending you take this ship and run it as fast as it can toward the rocks and crash it,” he said, suggesting later that not negotiating more for the future means education advocates “truly misplayed this hand.”

Sen. Knudson also took aim at the governor’s office, criticizing the state’s lobbyist for opposing the measure and endorsing a status quo that allows the state budget to grow at more than twice the rate of the per-student allocation.

“[The state’s opposition] shows schools are last, when they should be first,” Sen. Knudson said. “Nothing can better demonstrate the difference between the Administration’s attitude and my attitude, and this bill’s attitude, toward education.”

Committee members weren’t convinced.

Calling the legislation expensive and branding it as a “budget buster,” the committee scuttled the “4 percent or greater” component of the measure, opting instead for language to promise annual increases of 2 percent or the rate of inflation, whichever is greater.

Rep. Ryan Olson, R-Onida, asked lawmakers to adopt the amended version and its calls for smaller education investments in the future. According to Rep. Olson, schools are going to have to wait in line when the economy rebounds.

“When revenues do pick up and inflation picks up, we got a lot of people we’ve got to start paying back,” he said. “State employees have taken zero percent for going on three years now, the providers are going on zero percent, we’ve been saying no to a lot of capital expenses that are going to have to be caught up.”

Shortly after stripping the legislation of its “4 percent or greater” language, Rep. Mitch Fargen, D-Madison, offered an amendment to provide the 1.2 percent per-student increase currently required by law. The amendment failed on a 7-7 vote.

The committee’s action likely sets up the annual House-Senate volley on the state’s school finance policy.

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House Ed tweaks funding for open-enrolled students
Posted Friday, February 19, 2010

Members of House Education endorsed a measure Wednesday that will reduce small school aid provided for students who open enroll from larger schools to smaller schools.

The proposal, filed as HB 1150, creates a new mechanism to calculate state aid for students who open enroll. If passed, per-student aid would be based on the fall enrollment of the larger of two schools involved in an open enrollment.

Lawmakers heard testimony on the bill nearly two weeks ago. During its initial hearing, the bill’s main sponsor, Rep. Deb Peters, R-Hartford, told committee members that the measure would save $1.3 million. She also testified the savings would be redistributed to all schools – a statement later refuted by Education Secretary Tom Oster.

With an eye on the potential savings in a tight budget year, lawmakers backed the bill on a 9-5 vote. The committee’s endorsement came following an amendment that would exempt sparse schools from funding restrictions the bill puts in place.

The measure now moves onto the House.

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House panel backs on-time funding for growing districts
Posted Friday, February 19, 2010

Growing school districts should receive state aid based on the number of students they actually educate in a given year, members of House Education decided Wednesday.

Lawmakers gave unanimous approval to HB 1248, a measure sponsored by Rep. Roger Hunt, R-Brandon. The bill modifies legislation passed in 2007 that provides additional aid to districts with increasing enrollment.

Under the proposal, the amount of state aid deliver to a growing district would be based on the current year’s fall enrollment. Under current law, state aid is based on the previous year’s enrollment, and growing districts receive a one-time payment to help them deal with the influx of students.

Harrisburg Superintendent Jim Holbeck told lawmakers that current formula treats the rapidly growing district unfairly.

Under the current structure, when Harrisburg receives 300 new students each year, the district only receives funding for 150 students that year. Making matters worse, Holbeck added, if a student enrolls after the fall head count, the district won’t receive funds for that student for two years.

In asking for the change, Holbeck also pointed out that the bill doesn’t change the formula that provides declining enrollment districts with a budgetary cushion.

“We did not want a bill that would take from one to give to another,” he said, after suggesting that K-12 education too often looks to “rob Peter to pay Paul.”

Brandon Valley Superintendent Dave Pappone also made the trip to testify. He was joined by representatives from the Department of Educaiton, ASBSD and other education groups who also asked lawmakers to pass the bill.

The measure now goes to the House floor for consideration.

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Fund balance flexibility heads to governor
Posted Friday, February 19, 2010

Schools would be able to maintain a 40 percent general fund balance if the governor signs legislation that has passed both the House and Senate.

Legislation passed in 2007 was designed to gradually lower a school districts maximum general fund balance to 25 percent by 2012. House Bill 1108 suspends that law through 2015, allowing districts to hold up to 40 percent of their budget for cash flow and budget reserve.

The bill, sponsored by Rep. Bill Van Gerpen, R-Tyndall, faced little opposition throughout the legislative process. Just four lawmakers voted against it on its journey through both legislative chambers.

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A tax shift by any other name is still a tax shift
Posted Thursday, February 18, 2010

Sensing the demise of the governor’s plan to freeze the state’s property tax levies, the state’s budget chief told lawmakers on Monday that he plans to seek alternative ways in which to shift state costs on to local property tax payers.

Jason Dilges, the commissioner of the Bureau of Finance and Management, made the comments during a House Taxation Committee hearing on HB 1084.

He told legislators that the state has considered preparing an amendment that would “go about things a little bit differently.” The plan, Dilges said, was to “roll some additional items into the state aid formula.”

Digles’ comments could mean the state plans on resurrecting a proposal floated the last two years to create a “technology and assessment adjustment” component of within the state aid funding formula. The move forces local property tax payers to contribute local effort to help pay the costs associated with technology and assessment.

According to Dilges, the state will work through the appropriations committee in its attempt to shift approximately $4 million in state responsibility onto local tax payers.

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House tables funding freeze
Posted Thursday, February 18, 2010

The House of Representatives on Thursday tabled legislation that would freeze per-student state funding for K-12 education.

The motion to table – which temporarily kills HB 1050 – was approved by a 66-0 vote. The House has delayed action on the legislation for more than a week.

While the bill may be dead for now, the issue isn’t. The Senate has already approved a funding freeze as part of a measure that will provide higher per-student funding increases when the economy recovers.

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By razor-thin margin, Senate votes to freeze per-student aid
Posted Friday, February 12, 2010

Lawmakers are now officially on record backing the governor’s recommendation to freeze per-student funding for FY11, following a close 18-17 vote Thursday in the Senate.

The vote came during floor debate on SB 124, a measure offered by Sen. Dave Knudson, R-Sioux Falls. The intent of the legislation is to boost per-student increases when the state’s economy recovers, but it also contains a funding freeze for FY11.

During debate, Sen. Sandy Jerstad, D-Sioux Falls, proposed an amendment to provide schools with the 1.2 percent increase currently required by law.

“Do we want to completely wipe out their budget for next year?” asked Jerstad. “I think it’s going to be an awful burden on them.”

Sen. Knudson resisted the amendment, suggesting that the state can’t afford the increase this year. Saying again that the freeze is a “bitter bill to swallow,” Knudson recounted the state’s budget deficit, which he says now approaches $40 million, as justification to hold the line on per-student spending.

The amendment failed, but SB 124 passed on a 28-7 vote.

Senators who voted for 1.2 percent increase:

• Abdallah; Adelstein; Ahlers; Bartling; Bradford; Gillespie; Hanson (Gary); Heidepriem; Hundstad; Jerstad; Kloucek; Maher; Merchant; Miles; Nesselhuf; Peterson; Turbak Berry

Senators who voted against a 1.2 percent increase:

• Brown; Dempster; Fryslie; Gant; Garnos; Gray; Hansen (Tom); Haverly; Howie; Hunhoff (Jean); Knudson; Nelson; Novstrup (Al); Olson (Russell); Rhoden; Schmidt; Tieszen; Vehle

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House continues to delay funding freeze vote
Posted Thursday, February 11, 2010

The South Dakota House of Representatives took a pass again Thursday on whether to freeze per-student funding for FY11.

