Another Surplus, Another Missed Opportunity: Invest Reserves in Ending Teacher Shortage

“In South Dakota, we don’t spend money we don’t have,” says Governor Dennis Daugaard, celebrating South Dakota’s third-best fiscal solvency.

We don’t spend money we do have, either. For the fourth year in a row, South Dakota has posted a budget surplus.

Gov. Dennis Daugaard said Monday that state government finished its 2015 fiscal year on June 30 with a surplus of $21.5 million.

The money came from a combination of state agencies spending $11.5 million less than they were budgeted and state revenues coming in $10 million above forecast.

State law requires the surplus to be put into the state’s budget reserve fund, which now has $126.7 million [Bob Mercer, “SD Puts $21.5M into Budget Reserve Fund,” Aberdeen American News, 2015.07.13].

Governor Daugaard says, ‘When I took office, balancing the budget was my number one priority.” No wonder: his predecessor, now-Senator Mike Rounds, left him with a 127-million-dollar structural deficit. Our budget reserve now equals the amount Daugaard had to cut to clean up Rounds’s fiscal irresponsibility.

Governor Daugaard says the state shouldn’t spend money just because it’s there. But wouldn’t it be nice, instead of our spend-averse Governor socking our tax dollars away in the state mayo jar, we took Minnesota Governor Mark Dayton’s advice and invested that money in education?

$5 million out of the $21.5 million came from unspent K-12 dollars. Bob Mercer notes that that mere quarter of this year’s surplus could provide pay bonuses for K-12 teachers of $500. Divvy up the entire surplus among our 9,200 teachers, and we could give every teacher a $2,300 “stick around, please!” bonus.

But let’s think bigger. First, consider Governor Daugaard’s surpluses:

  • 2012: $37.8 million
  • 2013: $24.2 million
  • 2014: $9.8 million
  • 2015: $21.5 million
  • Average surplus: $23.3 million.

We could break the current budget reserve into three teacher pay raises: $30 million this year (yes, right now: tell Treasurer Sattgast to cut “Welcome Back” checks for every K-12 teacher and send them to the school districts to hand out on the first day of in-service), $40 million next year, and $50 million in August 2017. Such bonuses would effectively raise K-12 teacher pay $5,430. We’d reach 45th in the nation, between Arizona and Utah. We’d burn up $120 million of the reserve, but two more years of average Daugaard surpluses would put the reserve at $53 million. With one more average surplus, we could easily spot teachers $60 million in bonuses in at the beginning of the 2018 school year and reach 43rd in the nation. And we wouldn’t be spending money just to spend it: we’d be spending money to tackle the teacher shortage that pretty much everyone but Lana Greeenfield agrees South Dakota must address.

Governor Daugaard would gripe that I’m proposing one-time money for ongoing expenses. But this reserve-surplus diversion alone covers four years of teacher pay increases. That’s a longer-term plan than Daugaard or the Legislature have come up with. And after four years of loading our teachers up with bonuses, we’ll have the chance to see if better pay attracts and keeps more teachers. If it doesn’t, fine: replace all the teachers with room monitors and let the kids watch Khan Academy all day. If it does, then our Governor and legislators will have had four years to see the program work and to build the political will to find ongoing revenue to sustain and increase our investment in $10K raises ($92 million total) to reach 28th in the nation… or $20K raises ($184 million) to beat teacher pay in any neighboring state and put an end to our teacher shortage once and for all.

Governor Daugaard will hoot and holler about how we spent less last year than we took in. Now if he would just invest that money so we could all hoot and holler.

14 Responses to Another Surplus, Another Missed Opportunity: Invest Reserves in Ending Teacher Shortage

  1. Whoa, hold on there Cory. You are suggesting that South Dakota invest in itself rather than just bragging about the excess money we get from federal taxpayers then stuffing it in a mattress, and then telling teachers to drink some Blue Ribbon. Higher pay for teachers would mean higher spending on main street that would generate sales taxes for further investments in our state. That sounds like sound business to me with a growing economy as its fruits. With thinking like that, “looking good on the radio”, strikes me as a valid reason for more folks to get to know you.

