Last updated on 2016-03-18
The South Dakota Legislature wrapped up business Friday, casting its final votes for the Fiscal Year 2017 budget and leaving town before lunch.
That final budget, Senate Bill 172, includes $448.4 million for state aid to general K-12 education. That budget line is where we expect to see teacher pay raises to happen. It does not include approriations for special education, the school sparsity factor, technology in schools, support for National Board certification, or anything else.
That’s $101 million more than allocated to state aid to general education last year, a 29.0% increase. To see just how remarkable that increase is, let’s compare the state aid to general education allocated each year since FY2006:
| Fiscal Year | State Aid to K-12 | K-12 Fall Enrollment | State spending per student (SSPS) | % chg SSPS | inflation previous calendar year | SSPS if increase had matched inflation | SSPS purchasing power in 2006 dollars |
| FY2006 | $282,838,960 | 121,382 | $2,330 | ||||
| FY2007 | $282,838,960 | 121,260 | $2,333 | 0.10% | 3.40% | $2,409 | $2,256 |
| FY2008 | $308,704,345 | 121,338 | $2,544 | 9.07% | 3.20% | $2,486 | $2,384 |
| FY2009 | $336,669,733 | 121,560 | $2,770 | 8.86% | 2.80% | $2,556 | $2,525 |
| FY2010 | $345,749,096 | 122,779 | $2,816 | 1.68% | 3.80% | $2,653 | $2,473 |
| FY2011 | $340,953,505 | 123,925 | $2,751 | -2.30% | -0.40% | $2,643 | $2,426 |
| FY2012 | $276,044,687 | 125,152 | $2,206 | -19.83% | 1.60% | $2,685 | $1,914 |
| FY2013 | $314,937,745 | 127,169 | $2,477 | 12.28% | 3.20% | $2,771 | $2,083 |
| FY2014 | $330,295,934 | 128,746 | $2,565 | 3.59% | 2.10% | $2,829 | $2,113 |
| FY2015 | $340,534,252 | 130,051 | $2,618 | 2.07% | 1.50% | $2,871 | $2,125 |
| FY2016 (budgeted) | $347,719,770 | 130,650 | $2,661 | 1.64% | 1.60% | $2,917 | $2,126 |
| FY2017 (adopted) | $448,404,255 | 131,500 | $3,410 | 28.12% | 0.10% | $2,920 | $2,721 |
Factoring in enrollment, this budget spends $3,410 in state dollars per enrolled student. That amount makes up for the cuts of FY2011 and FY2012 and then some. Even in inflation-adjusted dollars indexed to FY2006, this budget spends 7.8% more per student than we did in our prior peak year, FY2009.
So what does that $101 million mean for teacher pay?
Recall that the new K-12 funding formula (Senate Bill 131) expects that teacher benefits (mostly pension and health insurance) will be 29% of pay and that “overhead” (according to the Blue Ribbon K-12 panel, “operating costs as well as salaries and benefits of non-instructional staff, such as administrators, guidance counselors, librarians and school nurses”) will be 31% of the sum of teacher pay and benefits.
If we work those percentages backwards, we can separate that $101 million into three components (note just a touch of rounding error):
- Overhead: $23.8 million
- Benefits: $17.3 million
- Teacher pay: $59.6 million
$59.6 million is available to raise teacher pay. If we divide that amount equally among the 9,430 teachers who filled the K-12 rolls at the end of last school year, we can raise every teacher’s pay by $6,320. If we divide that amount by the 9,135 teachers the new formula fully funds, the raises can reach $6,520.
If I take a wild guess (based on multiplying actual teacher salary data from last school year and multiplying by the 2% per-student allocation increase in the FY2016 budget) and say that our average teacher pay this year is $41,698, the above dollars, applied by the formula, could produce a statewide average salary of $48,000 to $48,200… which is the minimum the Blue Ribbon K-12 panel was aiming for and not much below the $48,500 goal the Governor declared in January.
