General Opt Out Information – Garretson School District

Glossary:

GF = General Fund: This is one of two major funds that schools use.  The General Fund is how the school district pays most of the “operational” costs incurred as the school district provides education for our students.  Eighty percent of this fund is used for paying salaries and benefits to employees.  It is funded through a combination of state and local money.  The levy for this fund and the formula is determined annually by the SD Legislature.  Different property types are taxed at different levels.  In the 22-23 school year, those levies were: Ag property at $1.362/1,000; Owner-Occupied property at $3.048/1,000 and all other property (commercial and utility) at $6.308/1,000.  Main source of revenue for this fund is determined through a count of the students served in the district on the last Friday in September.   Essentially, the formula (when adjusted to Garretson’s school size) provides for $7,230 per student.   

General Fund Reserve: This is the “cash on hand” in the General Fund.  Any part of the budget that is unspent stays in “the reserve,” which is carried over from year to year.  The reserve is often times reported out as a percentage of the expenditures budgeted for the year.  Because local taxes are collected twice per year, schools see two large spikes in revenues when property taxes are paid.  We need to have approximately 15% in our reserve in order to pay all of our bills between those two revenue spikes due to the local property tax collection.  

As we started the FY23 school year, the difference between revenues and expenditures is $1.1M.  We expect the difference to be between $600,000 and $700,00.  At the start of the year, our GF reserve was at $1.2M.  We expect that it will decrease by the deficit, bringing it down to $600,000.  If expenses continue to increase (inflation), and student numbers go down, or hold steady, we can expect that deficit to increase.  As discussed above, in order to “make cash flow,” we need to have approximately 15% in reserve.  This allows us to continue to make payroll obligations in the months before the semi-annual tax payments are disbursed.  

CO = Capital Outlay Fund: This is the second major fund that schools use.  The CO fund is used for buildings, large pieces of equipment, technology and infrastructure, and textbooks.  This fund is designed for the purchase of those things that will last for some time.  This is funded through local property taxes.  In 2016, the law was changed to decrease the growth in local Capital Outlay funds, and is now limited to growth of 3%, or the rate of inflation (CPI-W), whichever is less.  The maximum dollar amount  is set by the Board of Education in July each year and then the county auditor determined the levy that will generate those funds, based on total valuation in the district.  The levy is applied equally to all property types.  

  1. What is an “opt out?”

In South Dakota, the taxing authority for local governments (school board, city, county) is spelled out in state law.  There are limits defined in state law that sets maximum tax levies for these local governments.  There is  a provision in the law that allows those local governments, with the consent of the people, to “opt out” of the tax limits. In Fiscal year 2023, 63 school districts (42%) in the State of SD have an opt out in place.  Sometimes, people think that this is only a “small school” issue.  Several districts in our region have been forced to opt out in order to preserve programs.  The list includes: Harrisburg, Sioux Falls, Tri-Valley, Beresford, and West Central.  Some are large and some are not, and each community has programming that local taxpayers have committed to keeping in their districts.  (Source: SD Dept of Education – Opt Out History).  When a school district opts out of those tax limitations for the General Fund, different property types pay a differential rate that follows the ratio set by the legislature in SD law.  For taxes payable in 2023, that ratio is for every one dollar in ag levy, the owner occupied rate is 2.2370 times that. For “other” property and utilities, the ratio is for every one dollar of ag levy, the “Other” rate is 4.6314 times that.  

  1. Why do we need to do an opt out?

In 2016, the Board of Education passed a resolution to opt out for a maximum of $500,000 for five years.  In that resolution, the board wanted to ensure that our public’s voice was heard through an election.  At that time, the public voted in favor by a margin of 472 “yes” votes to 360 “no” votes.  At that time, the board committed to the goal of reducing the opt out over time by reducing expenses in a thoughtful manner that would have the least impact on our students.  For the first three years of the original opt out, the Board used the entire $500,000, but in the last two years, reduced that amount to $350,000.  When that opt out expired, we knew that we would still need to ask the community to opt out.  In the meantime, covid hit, and the influx of federal money has allowed the district to put off the opt out.  At the same time, our trajectory for student count was going up until 2019, when we had a population of 492.  After the covid pandemic, our student numbers dropped.  This year our student count was 444.  This decrease in the number of students has resulted in close to $350,000 less in funding for the district.  Couple that with state funding that has not kept pace with inflation, and there is a need to ask the community to opt out.  The Board and administration are committed to only taking as much as necessary to maintain programming in the district, with the goal of reducing the amount needed over time.  

