Transcript SD Talking K-12 funding web posting

WELCOME to South Dakotans Talking
k-12 education funding
Finding budget solutions through our shared values
How South Dakotans collect and spend
money for the common good reflects our
shared values — our consensus on what
public services we believe we need in our
state and are willing to pay for together.
Coordinated by:
SD Budget & Policy Institute
• Mission - to promote responsible and equitable fiscal policy through
research and education
• Nonpartisan, not-for-profit 501(c)3 [not a state government function]
• Funding from Northwest Area Foundation and donations from
people and businesses in South Dakota
Board of Directors
SDbpi.org
Robert Burns, President
Deb Fisher-Clemens
Kay Jorgenson
Dave Volk, Vice President
Eileen Briggs
Paul Dennert
Gene Lebrun, Sec/Treasurer
Rob Oliver
Jim Fry
Rich Garry, Past President
Mary Bibby
South Dakota CONSITUTION:
Article VIII Section 1.
Uniform system of free schools
The stability of a republican form of government
depending on the morality and intelligence of the people,
it shall be the duty of the Legislature to establish and
maintain a general and uniform system of public schools
wherein tuition shall be without charge, and equally open
to all; and to adopt all suitable means to secure to the
people the advantages and opportunities of education.
Research finding
• K-12 education salaries in South Dakota compared to regional marketplace
• How SD funds k-12 education and historic trends
• Educational Outcomes (South Dakota KIDS COUNT Beacom School of Business University of South Dakota)
• SD BPI preliminary research on alternatives
MT
Lets talk teacher salaries
(SD average is 76% of regional average)
WY
MT
Regional
States
NE
40+ years snapshot of average teacher salary changes (constant 2012/13 dollars)
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
US
IA
1969-70
MN
1979-80
MT
1989-90
NE
ND
SD
WY
1999-2000
2009-10
2011-12
2012-13
Chart by SD Budget & Policy Institute
Data Source: NEA, Estimates of School Statistics, 1969-70 through 2012-13
MN
IA
Teacher Salaries
data source
SD wages are 88% regional average
Average hourly earnings of all employees on private non-farm payrolls, by
state (source bls SAE table 4)
SD teacher salaries are lower
than other SD salaries
30.00
25.00
20.00
15.00
10.00
5.00
0.00
Iowa
Minnesota
Montana
2011
SD wages vs wages in neighboring states
Nebraska
2012
88%
76%
All SD private non-farm workers
SD teachers
2013
North
Dakota
South
Dakota
Wyoming
Teacher salaries have higher purchasing
power in neighboring states.
SD teachers make more
money when they choose to
teach in neighboring states…
Mt  18%
both in actual dollars and in
purchasing power
WY  34%
57,920
$60,083
56,268
$57,711
51,528
IA
$57,573
NE
48,931
$54,307
MT
49,999
$53,077
47,344
$52,372
ND
39,580
$44,875
SD
$-
$10,000
$20,000
Average Salary
$30,000
$40,000
Adjusted for price parity
Chart and analysis by SD BPI; Data Source NCES, Census, BLS
Where to
teach?
NE  21%
WY
MN
ND  17%
$50,000
$60,000
$70,000
MN 
29%
IA  28%
Administrative salaries have higher purchasing
power in most neighboring states.
SD administrators also earn less
than their counterparts in
neighboring states…
MT5%
in actual dollars and purchasing
power (in all states but MT)
WY  16%
$96,338
$97,690
MN
$100,195
$86,850
IA
$97,039
$88,710
NE
$98,457
$74,860
MT
$79,469
$81,670
ND
$90,343
$73,550
SD
$83,390
$-
$20,000
$40,000
Average Salary
$60,000
$80,000
Adjusted for price parity
Chart and analysis by SD BPI; Data Source NCES, Census, BLS
Where to
administer?
