Superintendent Mark Froke told District 17 legislators earlier this month that recent budget proposals from Gov. Dennis Daugaard may have initially sounded like good news for South Dakota public school districts.
The fiscal reality becomes less rosy, however, once all of the numbers are analyzed.
"There was a lot of very positive press that came out immediately, and I think people were happy with the fact that we weren't cut," the superintendent said, "but on the other hand, the amount that we are receiving is not the percentage amount that was promoted."
The superintendent made his comments to state lawmakers Sen. Eldon Nygaard and Reps. Jamie Boomgarden and Tom Jones Dec. 15 at a luncheon meeting held in Vermillion.
The governor has proposed providing the legally required per-student increase in student funding. Under his plan, introduced to legislators Dec. 6, the base per-student allocation will jump by 2.3 percent, or $101. The governor also proposed a 0.7 percent one-time increase of $30.73, which won't be guaranteed in future years. Including one-time money provided in fiscal year 2012 and proposed for fiscal year 2013, the governor's proposal amounts to a $35 per-student increase.
"That equates to $43,000 for the (Vermillion) district," Froke said. "Rather than the 3 percent (funding increase) that was promoted by the governor, it actually works out to be eight-tenths of one percent, and that amounts to $35 per student, or again, $43,000."
He shared budget figures compiled with the help of Business Manager Sheila Beerman that better illustrates how the governor's proposal for education funding will create challenges for the Vermillion School Board.
It is estimated that the there will be an average decline in district enrollment of 17 students, which will result in a loss of $75,000 in the 2012-13 preliminary general fund budget of the school district. District officials are also expecting a $40,000 loss in interest revenue from funds on account, meaning a total revenue loss in the general fund of $115,000.
School officials are also projecting that increased costs to the general fund may total $110,000, in the form of a $60,000 increase in health insurance, a $25,000 built-in payment for teacher college credits and degrees and $25,000 for the bus contract, utilities and other fixed costs.
"The governor's proposal for funding won't even take care of our health insurance increase," Froke said. "And we have some ongoing costs spread over an $8 million budget, such as the bus contract. Our utility costs go up each year, and other costs as we get into the budget are sure to arise."
The bus contract, along with utility and other fixed costs are expected to total $25,000. Total increased costs to the general fund are expected to total $110,000.
"When we total the loss of revenue and our increased costs, we come up with a total of $225,000 of loss," he said. "We then plug in the increase from the governor of $43,000 and subtract the $43,000 from the $225,000 loss, so our actual funding shortfall from one year to the next is $182,000."
Just to meet that shortfall could mean reducing staff by as many as four teachers, Froke said. "I don't know that it will happen, but that gives you some point of reference. And this year, we've budgeted a $238,000 use of reserves. That doesn't just go away; that carries forward each year, so you have to add our funding shortfall to our use of reserves, so starting out, we are down $420,000 in our general fund budget.
"We always seem to underspend our budget; we try to underspend it by about $200,000, so we'll look at that $182,000 as a figure we can probably work with," he said. "Last year, we didn't give any raises, and there are no raises plugged into this projection. It's a dismal picture. I was really surprised at how positive the presentation was accepted after the governor talked, because it took us about 10 minutes to figure out where we were going to be as a school district with only $35 more per student."
"I'm sure you'll find that most schools in your (legislative) district will be facing a similar scenario," Vermillion School Board President Mark Bottolfson told the legislators, "because about all of the schools in your guys' district probably have declining enrollments."
Per-student funding will increase slightly next year and school districts won't have to absorb the full cost of implementing two major state school improvement initiatives, according to Gov. Dennis Daugaard's FY13 budget blueprint.
During his Dec. 6 address to lawmakers, the governor outlined his plan to increase ongoing state general fund spending by $93 million next year. Nearly $37 million of the increase is needed to fill a gap created by the loss of federal stimulus money, which was used to fund a portion of the state's obligation to K-12 schools and higher education. The remaining $56 million will be spread across the state budget, with the largest portions set aside to fund Medicaid programs, state employee salaries and K-12 schools.
The governor's budget also recommends $75 million in one-time general fund expenditures, including $25 million in reserve spending to cover the state costs for natural disasters. The bulk of the one-time money will be paid out of the current budget year, but $28 million will come as part of the state's FY13 budget.
South Dakota public schools will receive a blend of ongoing and one-time increases. The governor's spending plan includes the legally required increase to the per-student allocation and a one-time allocation of $31 per student. Factoring in one-time money received in FY12 and budgeted for FY13, per-student funding will increase by $35 next year, a 0.8 percent increase.