SD Budget Blog

The SD Legislature takes historic steps to improve its appropriations process

Added January 20th, 2016 by

New rules mean greater transparency and more time for deliberation

 

Budget ProcessRevenue Report now due by 20th legislative day

Historically, the revenue report isn’t approved by the appropriations committee until about a week before end of session (last 12 year average = 7 days).  That lead time shrunk to 3-4 days during the last three legislative sessions.  Under the new rules, interested South Dakotans will have time to provide input to their legislators as appropriators prioritize allocating tax dollars.

Rule 7-11.1.   Selection of revenue targets. The Joint Committee on Appropriations shall select general fund revenue targets for the current and next fiscal years before the twentieth legislative day for the purpose of setting appropriations. The Committee may subsequently adjust the general fund revenue targets.

New timeline allows two weeks for budget setting, legislative day 23 through 32.  During this time the Joint Committee on Appropriations can combine discussion on general bill components, related special bills or amendments  together – allowing for public to follow the appropriators’ deliberation of the entire spending package for each budget area. 

Historically, special bills were introduced separately from the agency programs they may impact, and the general bill wasn’t open for discussion and consideration of amendments until the last days of session.   This new timeline opens the general appropriation’s bill earlier in the session, potentially allowing a more deliberate and transparent discussion of fiscal expenditure priorities. SD Budget & Policy Institute testified at Joint rules committee hearing about the situation:

“Several years ago SD Budget & Policy Institute teamed with the Extension Service and we held meetings around the state in 16 different communities. We educated the people who attended on how the budget process works in South Dakota.  We used our Budget Primer –Many of you are familiar with and have seen it and if you are not we are always happy to get you another copy. The final recommendations that came out of this group were in a number of areas. They looked at education, looked at health care but they also focused on budget process. And I would like to read to you what they recommended on budget process.

For budget systems scheduling – they recommended adjusting the timelines or deadlines to better allow public input.  One of their key concerns was based on what we all know… over the last 12 years 50% percent of the time our general budget bill has been waiting to open up until two days before the end of the session.  The other 50% of the time it was either opened up one day before the end of the session or on the last day of the session.  Leaving those amendments – that careful consideration of the budget amendments to the very last minutes makes it very difficult for the public to perceive transparency in how this process is happening.”  Joy Smolnisky, testifying 1-13-16 to the Joint Legislative Procedures Committee.

7-12. Joint session or action for house and senate committees on appropriations. The Senate and House Committees on Appropriations may meet in joint session or form combined subcommittees to hear agency or other budget presentations. All Joint Committee on Appropriations action shall be approved by a majority vote of the Joint Committee unless a member calls for a separate vote of the House Committee on Appropriations and the Senate Committee on Appropriations in which case a majority vote of each committee is required to adopt the action. The majority vote of the committees in joint session to adopt the action or the majority vote of each appropriations committee to adopt the action constitutes the committee report of the house of origin on the general appropriation bill or an appropriation made by a separate bill.

CHAPTER 17. LEGISLATIVE DEADLINES

Legislative Deadlines
Legislative Action   40 Day Session
A. Last day for unlimited introduction of individual bills and joint resolutions1 12th Day
B. Last day for introduction of individual bills and joint resolutions1 15th Day
C. Last day for introduction of committee bills and joint resolutions1 16th Day
D. Last day upon which Joint Rule 5-17 can be invoked on a bill or resolution in either house 26th Day
E. Last day to move required delivery of bills or resolutions by a committee to the house of origin1 27th Day
F. Last day to pass bills or joint resolutions by the house of origin1 28th Day
G. Last day for introduction of concurrent resolutions and commemorations 28th Day
H. During the seven final legislative days motions to reconsider and reconsideration being made upon the same day (any time before adjournment) 34th Day on
I. Last day to move required delivery of bills or resolutions by a committee to the second house1 35th Day
J. Last day for a bill or joint resolution to pass both houses1 36th Day
K. Two days preceding the last two days of a legislative session shall be reserved for concurrences or action upon conference committee reports 37th Day 38th Day
L. The last day of a legislative session is reserved for the

consideration of vetoes

40th Day

 

1 Bills and joint resolutions must be submitted to the Legislative Research Council at least 48 hours prior to this deadline, pursuant to Joint Rule 6A-5.