House Bill 1050, which reflects the governor's plan to freeze per-student aid, was scheduled for floor debate on Feb. 9. House Majority Leader Bob Fahen, R-Watertown, has consistently postponed the vote.






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Senate approves index factor change and per-student freeze
Posted Thursday, February 11, 2010

After narrowly supporting a per-student funding freeze for next year, lawmakers strongly endorsed a permanent change to the law that governs annual education increases.

Senators passed SB 124, known as the Knudson bill, on a 28-7 vote. If the measure passes the House, per-student funding will be held at current levels next year but stands to increase at greater intervals as the state's budget recovers.

During debate, Senators narrowly defeated an amendment, proposed by Sen. Sandy Jerstad, D-Sioux Falls, that would have provided a 1.2 percent increase in the per-student allocation for next year. The amendment failed on a 18-17 vote.

For more on this story, stay with Open Forum.


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Senate Ed votes to change index factor, freeze state aid
Posted Tuesday, February 9, 2010

School districts won't receive a per-student increase next year but could be in line for larger increases in the future, according to a plan approved Tuesday by the Senate Education Committee. 

The committee unanimously endorsed SB 124, a measure to change a decades-old state law, known as the index factor, that limits annual per-student state aid increases to 3 percent or the rate of inflation, whichever is less.

Sen. Dave Knudson, R-Sioux Falls, the prime sponsor of the bill, told legislators that his proposal appropriately balances the needs of K-12 schools with the broader interests of the state budget.

Under the Knudson plan, schools would receive a 4 percent per-student increase unless the state budget is in trouble or inflation is abnormally high. In tight economic times, increases would mirror state revenue growth. When inflation is higher than normal, schools are eligible to receive up to a 7 percent per-student increase. 

In addition to changing the index factor, Sen. Knudson’s proposal also implements a freeze in K-12 spending for FY11, eliminating the 1.2 percent increase required by current law.

Sen. Knudson, who has historically fought to boost state aid to schools, characterized the funding freeze is a “very bitter pill to swallow.”

He told lawmakers that the state’s budget deficit has grown $8 million since December, when the governor first presented a recommended state budget. Lawmakers' insistence on reversing the governor's property tax freeze, combined with an unexpected 500-student jump in the K-12 fall enrollment, has lifted the total FY11 budget shortfall to $40 million, Sen. Knudson said. 

“As much as I would like see schools have an increase this year, I don’t see how we can afford it,” Sen. Knudson said.

The state’s budget picture didn’t prevent Sen. Sandy Jerstad, D-Sioux Falls, from offering an amendment to SB 124 to reinstate the $57 per-student increase. She positioned the vote as a rubber-meets-the-road moment.

“Do we value education or not?” asked Sen. Jerstad.

The amendment failed on a partisan vote, but SB 124 drew unanimous support from the committee.

The Senate will consider the full measure this week.

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ASBSD testifies in opposition to K-12 funding freeze
Posted Friday, February 5, 2010

A House Committee voted Thursday to endorse Governor Rounds' plan to freeze the per-student allocation, passing HB 1050 on a partisan 6-2 vote.

Jim Terwilliger, a representative of the state budget office, briefed lawmakers on the mechanics of the legislation. The proposal freezes the amount of per-student funding delivered in FY 11, he said, meaning the dollar amount would continue to increase in future years.

The governor's representative told lawmakers that the funding freeze is necessary, given the state's economic downturn. In asking for their support, he reminded lawmakers of past sessions when lawmakers provided additional money to K-12 education. Those decisions, he said, delivered a total of $125 per student more than the law required.

ASBSD Executive Director Wayne Lueders testified against the legislation, challenging the need to implement an education funding freeze and offering comparisons of how state government has grown at nearly twice the rate of per-student education funding.

“The state's financial troubles aren't the result of overspending on K-12 education,” he said, before asking lawmakers to honor a state law that requires a $57 increase for FY11.

Lueders also reminded legislators of their past decisions to cut aid and programs, telling lawmakers that the state's plans to prop up its reserve accounts have come at the expense of programs that provide additional teacher training and expand programs for students.

Closing his testimony, Lueders asked lawmakers to provide local school boards with some measure of consistency.

“Over the past several years, there has been a wave of temporary funding,” he said, citing examples of programs created one year then cut the next. “A vote for this bill takes away the only confidence that our public system has in a consistent funding stream.”

Jim Hutmacher, a lobbyist for the state's small and mid-sized schools, also opposed the legislation. He asked lawmakers to remember their constitutional obligation to fund schools and railed against the state's history of providing one-time money.

Hutmacher also took time to comment on other pieces of legislation filed to take resources away from schools.

“I believe there are a lot of school districts that can survive this year on zero percent,” Hutmacher said before telling lawmakers that may not be the case if other pieces of legislation are passed.

The House is scheduled to hear the legislation on Feb. 9.

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Education secretary stands firm against funding tweak for open-enrolled students
Posted Thursday, February 4, 2010

Education Secretary Tom Oster on Monday railed against a proposed law that would reduce small school aid for students who open enroll from larger schools to smaller schools, saying it would eliminate parental choice and weaken open enrollment laws.

The proposal, filed as HB 1150, creates a new mechanism to calculate state aid for students who open enroll. If passed, per-student aid would be based on the fall enrollment of the larger of two schools involved in an open enrollment.

Rep. Deb Peters, R-Hartford, a sponsor of the legislation, told members of the House Education Committee that current open enrollment laws are needlessly burdensome to taxpayers because they allow state aid to be calculated based on the school a child attends. The practice costs the state $1.3 million, she said.

“I’m not against open enrollment,” Rep. Peters said. “The issue that I have is when this student chooses to go to a different school and that costs the state’s taxpayers additional dollars.”

Diana Miller, a lobbyist representing a group of the state’s larger schools, testified in support of the legislation. She argued the change will bring fairness to the open enrollment process, moving the practice back in line with the law’s original intent.

Miller also told lawmakers that education aid saved as a result of the change would be redistributed to all schools – a statement that Education Secretary Oster later characterized as false.

In his opposition to the legislation, Secretary Oster characterized the legislation as an accounting nightmare and punitive to students, parents and kids.

“What this bill does is not only penalize the parent for making a decision to open-enroll a student, it penalizes the school in which that child is deciding to attend,” Oster said.

The secretary also called the legislation unfair, citing a state law that prohibits schools from rejecting open enrollment requests. Oster told lawmakers that since small districts can’t reject open enrollments, prohibiting small school aid from following the student reduces the total amount of smalls school aid to the district – a scenario the secretary described as unfair.

Oster also rejected Miller’s argument that money saved as a result of the legislation would stay within the K-12 system, calling the statement inaccurate.

“The department does not have the ability to redistribute those funds,” he said.

Parkston School District Superintendent Shane McIntosh also testified against the bill.

After telling lawmakers that his district doesn’t receive small school aid, and saying that neighboring districts send busses into his district to transport students to other schools, McIntosh told committee members that he’s not concerned about the money a different school receives. 

“I guess we look at it a different way,” McIntosh said. “It’s not about what they’re getting; it’s about what we aren’t doing to keep [students] here.”

Florence School District Superintendent Gary Leighton, the South Dakota Coalition of Schools, and the Rapid City and Sioux Falls school districts also opposed the plan.

The committee did not take action on the measure. House Education Chair Ed McLaughlin, R-Rapid City, did not allow a vote on the bill Monday. Because the bill promises savings, he said the committee will hold the bill until a later day to allow lawmakers more time to evaluate the state’s budget.

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Bill would strip funding adjustment for open-enrolled students
Posted Friday, January 29, 2010

School districts that accept open-enrolled students from larger schools would experience a reduction in the small school adjustment contained in the state aid formula, according to a bill filed in the House of Representatives.

