Makenzie Huber/South Dakota Searchlight – South Dakota lawmakers haven’t made major changes to education funding and teacher pay in eight years.
But that could change this legislative session.
The last time the Legislature made major reforms was a half-percent sales tax increase in 2016 to boost the state’s last-in-the-nation ranking for average teacher pay. That infusion raised average teacher pay by nearly 12%, and bumped South Dakota from last to 47th in the nation.
Since then, South Dakota has fallen back to 49th in average teacher salaries (out of 51 states, due to the inclusion of Washington, D.C.).
Rep. Tony Venhuizen, R-Sioux Falls, served on the Blue Ribbon Task Force in 2016 that proposed the sales tax increase when he was chief of staff for then-Gov. Dennis Daugaard. He’s introduced one of three bills this session that address teacher pay and education funding. His bill would set a minimum teacher salary.
“My intention is really to just cut to the chase of the conversation,” Venhuizen said. “We really want to get the teacher salaries up. Is it time for the Legislature to just be more direct and say, ‘This is the standard we’re going to set’?”
The state Department of Education introduced a bill that would tie average teacher salaries to legislative increases in funding, and Sioux Falls Democratic Rep. Kameron Nelson introduced a bill that aimed to help school districts boost teacher pay by changing the way enrollment is counted in the state funding formula.
Only Nelson’s bill has had a hearing so far this session, and the House Education Committee unanimously rejected it.
Setting a minimum teacher salary to lift state average
Iowa Gov. Kim Reynolds asked her Legislature earlier this year to invest $96 million in new money to increase starting teacher pay to $50,000 and set a minimum salary of $62,000 for teachers with at least 12 years of experience.
As part of the Blueprint for Maryland’s Future Act, which increases state funding for education by $3.8 billion over 10 years, that state will set a minimum salary for teachers at $60,000 by 2026.
Both states are infusing millions of dollars into teacher salaries to help school districts reach those requirements. Neither Venhuizen nor the Department of Education’s bills propose new funding.
Venhuizen’s bill sets a minimum teacher salary at $45,000 for the next school year, though he said he’s open to other amounts. That minimum would increase each year based on the educational state aid increases to the “target teacher salary” approved by the Legislature.
The “target teacher salary” isn’t actually the state’s goal for average teacher pay. In reality, it’s a basis for the state’s public education funding formula.
Funding determined by the “target teacher salary” formula update goes not just toward teacher salaries, but also toward overhead costs and salaries for other school workers — bus drivers, preschool teachers, librarians, administrators, custodians, food service workers and counselors. Schools also receive funding from their own local property taxes.
If a district doesn’t meet the minimum salary in Venhuizen’s bill, then the district’s state funding would be reduced.
Venhuizen said the bill would increase salaries for starting teachers, thereby increasing South Dakota’s average teacher pay. More experienced teachers would still receive raises, but the minimum would encourage districts to spread state aid dollars more evenly across its teacher payroll.
Venhuizen and other Blue Ribbon Task Force members intended that when older teachers retire, school districts would reinvest the money from retiree salaries into younger teacher salaries. But that hasn’t happened at all school districts.
Some school districts have been using state funding increases to cover expenses due to enrollment declines instead of teacher pay increases, Venhuizen said.
“What you’re doing then is shorting the teachers and the raise they should be getting because you’re not making yourself efficient and right-sizing to the student count,” Venhuizen said.
School board member calls minimum pay an ‘unfunded mandate’
But it’s not that easy, especially for larger districts in the state, said Coy Sasse, chief financial officer and business manager for Rapid City Area Schools.
“That’s a very simplified idea that just doesn’t work in reality,” Sasse said.
The district’s enrollment has dropped by more than 1,300 students since 2017. A decline in enrollment doesn’t mean all those lost seats are on the same bus route or in the same building or classroom, making it more difficult to cut staff or building space than some might assume, Sasse said. District contracts are also typically locked in before the school year starts and enrollment is collected.
Largely because of its enrollment decline, Rapid City has seen a $3.2 million reduction in state aid since 2019, despite the Legislature increasing overall state aid by about 14% during that time.
Local property taxpayers in the area are picking up those costs, paying $9.36 million more toward the school district than in 2019, according to school finance data from the Department of Education.
The funding formula for public education has four major components:
- Enrollment, which has the greatest impact on state funding to school districts.
- An overhead factor, which is the state’s share for non-teacher expenses.
- Target teacher salary, which is determined by the Legislature each year.
- Local property tax contributions.
Increased local tax contributions would typically mean increased enrollment and therefore increased state aid for a school district, but since that’s not the case for Rapid City, the funding formula “works against us and our unique situation,” Sasse said.
Sasse added that the funding formula favors districts with lower property tax increases and increased enrollment, since less local property tax contributions mean the state is covering more expenses and therefore contributing more to potential salary increases for teachers.
Despite the factors working against Rapid City, Sasse said the school district increased its average teacher salary by 4% in the last school year, and expects a similar increase this school year. The district has had the slowest growth in teacher salaries in South Dakota since the Blue Ribbon legislation – growing 2.5% between 2017 and 2023.