  1. What if the district doesn’t need the full amount of the opt out?

After an opt out is passed, state law allows the district, through the annual budget process, to request all, some or none of the opt out amount within the time frame specified in the resolution.  The administration, and our board would only recommend the amount that is necessary to maintain programming.  Our history during the last opt out has shown the the district takes that commitment to our community seriously by not taxing for the maximum amount allowed in fiscal years 2020 and 2021.  We remain committed to the principle of only taking additional tax revenue to support our programming until growth allows us to grow our programs with funds provided by the state funding formula.  

  1. If we support this opt out, will my taxes go up?

When the last opt out expired in 2020, there were no levies for opt out in FY21 and FY22.   For a $500,000 opt out, the levies would increase by 62.4 ¢  / $1,000 for ag property, $1.396 / $1,000 for Owner-Occupied property and by 2.89 / $1,000 in valuation for all other property.  So, to do the math, for each $100,000 in valuation of your home, the owner would pay an additional $139.60 in taxes.  

  1. What has the school done over the last five years to reduce costs?

One of the things that this opt out over the past five years has enabled us to do as a school district is to look very carefully at ways we can reduce our costs without causing harm to our students and our programming.  We have taken a number of smaller steps that together, have resulted in recurring reduction in costs from year to year.  Over the last five years, our General Fund reserve has grown to a level that will allow the district to spend down in a strategic manner over the next couple of years.  One of the ways we have been able to do that is by reducing expenditures in certain areas over time.  Some examples are below:

  • In 2017, the food service fund was in the negative by a little over $90,000.  The district worked with Lunch Time Solutions with the goal of breaking even in our food service.  In 2019, we no longer needed to subsidize the food service fund with general fund money.  In 2020, the revenue generated through the food service program was enough to pay for the entire cost of the program.  We expect that to continue in 2021 and beyond.  Savings: approximately $90,000 annually.
  • In 2016, the district contracted a service provider for custodial rags, microfiber mops and rugs in the building.  As we looked at the cost for the service, we decided to make the investment in our own washing machine/dryer and purchase our own custodial mops, rags and permanent rugs.  Our custodians now wash these materials, and outside of the initial purchase costs, replacement of worn out mops and rags has been a minimal cost.  Savings to the district is 3-4,000 annually.  
  • In 2018, we compared costs associated with refinishing our gym floors with different vendors.  Up until that point, we had spent $9,000 annually in refinishing those wood floors.  After exploring different options, we were able to reduce e that cost to around $2,500.  Annual savings to the district of approximately $6,000.
  • In 2019, we went through the Request For Proposal (RFP) process for our copier lease.  At that time, we had a five year lease that was costing us approximately $36,000 per year.  After the RFP process, our costs are now closer to $12,000 per year for copier services.  Savings to the district is approximately $24,000 annually.
  • In 2019, we went through the RFP process for waste services as well.  Through the process, we were able to reduce the cost of those services significantly.  Annual savings to the district is approximately $6,000.
  • In the summer of 2020, we completed a project to replace the old chiller and replace our fluorescent lights with LED lighting.  Costs of the improvement were paid through the Capital Outlay fund, but we expect to see savings of between $15,000 and $20,000 in the General fund through reduced energy costs.   

Maintaining the opt out will allow us to continue reducing costs in a thoughtful, well-planned manner that leads to greater efficiency without negatively impacting our students. 

  1. How can the district be replacing the turf and track and asking the community for more money?  

The athletic complex was completed in 2005, with an expected life span of the turf and track for 10-12 years.  We are on year 17 currently.  Both the track and the synthetic turf are showing a great deal of wear and need to be replaced.  The money for this project comes out of the Capital Outlay fund, a fund designed for infrastructure, facilities and long-lasting improvements.  The Opt Out is to maintain our general fund, the fund that pays for programming.  In our district, 82% of the General Fund is spent on personnel.  

  1. Why doesn’t the district use capital outlay flexibility in stead of opt out?

State law does allow flexibility within the capital outlay fund, and with our current plan, we intend to transfer money from the CO fund to the General fund annually.  However, to cover the entire amount, we would need to basically stop all capital outlay purchases, including sports uniforms, textbooks, curriculum, iPads, school vehicles and building improvements.  If the CO fund is used for the General fund, we run the risk of allowing our buildings to deteriorate, which in the end would be much more expensive for the community, when it came time to replace the buildings due to neglect.  

