Sales Tax Hike Raises SD Teacher Pay Only 54% of Promised Amount

The state Department of Education has released its official calculation of South Dakota’s average teacher pay in the first year of the extra half-penny sales tax to raise teacher pay: $45,625. DOE says that’s an 8.8% increase, meaning our extra sales tax raised pay from an average of $42,245 the year before, or $3,380.

That’s a significant downgrade from the preliminary projection Governor Dennis Daugaard issued last year, when he said South Dakota’s teacher salaries had been raised 11.9% to $46,924 by his hard-fought teacher-pay plan.

The state’s press release says South Dakota is “on track to meeting a statewide target average of $48,500,” but that was the target we were supposed to meet last year. The formula passed in 2016 planned for that target to index up each year; this year, we’re supposed to hit $48,645. We only reached 54% of last year’s target; getting to $48,500 would have required a 14.8% increase.

We’ll need to look around to see how far out of last place nationwide this 8.8% increase raised our teacher pay compared to other states, but $45,625 would vault us above just one other state in the rankings for the preceding school year, moving us from 51st to 50th.

Democrats lined up behind increasing our regressive sales tax on the promise that it would move South Dakota teacher pay to $48,500 PDQ and lift us several ranks up from last place in the nation. The sales tax plan appears not to be delivering on that promise.


37 Responses to Sales Tax Hike Raises SD Teacher Pay Only 54% of Promised Amount

  1. Hate to be the negative Nancy about this, but ‘I told you so.’ Raising sales taxes to fund a teacher pay increase is and was stupid. The Dems should have voted against it and offered a realistic plan.

    Teacher pay and education funding should be funded through state investment funds and eliminating property tax exemptions. You can’t depend on a regressive sales tax on food to deliver consistent returns. Besides overturning IM 22 this was probably one of the stupidest things our legislature ever did on both sides of the aisle.

  2. Charlie Johnson

    Show and blow for a goal that had merit but had a funding source that choked the horse.

  3. The sales tax increase for raising teacher pay kind of worked out like raising liscensing fees and gas tax for fixing our roads. We paid the tax but see little results. Check your local schools general fund balances and you will see that if your school wanted to raise teacher pay that most could have done it. I am completely sick of tax increases and not seeing results. People always question if the increased tax monies will ever reach their intended destinations. Looks like we came up short one more time.

  4. Donald Pay

    Salaries are being raised faster than I thought they would. Daugaard oversold how fast change happens in education, but better to oversell it and get it done, than undersell it and keep the status quo. As long as it keeps going up at 8 percent for a few years, I think people will be OK with it. If it starts sputtering, that’s when people can worry. But people should be vigilant and make sure that the politicans KEEP THE PROMISE.

    Of course, other states are going to be trying to raise teacher salaries, too, in order to correct teacher shortages they are experiencing.

  5. It is indeed good that salaries for good teachers are skyrocketing! Let us hope that the fatcat administrators are getting squeezed.

  6. If we are to believe Mr. H’s math, which is far too complicated for me to comprehend his figuring, might we see a law bill raising taxes 14.8% this session from Mr. Sutton?

    I am almost of the opinion that in big stores like Walmart we make people pay taxes through a toll-booth system when they leave, and they can put the tax money into buckets for the purpose they wish. Teachers, Roads, Police, or fatcat administrators, even.

  7. grudznick Walmart is getting subsidies from the state of SD every year in the amount of between $2 Million to $11 Million dollars in addition to a reduction in property taxes . Keep in mind that is just Walmart – add into that 6 pages of about 240 other businesses getting subsidies including things like prairie berry.
    We don’t work to better ourselves we are working to make a nice life for everyone else

  8. Tinkering with existing tax rates won’t ever really get anything done. What everyone needs is a NEW tax source. Since an income tax won’t ever fly in South Dakota, how about cannabis? It’s already here anyway. Might as well bring it above board.

  9. Just raise the taxes again. It’ll work. It always does. . . Smirk

  10. mike from iowa

    Just cut taxes on the wealthy some more. It’ll work. It always does…Double Smirk.

    Fickstit fer ya, OldPaint.

