Governor: SD Might Not Accept Federal School Money (SD)
August 12, 2010
South Dakota may not be able to use more than half of the federal aid it’s due to get from a jobs bill passed Tuesday by Congress because of state rules on spending for schools, Gov. Mike Rounds said.
South Dakota can accept an extra $21 million in federal money for the Medicaid program that provides health care for poor people, Rounds said.
But it might not take an extra $26 million in education aid because acceptance of the money could trigger an increase in local school districts’ property taxes under the language of South Dakota’s school funding law, the governor said. The federal money also would boost public education spending for one year but provide no way to maintain that level of spending in future years, he said.
Rounds said South Dakota and other states will wait to see how the U.S. Department of Education writes rules for the program in a month or so. States need flexibility in using the school money, he said.
"It depends on how they write the rules as to whether we can accept the education money. We hope we can," the Republican governor said.
Wayne Lueders, executive director of the South Dakota Associated School Boards, said the state’s schools have problems but do not face as severe a crisis as those in other places. South Dakota schools have not had large layoffs, but many have had to trim programs because of state budget constraints, he s aid.
Lueders said he was pleased Congress passed the jobs bill.
"We are hopeful we can make good use of this money. We are hopeful it will end up where it was directed, and that is K-12 education," Lueders said.
The U.S. House on Tuesday passed the $26 billion jobs bill, which was signed later that afternoon by President Barack Obama. The bill provides $10 billion to help retain teachers or rehire those already laid off. It also provides $16 billion for six months of increased Medicaid payments to states, which will free up state money to meet other budget priorities.
Rounds joined 46 other governors earlier this year in asking Congress for the additional Medicaid money. That aid will free up about $21 million in state money that can be used for other purposes, such as replenishing the fund that has been used frequently in recent years to cover emergencies and disasters such as floods and blizzards, he said.
The money cannot be used to increase the state’s reserve funds. But Jason Dilges, the governor’s budget director, said the Medicaid money might be handled in a way that would help reduce next year’s budget gap.
Dilges also said the bill passed by Congress requires the extra education money to go through each state’s main funding formula for school districts. South Dakota’s state aid system uses a combination of state aid and local property tax money to fund schools, with the state paying about 57 percent and school taxes paying 43 percent statewide, he said.
The extra $26 million in federal education money might require a $20 million increase in local property taxes, depending on how the rules are written, Dilges said. The bill also prevents states from getting extra money for kindergarten through 12th grade schools if they have cut higher education, and the Legislature this year cut the university system’s budget, he said.
If education spending is increased by $26 million this year, the state would have trouble maintaining that spending next year, when the federal stimulus money disappears and South Dakota’s budget problems are expected to worsen, Dilges said.
South Dakota did not increase funding for public schools this year.
South Dakota’s lone member of the U.S. House, Democratic Rep. Stephanie Herseth Sandlin, voted for the jobs bill, saying it was paid for by spending cuts and the closing of a tax loophole.
"This is about doing the right thing for South Dakota’s children and seniors, and the bill won’t add a dime to the deficit," Herseth Sandlin said.