NE  18%
$92,870
WY
ND  8%
$100,000
$120,000
MN 
20%
IA  16%
Don’t South Dakota’s low state and
local tax rates off-set its lower wage rates
compared to neighboring states?
share of family income going for state and local taxes
varies by total household income
(rates in SD & neighboring states)
12.00%
10.00%
lowest 20%
8.00%
second 20%
6.00%
middle 20%
fourth 20%
4.00%
next 15%
2.00%
next 4%
0.00%
SD
Data Source: ITEP Who Pays?
IA
NE
Analysis and graphic: SD BPI
MN
ND
WY
MT
top 1%
State Individual Income
Tax Rates as of 1-1-14
State Rates
IA
MN
MT
NE
0.36% >
0.72% >
2.43% >
4.50% >
6.12% >
6.48% >
6.80% >
7.92% >
8.98% >
5.35% >
7.05% >
7.85% >
9.85% >
1.00% >
2.00% >
3.00% >
4.00% >
5.00% >
6.00% >
6.90% >
2.46% >
3.51% >
5.01% >
6.84% >
ND 1.22% >
2.27% >
2.52% >
2.93% >
3.22% >
SD none
WY none
Brackets
Stand
Deduct
Exemption
$0 $1,900 $40
credit
$1,515
$3,030
$6,060
$13,635
$22,725
$30,300
$45,450
$68,175
$0 $6,200 $3,900
$24,680
$81,080
$152,540
$0 $4,270 $2,280
$2,800
$4,900
$7,400
$10,100
$13,000
$16,700
$126
$0 $6,200
credit
$3,000
$18,000
$29,000
$0 $6,200 $3,900
$36,900
$89,350
$186,350
$405,100
State income tax as a factor
Increase in neighboring state teachers’ purchasing
power after paying state income taxes
MT  13%
ND  16%
And no state sales
tax on anything
And no sales
tax on food
WY 34%
And no sales tax
on food or
prescription
drugs
Where to
teach?
MN  22%
And no sales tax
on food or
prescription
drugs
NE  16%
IA  22%
And no sales
tax on food
And no sales tax
on food or
prescription drugs
Share of SD income going to state and local taxes
averages 1% more than neighboring states’ average
(range for 20th to 80th percentile is +2.6% to -3.2%)
IA
State % local tax rate for second
20% income households (20th to
State & local tax rate for middle
income households (40th to 60th
State & local tax rate for fourth
20% income households (60th to
40th percentile of households)
percentile of households)
80th percentile of households)
$21-38,000
10.30%
NE
$34-57,000
10.30%
IA
$38-57,000
10.10%
$41-62,000
IA
$57-87,000
9.60%
MN
$62-96,000
9.60%
NE
$57-87,000
NE
$20-34,000
MN
$23-41,000
9.60%
MN
SD
$19-36,000
9.50%
SD
$35-56,000
8%
SD
$56-87,000
7%
ND
$23-39,000
ND
$39-67,000
7.50%
ND
$67-95,000
6.70%
WY
$23-39,000
MT
$3150,000
MT
$50-79,000
MT
$17-31,000
Data Source: ITEP Who Pays?
