Lawmakers hope to save special kinds of school aid in face of funding shortage

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PIERRE - South Dakota lawmakers hope to find a way to avoid eliminating some specific categories of state aid that have gone to school districts, according to a survey by The Associated Press.

Two-thirds of the legislators who responded said they did not plan to support Gov. Mike Rounds' proposal to eliminate extra state aid that has gone to school districts that cover large areas and contain few students.

About half said they also opposed doing away with extra aid to districts with significant increases or decreases in enrollment.

However, the lawmakers gave their answers to the survey before the governor announced on Friday that state revenues are declining even more than had been expected only a month ago. With the budget crisis worsening, some lawmakers may change their minds about trying to save the three categories of aid to schools.

In December, Rounds proposed eliminating the special categories of aid as a way to help balance the budget during the economic downturn. The revenue outlook has since become much more bleak.

Democrats have said they want to cut elsewhere in state government to find money for aid to schools. Senate Democratic Leader Scott Heidepriem of Sioux Falls said state government in previous years has forced agencies to cut spending by a certain percentage, and that approach could work again.

"It's so simple it's amazing to me," Heidepriem said, adding that he doesn't believe the Republican governor is willing to control the size of state government.

Rounds has said state agencies have only the employees they need to run existing programs, which have been approved by the Legislature, and further cuts likely will involve getting rid of some programs. Trimming the bureaucracy can only save a limited amount of money because most spending is on education, care for the needy and public safety, he said.

House Republican Leader Bob Faehn of Watertown said GOP lawmakers have said they also want to cut the state budget while keeping the special categories of aid to school districts. "It's going to be hard to have both."

Rounds on Friday said declining state tax collections have prompted him to start revising his proposed budget for next year. In a couple of weeks he will propose additional ways to cut state spending for the rest of the current year and for the next budget year that starts in July.

South Dakota law says state aid to school districts must increase each year by the rate of inflation or 3 percent, whichever is less. Rounds has said that means state aid to schools must increase by 3 percent next year, or $12.5 million.

But when the governor made his original budget proposal in early December, he proposed several ways to cut spending by making adjustments in state school aid.

The governor's plan would reduce state spending on school aid by $6.3 million by freezing local levies for school property taxes at this year's rates, which would mean more of the cost in increased spending per pupil would be supported by local property taxes. Those property tax levies usually are lowered by the Legislature each year so the local share of education spending does not increase in comparison to the state's share.

School property tax revenues could increase because of rising valuation rates.

Rounds wants to cut state spending by eliminating extra aid that has gone to schools with sharply declining or increasing enrollments, a savings of $5.7 million to the state. He also wants to save $2.3 million by doing away with sparsity payments that have gone to school districts that cover large areas with few students.

Rounds on Friday said his efforts to trim spending further are not focusing on school aid, but he has not ruled that out.

Eighty-two of the 105 members of the Legislature responded to the AP survey.

While more than 90 percent of Democrats said they wanted to boost state aid to schools by more than the 3 percent recommended by Rounds, only about a quarter of Republicans said they believed state aid should increase by more than that.

Most Republicans said they were undecided about the governors' plan to freeze school property tax rates, but more than three-quarters of the Democrats opposed it.

More than two-thirds, including a majority from both parties, said they oppose eliminating extra aid to sparse school districts. And a slim majority said they oppose doing away with extra aid to school districts with significant increases or decreases in enrollment.

House Democratic Leader Bernie Hunhoff of Yankton said the Legislature should honor its commitments to school districts by keeping financial aid the same as in past years.

"At least school boards, though underfunded, knew where the Legislature was going. This year it seems like that's all been thrown back up in the air, and that's really caused a lot of heartburn for school boards and school administrators," Hunhoff said.

"I'm glad to see legislators don't want to break those pacts, those agreements with school boards," Hunhoff said.

Senate Republican Leader Dave Knudson of Sioux Falls said his discussions with legislators and the public indicate that people do not like the changes proposed by Rounds.

"I think the survey suggests what I've heard in talking to voters and taxpayers, that the proposal to shift more of the school funding burden onto property tax payers is very unpopular," as are the plans to eliminate aid for increasing and decreasing enrollment and for sparse school districts, Knudson said.

Knudson said he will propose a bill that would change the annual state aid increase to 4 percent or the rate of inflation, whichever is greater, but with a safeguard that says state aid to schools cannot increase by more than the percentage growth in total state general revenue in any year.

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