  1. Is this sustainable?  Why do we need to continue this opt out?

Since 2016, many have worked hard to ensure that our community grows, with infrastructure work, additional housing and businesses coming to town.  These efforts have not gone unnoticed by the district and have been appreciated.  We have had a number of families that have moved in to town, but many of the homes have been purchased by residents who do not have school age children.  We are happy to see the work on growth continue in the district.  

Had the trajectory in growth in students from 2016 to 2019 continued, we would be talking about a significantly lower amount, or possibly not talking about an opt out at all.  However, when we consider a reduction in student count by 48 students, inflationary pressures, and the fact that post-pandemic, we are seeing higher needs in families and children than we ever have before, that tells most of the story – a reduction in close to $350,000 in funding, increase in demand for services as well as increased costs for almost everything that the school needs to run.  The opt out for five years may give us time for the community to continue its growth and hopefully increase the number of housing units that are available in town.  

  1. What will the money be used for?

The money will be used to sustain our current programming.  As explained earlier, 82% of the general fund is used for salaries and benefits for employees.  The opt out will go toward keeping the same number of staff as the district currently has.  

  1. What happens if the community votes no?

Right now, graduating class sizes in Garretson are relatively small.  K-42, Grade 1 – 42, Grade 2 – 33, Grade 3 – 34, Grade 4 – 34, Grade 5 – 37, Grade 6 – 27, Grade 7 – 29, Grade 8 – 33, Grade 9 – 30, Grade 10 – 41, Grade 11 – 25 and Grade 12 – 32.  We split those groups into two sections, resulting in class sizes typically between 13 and 21 students.  Small class sizes are one of the things that our parents appreciate about our small school.  If the community chooses not to support the district with an opt out, we can expect to see larger class sizes, with upwards of 30 students in each class in High School, Middle School and in the Elementary School.  If this were the case, it would be likely that many parents would choose to open enroll their children into another district that either offers more programs and services or offers small class sizes.  Those open enrollments would result in a smaller student population overall, which leads to less funding, which leads to more budget cuts, which may lead to more students leaving the district.  

  1. Why are we voting?

School boards are a great example of representative democracy.  This means that the public votes for someone to represent them in the decision making body.  The decision making power of local boards (and city councils and other forms of local government) is spelled out in the laws of the state of South Dakota.  When opting out, the school board may pass the resolution with, or without, an election.  There are some school districts in the state that have moved forward without an election, hoping that the public won’t refer the opt out resolution to a public vote.  Back in 2016, during the first opt out effort, our board made the commitment that this decision needs to be made by the entire community, with everyone’s voice being heard through their vote. The administration and board remain committed to that principle.

We do believe that the school’s future and the community’s future are tied to one another.  As our community grows, so will our school.  We believe that over time, growth in the community and growth in our student population will converge to allow us to let the opt out expire.  Until that time, we are hopeful that the community will continue to support the school by extending the opt out.  Our board and administration ask for your trust that we will remain true to our word.  

We have many things to be proud of in both our school and our community, and ask for your continued support.  

Garretson School Board Passes Resolution to decrease opt out and extend for five more years

In 2016, the Garretson Schools held an election to opt out of property tax limitations for five years. Voters supported the resolution, and the District has been able to decrease the amount needed for operations from $500,000 to $350,000. That opt out expires in 2021. On Monday, March 8, the Garretson School Board took action to pass a resolution to opt out of property tax limitations for five more years and decrease maximum amount to $350,000. According to SD law, in communities with an opt out in place, school districts are not obligated to take the maximum amount. Upon approval of the annual budget, the school board could choose to tax for all of the opt out amount, some of the opt out amount or none of the opt out amount.

The board invites the public to attend a public meeting intended to provide information and answers to questions the public might have on March 23, at 7:00 in the New Gym. Mr. Johnson and Board President Shannon Nordstrom will offer a short presentation regarding the mechanics of school budgets and opt outs and also the current status of the budget in our school district, followed by a question and answer session. We look forward to sharing where we’re at, and where we’re going as a District as well as answering your questions!

