Ed Funding Plans Compete At Statehouse

Feb 18, 2016

As a bill to increase the sales tax to benefit teacher pay trudges through the Statehouse, some Republican lawmakers are floating an alternative plan that doesn’t raise taxes. House Bill 1182 adds one half percent to the state sales tax. Lawmakers twice used a procedural rule to delay the bill. It’s on this afternoon’s House calendar.

Most lawmakers acknowledge that teachers are paid too little for South Dakota schools to compete with surrounding states, but not everyone says a tax increase is the fix for a pay bump.

Some members of the GOP are offering an alternative plan to increase teacher pay. State Representative Brian Gosch is majority leader in South Dakota’s House of Representatives. He says the state can provide more money for teacher salaries without increasing revenues. Gosch says education can receive money already in the budget.

"Appropriators have found and identified dollars available for that purpose. It would be $30 million in year one, $20 million in year two, $20 million is year three for a total of $70 million," Gosch says.

"Teachers are going to assume that if they get a raise this year their salary's not going to go back down next year." -Tony VenHuizen, Governor's Office

Gosch says the first year’s funding comes from six areas of the general fund. The proposal takes more than half of this year’s increase from the state’s Social Services budget. Gosch says the more than $15 million is the difference between the amount budgeted and actual money.

The alternative plan actually has an alternative itself. Instead of finding ongoing revenues, Gosch says another option includes permanently moving some capital outlay money to the general fund.

"The governor’s plan looked for $67 million. We’re providing $70 million over three years," Gosch says.

That’s not a true comparison, according to information from Governor Dennis Daugaard’s chief of staff. Tony VenHuizen says the governor’s plan does put $67 million into schools right away this year and those funds compound.

"It would be $67.4 million in extra money the first year, and then going forward that would be added to the funds that districts already receive and grow by an inflationary amount," VenHuizen says.

That means the governor’s proposal adds more than $200 million dollars into K-12 education over three years, while the alternative plan contributes $70 million in the same time frame.

VenHuizen says Governor Dennis Daugaard’s proposal adds one half of one percent to the state’s sales tax so schools can increase teacher pay. He says the half-penny tax hike provides consistent, reliable funding.

"It’s important to the schools and the teachers, obviously, but it’s also important to the state. Because, if the state puts new money in and says to the schools, ‘You need to use this to increase your teachers’ salaries,’ now going into the future, those are costs that are built in going in to the future," VenHuizen says. "Teachers are going to assume that if they get a raise this year their salary’s not going to go back down next year, and so we need to have a revenue source that’s sustainable over time that will support that increase going into the future. "

"There's money there that you can pull from on an ongoing way to give to teachers." -Brian Gosch, State Lawmaker

VenHuizen says a dedicated funding source is key to successfully translating tax dollars into higher teacher pay.

State Representative Brian Gosch says ongoing funding for the alternative plan is based on normal economic estimates. He says lawmakers rely on these increases every year for many expenses.

"The money in year two and year three would come from growth in revenues and growth in the economy just as we’ve always in the past have used that additional revenue to provide K-12 education funding," Gosch says.

Gosch says schools have money tucked away right now that they could use immediately to increase salaries. He points to capital outlay dollars and schools’ rainy day accounts.

"That shows that the general fund reserves for all schools in South Dakota grew by $66 million over and above inflation. That would tend to indicate that’s an ongoing source of revenue," Gosch says. "When you’re growing that fund beyond inflation, there’s money there that you can pull from on an ongoing way to give to teachers. And this is money that’s in the schools’ pockets right now. They’ve already got this."

Gosch comes to that conclusion based on the statewide average. 

Tony VenHuizen says the governor’s plan caps reserve funds based on school district size and acknowledges 151 districts have different financial circumstances.

"There are a few who are saving a lot of money, and it’s hard to understand why. The policy decision that drives bringing back reserve fund caps is that, if we’re allocating dollars to a school, yes, they should have a reserve in a prudent amount, but for the most part they should be spending on the kids who are here right now," VenHuizen says. "So I think I would agree that we want to encourage that, but you have to remember how much money that will mean is going to vary greatly from district to district."

An element that is the same in both plans is a change to the way schools collect pension fund money. The alternative plan and the one the governor presents eliminate the special tax and incorporate it as part of the general fund.
The alternative plan also boasts a specific financial consequence for schools that don’t spend enough of the new money on teacher pay. The Governor’s bill does not include a repercussion, but he says he’s open to amendments that strengthen accountability. (Read more about that at this link.)

Democrats in the state legislature have an additional plan for education funding. They want to add a full penny to the state’s sales tax but remove it from food. They say that and other elements of their plan provide a better competitive opportunity for South Dakota schools to attract and retain quality teachers.