Funded: State Policy Analysis

A Detailed Look at Each State's Funding Policies

Below, see summaries of the state’s education funding policy in each issue area. Click the Expand icon next to any summary to see more detail, if available, about that state’s policy regarding that issue area. Click the Citation icon
next to any summary to see the sources of the information regarding that issue area.
South Dakota
Funding Basics
Formula Type

South Dakota has a primarily resource-based formula. It determines the cost of delivering education in a district based on the cost of the resources, such as staff salaries and course materials, required to do so. It does so by setting a target student-to-teacher ratio and a target statewide average teacher salary. The salary target was $48,645.50 in FY2018 and increases annually based on inflation or 3%, whichever is less. The calculated cost is then increased to cover the cost of providing benefits for instructional staff and both salaries and benefits for non-instructional staff.

The categories of students generating supplemental funding in South Dakota are English-language learners, students with disabilities and students in sparsely populated and small districts. Services for students enrolled in career and technical education programs are funded through a program-specific allocation.

References:
Derek Johnson, Chief Budget Analyst, Bureau of Finance and Management, South Dakota Department of Education, email message to EdBuild, January 17, 2018.
South Dakota Department of Education, “Presentation to the Joint Appropriations Committee,” (Presentation, February 8, 2017),
South Dakota Department of Education, Summary of new school funding laws, (Pierre, SD: South Dakota Department of Education, 2016),
Base Amount

The state of South Dakota uses a resource-based formula and therefore does not use a base per-student amount as the basis for its funding.

However, South Dakota does calculate a per-student equivalent amount, which is used for funding calculations that are determined on a per-student basis, such as the calculation of aid for sparse school districts. The per student-equivalent is the per-student cost of teacher salaries and overhead costs, assuming a student-to-teacher ratio of 15 to 1.

References:
S.D. Codified Laws § 13-13-10.1 (Lexis 2017).
Local Revenue
Expected Local Share

South Dakota expects school districts to contribute revenue to the funding of public schools. The amount each district is expected to raise for its education costs is based on its property values and its revenue from other local sources. School districts are expected to contribute a property tax rate that varies based on the type of property, and to contribute revenue from six other local sources.

For general education, school districts are expected to contribute $1.507 for every $1,000 of assessed agricultural property wealth, $3.372 for every $1,000 of assessed owner-occupied property wealth, and $6.978 for every $1,000 of all other types of assessed local property wealth. For special education, districts are expected to contribute $1.261 for every $1,000 of assessed local property wealth. Once the state calculates the total amount of funding necessary to educate students within a district, it subtracts the expected local contribution and provides the difference in the form of state education aid.

Between FY2017 and FY2022, revenue from six additional revenue sources, including the utility tax, bank franchise tax, and wind farm tax, will be phased in as part of districts’ expected local contribution. This will increase the local share of the formula amount and decrease districts’ state aid allocations. Districts that rely heavily on these sources of revenue may keep their funding at FY2016 levels until increases to their allocations as a result of inflation compensate for the loss of funding.

References:
South Dakota Department of Education, Summary of new school funding laws, (Pierre, SD: South Dakota Department of Education, 2016),
Property Tax Floors and Ceilings

South Dakota does not set a floor or a ceiling for local property tax rates, or a level above which voter approval is generally required. However, South Dakota does set level above which local property tax rates require the approval of two-thirds of school board members, and under limited circumstances may require approval in a voter referendum. This level varies depending on the class of property.

Property taxes for operations are limited depending on the class of property. School districts may levy a tax rate of no more than $1.507 for every $1,000 on agricultural property, $3.372 for every $1,000 on owner-occupied property, and $6.978 for every $1,000 on all other types of property. School boards may exceed these limits with the approval of two thirds of board members. If 5% of voters in the district petition in response to such a board decision, the tax increase will be referred to a referendum.

Property taxes other than operating taxes are also limited. Districts may levy a tax rate of no more than $1.461 for every $1,000 for special education, and no more than $3.00 for every $1,000 for capital expenses. Beginning with taxes payable in 2021 an alternative limit of $2,800 per student for taxes for capital expenses will be imposed.  The alternative limit will increase for inflation at the same rate as the formula. These limits may not be exceeded even with voter approval.

References:
S.D. Codified Laws § 10-12-42 (Lexis 2017).
S.D. Codified Laws § 10-12-43 (Lexis 2017).
S.D. Codified Laws § 13-16-7 (Lexis 2017).
S.D. Codified Laws § 13-37-16 (Lexis 2017).
Other Local Taxes for Education

School districts in South Dakota receive revenue from local property taxes, a tax on utilities, a bank franchise tax, a wind farm tax, and other sources of local revenue.

