Lawmakers Return for $35-$40M Budget Fix

March 29, 2010

With costs increasing and no additional money coming from the state, South Dakota teachers could lose their jobs and property owners in some districts might be asked to pay more for education.

Tight budgets are nothing new to South Dakota schools. But in a bill signed Friday by Gov. Mike Rounds, lawmakers removed a scheduled 1.2percent increase to the per-student state aid formula.

It means school districts such as Lennox are losing ground to inflation.

In a Chamber of Commerce roundtable last week, Lennox Superintendent Pat Jones called the funding freeze "devastating."It’s getting increasingly expensive to feed and transport students and provide employees with health care, he said.

"Yet, we have less and less to do things with,"Jones said. "There’s a reason fewer people are going into education, and it’s getting harder to hold onto good staff."

The freeze was not entirely unexpected.

Formula funding is supposed to increase by 3 percent or the rate of inflation, whichever is less. School officials last summer thought inflation might be flat, meaning there would be no increase from the state.

The figure ended up at 1.2 percent, but in his budget,Rounds proposed changing the formula so there would be no per-student increase.Lawmakers ultimately agreed.

"A lot of schools have been preparing for the worst," said Brian Aust, spokesman for the Associated School Boards of South Dakota.

But what the funding freeze will look like in the classrooms depends on the district.

Need great, timing bad for opt-outs

"It’s going to be handled 154 different ways,"Aust said. "There’s a lot of school districts that are considering extending or pursuing new opt-outs; it’s a tough time to ask yo ur constituents to do that."

Harrisburg, which spends less per-student than all but two of the state’s school districts, is looking into opting out of the state’s property tax freeze, Superintendent Jim Holbeck said. It would open up another$1.2 million per year.

Brandon Valley plans to spend about $150,000 in reserves but also reduce expenditures, anticipating the state’s budget – and consequently those of school districts – will be in even worse shape next year.

"The only question is how deep will we need to go?" Superintendent David Pappone said of spending cuts.

Two years ago, Rounds chided school districts for stashing away millions in rainy-day funds. Tri-Valley Superintendent Terry Eckstaine said those reserves now are softening the blow for the schools.

"We won’t have to make any drastic cuts" to personnel because of the reserves, Eckstaine said.

At West Central, Superintendent Jeff Danielsen saw trouble coming a year ago. When two teachers retired, administrators filled only one of those jobs.

"We tried to be a little proactive," he said.

K-12 education could benefit from a bill waiting for action in the U.S. House, which would send an estimated $31 million to South Dakota through an extension of an increase in Medicaid dollars. If and when the bill passes, Rounds is expected to call a special session so lawmakers can rescind many of the $35 million to $40 million in cuts they’ll make Monday.

Other priorities for stimulus money

It’s no sure thing that the stimulus money will come through. Even if it does, K-12 education might not be a priority.

Sen. Jean Hunhoff, R-Yankton, chairwoman of the Joint Appropriations Committee, said education shouldn’t expect any extra money. It received a 3 percent increase last year. State employees received no pay increases, she noted. Any stimulus money should be spent on programs, she said.

Senate Minority Leader Scott Heidepriem of Sioux Falls sees it differently. He advocates for across-the-board cuts for all department except K-12 education and Medicaid. And if the state gets extra stimulus money,he said, priorities should be increases for education, Medicaid providers and state employees.

Heidepriem said it does not matter to him whether education would get its money through the usual formula or a one-time bonus, which wouldn’t carry over to future budget years.

But Rounds, who has handed out one-time money before, has soured on the practice. School districts don’t appreciate that kind of money once it’s gone, he said.

"They’ve kind of burned their own bridges in that respect," he said.

Aust said one-time money isn’t perfect, but any extra dollars would help.

"That would be part of a very bitter pill to swallow but certainly would be welcome," he said.&l t;o:p />