  11. Neal I don’t give a wit one way or another about cannabis. I don’t believe it’s a dangerous drug and I also don’t imbibe. The issue is not about not enough money in the world , the issue is about a corporate system which moves money from the poor and middle class into the hands of the rich.

    The taxation did very little to relieve Colorado schools or the state deficit. Most of the taxes went to subsidies for corporations. The school system saw very little of tax raised through cannabis sales and is again facing cuts. The state deficit rose to $700 Million this year because very little of that money went towards the state deficit. Mostly it went to the corporate welfare system.
    You have a systematic failure in our economic system that no one wants to talk about and until we force people to break the blame and the taboo of talking about it , it is going to continue. And no I am not talking about moving to socialism or marxism.

  12. Hey, Negative Nancy, while I don’t like regressive taxes and agree that Democrats should have fought harder for a progressive funding mechanism, the funding source isn’t the cause of falling short. The funding formula locked in a target salary and a state aid formula. The amount given to schools under this plan would have been the same regardless of the revenue source. What’s chapping me is that we were asked to swallow this plan with its regressive funding source in order to reach a specific target salary—not in every school or for every teacher, sure, but as an average across the state. I don’t want the state to take back that funding, but the amount we are investing isn’t living up to its promise.

    Even with the remarkable infusion of revenue we passed last year, we may still end up no better than 49th or 50th in the nation. South Dakota still isn’t paying its teachers what they are worth. If we want to compete with other states for good teachers, we need to up our game and our investment in education. OldSarg, if you can find a way to raise teacher pay to competitive levels without raising taxes, tell us now.

  13. Greg is right: we do need to look at our local districts now and ask them how they are using the money. Some districts may well be reaching and beating the target salary, but apparently the majority of teachers are not reaching the target. Do local districts have good reason for not reaching that target? How long will the market allow them to not reach that target?

  14. I agree with Donald, too, that some change, some movement in the right direction, is better than none. But if a massive change that barely passed the Legislature makes so little impact on our teacher pay compared to other states, imagine how much more work we have to do to reach genuinely competitive pay levels. That may be the scariest part of this deal: we expended enormous political capital last year to get the Legislature to take its first serious action after 30 years of being last in the nation. Republicans want us to believe they’ve done their part and can now take teacher pay off the table as a pressing political issue, but really, they’ve only taken a first step. We can’t wait another thirty years to meet a target that by then will still leave us behind the other states.

  15. Democrats in this state are interesting. With 19 colleges in this state not a single Democrat is resourcing important economical resources. In regards to teachers pay they did not bother to actually check where that increase came from- Several thousand people whose pay comes directly out of the state budget took a hit in pay when the teachers got their raise- So Cory you are going to tell me we are making progress? I don’t define progress as workers giving up pay so another group can get an increase as progress. Just robbing Peter to pay Paul so that Democrats feel good as progress.

  16. Donald Pay

    I think there needs to be some follow-up, regarding why the promised increase has fell below target. Sometimes it takes a few years for that money to actually get worked into the system in the way the folks in Pierre envision. Education is a conservative institution and there are lots of moving parts to get going in the same direction. Often it takes a few years for changes to occur to allow the money to flow. That may be the case here.

    On the other hand, you would want to find out if any money is being rat-holed somewhere or diverted elsewhere, either in Pierre or at the district level, and not getting to teachers.

    And, if we had three hands, we could consider whether Daugaard overstated about the raises that would come about. If that was the case, we would want to know how he came up with his figures. What model or assumptions were used and what factors went into the calculations, and why did they not predict accurately? Further you would want to know what is going to happen to KEEP THE PROMISE.

  17. If you were following the news stories Daugaard stated that a huge percentage would be used for property tax relief. Now just to be clear they did not say whose property tax but I can guarantee you it was not for the average person. Oh well you all carry on with the Whine and Cheese which is actually why the Republican and Tea Party are running over you.

  18. Robin-yes we know u think we are snowflakes, crybabies [(alcohol abuser) John Boenhner/Jimmy (superman) Kimmel, weak in war decisions (dead OBL), successfully protested DAPL, successfully protested Vietnam war, and you elected pussy-grabber puppet moron trump. Still sounds like kindergarten for you.

