South Dakota Cost Study Finds Education Underfunded by $133 Million

In January 2006, the South Dakota Alliance for Education, a coalition of advocacy groups and numerous school districts, released a study estimating the cost of an adequate education in South Dakota. The final study finds that, in districts that did not fully fund K-12 schooling, actual 2003-2004 spending fell short of adequate levels by $133.6 million, or $1,148 per pupil, a 22% shortage. The study's preliminary figures, released in December, are the basis for proposed legislation for the current legislative session to raise education funding by $102 million over the next five years.

The Study

The study employs the Successful School District approach to determine base costs and the Professional Judgment approach to determine additional cost “weights” for students with special needs, including those who are low-income, in special education, or English language learners. The study claims to determine the cost of adequately educating students to meet both state and federal standards. (However, education economists debate whether the costs of helping 100 percent of students pass NCLB tests can even reasonably be estimated at this time.) The study took into account school district variation in size of enrollment, concentration of special needs students, and severity of needs.

The study examined 41 school districts deemed successful because they met state standards on the STEP tests and federal NCLB goals for 2007-2008 during the school year 2003-2004. The base cost figures for these schools, at $4,717 per student, were calculated from the average expenditures in K-12 education, including “student staff services, administration services, and co-curricular spending.” Professional judgment panels separately were asked to analyze the resources needed to enable special needs students to achieve NCLB targets for 2013-14, that is, 100 percent of students testing at proficient levels.

The study developed hypothetical school districts of four different sizes, with concentrations of special needs children based on average characteristics of actual South Dakota districts. The panels determined the resources needed to meet standards – including personnel, supplies, non-traditional programs and services, and technology. Then, the economists determined the prices associated with these resources on the school- and district-level. The professional judgment approach resulted in a range of costs, from $8,641 per pupil in a very small district (enrollment 221) to $6,362 per pupil in a large district (enrollment 5,320).

Like many studies, this study did not include transportation, food services, or school construction. Additionally, the study did not address early childhood education, which is ironic because early education is crucial for special needs students.

Overall, according to the successful school district calculations, the estimated aggregate cost of adequacy in 2003-2004 was $799 million, or $6,496 per pupil. This represents a 19% increase over actual spending during 2003-2004 among all districts, which spent an aggregate total of $634 million, or $5,475 per pupil.

Legislative Proposals

The Alliance emphasizes that the study was undertaken as a way to bolster legislation to increase school funding. According to the Argus Leader, the Alliance supports a Democratic bill that would add $102 million or $820 per pupil, the study's initial estimates, to school funding over five years, while Republicans are supporting a bill which would offer $40 million more per year if schools meet several accountability requirements.

Proponents of the first bill claim that their funding increase would be accomplished without raising taxes, as the money would be drawn from a “property tax reduction fund” in the short-term. In FY2008, the measure would cap state expenditures at a growth rate of 3% or inflation, whichever is less, and use the difference between the growth in revenues and expenditure to fund an “education adequacy fund”; when the measure is fully funded in about five years, the cap would then be removed.

The Alliance

The South Dakota Alliance for Education is a coalition of education advocacy groups, including the Associated School Boards of South Dakota, the South Dakota Education Association, and a number of school districts. The cost of the study itself was underwritten by the Alliance and a group of 125 school districts.

The study was conducted by Augenblick, Palaich, and Associates (APA).

Prepared by Katherine Lu, January 20, 2006