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How South Dakotans collect and spend money for the common good reflects our shared values — our consensus on what public services we believe we need in.

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Presentation on theme: "How South Dakotans collect and spend money for the common good reflects our shared values — our consensus on what public services we believe we need in."— Presentation transcript:

1 How South Dakotans collect and spend money for the common good reflects our shared values — our consensus on what public services we believe we need in our state and are willing to pay for together. WELCOME to South Dakotans Talking k-12 education funding Finding budget solutions through our shared values

2 Coordinated by: SD Budget & Policy Institute Mission - to promote responsible and equitable fiscal policy through research and education Nonpartisan, not-for-profit 501(c)3 [not a state government function] Funding from Northwest Area Foundation and donations from people and businesses in South Dakota Board of DirectorsSDbpi.org Robert Burns, PresidentDeb Fisher-ClemensKay Jorgenson Dave Volk, Vice PresidentEileen BriggsPaul Dennert Gene Lebrun, Sec/TreasurerRob OliverJim Fry Rich Garry, Past PresidentMary Bibby

3 South Dakota CONSITUTION: Article VIII Section 1. Uniform system of free schools The stability of a republican form of government depending on the morality and intelligence of the people, it shall be the duty of the Legislature to establish and maintain a general and uniform system of public schools wherein tuition shall be without charge, and equally open to all; and to adopt all suitable means to secure to the people the advantages and opportunities of education.

4 Research finding K-12 education salaries in South Dakota compared to regional marketplace How SD funds k-12 education and historic trends Educational Outcomes (South Dakota KIDS COUNT Beacom School of Business University of South Dakota) SD BPI preliminary research on alternatives

5 Lets talk teacher salaries (SD average is 76% of regional average) MT WY NE MT MN IA Regional States

6 Teacher Salaries data source

7 SD teacher salaries are lower than other SD salaries 88% 76% SD wages vs wages in neighboring states All SD private non-farm workers SD teachers

8 SD teachers make more money when they choose to teach in neighboring states… both in actual dollars and in purchasing power Teacher salaries have higher purchasing power in neighboring states. Mt  18% WY  34% IA  28% ND  17% NE  21% MN  29% Where to teach?

9 SD administrators also earn less than their counterparts in neighboring states… in actual dollars and purchasing power (in all states but MT) Administrative salaries have higher purchasing power in most neighboring states. NE  18% MT  5% ND  8% WY  16% MN  20% IA  16% Where to administer?

10 Don’t South Dakota’s low state and local tax rates off-set its lower wage rates compared to neighboring states?

11 State income tax as a factor Increase in neighboring state teachers’ purchasing power after paying state income taxes MT  13% And no state sales tax on anything WY  34% And no sales tax on food or prescription drugs IA  22% And no sales tax on food or prescription drugs ND  16% And no sales tax on food NE  16% And no sales tax on food MN  22% And no sales tax on food or prescription drugs Where to teach? State Individual Income Tax Rates as of StateRates Brackets Stand Deduct Exemp- tion IA0.36%> $0$1,900 $40 credit 0.72%> $1, %> $3, %> $6, %> $13, %> $22, %> $30, %> $45, %> $68,175 MN5.35%> $0$6,200$3, %> $24, %> $81, %> $152,540 MT1.00%> $0$4,270$2, %> $2, %> $4, %> $7, %> $10, %> $13, %> $16,700 NE2.46%> $0$6,200 $126 credit 3.51%> $3, %> $18, %> $29,000 ND1.22%> $0$6,200$3, %> $36, %> $89, %> $186, %> $405,100 SDnone WYnone

12 Share of SD income going to state and local taxes averages 1% more than neighboring states’ average (range for 20 th to 80 th percentile is +2.6% to -3.2%)

13 South Dakota spends 25% less per k-12 student than regional average SD per student spending

14 How SD funds k-12 education Source of funds to support SD k-12 education Federal State Local

15 Sources of k-12 Funding Revenue Charts by SD Budget & Policy Institute - inflation adjusted to 2011 dollar Data Source US Census FESEF Table 11, 2002 through 2011

16 Regional Rankings data source

17 Total per student funding & funding sources for SD school districts FY11 (in thousands)

18 School Funding Formula page 19 of Budget Primer

19 Funding formula 1997 per-student allocation (PSA) $3,350 equalize dollars per student annual increase— lesser of 3% or rate of inflation 44% of districts have opted-out tax limit

20 % of SD state and local revenue supporting k-12 education has decreased since funding formula implemented Data Source: Dept. of Revenue annual Reports 1996 through 2013 Analysis and graphic by SD BPI Data Source: SD Budget Analysis and graphic by SD BPI

21 Analysis and chart provided by SDSU economics Professor Emeritus Ring

22 K-12 spending as % of SD personal income down 25% since funding formula

23 Regional States K-12 education spending FY12 Amount per student by Source: % of Personal Income in state spent on K-12 Total Funds State Funds Local Funds Federal Funds United States$12,331$5,609$5,488$1, % Wyoming$18,446$9,466$7,372$1, % Minnesota$13,163$8,306$3,932$ % North Dakota$13,368$6,748$4,980$1, % Montana$11,336$5,350$4,480$1, % Iowa$12,175$5,407$5,736$1, % Nebraska$12,267$3,876 $ 7175,$1, % South Dakota$10,149$3,093$5,392$1, % Table by SD Budget & Policy Project; Data Source US Census Bureau 2012 Public Elementary-Secondary Education Finance Report

24 2014 KIDS COUNT Data Book Education Domain Rank MN 6 NE 9 IA 13 ND 19 MT 21 WY 24 SD 32 South Dakota KIDS COUNT Beacom School of Business University of South Dakota Educational Outcomes in South Dakota How do we compare to regional states?

