New Funding Formula Falls Short for Aberdeen Area Schools

Katherine Grandstrand goes to town on the new funding formula and finds that, while all 23 of the school districts in the Aberdeen American News coverage area get more money from the new K-12 funding formula (and her numbers match mine), most will not get enough new state money to raise their average teacher pay to the $48,500 target written into the new teacher-pay law.

Grandstrand samples 23 districts and reports their fall 2015 enrollment, the number of teachers funded by the new formula, and the new state money that would come based on those numbers. Those numbers will change, of course, based on fall 2016 enrollment. But as it stands, only three of the 23 schools listed—Aberdeen, Herreid, and Langford—receive enough money to pay their Senate Bill 131 formula-funded teachers an average salary beating $48,500.

Part of the problem is that the average salary in northeastern South Dakota is just about $2,000 less than the statewide average. DOE stats show the average statewide teacher salary in the 2015 school year was $40,880. For the 23 AAN-region districts, that average was $38,894, 95.1% of the statewide average. Apply the SB 131 funding formula to estimated 2% increases this school year, and that gap remains: $48,357 for the statewide average, $46,383 for the AAN region. (Bright side: that northeast region average creeps up to 95.9% of the statewide average.)

New state money for 23 AAN-region schools $4,869,108
Teachers funded by SB 131 formula 767.68
Average raise for formula-funded teachers $6,343
AY2015 avg salary $38,894
AY2016 avg salary $39,672
AY2017 avg salary for funded teachers $46,383
Actual AY2015 teachers 819.40
Actual average raise $5,942
AY2017 average salary for actual AY2015 teachers $45,614

The averages creep back if we look at actual teachers rather than the lower staff numbers the SB 131 formula prescribes for all but three of the 23 AAN-region schools (Aberdeen, Gettysburg, and Warner). Rejecting the SB 131 and sharing the new money equally with all teachers (as counted at the end of AY 2015, the most recent numbers available) pulls the new AY2017 average to $48,098. The AAN-region schools would fall back a bit further, to $45,614, 94.8% of the statewide average.

And of course, these numbers assume all of the schools would spend every penny of the new money on teacher pay. Such extreme budgeting contravenes the presumptions of the new funding formula, which expects that schools will spend 59 cents out of every dollar on teacher pay, 17 cents on teacher benefits, and 24 cents on other staff and overhead. If schools operated exactly the way the formula expects, average teacher salary in the AAN-region schools would just break $43,000, more than 10% shy of the target average of $48,500.


23 Responses to New Funding Formula Falls Short for Aberdeen Area Schools

  1. 1. Why are these area schools starting under the state-wide average? Independent of new money, is that an issue that ought to be addressed? I see a lot of post-hoc fallacies in the discussion of the new formula: schools that have issues that may have been long standing (ranging from declining enrollment to underfunding salaries to staffing . . . from before the formula) all blame everything on the new formula if they do not meet the new salary target.

    2. Does the WHOLE district general fund dedicate funds to salaries at an appropriate level? Are other spending priorities reducing the funds that (even before the formula change) take money away from salaries?

    3. Does Capital Outlay allow districts to fund salary to a competitive level?

    Without looking at the full spectrum of spending priorities in a district, it is misleading to lay the blame (and all of the success) of any salary level on the new formula alone. I do agree that the new formula alone will not fix all problems with funding allocation priorities, but the ability to make those decisions was reserved for local school boards (local control).

  2. The problem most school districts have with this is that it grossly changes the amount of money they are getting, and grossly changes the amount among the schools. When the bill was proposed every teacher is going to get a big raise, every school is going to be able to increase their salaries, etc. Now its well some schools will, some won’t, some will be able to give big raises, where others not near as much.

    This really hurts some small schools. The demographics hurt their enrollment, and this won’t help any, as you lose teachers, you lose students to neighboring districts.

  3. Joe says it all, the new teacher pay increase will go mostly to bigger more efficient schools. I think this was the plan from the start to kill off the small schools.

  4. Which in some cases might be needed, but in others its easy for some city person to say ride a bus, but they aren’t the ones putting their 7 year old on the bus every morning to ride 45+ miles.

