It’s been nearly five years since the Vermillion School Board voted to continue the school district’s opt-out of the state property-tax freeze by $880,000 annually, meaning that opt-out will soon expire.
Judging by the discussion at Monday’s school board meeting, the board will likely be voting in the near future to extend the opt-out for another five years.
If history is an accurate indicator, there will be no public opposition to such action that will, once again, provide the district with an extra $880,000 of local property tax funding for another five year period.
Among the paperwork provided to school board members for its Monday meeting was an educational sheet that likely will be used to inform the public of what a property tax opt-out is and why it is needed in the Vermillion School District.
“This is a document that we’ve put together to start sharing our information to the public about the opt-out that our district will be seeking this spring,” Superintendent Damon Alvey told the board. “We are in the fifth year of an opt-out; we’ve actually had an opt-out for 15 years so this (the current opt-out) is our third round of opt-outs.
“The current opt-out is for $880,000 (annually) and this spring the board will seek to do that again,” he said.
The information sheet shared with board members provides answers to questions about the opt-out that Alvey said he often asked. One of those questions is ‘what does an opt-out do for our school district?’
“The message is pretty simple. It’s an investment in our students; it’s an investment in our community,” he said. “Some of the things that I talk about when I received these questions is that it is an opt-out of the general fund dollars. It gives us more dollars than we receive in tax revenue and state aid from the state of South Dakota and so it allows our local taxpayers to invest in our community.”
Alvey noted that about two-thirds of school districts in South Dakota “unfortunately operate under an opt-out of the finances of the state of South Dakota because they want to do more than what the tax dollars they are receiving (from Pierre) give them.
“The things that we do with those dollars is invest in smaller class sizes in our lower elementary classes,” he said. “We also think what is an investment is the board put into place this last year a social worker and a career and curriculum technical integrationist which were two pieces of our staff that we felt will have a large impact not only in our professional instruction but also with our abilities to work with students and their families and give them resources.
The extra funding from an opt-out, Alvey said, also helps the school district provide a variety of curriculum and extracurricular opportunities.
“Vermillion offer curriculum that far exceeds a lot of AA-sized schools in this state,” he said. “We have a lot of curriculum that’s rigorous, challenging and gives students a variety of options to take. All of those things, of course, are investments in students and we think they are well worth that.”
The informational sheet that’s been prepared as the current opt-out approaches its expiration at the end of its fifth year notes that South Dakota law provide an opt-out option in order to raise additional revenue for general funds. According to the Associated School Boards of South Dakota, an opt-out is a practice that has become more commonplace for districts in recent years.
The paper notes that if the new opt-out is approved next year, the Vermillion School District will be able to maintain the quality of education for the students in the community. With growing enrollment, opt-out dollars will help keep class sizes at their current levels in addition to attracting and retaining quality teachers, administration and staff.
The informational sheet also states that if a new opt-out fails next year, the Vermillion School District would be faced with a struggle to maintain current offerings to students and staff. It may result in increased class sizes, decreased staff, as well as reduced professional development opportunities.
It is estimated that the annual property tax increases due to the proposed opt-out on property valued at $100,000 would $46 on ag land, $103 on owner-occupied property and $213 on commercial property.
Tax increases on similar classifications of property valued at $150,000 would be $69, $154.50 and $319.50, respectively.
Property with a $200,000 would see its school district property taxes increase by $92 for ag land, $206 for owner-occupied property and $426 for commercial property.
The Vermillion School Board first agreed in January 2005 to opt-out of the property tax freeze for the first time by $800,000 annually for five years. The board noted that at that time that it locally would have to cut the school budget by $350,000 that year to make ends meet while maintaining only necessary programs.
The $800,000 figure was chosen at that time because the district would only receive half the amount — or $400,000 — during the first year of the opt-out, enough to stave off cuts in 2005-06. Board members noted the opt-out would not bring back past cuts.
The board then voted unanimously to put the opt-out on a March 15, 2005 ballot for voters to approve or reverse the decision. The district’s first opt-out began with the 2005 taxes payable in 2006 and concluded with the 2010 taxes payable in 2011.
The Vermillion district's opt-out very first opt-out in 2005 was based on three assumptions: a 2 percent annual increase in state funding, a 3 percent annual rise in expenses and an average loss of five students a year.
The 2005 Legislature approved $4,237.72 per student in state aid. The figure ran $32 higher than Gov. Mike Rounds' request, but the funding still fell far short of what is needed, Vermillion school board members said.
Rounds said the state-aid figure represents about a 3 percent increase. However, Vermillion board members in 2005 interpreted the state-aid increase as a hike of about 1 percent in new dollars because one-time money was no longer included in the aid.
Since then, a new $800,000 opt-out was approved by the school board in 2010 and received no public opposition. The current opt-out which expires soon -- at $880,000 for five years -- was approved in 2015 and like before, the issue was not referred to a public vote by school district citizens.