 

17-1. Exceptions to deadlines for appropriation bills. Any general appropriation bill is not subject to the legislative deadlines of C, E, F, I, J, and K, in this chapter, except that the general appropriation bill requested by the Governor shall be subject to legislative deadline C.

Any appropriation bill that is not a general appropriation bill, which is referred to or reported to the floor by the House Committee on Appropriations, the Senate Committee on Appropriations or the Joint Committee on Appropriations, is subject to the following legislative deadlines, in lieu of the legislative deadlines of E and F, in this chapter:

(1) Last day to move required delivery of bills by a committee to the house of origin: 31st Day;

(2) Last day to pass bills by the house of origin: 32nd Day.

17-2. Calendar less than 40 days. If a Session Calendar is adopted for a period of thirty-five (35) days to thirty-nine (39) days, inclusive, the legislative deadlines set forth in Chapter 17 of the Joint Rules shall be decreased as follows:

(1)    Decrease the deadlines occurring after the 16th day but prior to the 34th day by one (1) day for every two (2) days by which the length of the adopted calendar is less than forty (40) days;

(2)    Decrease the deadlines occurring on and after the 34th day by the same number of days by which the length of the adopted calendar is less than forty (40) days.

 

 

 

One win and one loss on new funding proposals for SD counties

Added January 20th, 2016 by

Counties still have a funding bill alive in SD legislature

thumbs up

Passed:   SB 2   Purpose: revise the distribution of the revenue from the alcoholic beverage fund

 

thumbs down  Killed:    HB1006 Purpose: authorize counties to impose sales and use taxes

 

 

Although South Dakota’s House State Affairs committee killed  HB1006 – a proposal to allow counties to raise revenue through a 1 cent sales tax, the Senate Local Government kept alive an amended version of  SB 2 – a proposal to revise the distribution of the revenue from alcoholic beverage fund.

Originally SB 2 proposed dividing the revenue from the Alcoholic Beverage Fund evenly between the state, county and municipalities (1/3 each).  An approved Amendment decreased the county and municipality shares to 25% each, leaving the state with 50% of the revenue. The Bureau of Finance and Management testified that this would reroute $3.8 million from the state general fund to the counties.    A quarter of the counties’ share would come be evenly allocated between all counties  so each would get a minimum baseline benefit of about $14,000 per county. The remaining 75% of the county share would be distributed based on county population.  The use of these funds would be limited to law enforcement and court or incarceration expenses.

Senate Bill 2 will now be heard on the full Senate Floor, and if successful, would move over to the House of Representatives for further consideration.

The legislation was a recommendation of the SD Legislature’s 2015 County Summer Study (see their report on page 9).  Other bills filed from this summer study are:

HB 1002    Proposal:  eliminate certain reporting requirements for the county general fund.  Status:  Passed Local Government Committee on 1-19-2016

HB 1003    Purpose: revise certain administrative functions regarding county government.  Status:  Passed Local Government Committee on 1-19-2016

HB 1004   Purpose: make form and style revisions to certain statutes regarding counties.  Status:  Scheduled for first hearing in Local Government Committee on 1-21-2016

HB 1005   Purpose: revise and repeal certain fees that are established to compensate counties for services provided by county officials.  Status:  Scheduled for first hearing in Local Government on 1-21-2016

 

 

 

Spending on k-12 support services

Added October 28th, 2015 by

There is growing awareness that South Dakota Teacher Salaries are not competitive. There is less awareness that support services spending per pupil also lags the regional and the nation      PDF:  Spending on SD k-12 support services

SD Blue Ribbon Education Taskforce explored ideas for designing a teacher compensation based funding formula at its October 1st meeting.

One area of discussion was whether the funding considerations should be based on a target percentage for instructional vs non-instruction expenditures (“non-instructional services” are commonly referred to as “support services”).

SD BPI dug into the most recent US Census Bureau Annual Survey of School System Finance to find some clarifying data on this question.
SD FY13 Current Education Expenditures

 

 

 

 

 

 

 

 

Currently, instructional teacher salaries and benefits encompass 53% of school district expenditures.  Another 7% goes for “other” instructional expenses (curriculum, supplies, etc.).  Central Administration and general administration account for 8% of expenditures and Other Current Spending1 consumes 32% of expenditures.

