Two years ago, South Dakota News Watch, a young news service in the state that offers in-depth stories on a variety of subjects, noted that even after a new half-cent sales tax to provide raises to public school teachers, school districts across the state continue to struggle with their budgets.
That came to mind after watching what just happened in Yankton. After three attempts, voters in the Yankton School District approved an opt out of the state’s property tax freeze so that more funding on the local level can help with that district’s education program.
The opt out requested in the Yankton district was for a maximum annual sum not to exceed $1,850,000 annually for four years, beginning with 2020 property taxes, and payable in the year 2021. Each year, the exact amount of the additional tax levied is to be determined by the YSD school board. Also, the annual additional amount levied may be less than the requested $1,850,000.
Approximately a month ago, the Vermillion School Board officially agreed to opt out of the state’s property tax freeze in the amount of $880,000 for five years.
“This $880,000 is a critical part of our budget that enables us to retain a number of the programs and educational opportunities that we have in the district for the last 15 years,” School Board President Doug Peterson said, “and I certainly do hope that we have the continued support both of the board and of the community for this.”“We’ve all done a lot of work over the last many years with the state Legislature, also,” said board member Tim Schwasinger, “and it just seems like we really do need the public’s confidence to allow us to continue this.”
The Vermillion School District, with the grace of local patrons, has opted out of the state’s property tax freeze in five-year increments as allowed by state law since 2005.
South Dakota law provides the opt-out mechanism for school districts to raise additional revenues for their general funds beyond the amount generated by the existing tax levy and money from state aid. An opt-out allows the district to impose a higher tax levy.
After an opt-out is approved by the school board, district patrons can refer it to a public vote
The local school board 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 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 was needed, Vermillion school board members said.
Rounds said at the time that the state-aid figure represented 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.
It appears that the latest opt-out request made last month will also receive no public opposition. People here want their kids to get a good education and they realize the state will not change. It will continue to shortchange South Dakota public education, leaving school districts no choice but to opt-out of the state’s property tax freeze.
South Dakota News Watch noted in its report from 2018 that more than 44 percent of South Dakota’s 149 school districts currently have opt-outs in place, allowing them to raise additional operating funds by levying taxes on property owners within their district.
It also reported, back in 2018, that thanks to meager increases in state funding in recent years, education officials and superintendents across the state expected that opt-out trend to continue or even grow.
We just witnessed that growth this week. Add Yankton to the list of opted-out districts.
Who can blame Yankton or Vermillion or dozens of other South Dakota school districts from opting out?
For the first time since 2016, school districts won't be receiving an increase in state aid to raise teacher salaries under Gov. Kristi Noem's proposed 2021 budget that was revealed last December.
State education organizations and local education leaders pushed back, hoping to change the proposed state budget to keep the state accountable to the laws passed in 2016 that promised to help local school districts increase last-in-the-nation teacher pay.
Noem urged state departments in December to tighten their belts as they head into a difficult financial year. That plan included not having any discretionary inflation increases for overall K-12 education, Medicaid providers and state employees.
That also means there would be no change between target teacher salaries from 2020 to 2021, making it the third year the state has fallen behind on its promise to keep teacher pay competitive if the budget passes.
There has been talk that since December, a few extra resources have been found that may be funneled to state education. We really won’t know until the state Legislature finalizes the 2021 budget.
What becomes more and more clear is South Dakota when the national, state and farm economy is strong, things are tight budget-wise in our state. When those sectors of the economy aren’t doing well, guess what? Things are still tight, budget-wise in our state.
It doesn’t help that, while a candidate for governor, Noem today signed the Taxpayer Protection Pledge, making a written commitment to the taxpayers of South Dakota to oppose all tax increases.
Such action provides no solution to the revenue dilemmas that haunt our state year after year.
It’s simply an easy way to make revenue shortfalls someone else’s problem to solve -- like the patrons of the Yankton and Vermillion school districts.