District rewards retirees

By Andrea J. Cook, Journal Staff Writer | Monday, June 05, 2006

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RAPID CITY -- This school year, 27 teachers and five administators are retiring from the Rapid City School District.

Retiring teachers not only take years of valuable experience out of the classroom; some also take extra cash by retiring early.

Early retirement payments are the fastest-growing piece of the Rapid City School District's budget because of an aging staff.

Among those stepping down is Dan Dryden, the district's business manager, who is retiring after 35 years with the school district.

One of Dryden's final duties was to prepare the district's $112 million budget for the 2006-2007 school year, which does not include Western Dakota Technical Institute's $10.8 million budget.

The school district's budget is almost $4 million more than it was last year.

For next year, Dryden increased the school district's pension fund by 41 percent, or $600,000.

In contrast, the district's $73.5 million general fund, which includes salaries and operational expenses, will grow by less than 5 percent, or about $3.4 million.

About 29 percent of the district's 903 teachers will be 55 or older next year.

This year, on average, a teacher's early retirement will cost the Rapid City School District $25,879. Retiring teachers are paid the early retirement benefit over a three-year period.

As members of the South Dakota Retirement System, teachers can draw retirement benefits if they are 55 or older and their age, combined with their years of service, equals 85.

The district's $112 million budget is workable but is a very delicate balance with current revenue projections, Dryden said.

A 12 percent increase in assessed valuation of property on which taxes are paid, a three percent increase in the state funding formula and about $880,000 in one-time state aid will help cover some of the budget growth, Dryden said.

The district is also predicting slightly higher enrollment, which will increase state aid.

"We're maintaining students, not dropping off like in previous years," Dryden said.

In addition to local taxes and state aid, the district counts on several smaller revenue sources.

A few of those sources, such as the bank franchise tax, county apportionment from highway fines, and gross receipts taxes, could become more unreliable in the future, Dryden said.

Rapid City School Board member David Janak has cautioned the board that some of those revenue sources may not yield the returns the district is counting on.

"All of those numbers are driven by what's happening in the economy," Janak said. "Frankly, in good times they yield well and when things are a little tight they don't do so super, and when you're trying to forecast and base annual expenditures on numbers that fluctuate as heavy as those can, it wouldn't take much for us to be spending into our reserves," Janak said.

Salaries account for more than 80 percent of the district's general-fund budget, and the school board has not completed contract negations with employee groups.

The school board is also debating the merits of a new transition program for middle and high school students that would require hiring more teachers.

Adding programs is a sharp contrast to where the district was four years ago, when the district spent some of its cash reserves.

Spending reserves creates cash-flow problems. When reserves fell below 10 percent of the total budget, the district came close to borrowing money to meet its monthly bills.

"We had some revenue come to the district earlier than expected, which helped us avoid borrowing to meet our cash-flow needs," Dryden said.

"It's bad business to be that low," Dryden said. "You can't cash flow and meet payroll."

Janak admits people have a hard time understanding the need for cash reserves.

"In the middle of the year, when all of the tax revenue has come in and is gone, you need a certain amount of reserves," Janak said. "We still have all summer long that we have to pay the bills."

And that could happen this summer, he said.

"Since I've been on the board this is going to be the first year that legitimately there's some potential that we may have to borrow to get through the summer," Janak said.

"That's been a first, we've not proposed a budget to this point that has done that," he said. "I think it's a combination of state funding is not meeting the cost of educating these kids and we've set a priority a long time ago of trying to pay teachers a fair wage, and it gets tougher and tougher to keep doing that."

Four years ago, when the district was tapping its reserves, enrollment was also falling, which reduced state aid.

To restore the reserves, the school board reduced 100 teaching positions through attrition, which cost high school teachers a planning period and reduced middle school programs.

The school board has adopted a proposed budget and has until Sept. 20 to adopt the annual budget, which may change after negotiations are completed and final decisions are made the transition program.

Contact Andrea Cook at 394-8423 or andrea.cook@rapidcityjournal.com