Support services spending per SD pupil lags the region and the nation.  See full report for details  Spending on SD k-12 support services

1Current spending for other than elementary-secondary education instruction and support services activities. Included in this category are food services, enterprise operations, community services, and adult education expenditure.

 

Census data reveals a persistent poverty problem in South Dakota despite economic recovery

Added September 17th, 2015 by

Do you know the kids in your community who are living in poverty?Child Poverty in SD remains among highest in the region

According to the latest census data[i], 36,240 South Dakota children are living below the poverty level – that is 17.7% of all South Dakota children.

Unfortunately, things have not been getting much better. Child poverty rates in SD have increased from 13.3% in 2000, to the current 17.7% rate, which is among the highest in our region.

Over the past 15 years, there has been a statistically significant[ii] increase in the rate of poverty for South Dakota children

Kids Count SD map showing children in povertyEvery SD County, with the exception of Lincoln and Union Counties, has a child poverty rate of over 10%. Some are as high as 55%. Check out the Kids Count interactive map of SD Counties[iii] to see your county’s poverty rate.Poverty rates in SD have not recovered from the recession

Poverty rates for the total population in South Dakota are also lingering at recessionary highs of 14.2%, meaning 116,843 South Dakotans live on incomes under the Federal Poverty Level.

2014 Federal Poverty Level[iv]

# persons in family Poverty Level
1 $ 11,670
2 $ 15,730
3 $ 19,790
4 $ 23,850
add $4,060 for each additional person

 

Analysis and Charts by SD Budget and Policy Institute

 

[i] US Census http://www.census.gov/programs-surveys/acs/

[ii] Statistical analysis of US Census Data by SD Budget & Policy Institute

[iii] http://datacenter.kidscount.org/data/Map/2938-children-under-age-18-in-poverty-estimate?loc=43&loct=5#5/any/true/36/any/6080/Orange/

[iv] http://aspe.hhs.gov/2014-poverty-guidelines

 

What are the facts are behind low teacher salaries in South Dakota?

Added September 3rd, 2015 by

Check out SDBPI latest Power Point (with speaker notes to help you understand the charts):

Why SD K-12 Funding Formula Isn’t Working 9-2-15

SD Budget & Policy Institute is available to help South Dakotans understand our research findings.  We can talk by phone or arrange a visit or Webinar to help local South Dakota groups understand and discuss this important public education funding issue.

Contact joys@SDbpi.org if you have questions.   605-929-1244

SD Funding formula stalls k-12 investment growth rate

 

Back by Popular Demand – Research of K-12 Funding in South Dakota

Added March 4th, 2015 by

With the Governor announcing a “Blue Ribbon” taskforce to answer some of the questions about k-12 funding, South Dakota Budget & Policy Institute is increasingly being asked to redistribute the research we’ve been compiling over the past 18 months!

Here you go – with an updated version of our power point (with speaker notes) that includes the latest findings (you keep asking more questions so we keep expanding the research!).

South Dakotans Talking k-12 Education Funding 3-4-2015

Remember – our research is open for use by the public – feel free to share, cite, critique or copy as you see fit.  Just don’t change our content please!

Good public decision making requires information!

Thanks for your continued interest in how we fund k-12 education in South Dakota

SD BPI testifies AGAINST a constitutional convention to require a federal balanced budget

Added February 6th, 2015 by

HJR1001, calling for a constitutional convention to enact a federal balanced budget amendment, passed the Senate State Affairs committee this morning 5 to 3 with 1 voting member excused.

Why did SD BPI testify against the resolution?  Read our testimony and find out!

Testimony:  “As part of our non-profit, nonpartisan mission, the Institute has compiled South Dakota specific research on this issue and concluded a constitutionally mandated balanced budget does NOT MAKE GOOD FISCAL sense for South Dakota.

Our concern is that constitutionally mandating the ongoing balancing of the federal budget limits options for how the American People can respond during recessionary phases of business cycles or abrupt changes in social, international or environmental conditions. 