    I talked to a few school members and the big thing they were upset with was how the Governor and state pushed the bill saying every teacher will get an $8K raise, and $48,000 average salary and now a bunch of them are going to be lucky if they can do half.

  5. Darin Larson

    If the plan was to kill off the small schools, then favoring small schools with the 12 to 1 student/teacher ratio for funding and disfavoring bigger schools with a 15 to 1 student/teacher ratio for funding makes no sense.

    The old formula was not going to save small, inefficient schools and neither will the new formula.

    It should also be noted that the new law brings some uniformity to funding that contributed in the past to some schools being haves and some schools being have nots. So called “other revenue” that was outside of the per student formula did not count against a school for state funding. Thus, some schools received hundreds of thousands of dollars for bank franchise tax revenue, state toll revenue etc. It was all based upon the vagaries of where the school was located. The school in one county received huge dollars. Just across the county line another school received nothing.

    The new law phases out this other revenue disparity between school districts over five years. The new law is arguably more fair than the old law.

  6. So after the dust clears South Dakota’s teachers will still be the lowest paid in the nation but there will also be fewer of them. The goal was to shore up the state’s teacher shortage by offering a competitive salary. Oops! The Governor and his Blue Ribbon Panel need to improve their aim.

  7. O, those are all good questions to which we ought to get answers. One item tucked into the Grandstrand article (an item that I think deserves a post of its own) was the observation from Leola that they are above the SB 131 student-teacher ratio because they maintain seven teachers at attendance centers for three Hutterite colonies. The Leola superintendent says that if they cut those jobs and made the Hutterite kids come to school in town, they’d be much closer to formula performance.

    But does the thesis behind those questions lead us back to a situation where the Governor and Legislature will say, “Hey, low teacher pay isn’t our fault, it’s up to local districts to set salaries” and use that excuse to insulate themselves from demands for action for another 30 years?

    Should the SB 131 formula raise schools to the $48,500 target without expecting them to raid capital outlay? I would think that if a school district did everything by the book, followed the funded-teacher numbers and pay:benefits:overhead ratios, they wouldn’t need to draw from capital outlay for salary, would they?

  8. Joe, Greg, brace yourselves: Tony Venhuizen will come out and say that the Governor never promised everyone an $8,000 raise. Recall the State of the State Address:

    This year we will be setting a state target of $48,500 for the average teacher salary. That means approximately $8500 more than the current statewide average. This doesn’t mean that every teacher will receive $48,500 as their salary, or that every teacher will get a raise of $8500. It also does not mean that every district will achieve that target average or that level of raise [Governor Dennis Daugaard, State of the State Address, Pierre, SD, 2016.01.12].

    Everybody was talking about averages from the beginning. I’m pointing out that the plan appears to fall short of its stated goal regionwide and statewide. I’m very willing to have the conversation O brings up about what failings at the local level might keep us from reaching the targets, but we need to first establish just how far the state plan can get us toward reaching the target.

  9. Mark, based on what we know now, I predict we’ll battle with Arizona for 45th in the nation. That’s down from the 37th I was estimating would could get from full-tilt HB 1182/SB 131 and 26th that we could have gotten from the Democratic plan. It’s up to you and me and the freshman class of 2017 to get South Dakota up out of the 40s.

  10. Cory: “Should the SB 131 formula raise schools to the $48,500 target without expecting them to raid capital outlay? I would think that if a school district did everything by the book, followed the funded-teacher numbers and pay:benefits:overhead ratios, they wouldn’t need to draw from capital outlay for salary, would they?”

    That is an excellent question. You refer earlier to the 54/17/24 ratios. I believe the answer to your question is yes, a district would achieve the salary average if those ratios are followed by EVERY dollar spent by the district out of the general fund – not just the new money. Check my math, but if those ratios are used to drive the total dollars given, then working from those total dollars given back through the ratios ought to end up at the $48,500. (Reflexive Axiom, right?)

    Spending capital outlay or an opt out would be needed only to vary one or more of the variables in the formula. Again, that was the preservation of local control. And not to minimize the seriousness of those decisions, some of those will be very difficult to make in districts.