Opt Out – FAQ

At the January 11, 2016 board meeting, the Garretson School Board passed a resolution to opt out of the property tax limitations, with a public vote to be held on March 22, 2016.  We have put together a list of frequently asked questions to help the public  to have accurate information to make an informed decision.  Here’s the list:

Glossary:

GF = General Fund: This is one of two major funds that schools use.  The General Fund is how the school district pays most of the “operational” costs incurred as the school district provides education for our students.  Eighty percent of this fund is used for paying salaries and benefits to employees.  It is funded through a combination of state and local money.  The levy for this fund is set by the legislature.  Different property types are taxed at different levels.  Main source of revenue for this fund is the “Per Student Allocation.”

General Fund Reserve: This is the “cash on hand” in the General Fund.  Any part of the budget that is unspent stays in “the reserve,” which is carried over from year to year.  The reserve is often times reported out as a percentage of the expenditures budgeted for the year.  Because local taxes are collected twice per year, schools see two large spikes in revenues when property taxes are paid.  We need to have approximately 18% in our reserve in order to pay all of our bills between those two revenue spikes due to the local property tax collection.

CO = Capital Outlay Fund: This is the second major fund that schools use.  The CO fund is used for buildings, large pieces of equipment, technology and infrastructure, and textbooks.  This fund is designed for the purchase of those things that will last for some time.  This is funded through local property taxes.  The levy is set by the Board of Education in July each year.  The levy is applied equally to all property types.

PSA = Per Student Allocation: This is the amount of money that the State of South Dakota pays school districts to educate each child.  In 2009-10, that amount was $4,805.  In 2010-2011, the PSA was cut by 8.6%, and has been creeping up slowly since then.  State law requires that the PSA increases by 3% or the rate of inflation, whichever is less.  In the 15-16 school year, the PSA rose back up to 09-10 levels, $4,877.

CO Flexibility: Money in the GF and CO funds generally can only be used to pay certain expenses that are outlined in state law.  In response to the freeze and then the reduction to the PSA in the 09-10 and 10-11 school years, the legislature eased some restrictions on the CO fund, allowing some expenses that were traditionally paid for in the GF to be paid out of the CO fund. This flexibility is set to expire in 2018.

BRTF = Blue Ribbon Task Force: This was a group that Governor Daugaard put together in the summer of 2015 to study the teacher shortage in SD.  The Group made recommendations to the Governor, who will propose legislation based on the task force’s final report.  In essence, the task force set a target of raising the average teacher salary in SD from $40,000 to $48,000.  Indications are that any legislation will have “strings attached” that will require school districts use any money from this group to increase salaries of present staff.  According to the Governor’s Chief of staff, this funding increase is not intended to “close holes in local budgets.”  link toBRTF final report here

  1.  What is an “opt out?”

In South Dakota, the taxing authority for local governments (school board, city, county) is spelled out in state law.  There are limits defined in state law that sets maximum tax levies for these local governments.  There is  a provision in the law that allows those local governments, with the consent of the people, to “opt out” of the tax limits.  After the Governor and legislature froze and then cut school funds in the 09-10 and 10-11 school years, our elected leaders have stated that schools could adjust to the “new normal” by opting out if local communities want to preserve programming in their schools.  Currently, 45% of school districts have had to opt out in order to preserve programs provided to students in South Dakota schools.  Sometimes, people think that this is only a “small school” issue.  Several districts in our region have been forced to opt out in order to preserve programs.  The list includes: Harrisburg, Sioux Falls, Tri-Valley, Beresford, Brookings, Canistota, Madison and Sioux Valley.  Some are large and some are not, and each community has programming that local taxpayers have committed to saving. 

2.  What about the bus barn and the athletic complex – doesn’t that mean that the District has plenty of money?

This opt out is about the money from the General Fund – money that is used to pay for the operational program of the school district.  General Fund money pays for people and programs.  In our budget, approximately 80% of the GF budget is spent on employee wages and benefits.  The Capital Outlay (CO) fund is used for facilities and more permanent fixtures in the district (buildings, textbooks, large pieces of equipment, technology).  With a few exceptions, money from the two cannot be interchanged.  The money for both of those projects came from the CO fund, which cannot be used to pay employees.

Even though the District was able to legally borrow money to complete these projects, the money in the CO fund is not able to be used for day-to-day operations, including salaries.  They are two completely separate funds.