9.90%
7.80%
7.10%
9.60%
6.30%
6.10%
WY
Analysis and graphic: SD BPI
Data Source: ITEP Who Pays? Analysis and graphic: SD BPI
$36-64,000
5.90%
9.00%
6.00%
$645.00%
100,000
Data Source: ITEP Who Pays? Analysis and graphic:
SD BPI
WY
6 year trend in current spending per pupil
In South Dakota and neighboring states
$18,000
$16,000
$14,000
South Dakota
spends 25% less per
k-12 student than
regional average
$12,000
$10,000
SD per student spending
$8,000
$6,000
$4,000
$2,000
$South Dakota
2007
Iowa
2008
Montana
2009
Minnesota
2010
Nebraska North Dakota Wyoming
2011
2012
How SD funds k-12 education
Source of funds to support SD k-12 education
•
•
•
Federal
SD k-12 funding sources 1997
SD k-12 funding sources 2012
State
Federal
9%
Local
local
55%
Federal
16%
state
36%
local
53%
state
31%
Sources of k-12
Funding Revenue
Charts by SD Budget & Policy Institute
- inflation adjusted to 2011 dollar
Data Source US Census FESEF Table
11, 2002 through 2011
Regional Rankings
data source
Total per student funding & funding sources
for SD school districts FY11
(in thousands)
local
$25
$20
$15
$10
$5
$0
state
federal
School Funding Formula
page 19 of Budget Primer
Funding formula
Actual PSA (per student allocation)
vs inflation-adjusted per PSA
• 1997 per-student
allocation (PSA)
$3,350
• equalize dollars per
student
• annual increase—
lesser of 3% or rate of
inflation
• 44% of districts have
opted-out tax limit
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
ACTUAL PSA
INFLATION ADJ PSA
% of SD state and local revenue
supporting k-12 education has decreased
since funding formula implemented
K-12 % of state general
fund down 25%
45.0%
40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
K-12 % of property taxes down 17%
70%
60%
50%
40%
30%
20%
10%
0%
1998
2003
2008
Data Source: SD Budget
Analysis and graphic by SD BPI
2011
2012
Data Source: Dept. of Revenue annual Reports 1996 through 2013
Analysis and graphic by SD BPI
State and local school revenue as percent of S. D. personal income
Revenue % S. D. personal incme
5.0
4.0
3.0
Local
2.0
State
1.0
0.0
1961
1966
1971
1976
1981
1986
Year
1991
1996
2001
Analysis and chart provided by SDSU economics Professor Emeritus Ring
2006
2011
K-12 spending as % of SD personal income
down 25% since funding formula
6%
5%
4%
3%
2%
SD
Ntl
2011
2012
2010
2009
2007
2008
2006
2005
2003
2004
2002
2001
1999
2000
1998
1997
1995
1996
1994
1993
0%
1992
1%
K-12 education spending FY12
Regional
States
United States
Wyoming
Minnesota
North Dakota
Montana
Iowa
Nebraska
South Dakota
Amount per student by Source:
Total Funds
$12,331
$18,446
$13,163
$13,368
$11,336
$12,175
$12,267
$10,149
State
Funds
$5,609
$9,466
$8,306
$6,748
$5,350
$5,407
$3,876
$3,093
% of Personal
Local Federal Income in state
Funds Funds
spent on K-12
$5,488 $1,235
4.51%
$7,372 $1,608
5.95%
$3,932
$925
4.36%
$4,980 $1,641
4.03%
$4,480 $1,506
4.40%
$5,736 $1,033
4.64%
$ 7175, $1,216
4.59%
$5,392 $1,665
3.51%
Table by SD Budget & Policy Project; Data Source US Census Bureau 2012 Public Elementary-Secondary Education
Finance Report
Educational Outcomes in South Dakota
How do we compare to regional states?
