By David Lias
Gov. Dennis Daugaard has once again been the bearer of good news.
He first heightened optimism among South Dakotans in a press release issued way back in July, in which he informed the state’s citizens that we, at that time, were in better financial shape than expected.
The state general fund budget for fiscal year 2013 ended with higher revenues and lower expenditures than budgeted.
Revenue growth for the completed 2013 fiscal year exceeded estimates adopted by the legislature last March by $13.6 million. In addition, state agencies also demonstrated fiscal restraint, spending $10.6 million less than appropriated.
In total, the state’s financial picture improved by $24.2 million from the March fiscal year 2013 estimates.
The $24.2 million surplus was transferred to the budget reserve account as required by state law.
Fast forward to the present. Things can change rapidly in South Dakota, and as the governor prepared to give his annual budget address to the Legislature on Dec. 3, there were no great expectations.
Daugaard had warned earlier that lackluster tax receipts would hold education-funding increases to around 1.6 percent, the minimum bump for inflation that state law requires for school aid. But he told state lawmakers on Dec. 3 that an unexpected $70 million in unclaimed property receipts – money the state gets from bank accounts and other property whose owners cannot be found – will allow 3 percent increases in school aid, payments to health care providers in the Medicaid program and other key programs.
The Republican governor also proposed a 3 percent raise for state employees and a 3 percent hike in spending on South Dakota’s four technical institutes.
The news is enough to put a spring in one’s step. As we look ahead with a new sense of optimism, however, we shouldn’t ignore one simple fact: South Dakota has had the means to more adequately fund education for some time now.
Our Republican Legislature, however, stubbornly clings to state dollars, directing them, at times, to projects that are somewhat questionable while forcing school district to scrape and slash while trying their best to keep everyone happy.
We’ll repeat observations we made back in July, because we believe this information is important as a new session of the South Dakota Legislature approaches next month.
Last July, the state’s two rainy-day accounts reached a combined record high of $158,952,076.
That total of nearly $159 million is equal to 12.3 percent of state government’s general-fund spending from the 2013 budget.
All of that revenue didn’t just suddenly appear out of thin air. There are a host of things at work here, including a high reliance by the state on a strongly regressive tax.
Another factor is the ease with which the state Legislature has, for two years in a row now, not only balanced its budget but also had plenty of money left over in its general fund and in reserve funds.
One reason the state’s ledger ends up in the black is the state legislature’s willingness to shift many financial burdens onto citizens’ shoulders in a variety of ways.
An example: For years, now, the Legislature hasn’t adequately funded public education in South Dakota. It has ignored South Dakota law that calls for state aid to education to increase annually by 3 percent or the rate of inflation, which ever is less.
Gov. Mike Rounds, in his last year in office, called for a freeze in state aid, and the Legislature agreed. During Daugaard’s first year as governor, it looked like schools would be hit with a 10 percent cut in funding. One-time monies were found to make that cut approximately 7 percent.
School districts have yet to recover from the double-whammy caused by the recession and state budget cuts.
The Associated School Boards of South Dakota (ASBSD) will be attempting this legislative session to bring funding to at least where it was three years ago.
“We’re still working toward a goal that we asked him for and the Legislature for, and that’s to get you folks back to a per student allocation of $4, 805,” Wade Pognay, executive director of the ASBSD, told the Vermillion School Board Monday night.
That amount – $4,805 – represents the amount of state aid per student to bring public school districts back to the funding levels before Daugaard made drastic cuts to the state budget early in his first term. Public school funding was decreased 8.6 percent.
“We think it’s important now, after these three years, that we restore that, to get back to that, if not exceed that,” he said. “My board and the delegates clearly said we need to try to persuade our legislators to achieve that level. I’m glad the governor has moved us in that direction.”
Pognay said to achieve the $4,805 per student funding level, the Legislature would need to increase funding eight-tenths of one percent above what the governor is proposing.
We understand the desire to have a “cushion,” in our state budget. It’s natural to be happy about having a positive balance in our bank accounts, and a wallet that’s has a bit of heft to it. Yes, we’re glad that South Dakota, as of last July, had a $24.2 million surplus in its state budget. It’s difficult to be disappointed in last July’s news that the state’s reserve funds have reached a record high of nearly $159 million.
Reserve funds, however, have a disappointing quality. They just sit there. Their potential to further improve our state, to make needed investments in the public good, go wasted.
So, the money has always had to come from somewhere else.
Patrons of a growing number of public school districts across the state, frustrated with the state’s unwillingness to fund public schools adequately, have had to raise needed revenue themselves by opting out of the state property tax freeze.
Of South Dakota’s 151 public school districts, 66 have opted out, raising additional revenue to pay for salaries and other ongoing general fund costs. The Vermillion School District is in the midst of its second five-year opt-out that provides $800,000 annually.
Our state wallet may have grown fat recently, but it’s done so at the expense of other programs and other citizens in our state. The examples we’ve offered are just in the field of education (by the way, tuition at state universities, including USD, increased about 4 percent for the 2013-14 school year – another burden the state easily passed on to others).
We hope state lawmakers will take that all into account as they soon will be asked to restore school funding to where it was three years ago. We realize that the governor’s plan includes tapping into a quite a bit of money he wasn’t expecting to have – namely, a windfall in unclaimed property payments to give bigger-than-expected spending increases for schools, health care for poor people and pay raises for state employees.
We hope the governor and lawmakers remember, however, that South Dakotans’ hard work, sacrifice, their doing without, their paying more than should be required in local, highly regressive property and sales taxes and fees and tuition have helped make those spending increases possible.
Hopefully they’ll agree that adding less than one percent – one-eighth of one percent, to be precise, to the governor’s proposed education funding amount – isn’t asking for too much.