3.  I didn’t get to vote on the athletic complex and I didn’t get to vote on the bus garage.  Why didn’t I get to vote?

School boards are a great example of representative democracy.  This means that the public votes for someone to represent them in the decision making body.  The decision making power of local boards (and city councils and other forms of local government) is spelled out in the laws of the state of South Dakota.  The decision to move forward with those building projects was made by the board at that time, within the context of the community at that time period.  The people who represent the community on the board saw a need in the district, and they took steps that were within their legal power and authority to fulfill that need.  Essentially, the public did vote on the projects – by electing the board members who served on the board at that time and saw a need to build those facilities.

Part of the reason that we have this representative democracy rather than direct democracy is the need to get things done in the community.  If the school had to put every decision up to a vote in the community, nothing would get done.  Instead, communities select their representatives through a democratic process.  Those representatives serve on the board and make important decisions for the community.  The law in South Dakota also requires local governing boards to be open with the public about their discussions.  As per state law, the agenda is always posted at the school at least 24 hours (and usually 72 hours) before the meeting to ensure that the public has a chance to find out what the board will be discussing.  We also post the agenda on our website prior to the meeting for those who cannot come up to the school to see what the board has on the agenda.  After the meeting, we try to keep the public informed by posting the minutes of the meeting on our website and we also publish the minutes in the Garretson Gazette.  Our school board members are interested in what the public has to say, and we invite anyone who is interested to come to our meetings.  They are held the second Monday of the month in the school’s library.  Meetings begin at 5:45.

4.  Why is it that all of a sudden, our school is in bad shape financially?

This situation has been a long time in the making.  The revenue for the General Fund in SD is primarily determined through the PSA (defined above) or the amount of money schools are paid to educate each child in the district.  There are some other local sources of revenue as well, but the majority of the funding is through the PSA times the number of students served in the district.  The roots of our financial situation can be traced back to three major causes: 

  • The Legislature and Governor have created part of our local crisis.  In 2009-10, the legislature froze the PSA, and the following year, the PSA was cut by 8.6%.  The impact on schools was disastrous.  Across the entire State, schools laid off staff, consolidated and opted out.  A this point, over 45% of schools in the state have been required to opt out in order to maintain programs.  Other schools were forced to consolidate to preserve programs.  After those cuts were made, the PSA has been creeping back up.  Just this year, the PSA rebounded to the level that it was in 09-10.  
  • Garretson School District did not cut staff at this time, but did all they could to maintain programming and small class sizes.  After the State decreased their support of education through funding cuts, the Board and Administration started spending money out of the General Fund reserve and paying for some GF expenses through the CO fund, as allowed by law.  After making cuts to education funding, the legislature authorized “flexibility” in the CO fund as a way to “soften the blow” of the cuts to education funding. The reserves have steadily gone down over the past 7 years – a little at first, and as funding has not kept up with the school’s expenses, it has gone down by a lot in the past three years.  Likewise, we have used more and more of that flexibility in the CO fund.  Last year we spent $85,000 on GF expenses and this year, that number was increased to $125,000.  
  • The last major reason for our current situation is that our student enrollment has gone from a high of 535 (2002-2003) students down to approximately 475 students (today).  Because the GF in schools is funded based on the number of students served in the school, this has led to a decrease in GF revenue.  One way to increase revenue for the school is to increase the number of students, but that is something that is not likely to happen in the short term. 

The best long term solution to increase revenues in our district is through growth in the number of students our district serves and growth in our community.  One of our goals in the school is to be warm, friendly and open to everyone who might be interested in coming to school in our district.  We share with parents what we believe are the greatest things about going to school in Garretson.  We hope that our community is also open, warm and helpful to those who may want to move to Garretson or start a business in town.  As the number of students increase, so does the revenue for our school.  As the community tax base grows, the need to fund our school and community projects can be shared more broadly.  

5.  What steps have been taken to keep the district financially strong?

The School Board and Administration have known that the reserve would eventually run out of money if our student count did not increase and the State did not take steps to fix the shortfall created by cutting the PSA.  Every year since the Governor and Legislature cut the PSA, we have been optimistic that the State would come up with a viable solution, and every year, a plan from the state just does not materialize.  The board and administration took steps to ensure that the reserve lasted as long as possible before asking the community to support the school and maintain our programming through an opt out. The following steps have been taken in the past few years to extend the lifetime of the reserve:  