Setting a mandatory minimum salary for teachers would threaten the district’s financial future, said Christine Stephenson, a member of the Rapid City Area Schools Board of Education.
“Setting a basement salary for teachers only, and then requiring that percentage to increase yearly, is an unfunded mandate that will harm our district,” Stephenson said, adding that she is supportive of other ways of raising teacher pay. “It will remove any ability we have to negotiate with teachers and other work groups in good faith.”
Teacher pay accountability bill would cost SD districts $16M
The Rapid City Area Schools similarly opposes a bill introduced by the state Department of Education.
The bill would encourage school districts to make headway in teacher salary by setting up a benchmark system identifying what districts should have paid in 2017, and then multiplying that number by the percent increases passed by the Legislature in the last eight years, roughly 26% overall.
Of the 149 school districts in South Dakota, 52 are currently paying their teachers at or above what the benchmark salary would be for 2023. But the remaining school districts would have to find nearly $16 million to reach those 2023 targets.
All school districts would have to reach 100% of their average teacher salary benchmark by 2028, meaning that school districts would have to find more than the $16 million estimate to comply with the bill’s requirements by its deadline.
Rapid City schools would have to find the most money to reach its 2023 target, about $5.14 million. Sioux Falls would need $2.94 million and Watertown would need $882,073.
Because the accountability bill wouldn’t provide new revenue for school districts to improve teacher salaries, that would mean school districts would have to make budget adjustments to reach that target – potentially drastic cuts, said Rob Monson, executive director of School Administrators of South Dakota, which is supportive of Venhuizen’s bill, but opposes the accountability bill as introduced.
That could include cutting benefits for teachers to improve salaries, cutting programs in schools, dipping into a district’s capital outlay fund (which is intended for costs such as construction expenses, not salary increases) or trying to opt out of state-imposed limits on property tax increases, which can be challenged and rejected by voters.
“That would buy you time as a district to figure things out,” Monson said.
The bill specifically works against school districts with declining enrollment, Monson added, saying that it “compounds the problem over time.” Only two school districts in western South Dakota reported an increase in student enrollment this year, according to Rapid City Superintendent Nicole Swigart.
In Rapid City’s case, the salary base for instructors is $54 million, so a 4% increase to salaries, mirroring the 4% increase in state aid as Gov. Kristi Noem has proposed, would cost the school district about $2.16 million. Factoring in benefits, that’d cost about $2.46 million, Sasse said.
On top of that, the district is expected to lose another $63,000 in state aid based on estimates for projected fall enrollment and local tax contributions for next year.
“Anybody can see why that’s an issue,” Sasse said.
South Dakota Secretary of Education Joseph Graves told lawmakers during a Joint Appropriations Committee meeting recently that the state’s lagging teacher pay was exacerbated during the pandemic, when many teachers retired or left the profession and school districts didn’t roll that money into boosting teacher salaries.
“We had a historically significant, historically unprecedented teacher shortage in South Dakota and across the nation and yet the classified staff — the custodians and the paraprofessionals and the rest — got commensurate increases. Administrators got increases over and above the increases,” Graves said. “The only group that didn’t get the commensurate increases were the teachers, and I find that curious.”
He hopes the accountability system would move South Dakota from 49th in average teacher pay to, perhaps, 45th in the nation.
There is no financial penalty in the bill if school districts don’t meet the benchmark teacher salary, though the department would check annually for noncompliance, which would result in an accreditation review and potentially losing accreditation status. Graves told lawmakers the department would be willing to work with districts that struggle.
Averaged enrollment: offsets decline, but funds ‘more kids than there are’
The one bill Rapid City Area Schools did support would have amended the enrollment portion of the state aid formula, allowing school districts to use either their three-year average or the current enrollment number – whichever is higher.
Nelson, prime sponsor of the bill, said the switch to averaged enrollment would allow for a discussion about funding and teacher pay “without tying the hands of local administrators.” He added that he believes the funding formula needs “considerable reworking.”
“If we want to have a conversation about increasing funding to public education, making sure that our students are supported, and school districts are receiving the necessary resources to keep the lights on and to have qualified, brilliant staff teach the future of our state, then I think that’s a reasonable place to start the conversation,” Nelson said.
But Venhuizen said he’s opposed to an averaged enrollment formula because “you end up funding more kids than there are.” Graves echoed the sentiment during his opposition testimony during the bill’s hearing Friday in the House Education Committee.
“A lot of times when people talk about the formula, what they’re really talking about is how much money we spend and they want to spend more,” Venhuizen added. “But the formula is not about how much we spend. It’s about how we spread the money around.”
Meanwhile, the School Finance Accountability Board, which was created to track if state aid increases went toward teacher salaries, expires this year. The only legislation introduced that would reauthorize it is the Department of Education’s accountability bill.
Monson is optimistic about discussions this session and believes lawmakers, school organizations and the Department of Education can put a plan together.
“We’ve got a really good group of people continuing to work on this,” Monson said. “We can come to some sort of agreement this legislative session.”