The bill, HB 1150, is sponsored by Rep. Deb Peters, R-Hartford, and Sen. Bob Gray, R-Pierre. The proposed law creates two new calculations in the state’s laws that govern the state aid formula.

The first provision addresses open enrollment between two districts of significantly different size. Specifically, when an open enrollment involves a district that qualifies for the small school adjustment and a school that has an enrollment above 600, no small school adjustment is calculated for that student.

A different provision covers open-enrollment between two districts that both qualify for the small school adjustment, saying the amount calculated for the student is based on the fall enrollment of the larger district.

The legislation is scheduled for an initial hearing for Monday, Feb. 1.

ASBSD is monitoring legislation.

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Senate majority leader files index factor legislation
Posted Friday, January 29, 2010

Sen. Dave Knudson, R-Sioux Falls, has once again introduced legislation to modify the index factor that governs annual per-student increases in state aid to education. The bill, filed as SB124, has often been referred to as “share the pain, share the gain” legislation.

Historically, per-student increases have been determined by the growth in the consumer price index, providing a maximum annual increase of three percent.

Senate Bill 124 establishes a minimum annual four percent per-student increase that would apply most years. The legislation makes exceptions to the rule for years when state revenue growth is down and for years when inflation is higher than normal. Funding also can’t be decreased and won’t be able to exceed seven percent.

The proposed law also freezes the current per-student allocation, meaning the bill’s provisions kick in during the 2011-12 state budget year – a mechanism that is consistent with Sen. Knudson’s support of freezing per-student aid as long as it comes with a “promise of a brighter day.”

Most years, the state’s revenue grows in excess of five percent. The past two years, revenue growth has been negative, but the governor’s proposed budget projects that pattern to reverse in 2011. For next year, the governor’s budget forecasts state revenues will jump in excess of three percent.

To accomplish the “share in the pain, share in the gain” philosophy, the measure charges the legislature’s appropriations committee to adopt revenue estimates for two years. If the projected general fund increase is less than 4 percent, the increase mirrors the lawmakers’ estimates.

In order to head off concerns that appropriators may estimate conservatively, the proposed law also contains an “honesty clause” that provides additional funding for schools if there is a difference between estimated and actual projections.

The measure has 19 Senate sponsors, including legislative leadership from both political parties. On the House side, the measure is backed by the Speaker of the House, the minority leader and the chair of House Education.

The bill has been referred to Senate Education.

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Enrollment increase puzzles, upsets lawmakers
Posted Tuesday, January 26, 2010

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.

“These are growths that nobody could have foreseen,” Darnall said, rattling off a list of atypical district-level enrollment increases. “We did the best estimate that we could at the time.”

 

Due to time limitations, the committee delayed the final portions of the education department's budget hearing.

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Bipartisan Coalition: A hope spring for K-12 funding?
Posted Friday, January 22, 2010

After being bombarded with talk of budget doom and gloom at the start of session, the conclusion of the second legislative week reveals at least some encouraging signs that legislators may be willing to overturn Governor Rounds’ proposal to eliminate the mandatory increase to K-12 education.

In a Rapid City Journal article earlier this week, House Minority Leader Bernie Hunhoff declared that there is bipartisan support to provide K-12 education with the 1.2 percent increase for next year. The statement was backed up by comments from Republican House members Bill Van Gerpen, R-Tyndall, and Roger Hunt, R-Brandon, who called the freeze unfair.

When the Republican legislative leadership outlined their budget strategy last Friday, they said they plan to seek $36 million in cuts from Gov. Rounds’ proposal - $32 million to prevent reserve spending and the additional $4 million it would take to rebuff the governor’s plan to freeze property tax levies.

During the press conference, Sen. Dave Knudson, R-Sioux Falls, said that lawmakers are committed to cuts and refused to eliminate the possibility that K-12 education would be in line for additional reductions.

Early-session reports from education lobbyists have indicated that House Republican leadership was leaning on caucus members to hold the line on the funding freeze. But, the on-the-record commentary in the Rapid City Journal indicates that a coalition supporting education increases may be forming.

Further evidence came today, during Gov. Rounds’ weekly press conference.

Gov. Rounds told the media that he was having personal conversations with lawmakers regarding the budget. He listed just two budgetary areas that have been the focus of talks - providing an increase to K-12 education and lowering school general fund levies.

In his comments to reporters, the governor took a hard line against rebuffing his budget plan. He chided lawmakers for restoring $43 million in cuts last year and said he will not allow lawmakers to spend more than he recommended in his budget – a statement that sounded a lot like a veto threat.

Though the governor wasn’t supportive of the change, apparently some lawmakers are at least willing to put up the resistance.

Categories:2010 Legislative Session, State Aid,

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Bill would ease fund balance caps
Posted Friday, January 22, 2010

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.

Several lawmakers serving on education committees have signed on a co-sponsors of the bill, including Senate Education Chair Cooper Garnos, R-Presho.

 

ASBSD supports the legislation.

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Plan to freeze funding doesn't change index factor
Posted Friday, January 15, 2010

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.

Categories:2010 Legislative Session, State Aid, School Funding,

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Lawmakers offer opening shots on K-12 funding debate
Posted Thursday, January 14, 2010

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.

Categories:2010 Legislative Session, State Aid,

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Gov. Rounds recommends no increase for K-12
Posted Monday, December 14, 2009

Citing a slowly recovering economy and increased expenses from federally subsidized healthcare programs, Gov. Mike Rounds told lawmakers during his FY11 budget address that this year the state can’t afford to provide K-12 education with the legally required 1.2 percent per-student increase.

By forgoing the increase, which amounts to $57 per student, the state can save $4 million next year. The governor also plans to freeze property tax levies for FY11, a maneuver that will shift an additional $4 million from state expenses onto local property tax payers, bringing the state’s total cost-savings to $8 million.

The governor issued warnings regarding the health of the state in recent weeks, reportedly telling various groups that the state’s budget hole was as large as $170 million. During his budget address to lawmakers on Dec. 8, Gov. Rounds fleshed out the state’s economic picture.

According to Gov. Rounds, the state has a $16 million deficit in the current fiscal year (the year that ends June 30, 2010). The gap, created by a drop in state revenue, will be closed using money from a variety of cash accounts without using the state’s two reserves accounts.

Looking forward, the governor forecasts a slight economic recovery. State revenues are projected to increase $34 million in FY11, a 3 percent increase above FY10. Revenues will be bolstered next year by stronger sales tax projections and a rebound in contributions on interest earned from the state’s trust funds.

While revenues are believed to rebound next year, the governor’s budget still paints a bleak financial picture for the state. According to Gov. Rounds, “mandatory” expenses will grow more than $50 million next year and the state will have to use $32 million in reserves to balance the FY11 budget.

In his address to legislators, the governor also urged cautious spending in FY11 in order to lessen the impact of budgetary shortfalls in FY12; the year stimulus money is set to expire. According to his budget numbers, the state will have a $107 million budget gap in two years. The large gap will only exist, however, if the state’s economy does not recover further and lawmakers do not enact spending cuts.

Categories:2010 Legislative Session, State Aid,

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Sparsity funding scaled back, but survives
Posted Friday, March 13, 2009

South Dakota will continue to provide additional aid and consolidation protection for districts serving sparsely populated areas, according to a legislative compromise awaiting the governor's approval.

The agreement comes after a session-long debate that was ultimately settled by providing $1.7 million to the state's most rural schools.

Lawmakers reacted differently to the deal.

Some legislators called the compromise a funding cut, saying the legislation amounts to $600,000 less than qualifying districts would have received if current law was extended. The agreement reduced the maximum amount any district could receive from $165,000 to $123,750 – a change some lawmakers criticized as an attack on the state's rural schools.