    The reason TP/Republicans are running over us is because you all believe in political incorrectness (verbal abuse) & FOX and Rush; Republican Comey used a bump stock on HRC (sure her campaign had drawbacks) in November, and y’all are puppets/”morons” of Putin

  19. bearcreekbat

    Maybe Robin has a point about “the corporate welfare system,” but it would be helpful if we knew exactly which specific “corporate welfare” arguably could be more effectively used for education.

    Objecting generally to a “corporate welfare system” is not particular helpful or informative. Identifying specific statutory or regulatory programs in South Dakota that provide public monies to particular corporations could make or break a case for redirecting the funding to education.

    For example, many non-profit corporations likely receive some public money from statutory funding programs that could be labeled “corporate welfare.” No doubt many of these corporations provide a valuable contribution to society with the public funds.

    Perhaps there are some particular SD statutes providing “corporate welfare” that could be amended or repealed. Until someone can identify such specific statutory programs, however, we probably still need to find or develop new revenue sources for education.

  20. mike from iowa

    I didn’t see the vote count. I wasn’t interested in the vote count. Could this cluster have passed w/o Democrat votes-the handful that are in the lege?

  21. Isn’t property tax relief just code for TIF’s?

  22. Jerry no Property relief is separate from TIFs Property tax relief is a misnomer it requires that the state go and devalue the property .when the state says it is reducing property tax it really means it’s taxing you for the loss of revenue. TIF is money that is redirected from improved properties. Here is an article for you to read on TIFs
    http://leg.mt.gov/content/Committees/Interim/2015-2016/Revenue-and-Transportation/Meetings/Nov-2015/nordtvedt-tif-dark-side.pdf

  23. 15:1

  24. Wait a minute, Robin. Nothing in either 2016 HB 1182 or 2016 SB 131, the main bills raising the sales tax and changing the school funding formula, called for reducing pay to state employees. The new money sent to the schools was pretty much self-contained in those two bills, not shifted from anywhere else in the budget. Can you fill me in on how money was moved from state payroll to state aid to K-12 schools?

  25. How to raise teacher pay without raising taxes:

    1) Allow teachers to participate in the state health care insurance. They already participate in the SDRS. Open the door to a larger pool of the insured. The state health care insurance is just about $400/month. The average for a teacher in South Dakota is $1,300 per month. For the “average” teacher making $39,000/yr that would mean a 27% pay increase.

    2) You got a better idea “Cory”?

  26. Robin is right that TIFs are a completely separate issue. The property tax relief that took place was a dedication of 34% of the new sales tax revenue to lowering the general education property levies (see 2016 HB 1182 Section 17). The majority of that relief went to commercial property, the levy on which was five times higher than the ag levy and over two times higher than the residential levy.

  27. Donald Pay

    Robin points out what has been a problem that needs to be addressed. I thought maybe it had been addressed with the Daugaard revision of the state education aid formula, but maybe not. She could be right about why the teachers are getting shorted.

    Since the 1990s when Janklow revised the formula, the state placed what are essentially revenue limits on local districts. This limits the ability to raise local (property tax) revenue. Before Janklow, short-falls in state aid could be made up by an increase in the property tax. The state had been such a dead-beat over decades that districts raised property taxes, rather than fight with the governors and legislature for more state aid. After Janklow, the revenue limits boxed districts into certain limits beyond which they could not raise property taxes without an opt out.

    Simultaneously the state increased state aid to education, but not all of that state aid went to education. About half to two- thirds of that “aid to education” was actually a pass through to property tax relief. Although the politicians crowed about how much money they were giving to schools and how much money they were passing out for property tax relief, they were double counting the same money!!!

    So, Robin is probably right here. If the state didn’t significantly relax or eliminate those limits, teachers ain’t going to see all those raises, because the state has had a thirty year run now of double counting money and fooling people that they are sending all this money to school districts. It’s a big lie.

  28. OldSarg, I think extending state health insurance to teachers is a good idea for lowering costs for school districts and freeing up more money to increase teacher salaries to levels competitive with neighboring states. Thank you for the suggestion.