Such a requirement would require significant budget cuts, substantial tax increases, or both in recessions, taking away vital help from South Dakota’s people and our state and local governments when, because of an economic downturn, we are least able to fiscally adapt. 

South Dakota depends more heavily on federal spending than most of our neighboring states.

Approximately $1.50 in federal dollars is spent in South Dakota for every dollar South Dakotans’ contribute toward federal revenue.

Here is how federal dollars are spent in South Dakota: 

  1. Over 40% of our state government budget comes from federal money. This is a higher percentage than all our neighboring states and above the national average of 32%.  
  2. Individual South Dakota residents receive direct payments – Pell Grants for college students, Social Security for the aged – that, If spread equally across our population – amounts to $5,300 per year ($5,988 when adjusted for price parity/cost of living by state). That is 6% higher than the national average and higher than receipts in ND, WY,MN and NE when adjusted for price parity.   So, our State and Local government and our individual residents in South Dakota are receiving more federal monies than the national average.
  3. Federal Contract Spending in South Dakota is also significantly higher than all of our neighboring states except North Dakota who has a comparable amount.  In fact–South Dakota has the highest Department of Defense Contract Spending of all our neighboring states (think Ellsworth Air Force Base) – over $400 per South Dakotan.
  4. Finally – There are almost 20,000 South Dakotans employed by the Federal Government. Their earnings represent about 7% of all wages and benefits earned in the state. SD’s federal employment rate is 75% higher than the national average and significantly higher than all of our neighboring states except MT.

These are the $8 billion in direct annual federal spending activities in South Dakota that would be at risk for unpredictable fluctuation under a constitutionally balanced federal budget.

You as legislators would have to decide, in a recession, would you be able to supplant lost portions of the $8 billion in federal funding that:

  • Keeps local and state government running in our state?
  • Fund school lunches and Head Start programs?
  • Supports research at our Universities?
  • Keeps our National Parks and Monuments open for tourism?
  • Help agricultural producers purchase crop insurance?
  • Provide income for our elderly and disabled?

Where would you find revenue dollars to supplant such loses during an economic downturn?  And if you did not supplant unpredictable cuts – how would those cuts affect South Dakota’s people and our economy during a recession? 

The SD Budget & Policy Institute maintains fiscally responsible federal budgeting can and should be achieved through prudently balanced taxation and spending policies without a constitutional amendment requiring a balanced budget.  A Constitutional Amendments takes away options the American people, including South Dakotans, may need to meet the unknown fiscal challenges of the future.” 

Instructional cost per student in South Dakota

Added February 6th, 2015 by

 

QUESTION: IF SD TEACHER SALARIES ARE SO LOW, WHY DO NINE STATES have lower instructional costs-per-student than South Dakota? SD Class Size

ANSWER: Instructional cost-per-student is based on two factors:

1. Teacher salary and benefits.

2. Number of pupils there are per teacher.

Total instructional cost-per-student can be low if moderately paid teachers have large class sizes, or higher if low paid teachers have smaller class sizes.Nine states have lower instructional costs

The average classroom size among our neighboring states is 13.5 children per classroom – ranging from a low of 11.4 in North Dakota to a high of 15.9 in Minnesota.

South Dakota averages 13.7 pupils per teacher. Although South Dakota’s class size is slightly higher than its neighbors, its cost per student for instruction is lower because we have much lower teacher salaries. With a constant class size only OK has lower instructinoal cost per student than SD

The nine states that have lower instructional costs than South Dakota all have larger classroom sizes, ranging from 14.7 in Texas to 22.8 in Utah.

If the classroom sizes in these nine states were comparable to South Dakota’s classroom size (13.7), the per-student-instructional cost would be higher in every state except Oklahoma.

Data Source: http://nces.ed.gov/programs/digest/d12/tables/dt12_078.asp

Feb 9, 2015 Correction:  Original publication stated “Total instructional cost-per-student can be low if moderately paid teachers have large class sizes or if low paid teachers have smaller class sizes.”  The missing word “higher” was added to correct the statement to read “Total instructional cost-per-student can be low if moderately paid teachers have large class sizes, or higher if low paid teachers have smaller class sizes.”

 

A federal balanced budget amendment sounds so reasonable – Why isn’t it?

