how south dakotans collect and spend money for the common good reflects our shared values — our...
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How South Dakotans collect and spend money for the common good reflects our shared values — our consensus on what public services we believe we need in our state and are willing to pay for together.
WELCOME to South Dakotans Talking
k-12 education fundingFinding budget solutions through our shared values
Coordinated by:SD Budget & Policy Institute
• Mission - to promote responsible and equitable fiscal policy through research and education
• Nonpartisan, not-for-profit 501(c)3 [not a state government function]
• Funding from Northwest Area Foundation and donations from people and businesses in South Dakota
Board of Directors SDbpi.org
Robert Burns, President
Deb Fisher-Clemens
Kay Jorgenson
Dave Volk, Vice President
Eileen Briggs Paul Dennert
Gene Lebrun, Sec/Treasurer
Rob Oliver Jim Fry
Rich Garry, Past President
Mary Bibby
South Dakota CONSITUTION: Article VIII Section 1.
Uniform system of free schools
The stability of a republican form of government depending on the morality and intelligence of the people, it shall be the duty of the Legislature to establish and maintain a general and uniform system of public schools wherein tuition shall be without charge, and equally open to all; and to adopt all suitable means to secure to the people the advantages and opportunities of education.
Research finding
• K-12 education salaries in South Dakota compared to regional marketplace
• How SD funds k-12 education and historic trends
• Educational Outcomes (South Dakota KIDS COUNT Beacom School of Business University of South Dakota)
• SD BPI preliminary research on alternatives
Lets talk teacher salaries(SD average is 76% of regional
average)
US IA MN MT NE ND SD WY$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
40+ years snapshot of average teacher salary changes (constant 2012/13 dollars)
1969-70 1979-80 1989-90 1999-2000 2009-10 2011-12 2012-13
Chart by SD Budget & Policy InstituteData Source: NEA, Estimates of School Statistics, 1969-70 through 2012-13
MT
WY
NE
MT
MN
IA
Regional States
Teacher Salaries
data source
SD teacher salaries are lower than other SD
salaries
88%
76%
SD wages vs wages in neighboring states
All SD private non-farm workers
SD teachers
Iowa Minnesota Montana Nebraska North Dakota
South Dakota
Wyoming0.00
5.00
10.00
15.00
20.00
25.00
30.00
SD wages are 88% regional averageAverage hourly earnings of all employees
on private non-farm payrolls, by state (source bls SAE table 4)
2011 2012 2013
SD teachers make more money when they choose to teach in neighboring states…
both in actual dollars and in purchasing power
SD
ND
MT
NE
IA
MN
WY
$- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000
$44,875
$52,372
$53,077
$54,307
$57,573
$57,711
$60,083
39,580
47,344
49,999
48,931
51,528
56,268
57,920
Average Salary
Chart and analysis by SD BPI; Data Source NCES, Census, BLS
Teacher salaries have higher purchasing power in neighboring states.
Mt 18%
WY 34%
IA 28%
ND 17%
NE 21%
MN 29%
Where to teach?
SD administrators also earn less than their counterparts in neighboring states…
in actual dollars and purchasing power (in all states but MT)
Administrative salaries have higher purchasing power in most neighboring
states.
NE 18%
MT5% ND 8%
WY 16%
MN 20%
IA 16%
Where to administer?
SD
ND
MT
NE
IA
MN
WY
$- $20,000 $40,000 $60,000 $80,000 $100,000 $120,000
$83,390
$90,343
$79,469
$98,457
$97,039
$100,195
$96,338
$73,550
$81,670
$74,860
$88,710
$86,850
$97,690
$92,870
Average Salary
Chart and analysis by SD BPI; Data Source NCES, Census, BLS
Don’t South Dakota’s low state and local tax rates off-set its lower wage rates
compared to neighboring states?
SD IA NE MN ND WY MT-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
share of family income going for state and local taxesvaries by total household income
(rates in SD & neighboring states)
lowest 20%second 20%middle 20%fourth 20%next 15%next 4%top 1%
Data Source: ITEP Who Pays? Analysis and graphic: SD BPI
State income tax as a factor Increase in neighboring state teachers’
purchasing power after paying state income taxes
MT 13% And no state sales tax on anything
WY 34% And no sales tax on food or prescription drugs
IA 22% And no sales tax on food or prescription drugs
ND 16% And no sales tax on food
NE 16% And no sales tax on food
MN 22% And no sales tax on food or prescription drugs
Where to teach?
