New DOE Spreadsheet Confirms New Formula Makes $48K Average Teacher Pay Possible

The South Dakota Department of Education has posted a spreadsheet—click and download the “Accountability Calculator”—that will allow every school district to calculate how much new money they will get from the new half-penny sales tax and how much they must raise their average teacher salaries to comply with the new K-12 funding formula.

I have plugged the state’s numbers and formulas into my own spreadsheet to create a comprehensive chart of the funding increases and salary requirements for every school district in South Dakota. I add the following data from the Academic Year (AY) 2015 district profiles and make two key assumptions:

• I input the number of teachers (instructional full-time equivalents) each district reported in AY2015 and assume they did not decrease or increase FTEs in AY2016. I use these staffing numbers to compare with the target number of teachers funded by the new K-12 formula.
• I input the average teacher salaries each district reported in AY2015 and assume those averages increased by 2% this year, in proportion to the 2% increase in the per-student allocation in the state’s FY2016 budget.

I invite school district superintendents and business managers to submit actual data to replace my assumptions for AY2016.

Note also that DOE and I both use student enrollment figures from fall 2015. Student enrollment on September 30, 2016, will determine actual funding for AY2017.

To understand how the spreadsheet works, let me walk you through what the numbers look like statewide.

1. The new formula (here, read DOE’s explanation of Senate Bill 131) allocates $746 million for state aid need in AY2017.
2. That amount includes $21 million is simply a bookkeeping change. Currently the school districts impose a separate pension levy. The new formula eliminates that separate levy and folds that revenue into state aid. That $21 million is tax-neutral and budget neutral.
3. Thus, to calculate the net new money schools get in AY2017, we take that $746 million, subtract the $21 million in subsumed pension levy, and then subtract the $665 million in general state aid need in the current school year. Result: $59.9 million in new state aid.
4. The formula requires schools to spend 85% of their new state money on teacher pay and benefits. 85% of $59.9 million is $50.9 million. (Schools must meet a second 85% requirement, but as far as I can tell, that requirement produces lower results than the first in every district, so only the first requirement is relevant.)
5. The funding formula sets target staffing levels at each district that add up to 9,060.25 teachers statewide.
6. If every district complies with the minimum 85% requirement, we divide $50.9 million by 9,060.25 teachers and get $5,622 as the minimum increase in pay and benefits for each teacher.
7. The new formula says benefits should be 29% of salary.
8. Put another way, the new formula says teacher compensation should be 78% pay and 22% benefits.
9. If every school applies that ratio to its disbursement of the new state money, the amount of the above compensation figure that would go to pay would be $4,358.
10. If schools spend 100% of their new money on teachers, the average teacher compensation (pay and benefits) would increase ($59.9 million divided by 9,060.25 formula teachers = ) $6,614.
11. Maintaining the 78/22 ratio produces and average pay increase of $5,127.
12. South Dakota’s average AY2015 teacher pay was $40,880.
13. If teacher pay rose 2% along with the per-student allocation, average teacher pay this year is $41,698.
14. The new formula provides for a minimum FY2017 average teacher salary of $46,056.
15. Maximization of new money—every penny to paychecks, none for benefits or overhead—would bring average pay to $48,312. 
16. That average shrinks if we try to divide the new money among every teacher on staff rather than adhering to the target student-teacher ratios of the new formula.
17. DOE figures show 9,432.4 FTEs in FY2015.
18. The new formula funds 9060.3 FTEs.
19. If we don’t want to fire anyone, we have to stretch our $59.9 million among 372 more teachers than the state wants to fund.
20. If all schools ignore the recommended staffing levels and max out the new money on pay for everyone they have, the state’s new money can get us to a statewide average teacher salary of $48,051.

These numbers roughly match the estimate I came up with in my last number-crunching post on the teacher pay-raise plan. We can reach the $48,000 goal of the Blue Ribbon K-12 panel (though not the new formula’s stated goal of $48,500), but only if we use every new state penny for teacher pay and handle other needs (increased insurance premia, high pension contributions, raises for cooks and custodians, ammo at Tri-Valley) with increased local taxes.

Breaking $48K is a great leap forward for South Dakota teachers. But remember: if teacher pay has increased in our neighboring states at the same rate that it has increased here over the last couple years, and if our neighbors only increased teacher pay at 2% for AY2017, we will still find ourselves $7,000 (14%) behind the regional average, $3,000 (7%) behind North Dakota, and $10,000 (21%) behind Minnesota.

And nationally, we will vie with Arizona for 45th place.

Download DOE’s spreadsheet to plug in your school’s numbers, or look up your school on my master spreadsheet, and tell me what you think!