State budget cuts for higher education boomerang, as feds cut off grant that aids low-income students

By Bob Mercer

State Capitol Bureau

U.S. Department of Education officials declared South Dakota ineligible to receive federal aid this year for College Access, a program that helps high school students from low-income households consider and pursue higher education.

The annual $1.5 million grant was halted, effective the Oct. 1 start of the federal fiscal year, because the governor and Legislature cut state funding for public universities two years ago.

South Dakota officials said they expect the program will be eligible to begin receiving the $1.5 million grant again next fall.

In the meantime, they intend to operate College Access this school year with $680,742 of federal aid that remained unobligated from a previous award. That money is available through Aug. 14, 2014.

There will be big effects.

Many fewer of the $2,000 scholarships will be available to first-year college students. Aid will be substantially reduced to the 44 high schools, six state universities, four public technical institutes and four tribal colleges and universities that participate in College Access.

State Education Secretary Melody Schopp said she doesn’t plan to ask the Legislature for state funding to offset the loss of federal funding on a temporary basis.

She said basic services will be able to continue using the leftover money.

The handful of College Access staff members travel to high schools to help make students aware of their opportunities in post-secondary education.

Events are hosted for students to attend with their parents, and families receive help completing their free applications for federal student aid, known as FAFSAs.

Schools with high percentages of students eligible for free and reduce lunch programs are the specific targets of College Access.

In turn, many of the students who qualify for College Access scholarships in South Dakota are of American Indian heritage. The $1,000 is available for the first semester and is paid directly to the institution where a student enrolls.

FAFSA completions are the most important piece of the help, according to Schopp.

The applications are lengthy, require personal information and are somewhat complex.

Because FAFSAs are a relatively new requirement, most current parents don’t see one until a family’s first child applies for college.

“It would never happen for these kids,” Schopp said.

The state Department of Education doesn’t actually operate College Access. The department contracts with Mid Central education cooperative located at Platte.

Mid Central hires and pays the College Access staff, using the federal funding, and makes the funding decisions involving student scholarship awards, counselor trainings and outreach aid to high schools and post-secondary institutions.

Mid Central also contracts with the East Dakota cooperative for an outreach coordinator.

The funding requests flow from Mid Central in monthly invoices to the state department ultimately to the federal department. Payments are made from the federal level back down on a reimbursement basis.

Some of the federal funding is used by the state department for administrative and related services. An advisory panel also receives some of the funding through Mid Central, and Mid Central uses some of the funding for administrative and operational costs.

The six state universities last year received $35,000 apiece for outreach work with prospective students. This year the amounts are cut to $20,000.

The tribal institutions and tech schools received $15,000 apiece last year and will get $7,500 apiece this year.

Private colleges aren’t involved in the program in South Dakota.

“The amount of funding available is limited, and the amount at each institution must be sufficient to support meaningful outreach activities,” said Mary Stadick Smith, a spokeswoman for the state department. “It was decided to partner with public and tribal institutions.”

Funding to the high schools is being reduced to $140,000, from $250,000 last year.

The numbers of students reached in some way through any College Access activities have grown from 7,227 three years ago to 45,876 last year. Plans for this school year call for College Access staff to continue their normal work, but scholarships will be substantially reduced.

Whether that affects student participation in FAFSA nights won’t be known for a while. Not every student who completes a FAFSA with the help of College Access gets a College Access scholarship.

Ninety FAFSA nights were held last year. There were 1,696 students and 275 parents who received assistance with financial aid forms at those events.

There were 113 students who received $1,000 scholarships for the first semester and 110 who continued to second semester and received their second $1,000 scholarships.

In all $223,000 was spent on scholarships last year. For the current school year, there is $89,000 set aside for scholarships.

The cuts are already rippling through high schools and post-secondary campuses. Their budgets were set months ago.

Starting in May, state and federal officials talked or corresponded at least five times about whether South Dakota had met the required maintenance of effort, and whether South Dakota could receive a federal waiver from the requirement.

Ultimately the federal officials ruled on Aug. 28 that South Dakota hadn’t met the requirement and didn’t qualify for a waiver.

“I went back and forth for two months trying to work it every way we could,” said Tamara Darnall, the budget officer for the state department.

She did however receive federal assurance that the unobligated money could be used for at least one more year.

A final option was available for South Dakota to backfill the 2012 state funding for higher education by adding $17.2 million. That would have kept South Dakota eligible for the College Access grant this year.

But that route was ruled out by state officials. Under the rolling five-year average used for determining maintenance of effort, Darnall said, South Dakota would have become ineligible for at least two future years, unless amounts were added again.

The problem began more than two years ago. The Legislature made budget cuts throughout state government, including for higher education, at the request of new Gov. Dennis Daugaard in the 2011 legislative session. The cuts were for the fiscal 2012 budget that started July 1, 2011.

Funding was subsequently increased by the Legislature in the 2012 and 2013 sessions. But federal officials this summer decided the financial situation facing state government in the winter of 2011 wasn’t dire enough to warrant a waiver that would keep South Dakota eligible for the College Access grant this year.

Schopp said she wasn’t aware of any other reduction in federal education funding for South Dakota that was a result of the 2011 state cuts.

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