  11. I had written about a 500 essay why the plan is wrong, I erased it all. It should have been set up in 5 blocks instead of 3 and ratios more closely to the reality of SD should have been used. Only districts that came out really ahead are the large and those with factors of 13 and 20 in their SAFE counts. Cory if you will run the ten block student ratio graph and table that was emiled to you. Maybe if people look at it they will see what groups of schools will find it hard to reach targeted ratios. No one has even mentioed yet that some school might have a 20% sped kids and you still have to use those teachers in your ratio. Try to be 15 to 1 ratio with SPED. I’d accept the plan if I thought it treated most schools fairly but it didn’t.

  12. Darin Larson

    You don’t have to use the sped teachers in the ratio calculation. Dept. of Ed. changed their guidance on this.

  13. Went to the calculator on doe sight and they use entire staff. Conventional plus sped.

  14. I’m checking your math, O. Interesting: When I multiply 59.18% (the teacher pay percentage in the new formula) by $665.1 million (the total statewide K-12 need, state and local money) for the current school year, I get $393.6 million. Divide that by 9,430.1 teacher FTEs reported at the end of AY 2015, and I get $41,738, which is within 0.1% of the $41,698 I’ve been using as an estimate for this year’s average teacher salary.

    Now I look at the total K-12 need given by the new formula, minus the pension levy dollars (that money shouldn’t count, right, since we assume schools use that money for pensions, just like before?), and get $725.4 million. Multiply that amount by 59.18%, and get $429.2 million for teacher pay. Divide that by actual FTEs, and we get $45,510 statewide average teacher pay. Divide $429.2 million by the 9,066 formula-funded teachers, and we get $47,350 statewide average teacher pay.

    To reach the target salary statewide at the target staffing levels, we need $10.4 million more than SB 131 provides. It thus appears that SB 131 does require schools to raid capital outlay or break the 59/17/24 prescription to reach the target average salary.

    I invite readers (especially Grudz) to tell me if I’ve miscalculated.

  15. 1254, it’s coming! It’s coming! :-)

  16. Darin Larson

    1254, I was told that the DOE changed their guidance on whether SPED and title one teachers are included for purposes of calculating the 85% minimum. As of about 10 days ago, you don’t have to include SPED and title one teachers. The DOE is leaving up to the schools to make the call. This is different than the DOE told school administrators up until about 10 days ago. Maybe they have not gotten around to updating their online info.

  17. Cory, do you need to also include other revenue (sped, sparsity, ELL) to get to the total state funding?

  18. Librarians do not count in the calculation either. Just an FYI

  19. Ability to use opt outs or capital outlay dollars are only relative to the size of a districts tax base. Just because a district has 600 kids does not mean it’s tax base is large. And vice versa a school of less than 200 might have a huge base. Example going ahead in 2016 . Redfield 601 kids 48.8 certified, 487M tax base. $810k per student. 20 miles down the road. Doland 179 kids ( 3 colonies) , 20 staff, 452M tax base or $ 2.5M per student. Or 7 miles south. Hitchcock Tulare, 216 kids(2 colonies), 23 staff, $543M base or $2.5M of base/ student. So who should find it easier to increase teacher pay?
    Who could spread out an opt of 100 more easily, or take 100 from capital outlay more easily. My point each district is unique and people cannot necessary apply common assumptions to all.

  20. Mr. H, I expect you have miscalculated. Why don’t you just call the Education Department and ask them? Nobody ever said that once you got the money it was going to be easy to get it to the good teachers, but there are good math teachers out there who can figure it out right. or, just take the money they send you and dole it out.

  21. O, the totals I used from the coming year included the LEP, as listed on the DOE spreadsheet. The totals for the current year included small-school adjustment, ELL, and Rule 24:17:03:07 adjustments.

    MJL, would librarians fall into the 24% overhead?

  22. Cory, so is the discrepancy the pension levy? Did that get counted as “new money” when as you pointed out, it is shifted money that was already being used to fund salary/benefits?

  23. O, I subtracted out the pension levy money before figuring salaries, as does, I believe, the DOE spreadsheet.