    The logical extension of “Open[ing] the door to a larger pool of the insured” for cost savings is to open the state health insurance pool to all local public employees and all private-sector employees, which would allow city and county governments and small businesses to enjoy similar cost savings and divert more money to pay increases for all South Dakota workers.

    And of course, that logic extends to opening up medicare as a public option for every American, or ultimately Bernie Sanders’s single-payer system. We can raise everyone’s wages by taking the cost of health care off private employers and bearing it collectively as a society.

  29. Roger Cornelius

    Consider me naïve, but why didn’t Governor Daugaard and the republican legislature use the 1% sales tax increase use it for its intended purpose, teacher pay increases?
    It should have been that simple.

  30. Cory: “And of course, that logic extends to opening up medicare as a public option”.

    Can you give us one example where anything controlled by the government that actually became less expensive?

  31. John Tsitrian

    OldSarg, I can think of at least one case where the relaxation of government controls made things considerably more expensive, and that’t the Financial Services Modernization Act of 1999. The resulting debacle in less than a decade afterwards made life miserably expensive for the entire country. Sgt. John Tsitrian, Third Battallion/Fourth Marine Regiment, Republic of Vietnam 1966-1968

  32. Thanks, John! In addition, let us address OldSarg’s tired, generic trope by citing Medicare, which provides medical insurance for nearly every old civilian in our country more cheaply than the private sector would, and public education, which delivers universal K-12 schooling for less than private schools can.

    But I’m not sure why OldSarg balks: his own logic was that adding teachers to the state pool increases the pool and decreases costs. That’s not even a government argument; it’s just a plain statement of how an insurance pool works, regardless of who controls it. And note that the state’s insurer is a private company. So hey, let the state buy insurance for everyone through DakotaCare. Increasing the pool will decrease costs.

  33. John Tsitrian

    Re: healthcare being cheaper if government-controlled. The evidence on a macro scale is strongly in favor of that argument. OECD says healthcare costs are 17% of U.S. GDP, the next highest proportion going to Switzerland at 11%, with most of the industrialized countries that have government-controlled healtcare systems being in that 10-11% range. No guarantee that an Americanized version would yield the same results, but I’d sure love it if the money represented by that 6% difference could be spent on other goods and services. My Republican business-oriented chops are slavering at the prospect.

  34. Old Sarge is correct on the insurance and should be handled through the state system of insurance to include dependents as does the current state plan. This actually would give the teachers real take home pay that would make an incredible economic development program for the state. The actual numbers depend on each district for savings, but 27% for a family is probably a starting point for average numbers.
    Some of these districts have older teachers and with that comes higher costs for that particular small group. This would provide the healthcare and save taxpayer dollars. Counties and municipalities could and should be able to do the same with their employees. This would increase sales tax numbers with purchasing power and pay off student loans.
    The state could also offer some sort of incentive plan as well to help pay off those student loans if a teacher were to come to a district that was remote or had other hardship issues.
    jerry 2/1 Infantry, 196th Light Infantry Brigade, I Corp Republic of Vietnam 1969.

  35. mike from iowa

    My government tells US Hospitals they will pay x number of dollars for each individual procedure. Hospitals routinely charge a much larger x for those same procedures. How is that not saving money on healthcare provided by the government?

    The hospital receives a guaranteed amount of money rather than hope uninsured patients can be asked, begged, threatened into paying much higher costs. Uninsured patients get charged the maximum amounts and the accounts get turned over to collection agencies pretty pronto.

    http://abcnews.go.com/blogs/health/2013/11/20/sticker-shock-investigating-the-high-costs-of-hospital-bills/

    This was not exactly the investigation I looked for. But it serves the purpose.

  36. Hospitals are tax exempt so they can treat the indigent. The poor could give a crap if they have a good credit rating or not as they already know they are forever screwed. If their paychecks are garnished, then they go find something else to do until they are garnished again. “Federal Wage Garnishment Limits for Judgment Creditors. If a judgment creditor is garnishing your wages, federal law provides that it can take no more than: 25% of your disposable income, or. the amount that your income exceeds 30 times the federal minimum wage, whichever is less”. In many cases, the collection agency’s are owned by the hospitals themselves, so they get to write that loss off as well. Good business.