Added January 24th, 2015 by

A Federal Balanced Budget Amendment doesn’t make fiscal sense for South Dakota

At risk:  Federal Budget Spending is $8.2 billion in South Dakota

Fiscally responsible federal budgeting can and should be achieved through prudently balanced taxation and spending policies without a Constitutional Amendment requiring a balanced budget.  A Constitutional Amendments takes away options the American people may need to meet unknown fiscal challenges of the future.

A balanced budget amendment would hurt our economy, making recessions longer, deeper and more damaging by requiring deeper budget cuts or tax increases when the economy weakens – which would weaken the economy even more.

SD gets back 1.5 for ever dollar we pay inWhen the economy is struggling and people are without jobs, expenditures for food stamps and unemployment insurance rise, while tax revenue declines.  As a result, a balanced budget requirement would require deeper budget cuts, substantial tax increases, or both in recessions, taking away vital help from South Dakota people and our state and local governments facing hard times.

What is paid for with the $8.2 billion of Federal Budget Spending in South Dakota

$1.7 billion – Federal dollars for South Dakota state and local revenue

Federal dollars provide over 40% of the South Dakota government revenue. These dollars pay for roads ($420 million), education ($273 million), agriculture and natural resources ($47.8 million), health and hospitals ($97 million) and housing and community development ($37.4).

Chart 1*

Chart 1*

 

$4.5 billion – direct benefits from federal government paid to individuals in South Dakota

Most of this money is Social Security and Medicare benefits for the elderly or disabled, but it also includes educational assistance like Pell Grants, federal unemployment benefits and food stamps.

Chart 2*

Chart 2*

$0.6 billion – Federal contracts in South Dakota

The United States pays venders to perform contracts in South Dakota (example – supplying the Military at Ellsworth Air Force Base in Rapid City).   Agency-wise, the biggest spender in South Dakota was the Department of Defense which oversaw 60% of federal contract money in the state.  Other top contracting agencies were the Departments of Veterans Affairs, Department of Agriculture, Department of the Interior and Department of Health and Human Services.

Chart 3*

Chart 3*

$1.4 billion – Federal employees in South Dakota

Almost 20,000 people in South Dakota work for the Federal Government, with their compensation making up about 7% of all wages and benefits earned by people who work in the state.

Chart 4*

Chart 4*

Who pays South Dakota’s $5.6 billion in contributions to the Federal Budget?SD contributinos to the Federal Budget

$5.2 billion—Individual and payroll taxes

$0.213 billion—Business taxes

$0.034 billion—Excise taxes

$0.017 billion—Estate taxes

$0.017 billion—Gift

Almost all (95%) of South Dakota contributions to the federal budget are from Individual income tax, self-employment tax or payroll taxes.

Business taxes (corporations) pay less than 4% of the total.  Excise taxes, estates taxes and gifts combined represent only 1.2% of contributions.

South Dakota per-person federal tax contributions are lower than the national average.

Chart 6*

Chart 6*

The average taxpayer in South Dakota paid $9,412 in federal income taxes in 2013.  That’s $2,303 less than the national average.  The following “receipt” helps taxpayers envision where their taxes were spent (both back at home in South Dakota and at the national level for items like defense, international affairs, science and interest on the debt).

Chart 7*

Chart 7*

Summary

Fiscally responsible federal budgeting can and should be achieved through prudently balanced taxation and spending policies without a constitutional amendment requiring a balanced budget.

A Constitutional Amendments takes away options the American people may need to meet unknown fiscal challenges of the future.

A balanced budget requirement would require deeper budget cuts, substantial tax increases, or both in recessions, taking away vital help from South Dakota people and our state and local governments facing hard times while making the economic downturn more serve.

Our opportunity as South Dakota citizens to best solve the challenge of an underfunded federal government is to advocate for policies and elect representatives who are willing to either raise taxes, cut expenditures, or a combination of both, on an ongoing basis to meet the needs of Americans, in both the long and short term.