2014 KIDS COUNT Data Book
Education Domain
MN
NE
IA
ND
MT
WY
SD
Rank
6
9
13
19
21
24
32
South Dakota KIDS COUNT Beacom School of Business University of South Dakota
South Dakota Compared to the Nation & Bordering States
Percent of children ages 3 to 4 not attending preschool,
2010-12
NE
IA
MN
52%
53%
54%
Nation
WY
MT
SD
60%
62%
ND
0%
10%
20%
30%
40%
50%
60%
54%
58%
70%
South Dakota KIDS COUNT Beacom School of Business University of South Dakota
64%
Percent of 4th graders who scored below
proficient reading level, 2013
MN
IA
NE
WY
MT
Nation
ND
SD
54%
56%
58%
60%
62%
64%
66%
59%
62%
63%
63%
65%
66%
66%
68%
68%
South Dakota KIDS COUNT Beacom School of Business University of South Dakota
South Dakota Compared to the Nation & Bordering States
Percent of 8th graders who scored below proficient math level,
2013
MN
ND
MT
59%
60%
SD
WY
62%
62%
IA
NE
64%
64%
Nation
0%
10%
20%
30%
40%
50%
53%
60%
70%
South Dakota KIDS COUNT Beacom School of Business University of South Dakota
66%
South Dakota Compared to the Nation & Bordering States
Percent of high school students not graduating on time,
2011-12
NE
ND
IA
MN
MT
SD
Nation
WY
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
7%
9%
11%
12%
14%
17%
20%
19%
South Dakota KIDS COUNT Beacom School of Business University of South Dakota
20%
= Higher ranking
(lower is better)
Education Domain Ranking by Year and State
Education Domain
Ranking
by Year by State
2012
Iowa
14
15
13
5
Minnesota
7
7
6
10
Montana
13
13
21
Nebraska
15
17
9
North Dakota
2013
2014
20122014
Minnesota Nebraska
Iowa
North
Dakota
Montana Wyoming
2013
2014
0
16
16
19
South Dakota
21
22
32
Wyoming
29
26
24
South Dakota KIDS COUNT Beacom School of Business University of South Dakota

15
20

25
30

35
2012
Data source South Dakota Kids Count
Graph by SD BPI
South
Dakota
Data & Graphic Source: Testimony by SD Dept. of
Ed. to SD Joint Appropriations Committee
January 2014
4th grade reading
(2013 NAEP)
SD lags nation and
region
4th Grade Reading
(NAEP 10 yr trend)
regional states stay above
national average, SD lags
4th Grade Reading
(NAEP 10 yr trend)
National improvement, SD
deteriorates
228
224
60%
226
222
40%
224
222
220
20%
220
0%
218
218
216
-20%
216
214
-40%
214
212
-60%
210
2003
212
2003
2005
2007
2009
2011
-80%
National
basic
below basic
proficient
advanced
South Dakota
2013
2005
2007
2009
2011
2013
National
Iowa
Minnesoate
Montana
Nebraska
North Dakota
South Dakota
Wyoming
Research on alternatives
“how to slice the pie”
1.
2.
3.
4.
5.
6.
7.
Status quo
School consolidation
Equalizing capital outlay or “other” funds
Cap reserves
Additional revenue earmarked for education
Prioritizing k-12 salary policy
Change funding formula CPI measurement
1. Status quo
• decrease in % of revenues committed to k-12 education will continue
• free up current revenue growth for other priorities (examples:
economic development, infrastructure, Medicaid expansion)
• Allows additional opportunity for decreasing current taxes
K-12 % of state general
fund down 25%
45.0%
40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
K-12 % of property taxes down 17%
70%
60%
50%
40%
30%
20%
10%
0%
1998
2003
2008
2011
2012
2.
Consolidation
151 school districts in South Dakota
more than 600
students (40 districts)
26%
Sparce (28 districts)
19%
Less than 250 students
(37 districts)
25%
250 to 600 students
(46 districts)
30%
Data Source: South Dakota Department of Education
Graphic by SD BPI
Would consolidating small school districts
increase economy of scale?
more than 600
students (40 districts)
26%
Sparce (28 districts)
19%
Less than 250 students
(37 districts)
25%
250 to 600 students
(46 districts)
30%
Is consolidation an answer?
Millions
How much would consolidation cut education
expenses in SD?
$1,200
$1,000
$978
$960.97
$943.79
$800
$600
$400
$200
Status
quo
-1.7%
-3.5%
$0
no consolidation
Consolidate 37 schools
with < 250 students
Consolidate 83 schools
with < 600 students
Data Source SD DOE 2012-13 expenditure data & rankings; SD DOE Scarcity Funding.
Analysis and chart by SD BPI
Assumptions only non-sparce districts consolidated, economy of scale equal to average
per student expenditures in SD districts with >600 students
3. Equalizing “other” revenue
“Other” revenue are not currently equalized and
range from $130 to $3,202 per-student,
depending on the district.
