SD Budget: Per-Resident Spending up More than Twice the Rate of Per-Student Spending

Last week I discovered that Governor Dennis Daugaard has actually expanded South Dakota’s general fund expenditures faster than the national average and faster than his sloppily spending predecessor, Mike Rounds. The reawakened Constant Conservative Michael Woodring launches his own examination of Governor Daugaard’s Fiscal Year 2017 budget proposal with an analysis that shows total per capita state budget expenditures growing faster than inflation. Woodring’s budget numbers differ from mine, and he makes some assumptions about inflation and population that may underplay the difference, but his analysis appears to show that two consecutive Republican governors have increased the amount every South Dakotan pays for roads, schools, and crony consultants faster than inflation would justify.

Woodring says per capita, and I think per student. Permit me to apply Woodring’s analysis to the per-student allocation the state uses to determine how much we will spend on K-12 education.

Since FY2005, the per-student allocation has grown from $4,087 to $4,877 in the current fiscal year, with Governor Daugaard proposing $4,891 for FY2017. By Woodring’s calculation, the amount South Dakota spends per resident has increased from $3,713 in FY2005 to a proposed $5,517 in FY2017. Our average teacher salary increased from $34,040 in FY2005 to $40,023 in FY2014; if we extrapolate from that nine-year rate of growth, the FY2017 average teacher salary (assuming, as we do with the current FY2017 PSA proposal, no Blue Ribbon intervention) would be $42,243.

• Annual rate of increase of per-student allocation: 1.51%
• Annual rate of increase of per-resident spending: 3.36%
• Annual rate of increase of average teacher salary: 1.82%

Those numbers suggest that school districts have been able to squeeze more money out of their strangled budgets to increase teacher pay at a faster rate than the stingy per-student allocation increases would allow (and that makes mathematical sense, given that many schools have chosen to opt out of the property tax cap). But the state has expanded per-student spending at less than half the rate it has decided South Dakotans can bear in terms of actual taxation.

Think of it this way: if the state had increased the per-student allocation 3.36% a year, in line with its per-resident spending rate, and if local districts had thus been able to raise teacher salaries at exactly that rate, our average teacher pay in FY2017 would be $50,579, and the Blue Ribbon panel’s “bold” plan to raise teacher 20% to $48,000 would sound like a bad joke.

Update 09:48 CST: Woodring calculates per-resident spending on the total budget, which includes federal spending. We could cut the state some slack and compare the growth rates for per-student allocation and average teacher salary to the growth rate of the general fund, the portion of the budget from which we draw the PSA. From FY2005 to proposed FY2017, the general fund increases at an annual rate of 3.64%. With Woodring’s assumed annual population growth rate over the same period of 1.07%, we end up with annual growth of per-resident general fund expenditure at 2.55%. Increasing the per-student allocation and teacher pay at that annual rate since FY2005 would put the FY2017 PSA at $5,527 (13% higher than Daugaard’s proposal) and average teacher pay at $46,035 (9% higher than my projected no-Blue-Ribbon average).

But consider that local districts managed to increase teacher pay at an annual rate three tenths of a percentage point greater than the per-student allocation rate. If we factor that extra effort from locals into the projection, if the state had increased its commitment to K-12 education at the same rate that it increased its commitment to spending your money in the general fund, we could have seen an average teacher salary in the coming year of $47,720, just a couple trips to the grocery store shy of the Blue Ribbon target.