  • One of the options that the legislature provided for schools when they cut funding in 09-10 was to allow certain General Fund expenses to be paid out of the Capital Outlay fund (insurance, fuel, etc), and our district has done so.  Each year, since those cuts, some GF expenses have been shifted to the CO fund.  Last year, we budgeted $125,000 of these allowable GF expenses to be paid out of the CO fund.  By law, the option to do this expires in 2018, and those expenses will move back into the General Fund.  
  • Pre-school programming is offered at our school, but starting in August 2015, there is a cost to parents for the service, unless their child qualifies for a program that will pay the tuition.  This has saved the district $15,000.  
  • When we have had staff members leave the district, we have done our best to look at our programs to determine if there is any way to offer the services while not filling the position.  Last year, we did not replace two full time teaching staff members, and also after two aides retired, we did not fill those positions.  This saved the district nearly $130,000.
  • Starting in 2015-16, the employment of food service employees was transferred to Lunch Time Solutions, the company that manages our school lunch program.  In our district, the food service program operates at a loss, and we have decreased the estimated loss from $50,000 to what is projected to be $15,000.

The district’s financial position is improved by each of these changes, but we still face a shortfall of over $500,000 in the General Fund.  

6.  We tried an opt out before, and it failed –  will this district ever support a tax increase?

The Garretson School District did propose an opt out in 2006, and it did not pass.  There were two votes on the opt out.  The first one failed by only 9 votes. The second time, it failed by 20.  Both elections were close.

7.  Why do we have so many sports?  If the district just focused on academic programming, the district would be ok. 

When we consider this question, we must consider the impact that cutting activities programming would have on our student body, our school and our community.  If we choose not to offer any sports, FFA, music and fine arts activities, but neighboring districts continue to offer those programs, will students choose to continue their education in our school district, or would many of our students be likely to transfer to a neighboring school where they have the opportunity to participate in activities that many people consider to be a part of the complete educational experience?  

The extra curricular programming in the Garretson School District makes up only 5% of the school’s budget.  Cutting any one program would save the district around $10,000 in coaching stipends and expenses.  Overall, the activities portion of the budget is only around $160,000.  When considering this cut, we would also need to think of the impact of the cut in terms of the loss of students who would open enroll to a community whose school could support extra-curricular programming.

The impact of cutting activity programs would also be felt throughout the entire Garretson community.  The spirit of the community is embodied in our school, and seen in our school activities.  We’ve all felt the excitement when “our team” does something great, and “we” earn a hard-fought victory on the field, the course, the court or the mat.  We get excited when our marching band comes down the street in our community celebrations and parades.  We take pride in our FFA program, a program that is known as one of the very best programs in South Dakota and recognized as one of the best in the entire nation.  What is the impact of losing these programs?  The “WE” of Garretson isn’t’ just for high schoolers.  The “WE” of Garretson isn’t just “the school.”  The “WE” of Garretson is our entire community – built through camaraderie developed by being part of “us” at our school events. We believe that these programs, as much as the academic programs shape who we are, as people and as a community.  We will do what we can to preserve them.  

8.  If the Blue Ribbon Task Force’s proposal comes through, we should be good, right?

Even if the Blue Ribbon Task Force is successful in finding a source of new revenue to pay teachers more, that money will not be allowed to to used to cover an existing shortfall of revenue for the schools.  We will be required to use that money to increase the salaries of existing teachers, with the goal to increase the average salary of staff in each school district by $8,000.  Unless we cut even more significantly into our programming, we will still have a structural shortfall in our budget.

9.  I’ve heard our taxes are the highest around.  Where are our taxes compared to other school districts?

Total property taxes depend on where your property is located.  The county has a general levy of $3.424 per thousand in taxable valuation.  Cities and Townships also levy property taxes to maintain services that those entities have deemed important.  School levies for the districts around the Sioux Falls Metro area depend on a number of different factors like whether or how much bonding has been done, if an opt out of the tax limits is in place.  

Of 14 SF-metro area schools(2014 taxes payable in 2015), only 5 have a lower rate for taxes paid on Ag land (we are lower than Baltic, Brandon-Valley and Dell Rapids).  Four of area districts have a lower rate for owner-occupied property (we are lower than Baltic, Brandon, Dell Rapids, and Tri-Valley).  Only 3 out of 14 area schools have a lower tax for all other property classifications. (Source: City of Brandon)

 10.  Does our school have too many administrators?

We can look at our school and compare with others to see if we spend too much money on administration.  When we look at our student enrollment and look at the next ten larger school districts and the ten next smaller districts (according to the most recent data available from the SD DOE), Sixteen of those 21 schools spend more money on administration than our district.  Most schools of similar size spend more general fund money on administrators than the GSD.  (Source: SD Department of Education – profile data.)

