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SD schools struggle to patch budgets together after state cut aid

Parkston superintendent Shayne McIntosh testifies to a legislative committee Monday in Pierre. McIntosh said his board accurately planned for handling its enrollment decline since 2006 but wasn’t prepared for the 8.6 percent reduction in state aid during state government's financial difficulty in 2011. (Bob Mercer/Republic)

By Bob Mercer

Capitol Correspondent

PIERRE — The fastest way to reduce financial problems in many South Dakota school districts is to finish restoring the state aid that was cut 8.6 percent in 2011 by the Legislature, leaders for two statewide school organizations told a panel of lawmakers Monday.

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They said about $23 million is needed to return to the $4,805 perstudent allocation that comes from state aid and the general-education tax on property.

“It isn’t a big leap. It’s very close to what you did (this) year,” Wade Pogany, executive director for the Associated School Boards of South Dakota, told the legislators.

Pogany said he and Rob Monson from the School Administrators of South Dakota made the $4,805 request to Gov. Dennis Daugaard.

The PSA was raised to $4,805 for the 2010 school year and frozen for 2011. Next came the cut to $4,390 for 2012 as the governor called for 10 percent cuts throughout state government and the Legislature took steep precautions during the recession.

The PSA was restored somewhat to $4,491 for 2013. Legislators also provided substantial amounts of other short-term funding for schools this year.

Currently, state aid is due for a 1.6 percent inflationary increase — approximately $5.3 million — for the coming year, unless the Legislature provides more.

“That won’t help our schools any,” said Sen. Chuck Welke, DWarner, a retired educator. He added, “We’re starving our schools to death and it’s time we take some action.”

State law calls for the PSA to increase by the rate of inflation but no more than 3 percent. Another committee member, Rep. Bill Van Gerpen, R-Tyndall, said the Legislature should follow the law — a reference to the two years of the freeze and the cut. The legislative committee, led by Rep. Jacquelyn Sly, R-Rapid City, is assigned to look at an unusual mix of issues including use of capital outlay levies and opt-out levies by school districts.

Capital outlay levies originally were intended for one-time expenses, but the Legislature is allowed more flexibility because of the stateaid cut.

Opt-out levies can be used for general purposes but are subject to a local vote, because they exceed the statewide maximums set by the Legislature each year for generaleducation levies.

The Sioux Falls business manager and school superintendents for Tea, Milbank, Custer, Estelline, Burke and Custer on Monday detailed for the legislative committee the financial difficulties their districts are facing and their usage — or not — of capital outlay levies, opt-outs and reserve funds to offset revenue shortages.

The presentations showed how they are patching together budgets while oftentimes making cuts in personnel, creating larger classes, freezing salaries and assigning multiple duties to the remaining teachers and administrators.

Parkston superintendent Shayne McIntosh said his board developed budgets to reflect declining enrollment without any idea there would be an 8.6 percent cut in state aid. So far, the Parkston board hasn’t sought an opt-out.

“We planned our best,” McIntosh said. “We just couldn’t do both. I don’t know what to tell my taxpayers.”

A common theme in the testimony was increasing difficulty retaining solid teachers and attracting quality applicants for vacancies. The denominator seemed to be pay. Base salaries range from $26,000-plus in some small rural districts to as much as $35,870 at Yankton.

Several superintendents, including Scott Lepke, of Custer, said they see test scores falling.

Lepke said his district covers 1,208 square miles and has about 865 students. The large property-tax base means very little state aid to the district, but Lepke said an optout probably would fail because 73 percent of the households in the district don’t have children.

Instead, Custer has been reducing spending wherever possible. “We currently offer a bare-bones education and we can’t afford to offer many of the opportunities the students are interested in,” Lepke said.

The Burke district gets by with a high school 75 years old and a middle school 60 years old. Local voters accepted a $300,000 opt-out in exchange for a reduction in the capital outlay levy to $231,000, superintendent Erik Person said.

Those are big parts of a $1.8 million overall budget. “We just need to fund our programs and hope our buildings hold together,” Person said.

At Milbank, superintendent Tim Graf said they have “nowhere else to cut.” Voters rejected two opt-outs and the district is using the liberalized capital outlay to help cover a structural deficit that Graf estimated at $350,000 to $450,000.

Graf told the legislators every additional dollar of state aid would help, whether to increase teacher salaries, reduce class sizes or restore programs. “But which way we would go with those dollars, we’d have to debate internally,” he said.

Estelline has two opt-outs that are providing $145,000 on a permanent basis and $350,000 for two more years. Voters are paying about $2 of additional opt-out taxes on every $1,000 of property value, according to superintendent Pat Kraning.

He said Estelline is 22 miles from Brookings and 24 miles from Watertown, which means he faces strong competition for teachers. Estelline is trying to offer attractive salaries, he said.

“People will vote with their feet. Districts need to be able to compete,” Kraning said. “There is a scarcity of teaching candidates out there.”

Sioux Falls uses an opt-out to help pay for programs serving an increasingly diverse population of students who increasingly qualify for free and reduced school meals, business manager Todd Vik said.

Rep. Mike Verchio said he doesn’t have any problem with restoring the PSA to $4,805. “I would back it,” said Verchio, R-Hill City. “But where are we going to find that $23 million? It all comes back to money.”