State Individual Income Tax Rates as of 1-1-14State Rates Brackets
Stand Deduct
Exemp-tion
IA 0.36% > $0 $1,900 $40 credit
0.72% > $1,515 2.43% > $3,030 4.50% > $6,060 6.12% > $13,635 6.48% > $22,725 6.80% > $30,300 7.92% > $45,450 8.98% > $68,175
MN 5.35% > $0 $6,200 $3,900 7.05% > $24,680 7.85% > $81,080 9.85% > $152,540
MT 1.00% > $0 $4,270 $2,280 2.00% > $2,800 3.00% > $4,900 4.00% > $7,400 5.00% > $10,100 6.00% > $13,000 6.90% > $16,700
NE 2.46% > $0 $6,200 $126 credit
3.51% > $3,000 5.01% > $18,000 6.84% > $29,000
ND 1.22% > $0 $6,200 $3,900 2.27% > $36,900 2.52% > $89,350 2.93% > $186,350 3.22% > $405,100
SD none WY none
Share of SD income going to state and local taxes averages 1% more than neighboring states’
average(range for 20th to 80th percentile is +2.6% to -3.2%)
WY
MT
ND
SD
MN
IA
NE
5.90%
6.30%
7.50%
8.00%
9.60%
10.10%
10.30%
State & local tax rate for middle income households (40th to 60th percentile
of households)
$34-57,000
$38-57,000
$41-62,000
$35-56,000
$39-67,000
$31-50,000
$36-64,000
Data Source: ITEP Who Pays? Analysis and graphic: SD BPI
WY
MT
ND
SD
NE
MN
IA
5.00%
6.00%
6.70%
7.00%
9.00%
9.60%
9.60%
State & local tax rate for fourth 20% income
households (60th to 80th percentile of households)
$57-87,000
$62-96,000
$57-87,000
$56-87,000
$67-95,000
$50-79,000
$64-100,000
Data Source: ITEP Who Pays? Analysis and graphic: SD BPI
MT
WY
ND
SD
MN
NE
IA
6.10%
7.10%
7.80%
9.50%
9.60%
9.90%
10.30%
State % local tax rate for second 20% income
households (20th to 40th percentile of households)
$21-38,000
$20-34,000
$23-41,000
$19-36,000
$23-39,000
$23-39,000
$17-31,000
Data Source: ITEP Who Pays? Analysis and graphic: SD BPI
South Dakota spends 25% less per
k-12 student than regional average
South Dakota
Iowa Montana Minnesota Nebraska North Dakota
Wyoming $-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
6 year trend in current spending per pupil
In South Dakota and neighboring states
2007 2008 2009 2010 2011 2012
SD per student spending
How SD funds k-12 education
Source of funds to support SD k-12 education
• Federal
• State
• Local Federal9%
state36%
local55%
SD k-12 funding sources 1997Federal16%
state30%
local53%
SD k-12 funding sources 2012
Sources of k-12 Funding Revenue
Charts by SD Budget & Policy Institute - inflation adjusted to 2011 dollar Data Source US Census FESEF Table 11, 2002 through 2011
Regional Rankings
data source
Total per student funding & funding sources for SD school districts FY11
(in thousands)
$0
$5
$10
$15
$20
$25
local state federal
School Funding Formulapage 19 of Budget Primer
Funding formula
• 1997 per-student allocation (PSA) $3,350
• equalize dollars per student
• annual increase—lesser of 3% or rate of inflation
• 44% of districts have opted-out tax limit
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
Actual PSA (per student allocation) vs inflation-adjusted per PSA
ACTUAL PSA INFLATION ADJ PSA
% of SD state and local revenue supporting k-12 education has
decreased since funding formula implemented
1998 2003 2008 2011 20120.0%
10.0%
20.0%
30.0%
40.0%
K-12 % of state general fund down 25%
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
0%
10%
20%
30%
40%
50%
60%
70%
K-12 % of property taxes down 17%
Data Source: Dept. of Revenue annual Reports 1996 through 2013 Analysis and graphic by SD BPI
Data Source: SD Budget Analysis and graphic by SD BPI
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
0.0
1.0
2.0
3.0
4.0
5.0State and local school revenue as percent of S. D. personal income
Year
Re
ve
nu
e %
S.