But backers of the plan, found in an amended SB 106, say that the proposal represents an increase of $1.7 million above the governor's proposed budget, which eliminated the additional aid entirely.

Sparsity funding was one of the last sticking points in a proposed school funding compromise package that restored a number of the cuts initially suggested by Gov. Rounds.

After the passage of the federal stimulus act, the governor told media outlets that he would back off his proposal to eliminate sparsity aid. But the governor stood his ground at $1.7 million, pushing back legislative attempts to fully fund sparsity.

The negotiations came to a head after the Senate failed to agree with a House's decision to offer $1.7 million. In an attempt to restore the full $2.3 million, Senators pushed the issue into conference committee

During House-Senate negotiations, lawmakers proposed an amendment to restore full funding for sparse schools. The amendment failed. The House and Senate both strongly endorsed the amended version.

The compromise represents the third time sparsity funding caps have been lowered. Originally passed with a $250,000 limit, the cap was lowered to $165,000 and now to $123,750.

Categories:2009 Legislative Session, State Aid,

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Senate votes to end TCA, CTE grants
Posted Tuesday, March 10, 2009

The South Dakota Senate has put an end to a two-year program that provides additional money to South Dakota teachers, voting along party lines Monday to pass HB 1252.

The legislation transfers tobacco tax revenue to the state's general fund, where it will be used to fund the state's ongoing expenses.

In 2007, lawmakers created the education enhancement tobacco tax fund by setting aside $9 million from a voter-initiated tobacco tax increase. Legislators used the new revenue source to fund TCAP, ESAs and $1.5 million in career and tech education.

In response to the state's declining revenue, Gov. Rounds proposed eliminating the special fund and using the money for state aid to general education. Lawmakers went along with that plan Monday.

There may be some money in the final budget for Education Service Agencies, lawmakers said.

Categories:2009 Legislative Session, State Aid,

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Sparsity funding scaled back
Posted Tuesday, March 10, 2009

Facing a threat of a governor's veto to any legislation that would fully fund sparsity, lawmakers passed compromise legislation Monday that legislators said will push the issue into conference committee.

Two days after 55 state representatives endorsed a plan to continue sparsity funding according to current law, legislators passed a hog-housed version of SB 106 that lowers the maximum amount of sparsity funding any district can receive to $123,750. The current maximum is $165,000.

The legislation promises $1.7 million in state sparsity aid next year, $600,000 short of the $2.3 million that state officials estimate would be needed to fully fund the program.

House Majority Bob Fahen, R-Watertown, asked lawmakers to vote for the compromise, saying any amount above $1.7 million took the issue into “veto-land.”

Rep. Tom Brunner, R-Nisland, tried again Monday to ensure full funding, but this time his amendment narrowly failed.

Stay with Open Forum for more updates.

Categories:2009 Legislative Session, State Aid,

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House stands up for sparsity funding
Posted Friday, March 6, 2009

A veto-proof majority of the South Dakota House of Representatives voted Thursday to fully restore Gov. Rounds' proposed cuts in aid to districts serving sparsely populated areas, departing slightly from a rumored school funding compromise agreed upon by the governor and legislative leaders.

The action came during SB 88, a measure that was intended to repeal the sunset on two sparsity laws enacted in 2006.

Rep. Kent Juhnke, R-Vivian, introduced an amendment shortly after the House started debate on the issue. The proposed language limited the amount any district can receive from the measure. The cap, which was lowered from $165,000 to $123,000, was instrumental in bringing the cost of the legislation down to the $1.7 million that was rumored to be available for the program. According to the governor, $2.3 million is needed to fully fund the program.

Lawmakers resisted the amendment, calling the funding cut unfair to rural schools. Funding cuts have been restored for other programs, and supporters of full funding argued the resources are greatly needed by those schools that are “small by necessity.”

Rep. Tom Brunner, R-Nisland, said the compromise was an attack on rural schools and he shamed the governor for proposing the cut in the first place.

After defeating the amendment, lawmakers endorsed the original bill on a 55-15 vote. The Senate endorsed the legislation by a 32-vote margin.

The bill now moves to the governor's desk. Since sparsity funding is typically a special appropriation – and not formula aid – it's likely the funds will have to be added to the general appropriations bill, meaning the debate to fully fund sparsity may not be over.

Categories:2009 Legislative Session, State Aid,

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Final funding proposal taking shape
Posted Thursday, March 5, 2009

It appears the final decisions on school funding will not be put on hold until the final days of Legislative session.

Two converging forces – depleted state revenues and the passage of the federal stimulus package – created a unique situation. State funding must be at a certain level to obtain stimulus funds, but lawmakers and state officials are budgeting cautiously to ensure the state can come out of the recession on solid financial footing.

Further complicating the picture is South Dakota's short legislative session, which is set to conclude on March 13, with one day reserved for the consideration of the governor's vetoes. The United States Department of Education has yet to publish official guidance for the stimulus, meaning the state's budget must be prepared with the limited information available now.

Gov. Rounds' revised budget, presented in January, called for a nearly $20 million net cut to state K-12 education aid, programs and services after including the 3 percent increase to the per-student allocation that the governor asked lawmakers to maintain.

The FY10 school funding proposal, which is not official but is the subject of considerable conversation, would restore a significant portion of the governor's proposed cuts. The details of the proposed school finance package are:

• A 3% increase ($139.94) to the per-student allocation;
• Increasing and decreasing enrollment aid, structured according to current law;
• Restoration of funding for schools serving sparsely populated areas, with a $100,000 maximum cap (decreased from $165,000);
• A reduction in local general fund property tax levies to comply with the Cutler/Gabriel amendment;
• Restoration of full funding for the birth-to-three program;
• A total of $500,000 in funding for Education Service Agencies, down from $2.2 million (DOE officials maintain that Title funds provided directly to schools from the stimulus may be a source of funding that districts could use to purchase service either from ESAs or for services similar to those provided by ESAs.);
• Flat funding for per-student state aid to special education;
• Elimination of the Teacher Compensation Assistance Program, Career and Technical Education grants, Alternative Education program funding and a suspension of grants paid to national board certified teachers.

Categories:2009 Legislative Session, State Aid,

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Senate Ed vote triggers broader funding deal
Posted Thursday, March 5, 2009

Members of Senate Education voted Thursday to transfer funds from an education enhancement fund to the state's general fund – an action that legislators said will set off a “domino effect” of other education funding proposals.

Legislators passed HB 1252 on a 6-1 vote. Legislators said the move effectively ends the state's short-lived Teacher Compensation Assistance Program and clips $1.5 million in career and tech education grants.

“I think we're kind of painted into a corner right now,” said Sen. Ben Nesselhuf, D-Vermillion. “It's my understanding that a lot of dominos will be falling once we place this vote.”

Sen. Nesselhuf's comments underscore the notion that administration officials regarded HB 1252 as an essential piece of legislation. Any attempt to block the legislation or to save the programs would have been considered a deal-breaker, jeopardizing the broader funding package being circulated.

That proposed package, which isn't final, includes restoration of the lion's share of Gov. Rounds' proposed cuts while maintaining the governor's proposed 3 percent increase to the per-student allocation. The final package reportedly involves maintaining aid for districts with fluctuating enrollments and restoring funding for districts serving sparsely populated areas.

Sen. Dave Knudson, R-Sioux Falls, said the education community shouldn't focus on the elimination of two programs. Local schools should consider the entire package, he said.

“When you look at the totality, it seems reasonable to me to eliminate the earmarks,” Sen. Knudson said, referring to TCAP and CTE grants.