I’ve been feeling queasy about whether the Governor’s pay raise plan had gotten whittled down. The above numbers suggest my queasiness was premature and that the Blue Ribbon K-12 panel may have delivered on its big promise.
Now the benefits factor is tricky: according to the Governor’s explanation, we’re folding the $19.2 million local pension levy into the state general fund. If I’m correctly reading that $19.2 million as part of the $101 million increase in state aid to general education, it’s not enough to cover the formula’s expected increase in retirement benefits, never mind any increase in health insurance.
So suppose we raid the overhead factor a couple million to provide a proportionate pension boost. We still have over $20 million to give pay raises to all those non-instructional personnel. Remember the custodians, bus drivers, and school cooks about whom some of the opponents of the teacher-pay plan expressed concern? We had about 7,400 of those workers at the end of last school year. Adjust the formula ratio to make the benefits portion match the pension levy shift, divide $21.8 million among the support staff, and all of those folks can get a $2,960 raise. (That leaves out about 540 administrators… but don’t push your luck, superintendents.)
These numbers are nothing but electrons right now. We now need to watch our school budgets carefully and find out on July 1 just where teacher salaries land. But that $101 million increase in state aid to K-12 general education could be enough to catapult South Dakota impressively far from its 30-year shame of the lowest teacher pay in the nation.
You can coat it with chocolate and marshmallows, just in time for Easter, all that you want to Cory, it is still a rotten egg and this raise is being paid for by the wrong people, and giving another tax break to the people who should be paying for the raise.
Lanny, I still share your distaste for the regressive sales tax funding these pay increases. Our legislative priority should be to protect and expand this improvement in state support for public education while seeking progressive reforms to our tax system.
Cory, I haven’t been following and am not as familiar with the numbers as I would have been if I were in the legislature, but off the top of my head, I’d say you are missing a big piece of the puzzle: what the law also did to property taxes. That affects the money available to schools as well. The administration did a masterful job of not allowing the spreadsheets showing winners and loser school districts that surely exist to be distributed, (and that probably helped get the package passed). The maximum school property tax levies were mandated to be ratcheted down in HB1044 at the same time that the state doles out more money, and that decrease of local funds needs to be factored into your formula. It’s the same format that was used by Janklow when the video lottery monies became available: increase state aid, tell the locals to decrease the property tax burden by a similar amount, except this time there actually IS more money going to the locals than the property tax relief granted. In spite of Shawn Lyon’s protestations that he wasn’t expecting such in exchange for his retailers’ support of the package, they gave it to the retailers and homeowners and ag property owners. I’m remembering the two numbers I heard the BRTF bat around: $75 million more to to schools, $40-45 million for property tax relief. I’m just waiting for the spread sheets to come out sooner or later. It would seem like every school would be scrambling to adopt amended budgets for the year starting July 1, so they ought to be releasing the information soon.
That’s a scary offset, Susan, and you’re right that we should watch for it. My impression was that lowering property tax $36.5 million (that’s the amount we get if we follow the Schoenbeck Amendment’s dedication of 34% of the $107.4 million in new sales tax revenue to property tax relief) was a straight trade with no additional impact on school budgets other than the missed opportunity to put all of that sales tax money to work for education instead of making sales tax payers subsidize property owners.
Ms. Wismer is very right. Righter than most. As much as it enrages you so was grudznick when I pointed out the math and conclusion errors and also the law bill about the tax levy law at 20:49. The legislatures can be more complicated than plain old arithmetic sometimes, I just bet.
I hope this flies and teachers get the raise. I do worry about disproportionate small-school big-school factor. We have been promised things before that we never got — so they could raise taxes. Again, we did not make concessions for the poor.
School funding is complex. There is a “local need” equation that 131 (the new formula) calculates for each district. From that need number, local effort is subtracted, and the remainder to get to that need number is state aid. If the local produces less through property taxes, then the state pays more to get to that need number; if the local pays more in property taxes, their state aid is less. The need number is set. I am not sure if that in part goes to answer Susan’s concern about the shifting of property taxes and state aide, but I think I can say it is a zero-sum movement between the two (under the umbrella of the local need value).