Officials say funding unfair

For the last five years the Hill City School District has been thriving. The district has been ranked first in the state by the prestigious US News and World Report rankings. Its enrollment continues to increase as many opt into the small class size and personal experience of being a Ranger. The number of advanced placement and dual credit courses is at an all time high, giving  students a low cost way to earn college credit. Yet for the last five years, the district has been faced with an invisible burden, which some say was unfairly created by a bill designed, on its surface, to increase teacher pay—House Bill 1182.

In 2016 the South Dakota Legislature enacted HB 1182. It was advertised as a property tax reduction that would earmark funds specifically for teacher pay. In a nutshell the bill was designed to “increase the state sales tax, the state use tax, the excise tax on farm machinery and amusement device tax for the purpose of increasing education funding and reducing property taxes,” according to the authors of the bill itself. 

The bill had 23 sections when initially passed. Section 17 is the part that focused on school funding. 

Section 17 aimed to take the proceeds of this new tax and dedicate 63 percent toward “increasing teacher salaries by school district” while 34 percent was dedicated toward “reducing the property tax levies for general education for all classes of property.” Three percent was “dedicated to increasing instructor salaries to competitive levels at postsecondary technical institutions.”

Initially it seemed like a win-win for everyone, even those who might not agree with higher taxes, since the money was going toward teacher salaries, which South Dakota has been notoriously behind on. 

When the bill was altered, some say it altered the intended effect on some districts, including Hill City.

In 2017 Senate Bill 35 passed. It was touted as a revision of the state aid to general education formula. It talked about maximum levies and alternative  local need calculations  and base amounts and contained technical terms that an average person could find extremely confusing. 

But what it did was all too clear, school officials say, and has been to the Hill City School Board for quite some time. It has forced the Hill City School District  to get by on less. 

Because even though Hill City and Keystone taxpayers pay into the extra tax created by HB 1182, they reap no benefits from it.  People pay the tax, the tax goes into the general fund (instead of being earmarked like it was initially) and that general fund money gets distributed to many districts in need. 

But Hill City is not one of them. Because, according to the state, Hill City collects enough property tax to fund its school district. Thus it is not eligible for this additional state aid.  There are eight schools in the state that receive no state aid. 

That means, like Hill City, there are eight districts whose taxpayers are paying the extra tax but not receiving any benefit from it. Lead-Deadwood is one such district. Custer used to be, but has recently increased enrollment and currently qualifies for the aid.

So how has  the HCSD managed to be one of the top schools in the state during this time? Its board has asked its administration to be creative and find ways to cut. It asks its teachers and coaches to do more, like drive vans in an effort to reduce transportation costs for the district. It’s been creative with its Elementary and Secondary School Emergency Relief Fund money, using those sources to make the upgrades to facilities the district needs. 

But this can’t continue, school officials say.

The district isn’t looking for anything extra. Board president Dennis Krull says the district wants to be “on a level playing field.” It wants to be able to offer competitive raises to its employees so it can compete for the best professionals. It wants to be operating on a budget that doesn’t look like it did in 2013. 

And it wants the state to see that there are eight districts whose taxpayers are paying into a tax that gives them nothing, that this tax benefits some districts but not all of the districts in the state. 

Representatives Julie Frye-Mueller and Tim Goodwin recently sat down with the school board to discuss this issue. It’s not the first time this has been addressed. Frye-Mueller and Goodwin seemed receptive, however, even willing to ask the state for hard  data. Frye-Mueller is asking for the state head fiscal analyst to see what the numbers from Hill City and Keystone really are. In other words, how much tax revenue the towns bring into the state that the school district is not getting back.

“We don’t think you should be punished,” said Frye-Mueller. “How is this fair when this area is contributing so much to this tax?”

Krull is hopeful but also realistic. He knows that without legislative action there will likely be no way to change things.  He is also looking at meeting with the other seven districts in the state that are aggrieved by this unfairness in the hopes that collectively their voices will be heard.