D.
pe
rso
na
l in
cm
e
State
Local
Analysis and chart provided by SDSU economics Professor Emeritus Ring
K-12 spending as % of SD personal income
down 25% since funding formula
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
0%
1%
2%
3%
4%
5%
6%
SD Ntl
Regional States
K-12 education spending FY12Amount per student by
Source:% of
Personal Income in
state spent on K-12Total Funds
State Funds
Local Funds
Federal Funds
United States $12,331 $5,609 $5,488 $1,235 4.51%
Wyoming $18,446 $9,466 $7,372 $1,608 5.95%Minnesota $13,163 $8,306 $3,932 $925 4.36%North Dakota $13,368 $6,748 $4,980 $1,641 4.03%Montana $11,336 $5,350 $4,480 $1,506 4.40%Iowa $12,175 $5,407 $5,736 $1,033 4.64%
Nebraska $12,267 $3,876 $
7175, $1,216 4.59%South Dakota $10,149 $3,093 $5,392 $1,665 3.51%Table by SD Budget & Policy Project; Data Source US Census Bureau 2012 Public Elementary-Secondary Education Finance Report
2014 KIDS COUNT Data BookEducation Domain
RankMN 6NE 9IA 13ND 19MT 21WY 24SD 32
South Dakota KIDS COUNT Beacom School of Business University of South Dakota
Educational Outcomes in South Dakota
How do we compare to regional states?
NE IA MN Nation WY MT SD ND
0%
10%
20%
30%
40%
50%
60%
70%
52% 53% 54% 54%58% 60%
62% 64%
South Dakota Compared to the Nation & Bordering StatesPercent of children ages 3 to 4 not attending preschool,
2010-12
South Dakota KIDS COUNT Beacom School of Business University of South Dakota
MN IA NE WY MT Nation ND SD
54%
56%
58%
60%
62%
64%
66%
68%
59%
62%63% 63%
65%66% 66%
68%
Percent of 4th graders who scored belowproficient reading level, 2013
South Dakota KIDS COUNT Beacom School of Business University of South Dakota
MN ND MT SD WY IA NE Nation
0%
10%
20%
30%
40%
50%
60%
70%
53%
59% 60% 62% 62%64% 64% 66%
South Dakota Compared to the Nation & Bordering StatesPercent of 8th graders who scored below proficient math level,
2013
South Dakota KIDS COUNT Beacom School of Business University of South Dakota
NE ND IA MN MT SD Nation WY
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
7%
9%
11%12%
14%
17%
19%20%
South Dakota Compared to the Nation & Bordering StatesPercent of high school students not graduating on time,
2011-12
South Dakota KIDS COUNT Beacom School of Business University of South Dakota
South Dakota KIDS COUNT Beacom School of Business University of South Dakota
Education Domain Ranking
by Year by State 2012 2013 2014 2012-
2014
Iowa 14 15 13
Minnesota 7 7 6
Montana 13 13 21
Nebraska 15 17 9
North Dakota 16 16 19
South Dakota 21 22 32
Wyoming 29 26 24
= Higher ranking (lower is better)
Min
neso
ta
Iowa
Mon
tana
South
Dak
ota
0
5
10
15
20
25
30
35
Education Domain Ranking by Year and State
2012 2013 2014
Data source South Dakota Kids CountGraph by SD BPI
Data & Graphic Source: Testimony by SD Dept. of Ed. to SD Joint Appropriations Committee January 2014
Min
neso
ate
Iowa
Wyo
min
g
Nebra
ska
Mon
tana
North
Dak
ota
Nationa
l
Sout
h Dak
ota
-80%
-60%
-40%
-20%
0%
20%
40%
60%
4th grade read-ing (2013 NAEP)SD lags nation
and region
basic below basic
proficient advanced
2003 2005 2007 2009 2011 2013212
214
216
218
220
222
224
4th Grade Reading (NAEP 10 yr trend)
National improvement, SD deteriorates
National South Dakota
2003 2005 2007 2009 2011 2013210
212
214
216
218
220
222
224
226
228
4th Grade Reading (NAEP 10 yr trend)regional states stay
above national average, SD lags
National Iowa Minnesoate
Montana Nebraska North Dakota
South Dakota Wyoming
Research on alternatives“how to slice the pie”
1. Status quo
2. School consolidation
3. Equalizing capital outlay or “other” funds
4. Cap reserves
5. Additional revenue earmarked for education
6. Prioritizing k-12 salary policy
7. Change funding formula CPI measurement
1998 2003 2008 2011 20120.0%
10.0%
20.0%
30.0%
40.0%
K-12 % of state general fund down 25%
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
0%
10%
20%
30%
40%
50%
60%
70%
K-12 % of property taxes down 17%
1. Status quo
• decrease in % of revenues committed to k-12 education will continue
• free up current revenue growth for other priorities (examples: economic development, infrastructure, Medicaid expansion)
• Allows additional opportunity for decreasing current taxes
2. Consolidation151 school districts in South Dakota
Less than 250 stu-
dents (37 dis-
tricts)25%
250 to 600 stu-
dents (46 dis-
tricts)30%
Sparce (28 dis-
tricts)19%
more than 600 stu-
dents (40 dis-
tricts)26%
Data Source: South Dakota Department of EducationGraphic by SD BPI
Would consolidating small school districts increase economy of scale?