25 South Dakota KIDS COUNT Beacom School of Business University of South Dakota

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29 Education Domain Ranking by Year by State Iowa Minnesota776 Montana13 21  Nebraska15179 North Dakota16 19  South Dakota  Wyoming  = Higher ranking (lower is better) Data source South Dakota Kids Count Graph by SD BPI

30 Data & Graphic Source: Testimony by SD Dept. of Ed. to SD Joint Appropriations Committee January 2014

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32 Research on alternatives “ how to slice the pie” 1. Status quo 2. School consolidation 3. Equalizing capital outlay or “other” funds 4. Cap reserves 5. Additional revenue earmarked for education 6. Prioritizing k-12 salary policy 7. Change funding formula CPI measurement

33 1.Status quo decrease in % of revenues committed to k-12 education will continue free up current revenue growth for other priorities (examples: economic development, infrastructure, Medicaid expansion) Allows additional opportunity for decreasing current taxes

34 2.Consolidation 151 school districts in South Dakota Data Source: South Dakota Department of Education Graphic by SD BPI

35 Would consolidating small school districts increase economy of scale?

36 Is consolidation an answer? -1.7% -3.5% Status quo Data Source SD DOE expenditure data & rankings; SD DOE Scarcity Funding. Analysis and chart by SD BPI Assumptions only non-sparce districts consolidated, economy of scale equal to average per student expenditures in SD districts with >600 students

37 3. Equalizing “other” revenue “Other” revenue are not currently equalized and range from $130 to $3,202 per-student, depending on the district. Slide 79 k-12 Education Funding Presentation to Legislative Planning Committee June 16, 2014 by Michael Houdyshell, Director Property and Special Taxes Division SD Dept of Revenue lhttp://legis.sd.gov/docs/interim/2014/documents/LPC Combined.pdfhttp://legis.sd.gov/docs/interim/2014/documents/LPC Combined.pdf

38 Slide 83 k-12 Education Funding Presentation to Legislative Planning Committee June 16, 2014 by Michael Houdyshell, Director Property and Special Taxes Division SD Dept of Revenue lhttp://legis.sd.gov/docs/interim/2014/documents/LPC Combined.pdfhttp://legis.sd.gov/docs/interim/2014/documents/LPC Combined.pdf

39 Cap school district reserves

40 4. Additional revenue options Increasing state sales tax from 4 to 5 cents would raise $206 million per year Additional revenue options used by other states: personal income taxes, corporate income taxes, Sunset clauses on existing tax expenditure statutes higher bank franchise taxes, higher “sin” taxes on tobacco or alcohol, sunset existing tax expenditures statues Other examples you can think of?

41 5. Prioritize k-12 salary policy State salary policy models Employee compensation plan PACE “movement to job worth” in place since FY92 Market-based-pay in place since FY13 (Note: annual FY15 cost $13 million—beyond 3.0% across the board raises) Investment council compensation plan (10 year plan) increases: Base compensation & 7% per year from $184,000 to $362,000 annual ave. Incentive compensation & 7.2% per year from $301,000 per FTE to $602,000 per FTE (Note: total personal services under Investment Council 10 year plan increases from $8.5 million to $18.1 million for 30 FTE)

42 Small group discussion 1. Choose a facilitator 2. Choose a recorder 3. Discuss k-12 education funding and/or teacher salaries Record ideas as you go: areas of general consensus you discover Recommendations or action ideas 4. Prioritize the top 1 or 2 issues you want to share with a larger group

43 Public Questions: Increasing or changing the CPI limit used in the formula Did the funding formula start out high enough per student? What happens when you limit growth to the lower of inflation or 3%? Are there more accurate inflation measuring tools available?

44 Large Group Discussion If you are meeting in a large group – share the range of ideas and options generated with each other. Discuss and then vote for your top priorities Please let the Institute know the outcomes of your dialogue so we can compile it with conversations from around the state (send to If you choose to form ongoing community discussion groups please let us know and we will provide you with contact information for other ongoing grass roots conversations that form around the state

45 Evaluation Please fill out the evaluation – it helps SD BPI provide meaningful reports on this process If you know of other communities that would like to hold this discussion or if you would like to have it repeated in your community – contact SD BPI South Dakotans Talking Help us describe who participated How long have you lived in the community? < 5 years 5-20 years years 35+ years Age Range Employment status Self employed employed full-time employed part-time student work at home unemployed retired no answer Where do you live? On a farm, ranch or acreage In a small SD town (< 1,000) In a medium sized SD town (1,000 to 5,000) In a larger SD town (> 10,000) How would you describe your general world view? Conservative moderate progressive How was your experience? What was your best experience of the event? Did this event None--somewhat-alot Increase your understanding of this topic? Change your perspective on this topic? Increase your ability to engage on this topic? As we facilitate more annual “South Dakotans Talking” events, what should we do differently? Are there other topics you would like to discuss? Thank you

46 How South Dakotans collect and spend money for the common good reflects our shared values — our consensus on what public services we believe we need in our state and are willing to pay for together. THANK YOU for being part of South Dakotans Talking k-12 education funding Finding budget solutions through our shared values


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