Prior to FY2016, revenue from these other sources did not affect districts’ level of state aid. Between FY2017 and FY2022, revenue from six additional revenue sources will be phased in as part of districts’ expected local contributions and will therefore reduce districts’ state aid amounts. These include a tax on utilities, a bank franchise tax, a wind farm tax, local revenue in lieu of taxes, county revenue in lieu of taxes, and revenue from traffic fines. (See “Expected Local Share” for a description of this policy.)

References:
South Dakota Department of Education, Summary of new school funding laws, (Pierre, SD: South Dakota Department of Education, 2016),
District Characteristics
Grade Level

South Dakota does not differentiate funding based on students’ grade levels.

English-Language Learner

South Dakota provides increased funding for English-language learners (ELLs). It does so by applying a multiplier of 1.25 to the number of students who are identified as ELLs. This inflated student count is then used to generate increased funding for school districts serving ELLs.

South Dakota identifies ELLs through a state-administered language proficiency assessment.

References:
Poverty

South Dakota does not provide increased funding for students from low-income households or for districts based on the concentrations of low-income students they serve.

Special Education

South Dakota funds special education using a hybrid system incorporating multiple student weights and census-based assumptions. Students are assigned to six different categories, one of which is funded assuming that a set percentage of students in each district will require such services.

Students are assigned to one of six categories: five based on their specific disabilities, and a sixth for students requiring prolonged assistance. Students in each category are funded with a flat amount of per-pupil funding, which ranged from $5,472.37 to $27,882.40 in FY2018. However, the first category, for students with mild disabilities, is funded using census-based assumptions: the supplementary allocation is applied to 10% of the general education student count rather than to an actual count of students who are assessed to have mild disabilities.

The supplemental funding for students in these disability categories is included in an overall formula amount that is funded through a combination of state and local dollars. Districts are expected to levy a local property tax of $1.261 per thousand dollars of property valuation that is specific to special education, and the total special education allocation that a district is entitled to receive is the sum of all the supplementary funding to which its students are entitled, reduced by the amount that this tax should generate for the district. The state separately appropriates $4 million per year for extraordinary costs funding, which is available to districts fulfilling certain prerequisites that serve high-cost individual students (those who impose costs exceeding twice their supplemental allocations) or that must maintain high-cost special education programs.

References:
Derek Johnson, Chief Budget Analyst, Bureau of Finance and Management, South Dakota Department of Education, email message to EdBuild, January 17, 2018.
S.D. Codified Laws § 13-37-35.1 (Lexis 2017).
South Dakota Department of Education, Extraordinary Cost Funding, Fiscal Year 2016, (Pierre, SD: South Dakota Department of Education, 2015),
Gifted

South Dakota does not provide increased funding for gifted and talented students.

Career and Technical Education

South Dakota provides increased funding for career and technical education (CTE) programs. It does so by subsidizing the tuition of students dually enrolled in high school and postsecondary CTE programs, and through a competitive grant.

For students dually enrolled in high school and postsecondary public universities and technical institutes, including those taking postsecondary CTE courses, the state subsidized tuition such that each credit cost only $48.33 in FY2017. The state also provides Workforce Education Fund grants, totaling up to $2.5 million statewide. These grants are intended for districts seeking to make transformative change in their CTE programs.

References:
“Dual Credit,” SDMyLife, n.d., accessed February 7, 2018,
“Workforce Education Grants,” South Dakota Department of Education, n.d., accessed February 7, 2018,
Sparsity and/or Small Size

South Dakota provides increased funding for sparse school districts. It does so by applying a multiplier, which varies depending on density, enrollment, and physical size, to the student count to generate increased funding for sparse school districts. The state also provides increased funding for small school districts by setting lower student-to-teacher ratios for smaller districts and calculating their state aid amounts accordingly.

To receive additional funding for sparsity, school districts must meet certain density, enrollment, and physical size requirements, operate a secondary school that is at least fifteen miles from that of a neighboring district, and levy property taxes at the maximum rates. South Dakota also provides increased funding for sparse school districts by inflating the district’s enrollment. It does so through one of two calculations which considers the district’s density, enrollment, and physical size. Sparse school districts may receive up to 1.75 times the per student equivalent, but no more than $110,000 per district per year (see “Base Amount” for a description of the per student equivalent).

South Dakota provides increased funding for small districts by setting student-to-teacher ratios that vary depending on the district’s enrollment. The target student-to-teacher ratio is 12 to 1 for districts with fewer than 200 students, compared with 15 to 1 for districts with more than 600 students. For districts with between 200 and 600 students, the target student-to-teacher ratio is set based on a sliding scale between 12 to 1 and 15 to 1.

References:
S.D. Codified Laws § 13-13-10.1 (Lexis 2017).
S.D. Codified Laws § 13-13-78 (Lexis 2017).
S.D. Codified Laws § 13-13-79 (Lexis 2017).
South Dakota Department of Education, Summary of new school funding laws, (Pierre, SD: South Dakota Department of Education, 2016),