An Open Letter to the Joint Committee on Appropriations:

I appreciate the efforts that the Legislature made in order to provide increased funding for schools in the 2016 session.  In South Dakota, any increase in taxation is not taken lightly, and our public insists that tax money be used appropriately.  In the Garretson School District, we have taken very seriously the responsibility to be good stewards of the tax money entrusted to us for the education of our students.  We appreciated being able to share our District’s story with the School Finance Accountability Board (SFAB).  However, we left the meeting frustrated by what appeared to be an irrational reliance on projections in favor of real student enrollment numbers for the purpose of accountability.

As we approached the SFAB, we relied on the Administrative Rules of South Dakota (24:44:01:06) that spell out the factors that the Board was required to consider when recommending a waiver of accountability rules.  As we presented our case, board members informed us that the committee had set precedent that morning, and that they would not consider the financial impact of retirement in the District or the financial impact of declining enrollment as appropriate justification for a waiver of the accountability rules.  These two factors had a financial impact in our district of $35,393 and $48,203 respectively.  We plotted our course thoughtfully, with knowledge that the ARSD spelled out these specifically as factors that would be considered for a waiver.  How were we to know that in the eleventh hour, these two factors would be removed from consideration?

Over the past five years, we have depleted our General Fund reserves by spending more money than we would receive in revenue.  Our General Fund balance ended the year at approximately 13.5% of expenditures.  We knew we could not sustain the trend of deficit spending, so we asked our community to opt out of the property tax limitations in order to preserve our programs.  We have done the things at the local level that many in leadership positions in Pierre have asked us to do. When presented with the funding package of 2016, our district negotiated with our teaching staff in good faith, knowing that we would fall short of DOE projections for enrollment, and therefore, receive less in new funding than the projections indicated.  When opportunities to bring our expenditures in line with expected revenues presented themselves, we took advantage of them.  We had two experienced staff members retire, to be replaced with first year teachers.  We also took advantage of an opportunity to develop a shared services grant by sharing a full-time Spanish teacher with the Baltic School District.  We made these decisions in a conservative, thoughtful manner, based on the factors clearly laid out in the ARSD for consideration of a waiver of the accountabilities.

We urge you to reconsider the recommendation from the SFAB.  We ask you to recognize the difficulty of being a school in which enrollment declined, and therefore, received less “new” revenue from the funding package of 2016.  As South Dakotans, we believe in using “common sense.”  We believe very strongly that the accountabilities should be based on the common sense of real, accurate numbers (for both enrollment and revenue) rather than the fiction of projections.  We ask that you give full credibility and consideration to factors that are delineated in the ARSD (24:44:01:06), and ask that you grant our request for a waiver to the accountability rules.  Thank you for your consideration.

Respectfully,

Guy Johnson,

Superintendent

Much has been written lately in the Argus Leader and the Garretson Gazette regarding the school’s position and decisions made by the School Finance Accountability Board.  Normally, these stories include a very bold statement in the headline and details that follow only tell part of the story.

In 2016, the legislature made significant changes to the funding formula for schools.  A half-penny sales tax was enacted to pay for this increase and a portion of the tax was intended for property tax relief.  In the end, the original bill was modified to include two different models for accountability for spending the money on instructional staff.  One model included a requirement to raise teacher compensation by a certain percentage and the second required that a certain dollar amount be spent on salary and benefits for instructional staff.  Both the percentage increase and the total dollar amount was based on enrollment projections from the Dept. of Education, which were based on the previous year’s student enrollment.

That year, our board went into staff negotiations with a clear picture of what needed to be done, and at the end of those negotiations, and planned to meet both accountabilities by spending over $3,000 more than was required and increasing instructional staff compensation by one full percentage point more than was required by the law.  After negotiations, the situation changed.

At that point, we knew that we would not have as many students as the DOE projected.  Knowing that the real increases in “new” money would not match up with projected increases in funding, the Board very thoughtfully considered opportunities that could be used to ensure that our budget stayed balanced.  The law included a provision by which schools could apply for a waiver to the accountability rules for certain conditions.  The impact of declining enrollment and the financial impact of retirements were two circumstances included in the list of factors that the Accountability Board would be required, by law, to consider for a waiver.

In the spring of 2016, opportunities presented themselves as a way that District could ensure that our budget remained balanced.  First, Two teachers retired and were then replaced by first year teachers. Second, the District was able to create a shared Spanish teaching position with the Baltic School District. The Board very carefully considered whether it was appropriate to take advantage of these opportunities to maintain a balanced budget, and ultimately decided that they would put their faith in the Accountability Board to recognize those factors that are outlined in SD law as significant and worthy of consideration for a waiver to the accountability rules.

On November 16^th, Board President Shannon Nordstrom and I attended the Accountability Board meeting in Pierre to tell our District’s story and ask them to consider a waiver.  At that meeting, members of the Accountability Board made it clear that they would not consider the impact of declining enrollment or the impact of teacher retirement, even though these were both clearly laid out in the law as factors for consideration in order to recommend a waiver to the rules.  In our District, the impact of declining enrollment was over $48,000 and the impact of teacher retirement was over $35,000.  Ultimately, the Accountability Board decided to recommend to the Appropriators a “conditional waiver,” which would require the District to spend an additional $62,000 on instructional staff salaries.

The process does not end with the Accountability Board.  That Board made a recommendation of this conditional waiver to the Joint Committee on Appropriations, which is made up of SD legislators.  That group will make the final decision, and we are hopeful that they will look at the provisions of the law and consider all of the factors that are laid out in it.  We ask for your patience as we learn more about what, if anything, we are required to do.  After we know the specifics, our School Board will consider our options, weigh out what they believe to be in the best interest of our District, and we will make adjustments where necessary to ensure that we are able to provide the best programming that is possible for our students and our community.