11.  Is this “forever,” or is there a time limit?

Since 2002, school districts can opt out for a specified period of time.  Our board is looking at five years.  If things change after the opt out is approved and the district does not need the full amount, the Board could request a smaller amount be collected by the County Auditor.  After the five year period, the board can decide whether to proceed with another opt out, or if it should just be allowed to expire.

12.  Will all property classes be taxed equally?

South Dakota law requires that different property types are not taxed at the same rates in an opt out.  Based on 2015 property valuation, the rates for each 100,000 requested in the opt out is taxed at 0.17 per thousand for Ag property, 0.44 per thousand for Owner-Occupied property and 0.94 per thousand for all other property types. 

13.  How much does the district need?

This year, the District plans to spend approximately $380,000 from our General Fund reserve.  We also saw fewer students than we projected, resulting in approximately $30,000 less in revenue than we planned.  We have another $125,000 in General Fund expenses that are being paid out of the CO fund (and our ability to use this flexibility ends in 2018).  An opt out of $500,000 would allow us to maintain the current academic and co-curricular programs.  

It is important to note that this DOES NOT increase the size of our staff.  It does not add any programs (or reinstate any programs or positions that have been cut), and it does not allow for any staff members to receive a raise.  The ONLY thing that this opt out would do is preserve the present level of services and programming in the school.  Any increases in salary and benefits for employees would need to be realized through the increase to the PSA or through legislative action taken on recommendations from the BRTF.

 14.  How much will that $500,000 opt out cost me, individually?

The answer depends on what type of property you own.  Based on 2015 property valuations, we calculated some possible costs.   Ag land for which the taxable valuation is $1,000,000 will see annual taxes go up by $841.  A home owner whose home’s taxable valuation is $150,000 will see an annual tax increase of $350.74.  All other property owners (businesses) would see an increase as well – for every $100,000 in taxable valuation, those taxes would increase by $467.66 annually.  For the average homeowner in the city of Garretson, the cost would be less than a dollar a day.  

15.  Are we almost done paying down any of our debt?

The 2002 building and renovation project was funded through bonds.  We will be finished paying for those bonds in 2020, and at that time, the levy will be removed.  The bond levy generates approximately $315,000 per year to pay for the bonds.  Debt in the CO fund will continue to be paid over the next 10-15 years, as we have re-financed these CO certificates based on favorable interest rates, which will save the district thousands over the life of the repayment schedule.

16.  What happens if it doesn’t pass?

If the opt out doesn’t pass, we would need to make cuts to programs.   In schools, programs mean people.  The average cost per teacher in our district is right around $50,000.  We would expect that we would have to cut at least 8-10 teaching positions in order to balance the budget.  We would look for other ways to save money as well, but the lion’s share of those cuts would be to personnel.  We are certain that this kind of reduction in programming would result in:

  • Increased class sizes at both the elementary and secondary levels.  We would need to consider combining classes that had typically been split into two groups, possibly even as large as 32-33 kids would need to be in one section.
  • Reductions in the number of courses offered at the middle school and high school.  Our students would need to rely on distance learning technologies for classes that most schools are able to offer in a face-to-face manner.  A significant number of elective courses would need to be offered via the computer.
  • Fewer opportunities for our students with respect to activities

One of the three roots to the problem itself is that our student numbers have shrunk in recent years.  We do need to think of the reasons why families and students choose Garretson over schools like Brandon-Valley and Dell Rapids

  • Opportunities for small class sizes
  • Opportunities for teachers to know them well, and for our students to know our teachers well
  • Opportunities to participate in multiple activities and find success in those activities
  • Opportunities to participate in the arts and athletics without penalty
  • Opportunities to participate in a wide variety of both required and elective courses with REAL teachers in the classroom

If families and students do not experience the “small school benefits” or do not believe that our school is meeting their needs, parents will simply enroll their students in a neighboring district.  More parents open-enrolling their student to another district translates to fewer students, which leads to less revenues to work with, which results in more cuts, which may drive more students from our school.  One very real question is how long it will take the cycle of programmatic cuts and declining student enrollment before the district is no longer viable.

OUR SCHOOL’S FUTURE IS OUR COMMUNITY’S FUTURE