Banking the benjamins instead of spreading it around.

There are several articles in the mornings news, Associated Press and otherwise regarding Governor Rounds' speech to the National Retired Teachers Association how funding from schools have gone up, but instead of it going towards teacher pay, school districts are squirreling it away for a rainy day:
Rounds says the state has given schools an extra 30 million dollars in the last four years while school districts have increased their budget reserves by 31.5 million dollars.

Lawmakers approved another 24 million dollars for the coming budget year, and the governor says he hopes that most of the extra money will be put into salaries and efforts to improve education.
Read that here. The Pierre Capital Journal has a more extensive story on the topic, which isn't on-line yet. (I'll put it here over the noon hour.)

This isn't the first time I've heard this. This past session, it was brought up in various legislative forums, including in Rapid City where I was told the Democratic Candidate for Lt. Governor was zinged on the issue after complaining about it. One legislator politiely told Eric Abrahamson about how much the reserves went up on the school board he sits on, and it wasn't welcome news.

Caught in the middle of this battle is the taxpayer, who sees the state's contributions towards education going up (dollar wise) yearly, but at the same time a lawsuit is being filed against the state for their contribution, and now hearing that all of the new money (and more) is going in the bank.

Is there a happy medium that could be forced through legislation?


scimitar said…
The Rounds/Republican double standard. At the state level, they are banking unprecedented amounts. $900 million banked in state government today, as opposed to only $143 million in 2000. Rounds likes to repeat like a broken record, "you can't use one-time revenue for ongoing expenses."

But then the hypocracy begins. When it comes to schools, Rounds gave one-time money for about 4 years. The schools followed Rounds' advice - not using the one-time money for ongoing salary expenses. They banked it (behaving much like state government).

But now Rounds says (while he sits on $900 million) that schools should not have so much reserves and they should have been using one-time that money for ongoing expenses. Yet another example of Rounds talking out of both sides of his mouth. "Do as I say, not as I do."

How many more schools have to opt out before Rounds and the tax-and-stash republicans will use even just the full interest of the $370 million education enhancement fund to enhance education? Each year, the Republicans add on average $12 million of unspent interest in the education enhancement fund. Once again, Democrats aren't saying spend the principal - just using the interest for the purpose it's intended would go a long way. And by the way, the interest is ONGOING REVENUE, not one-time revenue.
Anonymous said…
Anonymous said…
Rounds sure loves to play the victim. Everyone let's take a second and feel sorry for him.

You can't blame the schools for banking when they keep getting one-time money.

How much money does the state government have banked now as compaired to 4 years ago?

Kettle meet pot.
Anonymous said…
The schools have answer this question, I guess Rounds hasn't been listening. The Schools have said it's one time money so it's hard to spend on things that will continue to cost them in the future. They don't know if that money will be there from year to year so they can't count on it. It's called being fiscally responsible. There was a time when Republicans politicians knew about and practiced fiscal responsibility.
Anonymous said…
Something should be done to increase efficiency in the classroom so more money is going to students and teachers where it belongs.

Americans for Prosperity supported a bill that Rep. Hal Wick sponsored during the 2007 legislative session to do just that. The bill would have required 65% of education funding dollars that are spent to go to in-classroom expenditures (i.e. teacher salaries, text books, etc)
instead of increasing administrative costs. The bill was killed in committee, but I think it is a good idea. Americans for Prosperity are onto something. Improving our education and balancing taxpayers' interests who foot the bill.

Improving efficiency in the system could be a focus so we the taxpayers are getting more bang for our buck.

An example of this is for schools to do energy audits to improve efficiency with heating costs. It gets cold in the winter in SD. The schools should be able to save enough money to cover the cost of the audit within two years. Then more money can be spent on students instead of inefficiently sealed schools.
Anonymous said…
The lawsuit is wasting taxpayer dollars.

The taxpayers are suing the taxpayer for more taxpayer money.

This is not right.

Does anyone know how much money the lawsuit itself has cost and will cost by the time thte trial is done?

Some lawyer will be making a lot of money at the expense of the taxpayer.
Anonymous said…
One thing that never gets discussed, is how the level of expectation of what our schools should provide has changed.

Now don't get me wrong, I'm not saying it was right, but things are a lot different in schools than they were 20-30 years ago.

Just one example. School buses - There were plenty of old, I mean OLD buses on the roads then... again, not saying that was right, but saying that we now expect better.

Uniforms for the athletes. I think ours were 10 years old. All the warm up apparel had never even been thought of yet. Now, I don't think we go more than a year or two without all new get ups.

Again, not saying we should go back to "how it used to be", but we're seeing the same influence in schools that we do in homes. We all want to give our kids more than we had, irregardless of what it costs.

I'm guessing the cost per student today, excluding natural inflation, is about double or triple what it was 30 years ago.