  2. 30-pack of Pabst Blue Ribbon is $18. Work up to that $5,430 raise from the 2017 reserve disbursement, and every teacher in the state can buy 9,050 cans of PBR. That’s a can of beer or every teacher every day for nearly 25 years.

    “Beer for Life”—you tell me that investment won’t solve the teacher shortage! :-D

  3. Porter Lansing

    Hoarding is a psychosis. Pay your teachers, conservative bullies.

  4. We can do better, Cory.

    If teachers are willing to take on an extra 2 students per class, we could get our average student to teacher ratio up from 13.8 to 15.9 to coincide with our good neighbor Minnesota.

    Doing so would reduce our teacher ranks to about 7950. That frees up almost $46.8 million to redistribute – that’s just shy of $5900 per teacher.

    If we’re conservative with our predicted surplus and allocate $15 million annually as bonuses to teachers, that’ll add an additional $1886 to our teachers’ bank accounts (actually less due to all the FICA, payroll, etc. deductions)

    Now here’s the real kicker. Remember Gov. Daugaard’s state of the state in 2012 where he talked about how “other staff” increased from 5,436 in 1971 (with 173k students) to 9,0005 in 2011 (with 123k students)?

    If we cut 2,000 other staff positions and assumed an average salary of $25,000 that gives us $50 million to redistribute to teachers; $6,288 more.

    We increase the average teacher salary by $14,057 and that puts us at about $53,000

    Then we’d be running in the middle 20s for rank.

    And we could steal Minnesotan teachers due to the lack of an income tax.

    What do you say – willing to teach 2 more kids per class (and have the number of teachers per support staff increase from about 1 to 1.13)?

  5. *the “other staff” increased from 5,439 to 9,005

  6. Nick Nemec

    Increasing the student teacher ratio is easier said than done, each school district is required to teach certain classes. One district might have 12 first graders and another 20. Both need to hire a first grade teacher.

  7. Of course it’s not that easy, Mr. Nemec. But then again, small schools used to have one teacher teach multiple grades. If they could do it with slate tablets, what can we do with iPads and digital lesson plans & tutorials?

    I’m very flippantly talking about reducing the state workforce by about the size of Milbank. That’s no small thing to consider.

    But if the value paying teachers more, we have to get the funds from somewhere. It makes sense to shrink our education workforce to reflect the shrinking size of our student body.

    We’re already 40th in the nation in per student spending; that means there’s a sizable disconnect already between teacher pay and our contribution. Asking to increase our per student spending without correcting that disparity is fiscally irresponsible and puts a disproportionate burden on taxpayers.

  8. Typical Dennis Daugaard: Penny wise and pound foolish.

    That said, Wayne brings up a good point. Minnesota has been quite forceful with ensuring their school districts consolidate which is why most of their schools have such unique acronyms. The cost savings were probably substantial in doing that, producing savings that could be used to ensure that we were adequately compensating our teachers. Forced consolidation is an extremely bitter pill to swallow and may lead to some towns dying, but overall it could be the way we keep the system afloat and move us out of 51st place.
    Factoring into this discussion, we must consider the education that we are offering in smaller schools. Are we doing a disservice to students by limiting their educational opportunities? If you are getting a barebones education, it is going to limit you when you are pursing post secondary education, etc. It also limits opportunities for students, whether it be through extracurriculars or socially. We may be able to find balance to this problem through keeping elementary attendance centers in some of these small towns since the advantage of more individual education and location factor in greater for younger children.

  9. I completely agree with Wayne B. Consolidation alone will not solve all of our problems but will be a good start. Cory, you compare salaries of Minnesota teachers with S.D. teachers. If we are going to compete with Minnesota we have to run our schools like they do in Minnesota which consolidated years ago.