Less than 250 students (37
districts)25%
250 to 600 students (46
districts)30%
Sparce (28 districts)
19%
more than 600 students (40
districts)26%
Is consolidation an answer?
no consolidation Consolidate 37 schools with < 250
students
Consolidate 83 schools with < 600
students
$0
$200,000,000
$400,000,000
$600,000,000
$800,000,000
$1,000,000,000
$1,200,000,000
$977,652,374.00 $960,965,662.58 $943,788,031.62
How much would consolidation cut education expenses in SD?
-1.7%
-3.5%
Status quo
Data Source SD DOE 2012-13 expenditure data & rankings; SD DOE Scarcity Funding. Analysis and chart by SD BPI Assumptions only non-sparce districts consolidated, economy of scale equal to average per student expenditures in SD districts with >600 students
3. Equalizing “other” revenue“Other” revenue are not currently equalized and range from $130 to $3,202 per-student, depending on the district.
Slide 79 k-12 Education Funding Presentation to Legislative Planning Committee June 16, 2014 by Michael Houdyshell, Director Property and Special Taxes Division SD Dept of Revenue lhttp://legis.sd.gov/docs/interim/2014/documents/LPC06-16-14Combined.pdf
Slide 83 k-12 Education Funding Presentation to Legislative Planning Committee June 16, 2014 by Michael Houdyshell, Director Property and Special Taxes Division SD Dept of Revenue lhttp://legis.sd.gov/docs/interim/2014/documents/LPC06-16-14Combined.pdf
Cap school district reserves
4. Additional revenue options
• Increasing state sales tax from 4 to 5 cents would raise $206 million per year
• Additional revenue options used by other states:
• personal income taxes,
• corporate income taxes,
• Sunset clauses on existing tax expenditure statutes
• higher bank franchise taxes,
• higher “sin” taxes on tobacco or alcohol, sunset existing tax expenditures statues
• Other examples you can think of?
5. Prioritize k-12 salary policy
State salary policy modelsEmployee compensation plan
• PACE “movement to job worth” in place since FY92
• Market-based-pay in place since FY13
(Note: annual FY15 cost $13 million—beyond 3.0% across the board raises)
Investment council compensation plan (10 year plan) increases:
• Base compensation & benefits @ 7% per year from $184,000 to $362,000 annual ave.
• Incentive compensation & benefits @ 7.2% per year from $301,000 per FTE to $602,000 per FTE
(Note: total personal services under Investment Council 10 year plan increases from $8.5 million to $18.1 million for 30 FTE)
Small group discussion
1. Choose a facilitator
2. Choose a recorder
3. Discuss k-12 education funding and/or teacher salariesRecord ideas as you go:
areas of general consensus you discover
Recommendations or action ideas
4. Prioritize the top 1 or 2 issues you want to share with a larger group
Public Questions:Increasing or changing the
CPI limit used in the formula
• Did the funding formula start out high enough per student?
• What happens when you limit growth to the lower of inflation or 3%?
• Are there more accurate inflation measuring tools available?
Large Group Discussion
• If you are meeting in a large group – share the range of ideas and options generated with each other.
• Discuss and then vote for your top priorities
• Please let the Institute know the outcomes of your dialogue so we can compile it with conversations from around the state (send to joys@SDbpi.org)
• If you choose to form ongoing community discussion groups please let us know and we will provide you with contact information for other ongoing grass roots conversations that form around the state
Evaluation• Please fill out the evaluation – it helps SD BPI provide meaningful reports
on this process
• If you know of other communities that would like to hold this discussion or if you would like to have it repeated in your community – contact SD BPI
South Dakotans Talking
Help us describe who participatedHow long have you lived in the community? < 5 years 5-20 years 21-35 years 35+
years
Age Range 18-35 36-50 51-65 65+
Employment status Self employed employed full-time employed part-time student work at home unemployed retired no answer
Where do you live? On a farm, ranch or acreage In a small SD town (< 1,000) In a medium sized SD town (1,000 to 5,000) In a larger SD town (> 10,000) How would you describe your general world view? Conservative moderate progressive
How was your experience?What was your best experience of the event? Did this event None--somewhat-alot •Increase your understanding of this topic? 1 2 3 4 5•Change your perspective on this topic? 1 2 3 4 5•Increase your ability to engage on this topic? 1 2 3 4 5
• As we facilitate more annual “South Dakotans Talking” events, what should we do differently?
•Are there other topics you would like to discuss?
Thank you
How South Dakotans collect and spend money for the common good reflects our shared values — our consensus on what public services we believe we need in our state and are willing to pay for together.
THANK YOU for being part ofSouth Dakotans Talking k-12 education funding
Finding budget solutions through our shared values
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