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Dominoes begin to fall locally after state ed cuts

EDITOR'S NOTE: This is the first in a periodic series of stories examining the impact to the Mitchell School District budget resulting from a 6.6 percent reduction in state funding for K-12 education.

The deep cuts proposed by Gov. Dennis Daugaard and approved by the Legislature earlier this year may have solved South Dakota's $127 million structural deficit in one fell swoop, but the dominoes have only begun to fall at the local level.

The Mitchell School District is facing nearly $800,000 in cuts for the 2011-2012 school year as a result of the lost state funding, and some people are nervous.

"Everybody you talk to says it's going to be a tough year because of the cuts in funding," said Curt Smith, head negotiator for the Mitchell Education Association, which represents Mitchell teachers. The state cuts, some say, will send South Dakota schools skidding backward more than a decade in terms of funding. A recent report issued by the Associated School Boards of South Dakota claims the cuts will leave the state's public schools $54 million short of the level needed keep up with inflation. "In actual dollars, we already knew the dramatic cuts put schools back about five years," said ASBSD Executive Director Wayne Lueders. "But in terms of purchasing power, schools are now far behind where they were 15 years ago." In March, Mitchell Superintendent Joe Graves began preparing his district for a potential $1.2 million reduction in state funding. As it turned out, last-minute legislative changes softened the hit to the state's school districts to 6.6 percent, or $792,000 for Mitchell. One of those changes means that, even with the state budget reductions, homeowners and the owners of commercial properties will not see a reduction in their property taxes next year. It works like this: When property tax valuations rise, tax levies usually drop to stay under prescribed budget increase caps, but in a concession to school budgets, lawmakers voted to keep owner-occupied and commercial tax levies at 2011 levels for 2012, thereby creating more money for education from increased property valuations. The education levy on agricultural property will go down about 4 percent. Lawmakers also found an additional $12.2 million for schools during the 2011 session that will give a one-time funding boost of $97 per student next year. But Mitchell is still losing $792,000 in state funding. Precisely where those cuts will fall won't be officially known until May, when the board formally considers next year's budget. Final budget numbers are due at the end of June. Graves told the school board April 11 that he will request the district's use of opt-out funds be increased from the present $200,000 a year to $400,000 a year to help cope with the state funding situation. In 2003, Mitchell voted to opt out of the state's property tax limitations for up to $700,000 per year. The opt-out is permanent and does not require further voter approval. The school board has, however, only used the full amount of the opt-out once. Graves said it should be noted that schools operate on a July to June fiscal year and opt-out funds are disbursed on a calendar year. That means only half the opt-out funds are available in any given school budget year. So, the school district will have $100,000 from the current opt-out available next fall and $200,000 available from the new request next spring. The district also plans to use $55,886 from budget reserves and a host of other cuts and reductions to adjust to the lesser state funding. Mitchell has done its best to keep its budgets at reasonable levels in years past, said district Business Manager Steve Culhane, who believes his district's fiscal restraint is paying off. "We're continually looking for things we can do without," he said, adding he's convinced the district will do OK for the immediate future. "What worries me is a drop next year to our state aid formula. Our livelihood depends on that."