 

 

 

* Charts and analysis from https://www.nationalpriorities.org/smart/south-dakota/ and https://www.nationalpriorities.org/interactive-data/taxday/average/2013/sd/receipt/

 

 

Portion of SD state taxes dedicated to K-12 education drops by 25% in last 10 years

Added January 23rd, 2015 by

This week the South Dakota Legislature’s Apropriations Committee has been listening to seemingly comprehensive reports from the state’s Department of Education.  But something is missing:  a report about a decade’s worth of funding declines.

What wasn’t included in those Department of Education reports was an explanation about why state investment in K-12 education has been decreasing as a portion of the general fund for the last 10 years.

In 2004, South Dakota invested 37% of its general fund expenditures in state aid to K-12 education.  By 2014 that had plummeted to 27%.  That is a drop of over 25%. (See Chart 1)

How is a 25% decline even possible?

Chart 1: SD State Aid to Education Plunges by 25% in past 10 years

Well, for some unknown reason, when the education funding formula was established South Dakota decided to freeze its investment in K-12 education to include inflationary increases only, diverting all real growth in state revenues away from education.

Back in the early 1990’s South Dakota used to track with the nation, investing an amount equivalent to about 5% of the total personal income in our state toward K-12 education.  But while the rest of the USA has stayed pretty true to the 4.5 to 5% level of investment, South Dakota has not. (See Chart 2)

K-12 spending as percentage of SD personal income

Chart 2: Funding Formula diverts real economic growth away from k-12 education funding

In the late 1990s South Dakota implemented its “No-real-growth Funding Formula” for K-12 education. That is when our state investment in K-12 education begin to erode relative to the rest of the nation. By 2012, South Dakota spending on K-12 was only 3.5% of personal income.

If South Dakota continues its current strategy, diverting all revenue increases from real economic growth away from K-12 education, funding for each generation of students will continue to fall further and further behind our neighbors and our nation

How has this disavowing responsible K-12 funding harmed the education of our children?

Let’s look at one of the things that has happened.  Back in 2003, South Dakota’s fourth graders scored above the national average in reading.  By 2013, well over half our students (68%) were not proficient in reading by 4th grade.

4th grade NAEP score compared to region and nationSee the blue line in chart 3 (that is the national scoring average).  South Dakota is the red line. Shocking, right?

Today, students across the nation are scoring higher than our own South Dakota students. All our neighboring state’s students are holding their own, placing above that rising national average.  But South Dakotans are lagging, dropping behind both the national scores and regional scores.

An email of these research results to the South Dakota Secretary of Education was met with a reply that said we used to have a very effective reading program, which ended in 2005 when grant funding ran out.  That’s a burden, but then South Dakota didn’t replace it with an equally effective program.  Why?  We apparently didn’t want to fund our own effective reading program.

Should we be concerned about this?

SD DOE research on outcomes for 4th Grade students not proficient in reading

SD DOE research on outcomes for 4th Grade students not proficient in reading

Yes, according to South Dakota Department of Education research published this week (Chart 4).  If we apply the report’s findings to the 68% of South Dakota’s 2013 4th graders who weren’t proficient in reading, we can predict that in 2021 when they graduate:

  • Less than 50% of graduates will have taken the ACT
  • Less than 36% of graduates will have met the ACT English  benchmark
  • About 10% of graduates will have dropped out

Summary

This data suggests it may be time for South Dakota to take a serious look at its current funding formula, a formula that has frozen and stagnated K-12 investments at the same inflation-adjusted level for over 15 years. And we know the human and monetary expense of remediating current and future generations of graduates in incalculable.

The ability of our students to read and the ability of our teachers to teach them to read is not the problem.  The lack of adequate funding is the real, true issue, and it is harming our state’s ability to successfully transition our children from high school to being productive, economically viable adults.  We think that transition is worth the investment.

SD Budget & Policy Institute has shared these findings over the past five months in eight** South Dakota communities holding meetings with several hundred people and generating extensive media coverage.  Responses consistently reflect deep concern.  Every group unanimously agreed, “doing nothing” (i.e., staying with the existing funding formula) was unacceptable.

 

 

*NAEP:  National Assessment of Educational Progress  http://nces.ed.gov/nationsreportcard/niesdata/report.aspx

**  Aberdeen, Brookings, Mitchell, Pierre, Rapid City, Sioux Falls, Vermillion and Yankton

 

 

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