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


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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