We're stuck in the same boat that many low wage earners are in. They want their kids to have all the nice toys that their wealthier neighbors have.... In this case, oil rich states like WY or ND, or the tax and spenders in MN... but don't have the income to make ends meet.

Are we really underfunding schools, or have we just raised our expectations of what our kids "need" to the point of being unreasonable?

If some of the bells and whistles we now see as "necessities" could be removed, I bet there would be a lot more money available to pay the teachers.
Anonymous said…
10:10, you didn't read the earlier comments, did you?

The state could make this lawsuit go away anytime by just using existing education enhancement money for the purpose it's intended. The state's not doing that, which is why the lawsuit was brought.

So it's the state's choice: 1) Use education money for education, or 2)use taxpayer funds to pay lawyers to keep the $370 million (and growing) education stockpile untouched.

I bet the lawyers Rounds hired to represent the state are very good Rounds contributors. Here's how it works: Private lawyers give to Rounds' campaign. Rounds hires them to represent state - even though the attorney general has competent staff and using the AG would cost less. Taxpayer money goes to Rounds' private lawyers. Rounds' private lawyers give another round (pun intended) of contributions to Rounds' campaign. Rounds ends up with taxpayer funds in his campaign account in a roundabout way (pun intended). Lawsuits are good for campaign fundraising - see?
Anonymous said…
Scimtar - If all of the interest is used every year to fund education than amount of money in the trust fund in real dollars (inflation adjusted) decreases over time. 1 dollar is worth more today than 1 dollar will be in 10 years from now.

I am all for using some of the interest to fund education, that is what the fund is there for. But some of the interest should go back into the reserve so as costs increase each year so will the interest of the reservces.

That is just smart money management.
scimitar said…
If you want to have a real economic argument 11:27, then gear up. The education enhancement fund had $85 million in 2002. Now it has $370 million. It would take somewhere in the neighborhood of 40 years for the inflation adjusted value of $370 million to get back down to $85 million if we just used the interest.

But the other part you are forgetting is that if we pump $12 million into the South Dakota economy every year, people are going to spend that and generate tax revenue for the state. So even if we lose the $1 million or so in compound interest we'd be getting if we left the extra $12 million in the education fund every year, we'd be making that up in tax revenue to the state.

The bottom line is that investing an extra $12 million in schools and putting that money into the South Dakota economy is better public policy and better economic policy than investing it in mutual funds out of state and stockpiling the interest. The state breaks even while schools and teachers come out the winner.
Sam said…
Anybody who pays any attention at all to school financing knows and understands the problems created by dribbling out one-time money. A school board might give pay raises one year and then cut back pay schedules the following year.

And you'd better check that story about about Eric Abrahamson getting zinged. He got disgusted.
Haggs said…
Once again, Round proves that he doesn't understand education funding at all.

Schools can't use one-time money to increase salaries because there's no way to know if that money will be there next year. I've heard Republicans say that one-time money can eventually turn permanent, but schools can't trust that it will.

So of course they put the one-time money into their reserves. They really can't do anything else with it.
Anonymous said…
Rounds has been spending down the state reserves every year since he took office. It is important for the state to have a reserve because its revenues are not static from year to year, and because the state is sort of the "last resort" for funding in a crisis.

Schools may be underfunded, but they know more or less how much money they will have from year to year. And if a school building burns to the ground, the school doesn't have to get the money from its reserves - it holds a bond issue or gets state help. If a state building burns down, we do to the reserves. You cannot compare the two - it shows a lack of understanding of how things work
Anonymous said…
Attention all whiners who claim to understand state government-school district finances: 1) the attorney general is representing the state; 2) state "reserves" do not equate to $900m; 3)all of the "one-time" money that the schools don't want, can't use, or don't need should be returned to the taxpayers to fund the state's (attorney general's) defense expense; 4) these knotheads can't sue another branch of government. some property tax payer - somewhere - will step up and put an end to this....soon; and 5) the legislature should dissolve every school district, that is using taxpayer money, to sue the taxpayers, for more of their taxpayer money.
chad said…
7:16 --

You're exactly right about everything you say.

The only problem is that the state's reserves have increased by a factor of 5 in the very recent past. That's not smart money management. Especially when we have a school funding crisis right under our noses.

There are few places where the state can invest with a greater return than investing in the education of the population. Unfortunately, we have leaders in Pierre who believe the state is better off investing in T-bills and mutual funds. Sooner or later we will pay for ignoring education.
Anonymous said…
My question is this:

Will a kid get a better education if his teacher makes $40,000 a year than if the teacher makes $30,000 a year? I don't see how pay and performance are related when it comes to teaching. If a teacher WILL teach better if they get payed more, that teacher should be fired.
Anonymous said…
Anon 9:11 –
You seem to miss some of the point. We are not and will not attract quality teachers if they can do the same job across the border for a 30% pay increase. Why would I want to take a starting teaching job in Spearfish at $27000 a year when I can go to Cheyenne and make $40000. Why would I take a teaching position in Sioux Falls when I can make better money at Citibank.