Slide 79 k-12 Education Funding Presentation to Legislative Planning Committee June 16, 2014 by Michael Houdyshell, Director Property and Special Taxes Division SD Dept of Revenue
lhttp://legis.sd.gov/docs/interim/2014/documents/LPC06-16-14Combined.pdf
Slide 83 k-12 Education Funding Presentation to Legislative Planning Committee June 16, 2014 by Michael Houdyshell, Director Property and Special Taxes Division SD Dept of Revenue
lhttp://legis.sd.gov/docs/interim/2014/documents/LPC06-16-14Combined.pdf
Cap school district reserves
4. Additional revenue options
•
•
Increasing state sales tax from 4 to 5 cents would raise $206 million per year
Additional revenue options used by other states:
•
•
•
•
•
•
personal income taxes,
corporate income taxes,
Sunset clauses on existing tax expenditure statutes
higher bank franchise taxes,
higher “sin” taxes on tobacco or alcohol, sunset existing tax expenditures statues
Other examples you can think of?
5. Prioritize k-12 salary policy
State salary policy models
Employee compensation plan
•
•
PACE “movement to job worth” in place since FY92
Market-based-pay in place since FY13
(Note: annual FY15 cost $13 million—beyond 3.0% across the board raises)
Investment council compensation plan (10 year plan) increases:
•
•
Base compensation & benefits @ 7% per year from $184,000 to $362,000 annual ave.
Incentive compensation & benefits @ 7.2% per year from $301,000 per FTE to $602,000 per FTE
(Note: total personal services under Investment Council 10 year plan increases from $8.5 million to $18.1 million for 30 FTE)
Small group discussion
1.
2.
3.
Choose a facilitator
Choose a recorder
Discuss k-12 education funding and/or teacher salaries
Record ideas as you go:
 areas of general consensus you discover
 Recommendations or action ideas
4.
Prioritize the top 1 or 2 issues you want to share with a larger group
Public Questions:
Increasing or changing the CPI limit
used in the formula
• Did the funding formula start out high enough per student?
• What happens when you limit growth to the lower of inflation or 3%?
• Are there more accurate inflation measuring tools available?
Large Group Discussion
•
•
•
•
If you are meeting in a large group – share the range of ideas and
options generated with each other.
Discuss and then vote for your top priorities
Please let the Institute know the outcomes of your dialogue so we can
compile it with conversations from around the state (send to
[email protected])
If you choose to form ongoing community discussion groups please let
us know and we will provide you with contact information for other
ongoing grass roots conversations that form around the state
South Dakotans Talking
Evaluation
•
•
Please fill out the evaluation – it helps SD BPI provide meaningful reports on this
process
If you know of other communities that would like to hold this discussion or if you
would like to have it repeated in your community – contact SD BPI
Help us describe who participated
How long have you lived in the community?
Age Range 18-35 36-50
Employment status
student
51-65
Self employed
work at home
How was your experience?
< 5 years 5-20 years 21-35 years 35+ years
65+
employed full-time
employed part-time
unemployed
retired
no answer
Where do you live? On a farm, ranch or acreage
In a small SD town (< 1,000)
In a medium sized SD town (1,000 to 5,000) In a larger SD town (> 10,000)
How would you describe your general world view?
Conservative moderate
progressive
What was your best experience of the event?
Did this event
•Increase your understanding of this topic?
•Change your perspective on this topic?
•Increase your ability to engage on this topic?
None--somewhat-alot
1
2
3
4
5
1
2
3
4
5
1
2
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• As we facilitate more annual “South Dakotans Talking” events, what
should we do differently?
•Are there other topics you would like to discuss?
Thank you
THANK YOU for being part of
South Dakotans Talking
k-12 education funding
Finding budget solutions through our shared values
How South Dakotans collect and spend
money for the common good reflects our
shared values — our consensus on what
public services we believe we need in our
state and are willing to pay for together.