Education Service Agencies will survive, but with reduced state funding, Knudson said, adding that schools should purchase service from the agencies and that schools should not be forced to use them.

The Senate Majority Leader also offered forward-thinking advice to school districts. The CPI-W, an inflationary factor currently used to calculate state aid, is dropping, which means schools will likely go without an increase next year, he said.

“I think the education community needs to budget on that assumption,” Knudson said.

The Senate will take up the measure on Monday.

Categories:2009 Legislative Session, State Aid,

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Lawmaker says transfer of tobacco money is 'death knell' for TCAP
Posted Wednesday, March 4, 2009

Members of Senate Education stalled an effort Tuesday to prevent a transfer of education-specific tobacco tax revenues to the state's general fund – a maneuver that one lawmaker says would be the “death knell” for the Teacher Compensation Assistance Program and technical education grants.

The measure, proposed by Gov. Rounds, eliminates the Education Enhancement Tobacco Tax Fund, a special account established in 2007 following passage of an initiated measure that raised per-pack taxes on cigarettes by $1.

During the 2007 Legislative session, legislators diverted $9 million of the increased tobacco tax revenue to the education fund to pay for the Teacher Compensation Assistance Program, Education Service Agencies and $1.5 million in career and technical education grants.

Jim Terwilliger, a representative of the state bureau of finance and management, told lawmakers that the change is needed to balance the states budget.

Regardless of the budget situation, Terwilliger says the change should be made because the increased tax isn't generating as much as legislators originally anticipated. Less revenue will come into the fund in the future because the federal government has increased cigarette taxes, he said.

ASBSD Executive Director Wayne Lueders testified in opposition to the measure.

“We're concerned that in talking about transferring funds, we're actually talking about ending programs,” Lueders said, making a final pitch for lawmakers to continue TCAP and ESAs, two programs that provide professional development for school staff.

Dick Tieszen, a lobbyist representing the Sioux Falls School District, also opposed the legislation, reminding legislators that voters wanted the tobacco money dedicated for education enhancement.

While lawmakers acknowledged the fund transfer will impact the programs, they said that the state's tight budget situation means some cuts will have to be made.

“There's a reasonable chance that [HB 1252] represents a death knell for TCAP, CTE grants and a very substantial portion of ESA funding,” said Sen. Dave Knudson, R-Sioux Falls.

Sen. Knudson said the Legislature will preserve the “most important” cuts proposed by Gov. Rounds, including aid for districts with fluctuating enrollments, sparsity funding, and the birth-to-three program. Lawmakers can't preserve all cuts while at the same time approving a 3 percent increase to the per-student allocation, he said.

Categories:2009 Legislative Session, State Aid,

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'Stimulitus' takes hold of index factor discussion
Posted Tuesday, March 3, 2009

Two pieces of legislation aimed at changing the index factor have stalled in response to fears that changing the state's funding formula would jeopardize access to federal stimulus dollars.

Lawmakers have stripped SB 106 and HB 1254 of their original content, leaving the simple phrase “education shall be enhanced” remaining. In each case, lawmakers were responding to Department of Education requests to kill legislation which they say will prevent South Dakota from accessing more than $100 million in state stabilization funds.

The bills were amended Monday and Tuesday during education committee meetings in the House and Senate, clearing the way for possible House-Senate negotiations in the final day of session.

Department of Education officials cautioned lawmakers against making changes to the law, telling legislators that their informal conversations with advocacy groups suggest no changes can be made to the formula. Other states are trying to attempt formula changes, but have been told they can't, they said.

“Everything we have gotten form the feds say that the existing formula is king,” said Education Secretary Tom Oster. “I know that we're fine if we spend money through the existing formula.”

Not all lawmakers are convinced that changes can't be made. Rep. Ed McLaughlin, R-Rapid City, and Sen. Dave Knudson, R-Sioux Falls, both challenged the department's interpretation of the law and said more information is needed before the state can proceed.

Sen. Knudson, whose effort to change the index factor fizzled Monday in House Education, admitted that index factor language had come down with a case of “stimulitus” – a condition that he said has impacted several bills this year.

Worried that changing the index factor would hurt South Dakota's chances of gaining stimulus funding, Sen. Knudson asked committee members to amend SB 106 to implement the index factor change for FY12, one year after stimulus money runs out.

Lawmakers resisted that notion, arguing that the state can't afford to offer school districts additional dollars than what is currently permitted. Members of House Education then stripped the bill of its contents before passing the legislation to the House floor.

Sen. Knudson returned the favor Tuesday in Senate Education, hogging House Education Chair Rep. Ed McLaughlin's index factor legislation, HB 1254.

Both pieces of legislation will likely head to conference committee, but it's unclear whether the issues can or will be resurrected this session.

Categories:2009 Legislative Session, State Aid, Federal Stimulus,

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House votes to change index factor
Posted Wednesday, February 25, 2009

The House of Representatives has approved a change in the index factor that would guarantee per-student increases of between 3 and 4 percent annually.

Lawmakers voted 41-29 in favor of HB 1254 Tuesday, although there's reason to believe that many lawmakers who voted for the plan may not support it in the future.

House Chair Rep. Ed McLaughlin, R-Rapid City, asked lawmakers to approve the measure so the House would have a vehicle to negotiate with the Senate. The bill may be changed later in the process, he said.

If passed by the Senate, HB 1254 would offer per-student funding increases of 3.9 percent in FY10 and 3 percent in FY11. The totals represent significantly higher increases than Gov. Rounds has proposed this year, and would provide a minimum of 3 percent in the future.

The passage of the legislation provides somewhat of a twist in a year when Gov. Rounds has asked for significant cuts in K-12 programs and services. Bills to redefine the index factor and to provide higher increases to K-12 education have died on the House floor many times.

Categories:2009 Legislative Session, State Aid,

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House leadership says 'money will be there' for TCAP, ESAs
Posted Tuesday, February 24, 2009

Republican leaders in the House of Representatives say they believe in three education programs that Gov. Mike Rounds has slated for elimination and that money will be available to continue the programs.

The comments came Monday during a House State Affairs committee hearing on HB 1252, legislation that seeks to transfer tobacco tax proceeds from a secondary education enhancement account to the state's general fund.

The dedicated account, called the Education Enhancement Tobacco Tax Fund, was created in 2007 after voters approved a $1 per-pack tax increase on tobacco products. The fund has been used to pay for the Teacher Compensation Assistance Program, Education Service Agencies and $1.5 million in career and technical education grants.

“I think we can support these programs in the final budget using general funds,” said House Speaker Tim Rave, R-Baltic, who said he supports the programs but voted for the bill.

Rave said that approving the measure wouldn't kill funding for the programs, but it would fix concerns raised by Rounds Administration officials that suggest the fund is not meeting expectations.

State budget chief Jason Dilges, who presented the legislation on behalf of the governor, told lawmakers that the dedicated fund hasn't generated enough revenue to pay for the programs. The state general fund had to chip-in $400,000 last year, he said.

When pressed by Rep. Bernie Hunhoff, D-Yankton, Dilges said the governor will continue to push for the cuts. But if legislators chose to fund the programs, they should provide a fix for the cash-strapped special fund by making appropriations through the general fund.

Assistant Majority Leader Rep. Krysti Noem, R-Castlewood, said financial circumstances have changed, but her support for the three programs hasn't faded.

“I believe in all of these programs and all of them have had a great benefit,” Rep. Noem said, adding that they will have an opportunity to build the funding back into the general appropriations bill later.

The committee passed the legislation on a 9-4 vote, despite objections from Democratic lawmakers who said that killing the legislation is the only sure way to continue the programs.

Rep. Noem disagreed, telling lawmakers that the tobacco tax fund isn't a sound funding source.