  10. Wayne, two problems with turning your math into practical staffing decisions:

    1. Nick nails the first: Your student-teacher ratios work out statewide, but you can’t fire an English teacher at Rutland, Montrose, or Howard and divvy that teacher’s students up among the rest of the English department. You have to shut down entire districts and truck those kids to the nearest Class A school… and even then, very often you’ll be adding more than two students to each teacher’s load. (I’m curious as to which would be the harder political sell: a state income tax, or consolidation resulting in closure of 85 rural school districts?)

    2. The increase in staff (which Governor Daugaard portrayed as needless bloat) has happened in response to the increase in needs, particularly special ed/resource room/tutoring. You want to cut the individualized attention for special-needs students? You want to eliminate Individual Education Plans for kids with diagnosed learning disabilities and leave it to classroom teachers to figure out how to deal with those kids on their own? Adding two special needs kids to a classroom without a resource room specialist to handle the modifications is like giving a teacher an entire extra class worth of work. I don’t know how we got by with all this special-ed staff before the 1970s. Didn’t some of those kids just never go to school? Didn’t they end up institutionalized? If we cut all the “bloat”, what happens to special ed students?

    If you can show me that eliminating independent rural school districts and special-ed staff brings us the savings necessary to raise pay above $50K, and if you can show me that that solution is less damaging to student opportunities, and if you can convince South Dakotans that they built too darn many schools and are trying to do too much for too many kids, then you’ve got a plan for the Blue Ribbon panel. Obviously, I am dubious.

  11. rollin potter

    OK People, According to the wall street journal 10/27/2014 federal aid for K-12 education for schools with high proportions of low income families decreased by 10% between 2010 and 2014!!!!! Maybe all these people who voted for our power house senators and representative( thune,rounds and noem) should give them a call and ask for a little help in this area!!!!!

  12. Rollin, now the feds are undercutting us? Nuts! Does South Dakota have no elected officials who view education as an investment instead of an unwanted expense?

  13. Cory,

    Until we address why we’re 40th in per pupil spending and 51st in per teacher salary, it’s hard to get anywhere. It’s the leaky bucket issue.

    I’m not saying my back of the envelope number crunching is the right idea, but it at least addresses the fact we have a lot more staff per student now than we ever did. Are you telling me you’ve never said to yourself in any of your teaching jobs “just what does he/she do here?” or “that person really is dead weight”? Are you saying every last one of those 18,000 teachers and support staff are absolutely critical to providing quality education to our students?

    And don’t lay a 3600 increase in non-teacher staff solely on the shoulders of special ed students without evidence. Don’t use that as a shield. There’s a lot more “support” for teachers… but if that really made a difference, then we wouldn’t be in the mess we’re in now, would we?

    I’m not saying it’s a great idea… it’s a really bitter pill to swallow. But I have to wonder why we have a half dozen school districts within easy driving distance of Sioux Falls. Look at all the redundancy that could be used to improve salaries and educational opportunities. My neighbors made it real clear they open enroll their students to Sioux Falls because it’s a lot better than the local option…

    IF we want to increase salaries by $14,000 per teacher, it’s a heck of a lot easier to do it by copying Minnesota than it is to raise an extra $128.8 million in taxes (actually, it’d be more due to payroll & FICA taxes).

  14. Deb Geelsdottir

    I’m trying to remember the ratio of surplus in the bank Gov. Dayton said states ought to have compared to annual expenses. It just doesn’t come to my mind. I do know that the surplus in MN is several billion dollars. Of course, MN’s population and budget is much larger than SD’s.

    There was a multimillion dollar surplus again this year, but the Republican controlled house decided to clutch it tightly in their grubby little fists. So major infrastructure work, with accompanying jobs, wasn’t provided for.

    Republicans. Why do they hate America? [sarcasm]