We are not getting the best quality teachers because other neighboring states are recruiting the best and the brightest. Yes, some qualified veteran teachers will stay in state. And yes, some exceptional newcomers will start and stay in small communities. But these will be the exception, not the rule.

Why should we expect people with college degrees – with massive responsibilities – with overwhelming volumes work to do – to just accept the fact that they across the border in Iowa, or North Dakota, or Nebraska, or Minnesota, or Montana, that people doing the exact same job make more money?
Anonymous said…
Anon 10:32

Name one profession in SD that you couldn't make the same statement about.
Anonymous said…
Let's not forget that the taxpayers voted on locking up these trust funds for the very purpose of keeping the politicians in Pierre from spending them. The amount in the trust funds have gone up since inception because of additional principal from new trust funds.
The agrument that if the state would just spend the additional 12 million from reserves, the schools would be happy and the lawsuit would go away is ridiculous.
Let's also not forget that education is the only expenditure that is guaranteed an increase which has been nearly 3% outside of any one time revenue.
Why do businesses give bonuses instead of just salary increases?Are you telling me that if you received a bonus from you job that you can't figure out a good way to spend it? Wouldn't you pay off some debt or fix a roof or buy a new bus? There are plenty of things that can be used for one time money that frees up the money from the funding formula.
greatplains said…
Anon 6:49 AM,

So, as long as teaching isn't the only profession in SD that needs a wage increase, we should just leave teacher salaries the way they are? What exactly is the logic there? Why not refuse to settle for low wages and commit to starting with our teachers? Why not take the opportunity to communicate to our young people that we care enough about their education to make sure we're able to compete for the BEST teachers for them?
scimitar said…
7:16 you are either a liar or a dupe. You say Rounds has been spending down the reserves every year since he took office. Flat wrong. Just the opposite.

Budget reserve 7/02 $39 million. 7/06 $43 million

Property tax reduction fund 7/02 $80 million. 7/06 $99 million

Cement Plant trust fund 7/02 $230 million. 7/06 $255 million

Health care trust fund 7/02 $65 million. 7/06 $94 million

Education enhancement fund 7/02 $85 million. 7/06 $370 million.

When the numbers are out for 2007, they will be up yet again.

Have your taxes gone down? I didn't think so. Has your school district opted out and raised your property taxes? More likely than not. The state hoards money forcing cities, counties and schools to raise taxes. Your Republican government at work.

And 911, I laugh every time someone makes the argument that kids are doing great so teachers don't need a raise. When YOUR boss calls a company meeting and says things are going gangbusters, productivity is great - so nobody gets a raise, watch you squeal like a stuck pig.
Anonymous said…

With the exception of the education enhancement fund which went way up because of the cigarette master settlement agreement, those numbers have been following inflation. Yes, some are above but there is a formula to take that money out every year and some years are better than others. It's like saying you are going to make 20% on your IRA every year because of a few good years. It makes sense to have a somewhat conservative number that you can count on instead of taking 10% one year and 3% the next.
If you had $100,000 for retirement 50 years ago, that was a lot of money. If you had that same $100,000 today, that wouldn't last 2 years. That would be the result of spending all the interest every year.
scimitar said…
IRA's are for people who plan to retire. Is the State of SD planning to retire and stop collecting taxes at some point? Then it makes sense to keep "banking the benjamins".

In 1999 we had $92 million. Seven years later in 2006 we had $862 million. If we didn't need all the benjamins in the bank 7 years ago, why do we need them in the bank now? That's a question that nobody has ever been willing to tackle.

Is it wise for the state to hoard every penny it can get while still raising taxes? That would be a good topic for its own post.

Is it wise for the state to force county, school and city governments to raise taxes while the state gobbles up money hand over fist? This would also be a good topic for its own post.

I think the root concern here is a lack of vision, a lack of leadership from governor Rounds. He has no principles and he has no ideas.
nonnie said…
Why can't one time money be used for teacher bonuses? Bonuses vary from year to year in business if you are lucky enough to get them. There are many creative ways to use one time money. It's money people; just figure out a way to use it. Can't be that hard.

And I too agree that too much is wasted in schools - duplicate administrative duties, new costumes, i.e. uniforms for sports, buses trekking kids all over the state to play sports games that benefit only a few of the students.

If the schools win this lawsuit, they will be in "high clover" for a long time. Isn't it suing for that ridiculous amount proposed by that first study group? Get back to basics. Make sure academics are covered. The rest is gravy and not really the responsibility of schools anyway.

That said, I do agree that the current funding formula is not working. Scrap it and start over. It might have been an improvement over what we had at the time it was enacted, but it's not working anymore. And don't do the summer studies; they are simply that - studies - and don't accomplish anything except waste more taxpayer money.

The schools will always claim they need more money. Taxpayers will always complain about high taxes (and rightfully so). But find some common ground.

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