“This fund doesn't have enough dollars in it,” she said.

Categories:2009 Legislative Session, State Aid,

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Index factor bill passes Senate
Posted Wednesday, February 18, 2009

A legislative proposal to change state law that governs annual increases in state aid to education won the approval of the Senate Tuesday.

Senators passed SB 106 on a 26-7 vote, paving the way for the House to consider a measure that would change the state's index factor from “CPI-W or 3 percent, whichever is less” to “CPI-W or 4 percent, whichever is greater.” The bill also contains what supporters call a ‘safety valve' provision that allows for smaller per-student increases in poor economic times.

The measure's prime sponsor, Senate Majority Leader Dave Knudson, R-Sioux Falls, called the measure an “important step forward” for K-12 education funding.

Sen. Knudson told lawmakers that K-12 education's share of the state budget has declined from 39 percent to 31 percent during the past decade – a statistic that business leaders and education advocates say has led to the erosion of South Dakota teacher salaries.

The measure is a long-term solution that would put an end to annual school funding debates, he added.

ASBSD supports the legislation based on a resolution formally adopted at the annual Delegate Assembly.

Categories:2009 Legislative Session, State Aid,

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Stimulus offers $127 million in 'state stabilization'
Posted Sunday, February 15, 2009

• A district-by-district breakdown of Title I and IDEA grants (PDF) REFER US DOE
• A state-by-state breakdown of grants to states (PDF) REFER TO US DOE
• A one-sheet explanation of 'school modernization' funds provided through state stabilization funding (PDF).
• A one-sheet explanation of 'investing in excellent teachers' provided through the federal stimulus package (PDF).

Categories:Federal Stimulus, State Aid,

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Gov. Rounds: Stimulus could prevent K-12 cuts
Posted Friday, February 13, 2009

Cuts to K-12 education may have to be restored if South Dakota wants access to federal stimulus money, Gov. Mike Rounds told reporters during a weekly press conference in Pierre.

The governor said that he's yet to receive complete information on how much the state would receive form the $789 billion stimulus or what types of strings would be attached the federal legislation. More information would be available in 2 to 3 days.

“We don't know what's in the fine print,” Gov. Rounds said. “We're hopeful that there's enough leeway that it will actually help us get through the short term problems.”

The structure of the federal legislation has shifted in recent days and the governor is receiving a continual stream of information – as many as 20 updates an hour, he said – that provide additional information on how federal money would be distributed.

When asked about education funding in the federal stimulus, the governor spoke cautiously.

“We understand most recent legislation lots of strings attached to it,” said Gov. Rounds, adding that recent version of the bills require that states fund K-12 education at the FY08 levels in order to access federal funds. If that's the case, the governor said he would “lobby the legislature not to increase funding, but to leave it at its current level.”

During his hour-long press conference, the governor generally resisted to release number, except to say that the plan would offer $183 million for road construction projects.

He did mention that the legislation included funds to help South Dakota make its share of federal Medicaid payments – relief that would free up state general fund money, the governor said.

Categories:Federal Stimulus, State Aid,

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Senate Education passes index factor bill
Posted Thursday, February 12, 2009

The state should hold the line on school funding decisions made two years ago and should boost per-pupil funding when the economy rebounds, members of the Senate Education Committee decided.

Lawmakers unanimously endorsed SB 106 Thursday, legislation that would change state law – referred to as the index factor - that governs annual per-student increases to K-12 education.

Currently, the per-student allocation increases annually by 3 percent or the rate of inflation, whichever is less. Under SB 106, per-student funding couldn't be cut and would increase by a minimum of 4 percent in most years. However, passing the legislation would likely mean next year's per-student allocation wouldn't increase.

Sen. Dave Knudson, R-Sioux Falls, asked lawmakers to pass the legislation.

“I think the bill adjusts to fit the time,” Sen. Knudson said, adding that the bill would provide the state with flexibility in tough budget times but gives schools larger increases when the state's economy rebounds.

Passing the legislation makes it possible to save funds for districts with fluctuating enrollments, aid to districts serving sparsely populated areas and money set aside for the Teacher's Compensation Assistance Program, according to Knudson.

Tammy Darnall, a representative of the Department of Education, opposed the legislation. She said current law serves as the basis for the governor's budget, which she said “holds school districts harmless” in tough economic times.

Sen. Knudson was quick to contest Darnall's arguments, reminding her that the governor has cut non-formula K-12 aid and programs. The Senator also pointed out that current law is supposed to guarantee an increase in per-student special education funding – a provision that the governor has chose not to honor this year.

“How much is that guarantee worth?” Knudson asked.

Building off the hold-harmless discussion, Sen. Knudson asked committee members to approve and amendment that would ensure the per-student allocation couldn't decrease in any given year.

Under current law, the per-student allocation could decrease accordingly if inflation is negative – a situation that may occur next year, given the continued downward trend of the CPI-W, the inflation measure currently used to calculate state aid.

Inflation statistics released for December show a decline in consumer prices relative to the previous year – an event that hasn't occurred since the South Dakota decided to use the CPI-W to govern state aid increases. If the trend continues, CPI-W will be negative 1.25 percent for FY11.

In briefings with the media, Gov. Rounds has acknowledged that trends in the CPI-W would mean schools wouldn't get an increase in per-student funding next year. The governor hasn't commented on whether K-12 aid would decrease if the CPI-W is negative.

The full Senate will consider the measure next.

Categories:2009 Legislative Session, State Aid,

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Business leaders stump in support of K-12 funding
Posted Wednesday, February 4, 2009

Teacher salaries are eroding and the state's “3 percent or less” school finance policy is to blame, business leaders told lawmakers Tuesday.

The comments came during a Senate Education committee hearing on SB 106, legislation that will permanently change the definition of the index factor that governs annual increases to state aid to education.

Bob O'Connell, a representative of the Sioux Falls Chamber of Commerce, told lawmakers that the business community relies on K-12 schools to ensure the state's students are prepared for the workforce.

“We need to have the best educated and able citizens that we can produce,” O'Connell said. “The most important element in academic achievement is a good teacher.”

To outline limitations the state's “3 percent or less” school finance policy places on school districts, O'Connell shared a 12-minute video featuring data on K-12 funding and labor market trends (see the presentation here).

According to the data, increases in average teacher salaries began falling in 1995 with the adoption of the new K-12 funding formula. During that time, changes in private sector salaries outpaced K-12 teacher salaries, causing what business leaders called the “erosion of teacher salaries.”

O'Connell asked lawmakers to pass SB 106, a measure to change the state's index factor from “CPI-W or 3 percent, whichever is less” to the “CPI-W or 4 percent, whichever is greater.” The bill also contains a safeguard that will tie per-student increases to the state's economic prosperity in years that state revenues don't increase by more than 4 percent.

The bill's prime sponsor, Sen. Dave Knudson, R-Sioux Falls, told members of Senate Education that the bill is an alternative to Gov. Rounds' K-12 funding proposals.

“The governor has proposed a number of cuts to education and has left the per-pupil amount at 3 percent,” Knudson said. “This has been a case of the left hand giveth and the right hand taketh away.”

Sen. Knudson also said that his proposal is designed to work in conjunction with formula changes made in 2007, including sparsity funding and aid for districts with increasing and decreasing enrollment. The measure is also designed to maintain the Teacher's Compensation Assistance Program, he said.

A number of education advocacy groups supported the legislation, including ASBSD, the South Dakota Education Association, the School Administrators of South Dakota and the South Dakota Coalition of Schools.

State government officials provided the only opposition. They said the proposal would make the school formula more complex and that the state' couldn't afford the legislation – claims that Sen. Knudson dismissed.

The committee will take action on the legislation at a later date.

