School funding increases aren’t always what they appear – Enrollment-based formula punishes some districts unfairly

As a member of the Rapid City Area Schools Board of Education, I was pleased to hear that Governor Kristi Noem proposed a 4 percent increase to school funding during her budget address earlier this month. South Dakota continues to rank 49th in the nation for teacher pay, so any proposed increase to education is welcome.

But I would like to clarify what legislative increases to education funding have actually looked like in Rapid City Area Schools. Last year, the Legislature and governor were broadly praised for increasing state education funding by 7 percent. The way it was implemented, though, did not result in an increase in state funding for most districts. In fact, the Rapid City school district saw a drop of $497,881 in state aid this year despite the Legislature’s increase. How did this happen? The explanation lies in the State Aid to K-12 General Education Funding Formula.

The formula is based primarily on enrollment. Every year, on the last Friday in September, the district submits to the state Department of Education the number of students enrolled in the district on that day. The department then uses that number to determine the number of certified teachers a district needs. That number is multiplied by the target teacher salary and then multiplied again to account for support staff, administration, and other non-instructional costs. This final number is what the department calls the total need for state aid.

When the district’s enrollment goes down by 245 students, as it did this year, our state aid determination goes down. The funding the state provided to Rapid City schools decreased, despite the 7% increase passed by the Legislature.

While it might seem logical that a district’s budget should decrease if its enrollment declines, it is not easy for the district to pivot in real-time to decrease costs to match enrollment. A decrease in 245 students means, on average, that each of our 23 schools lost 10 or so students. 

Assuming those children weren’t all in the same grade, that means that each elementary grade per school decreased by two kids. Could we at the very last minute have moved kids around so that we decreased our elementary school classroom needs by three or four classrooms? Possibly. But last-minute forced transfers of students and staff are extremely unpopular and not good for students. Consolidating in middle school and high school would be just as difficult.

The funding formula has punished Rapid City Area Schools in another significant way. Once a district’s “total need for state aid” is determined by the formula, the state determines the “local contribution” before paying any state funds. As the value of real estate in Rapid City has gone up, so has our local contribution. As a result, the money the state provides automatically goes down. Imagine our total need for state aid as a glass: The local contribution is used first to fill the glass, and the state contribution fills in the rest. Property taxpayers in the district end up paying more to educate our kids, the state pays less, and the district doesn’t benefit from the funding increase for education.

Changing the entire funding formula is a major undertaking. Still, the Legislature could help Rapid City in one simple way, by assessing enrollment on a three-year average. Taking a three-year average would help the district predict funding and adjust the budget in advance.

The Legislature could also consider ways to increase district funding outside of the funding formula. Rapid City desperately needs bus drivers, paraprofessionals and other support staff. We can’t hire for these positions because our total need for state aid hasn’t increased with the rising cost of labor in our community. While $13 may be a competitive wage in rural areas, it is simply too low in Rapid City.

The Legislature could also use its budget surplus to create a zero-interest or low-interest loan fund for districts to build and remodel facilities. With this financing assistance, the district and local taxpayers could more easily afford to keep our facilities safe and up-do-date.

I applaud any effort to increase funding to education in South Dakota, and I’m very appreciative of the hard — and complicated — work done by our legislators to understand and bolster public education. I ask them to carefully consider how the 4% increase in educational spending is applied. Let’s work together to ensure those dollars reach Rapid City students.