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House Ed Chair proposes bill to end small schools
Posted Monday, February 2, 2009

South Dakota could have 100 fewer school districts by 2013 if legislation filed Monday makes its way through the Legislature.

House Education Chair Ed McLaughlin, R-Rapid City, is joined by a host of Rapid City area legislators in proposing HB 1254, a measure that will increase the minimum school size to 250 and dramatically slash the small school adjustment.

The plan triggers two waves of forced consolidation. Districts with enrollments below 175 will have to consolidate immediately. Schools with less than 250 students will have to merge starting in 2011. According to current fall enrollment numbers, the measure forces the closure of approximately 60 South Dakota school districts.

The remaining small schools aren't likely to survive, though. That's because the proposal also contains a 75 percent reduction in the small school adjustment, dropping the maximum value to $211 per-student by 2012.

That's not all – HB 1254 also:

• Eliminates declining enrollment aid, but keeps increasing enrollment aid for districts that experience a 25-student increase in enrollment.
• Changes the index factor from “3 percent or CPI, whichever is less” to “the CPI-W up to a maximum of 4 percent or the 3 percent, whichever is greater.”
• Increases consolidation incentives temporarily, until 2013.

ASBSD opposes the bill.

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House Ed urged to keep aid for enrollment fluctuations
Posted Friday, January 30, 2009

Public school advocates and administrators urged lawmakers Friday to keep additional state aid for districts with enrollment fluctuations, saying the funding is necessary to stabilize district budgets.

Members of House Education took testimony on HB 1067, a measure that would eliminate increasing enrollment aid and end enrollment averaging for districts losing students, but delayed final action on the legislation until a later date.

Jim Terwilliger, a staffer in the Governor's Bureau of Finance and Management was the only proponent of the legislation. Eliminating the provisions would save the state $6.8 million and is part of the Governor's plan to balance the FY10 budget.

“We all know the budget is in a difficult situation,” Terwilliger said. “If you add this back in, we're going to be dipping into the budget reserve fund.”

ASBSD joined a parade of opponents who asked lawmakers to maintain funding for increasing and decreasing enrollment.

ASBSD lobbyist Dick Tieszen reminded lawmakers of a two-year study of school finance that led to a host of reforms passed in 2007. That legislation added increasing and decreasing enrollment aid, but also included cuts to small school funding and forced consolidation for school districts.

Tieszen cautioned lawmakers that passing HB 1067 would mean they've taken away the positive aspects of the 2007 legislation, leaving only the negative reforms.

“This was important part of a larger package passed in 2007,” Tieszen said (read ASBSD's testimony).

The School Administrators of South Dakota, the South Dakota Education Association and a lobbyist for 11 large schools also testified against the legislation.

Two school superintendents also travelled to Pierre to testify how the loss of the funds would impact their districts.

Parker Superintendent Shayne McIntosh told lawmakers that declining enrollment aid provides a cushion for his district, allowing Parkston to make gradual budget cuts and reduce staff through attrition.

McIntosh also told lawmakers that school district revenue is declining from several sources, including bank franchise tax and apportionment from the Office of School and Public Lands. The fluctuation in state revenue makes it difficult to budget, he said.

Harrisburg Superintendent Jim Holbeck provided legislators with perspective from districts with significantly increasing districts.

“In a school district that always grows, we never catch up,” Holbeck said, telling lawmakers that in some situations his district doesn't receive funding for students until a year and a half after the student arrives.

“I have to hire teachers now,” he said.

The School Administrators of South Dakota, the South Dakota Education Association and a lobbyist for 11 large schools also testified against the legislation.

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Senate Ed endores sparsity aid
Posted Thursday, January 29, 2009

Lawmakers supported defining and funding sparse school districts, unanimously approving SB 88during a Senate Education Committee hearing Thursday.

Passing the legislation goes against Gov. Rounds' FY10 budget plans, which included $2.3 million in cuts for school districts serving sparsely populated areas.

Sen. Dave Knudson, R-Sioux Falls, voted in favor of the change. He said sparsity funding was added after at two-year study of education funding in South Dakota and it needs to continue.

“There really are no other options for these sparse schools,” Sen. Knudson said.

According to Sen. Knudson, the state should adhere to the host of K-12 formula adjustments that were made in 2007 following a two-year study of education funding. That means keeping sparsity and aid to districts with fluctuating enrollments.

Sen. Knudson also said he knows lawmakers are trying to fund sparsity through other cuts to K-12 funding.

“I think that's the way of madness,” Sen. Knudson said.

School superintendents from Faith, McIntosh and Bison made the trip to testify in support of the legislation, telling lawmakers that eliminating the aid would leave gaping holes in their district budgets.

“In our situation, when we'd have an 11 percent general fund cut,” said Mel Dutton, superintendent in Faith. “It's a matter of necessity,” he added.

The district has 18 certified staff and Dutton said Faith runs a very lean K-12 program, providing only what's required for district accreditation.

“Where are we going to cut?” he asked lawmakers before pointing out that the district has already passed a local opt-out that brings in $175,000 a year.

Superintendents outlined how sparsity payments enable rural districts to provide an education to students scattered across vast areas of South Dakota. The administrators were joined in support of the legislation by various education advocacy groups, including ASBSD.

ASBSD Executive Director Wayne Lueders stressed the need to continue sparsity funding, but also reminded lawmakers that SB 88 was necessary to protect rural districts from forced consolidation.

Lueders said the state's mandatory consolidation law, passed in 2007, included an exemption for sparse school districts – a provision that would be eliminated if sparsity laws were allowed to sunset (read ASBSD's testimony on SB 88).

School Administrators of South Dakota, the South Dakota Education Association and the Sioux Falls School District also testified in support of the legislation.

A member of Gov. Rounds' administration provided the only opposition to the bill. The Governor's staff said that sparse schools got by with the money before it was installed and that the only financial burden placed on sparse schools is the added cost of transportation.

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Legislation aims to save sparsity
Posted Wednesday, January 28, 2009

Lawmakers have filed legislation to allow payments to sparse school districts to continue.

Senate Education Chair Cooper Garnos, R-Presho, and Rep. Kent Juhnke, R-Vivian, are prime sponsors for SB 88, a measure that would eliminate the sunset clause originally put into the 2006 legislation that created sparsity funding.

Senate Bill 88 serves two purposes. Not only will the bill trigger critically important sparsity payments for the state's most rural schools, the legislation also ensures districts serving sparsely populated areas won't be forced to consolidate.

South Dakota's minimum enrollment law, established in 2007, exempts sparse schools from the 100 student enrollment floor. If the law is allowed to sunset, the exemption goes away, essentially shutting K-12 education out of the state's most rural areas.

The bill is scheduled for debate tomorrow.

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KELO: Changing '3 percent or less'
Posted Tuesday, January 27, 2009



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Business leaders lay out K-12 agenda
Posted Monday, January 26, 2009



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Republican leadership: Gov. Rounds' K-12 proposals not popular
Posted Friday, January 23, 2009

Gov. Rounds' K-12 education recommendations aren't sitting well GOP lawmakers, Republican legislative leadership said during their weekly press conference.

Senate Majority Leader Dave Knudson, R-Sioux Falls, said proposals to cut sparsity funding, eliminate aid for districts with fluctuating enrollments and to freeze property tax levies will meet opposition.

“There is great distaste for those proposals,” Knudson said, adding that the Senate caucus is looking for funds to restore the cuts.

Sen. Knudson thinks many of those provisions could be saved if legislators changed state law that governs annual per-student increases. He favors language that ties per-student increases to the state's economic prosperity. Under that plan, K-12 per-student aid wouldn't increase this year but would be in for a boost when the state's economy recovers.

“If schools are going to be asked to share on the way down, we are going to share the increase on the way up,” Sen. Knudson said.

House Assistant Majority Leader Kristi Noem, R-Castlewood, said House Republicans are also looking for ways to restore Gov. Rounds' proposed cuts.

She said cutting sparsity funding and aid for districts with fluctuating enrollments shows a lack of regard for the situations those schools are in.

“To just cut those causes me great concern,” Noem said.

Both lawmakers also expressed interest in maintaining the Teacher Compensation Assistance Program, which provides $4 million to K-12 school districts.

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Rounds' revised budget strips non-formula state funding
Posted Friday, January 23, 2009

Non-formula state funding for K-12 education will suffer significant cuts under Gov. Rounds' revised FY10 budget.

The Teacher Compensation Assistance Program (TCAP) and the state's Education Service Agencies are on a list of K-12 programs that the governor has targeted in a second wave of cuts aimed at balancing the state's budget in the face of declining revenue and a struggling economy.

Gov. Rounds presented his recommendations to lawmakers Thursday, six weeks after presenting his initial budget request to the Legislature. Since then, the state's revenue projections have changed, prompting the governor to eliminate $46 million from his original FY10 request.

In his Dec. budget message, Gov. Rounds asked legislators to approve a 3 percent increase to the per-student allocation while requesting approximately $8 million in K-12 cuts, including proposals to eliminate aid for enrollment fluctuations and funding for districts serving sparsely populated areas.

Gov. Rounds' FY10 K-12 recommendations include:

• A 3 percent increase to the per-student allocation for state aid to general education ($10 million increase);
• Flat per-student funding for state aid to special education;
• Elimination of increasing a decreasing enrollment aid ($5.7 million cut);
• Elimination of sparsity funding ($2.3 million cut);
• Elimination of TCAP funding ($4 million cut);
• Elimination of Education Service Agencies ($2.2 million cut);
• Elimination of Career and Tech Ed grants ($1.5 million cut);
• Cuts to K-12 technology services ($611,000 cut)
• Elimination of funding for National Board Certified Teachers and the Alternative Education Program ($543,000 cut)

K-12 Education and the State's FY10 Budget

The $46 million in cuts outlined Thursday were relative to the governor's original FY10 budget request, but actual state general fund spending will only decrease $10 million compared to the state's FY09 budget, a dip of 0.8%.

The governor's proposed 3 percent increase to the per-student allocation amounts to approximately $10 million in increased state spending – an investment offset by other cuts, resulting in a $611,000 reduction in state aid spending compared to FY09.

Programs and services targeted for elimination, including the TCAP, ESAs and CTE grants, were initially funded using revenue generated when voters approved a $1 per-pack tax increase on tobacco. Lawmakers set $9 million aside to provide an ongoing funding stream for the three programs, but Gov. Rounds has shifted that money to the state's general fund.

Dismal Revenue Forecast

During a morning press conference, Gov. Rounds' stressed that his revised budget is “fraught with tough decisions” before he explained the state's bleak revenue forecasts.

The state will be short more than $52 million in the current year – a deficit likely to be made up using the balance of the state's property tax reduction fund. Despite the budget revisions, the governor said the state will still enter FY11 with a $30 million structural deficit.

In a press conference last week, the governor said his economic forecasts show the state pulling out of the recession next year, making $50 to $60 million in new revenue available for FY11.

Looking Forward

Gov. Rounds told reporters his decision to maintain the 3 percent increase for the per-student allocation was based, in part, on the trends in the Consumer Price Index.

Currently, per-student funding increases each year by 3 percent or the CPI, whichever is less. Inflation this year was 4 percent, but will likely be close to zero next year, Rounds said, meaning K-12 wouldn't receive an increase for FY11.

Sen. Dave Knudson, R-Sioux Falls, will introduce legislation to change the index factor that governs annual per-student increases. Under Knudson's plan, the per-student allocation would grow by 4 percent or the rate of inflation, whichever is greater, provided state revenue grows by 4 percent.

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Tight state budget looms over legislature, school funding hangs in the balance
Posted Thursday, January 15, 2009

Amid an otherwise positive state-of-the-state message, Gov. Mike Rounds seemingly warned legislators to reject a proposal to change a state law that dictates annual increases in state aid to education.

The governor asked legislators to resist spending increases for next year and warned them against obligating future Legislature's by making long-term commitments.

“We should not commit dollars that may or may not be there in the future,” Gov. Rounds said.

Gov. Rounds reacted similarly following his Dec. 2 budget address, according to a report by the Argus Leader. When asked his thoughts on a proposal by Sen. Dave Knudson, R-Sioux Falls, to change the state's index factor, the governor likened the plan to “giving future legislators advice.”

Taking off on a message that made headlines last week, the governor told legislators that tax collections have decreased and asked to present a new budget to the Legislature – a proposal he says will come on Thursday, Jan 22.

In his original budget address, Gov. Rounds proposed relatively flat spending for K-12 state aid, balancing a 3 percent per-student increase by making cuts to additional aid for districts with increasing or decreasing enrollment and opting not to renew aid to districts serving sparsely populated areas.

Much of Gov. Rounds' presentation was focused on positioning South Dakota to survive and prosper during the national recession, making special point to contrast our state's relatively stable economy with the gloomy national trends.

The governor had kind words for educators, thanking teachers and administrators who continue to push students to achieve.

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Bill filed to eliminate increasing and decreasing enrollment funds
Posted Wednesday, January 14, 2009

Legislation has been introduced to repeal state laws delivering aid to school districts with increasing or decreasing enrollment.

Since House Bill 1067, put forward by the State Bureau of Finance and Management, was filed prior to session, discussion and action on the measure may come in the early days of session.

The legislation is part of a trio of cost-saving measures Gov. Rounds announced during his budget address Dec. 2 in Pierre. A bill to freeze property tax levies, filed as HB 1068, is also part of the governor's plan.

ASBSD opposes both pieces of legislation.

Since his budget address, Gov. Rounds has told legislators he will remake the state budget and submit a new plan on Thursday, Dec. 22. It's unclear whether the funding cuts and property tax levy freeze will be a part of the revised recommendations.

Additional aid for districts with increasing or decreasing enrollment was part of an “omnibus” education bill passed during the 2007 legislative session.

According to the law, when a school district's enrollment increases by 5 percent or 25 students, the state issues a one-time payment worth half the aid a district would received if state aid was based on the district's current fall enrollment rather than the previous year's student count.

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State aid increase in jeopardy?
Posted Wednesday, January 14, 2009

A struggling economy and dwindling state revenues may jeopardize the annual increase to the per-student state aid, according to a Rapid City Journalreport.

In an interview following Gov. Rounds' state-of-the-state address, Senate Majority Leader Dave Knudson, R-Sioux Falls, said he expects the governor to lower his requested increases when he presents his revised budget to the Legislature on Jan. 22.

“It just seems likely to see all those numbers go down,” Sen. Knudson told the Journal. The Sioux Falls lawmaker did not indicate whether he would support or oppose the governor's plan.

During his Dec. 2 budget address, Gov. Rounds proposed a 3 percent increase to the per-student allocation. The recommendation was offset by nearly 8 million in funding cuts, meaning the proposal amounts to approximately 1.4 percent statewide, according to an ASBSD analysis.

But new talk of freezing the per-student allocation could mean the governor's proposals would amount to a net reduction in state aid, assuming Gov. Rounds would hold firm on his plans to eliminate additional aid for districts with increasing or decreasing enrollment and funding for districts serving sparsely populated areas.

Any cuts to K-12 education funding would likely meet resistance from lawmakers, many of whom have already gone on record against reductions in state aid to education and are calling for closer scrutiny of state spending.

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