Blue Ribbon Bust!

by Tiberius Gracchus on January 9, 2016

“First, we want a quality system of schools focused on student achievement. Second, we want a workforce of great educators. Finally, we want an efficient, equitable funding system that supports those goals… We need to understand where teacher shortages are occurring and what can be done to address them. We need to ask why 12 states can spend less per student than South Dakota, yet pay their teachers more. We need to ask why, even as we hear growing concerns about teacher salaries, many schools’ reserve funds are increasing.” – Governor Daugaard.

The newly-created Blue Ribbon Task Force, which drew together twenty-six diverse members, both elected and appointed, was given the urgent task of accomplishing the Governor’s mission. The body first met at the beginning of July 2015 and gave their report—thirty-four pages including recommendations—early in November. They effectively decided that the only way to obtain revenue to increase teacher salaries was to raise the level of the statewide sales and use tax – a measure that would hit South Dakota taxpayers hard. No attempt was made to come up with any creative or intelligent solution to achieving the goals that the Governor had set; in particular, there was no attempt to answer the key question they had been asked to address – why are we being forced to pay more for less when it comes to our state education system?

Unnecessary Meddling and Key Areas of Concern Neglected

Instead, the task force has come up with a whole host of problematic recommendations. Significantly, they have made suggestions that would effectively result in greater central control of educational resources statewide. They have recommended, for example, changing the Per Student Allocation (PSA), which they claim is inequitable. What they have failed to realize, is that in actual practice, this has been a hugely effective budgetary tool for schools, ensuring that funding follows the students, and those who attend larger schools are not disadvantaged by mere circumstance. It is a fitting reward for school district excellence that a parent can effectively award that institution additional funding; by contrast, withdrawing a child punishes a poorly performing school. They have also suggested the capping of school district reserves, backed by the threatened withdrawal of a percentage of General Fund revenue following non-compliance in this area.

In an even worse attempt to butcher our funding model, the Task Force would like to transform the allocation of some taxes so that revenues are spread across school districts, supposedly ensuring fairness in educational resourcing for all – a reform which they indicate could be paralleled with similar unwelcome centralization of revenue generated from traffic fines and wind farms taxes, amongst other sources. Policies regarding our resources that are generated out of envy of ones’ neighbor are not the way forward in our great state – even if they are advocated by liberals elsewhere.

You don’t have to read far to identify the numerous contradictions and lack of logical consistency in the report. On page 21 of the document, for instance, the Task Force sets out its concern about the adequacy of infrastructure investment; while on page 16, the same body writes that capital outlay funds are actually robust and need to be unrestricted for disbursement. It is difficult to know what to make of this kind of intellectual confusion when it comes from a highly qualified body of elected state representatives and educators.

Their measures, recommended by the group, pose a significant threat to educational standards statewide. Recruitment of staff through the reciprocity initiative, for example, which is strongly endorsed, would allow teachers certified in other states to be immediately recognized as qualified to teach in South Dakota schools. This is extremely concerning on a community level, as it works against other efforts to promote consistency in teaching quality and ensuring that teachers are adequately equipped for culturally sensitive education which reflects our local values, concerns and priorities. As a measure, it seems to me to be somewhat akin to taking an automobile to be repaired by a boat mechanic (except education is more important than that!) or boarding a plane when the pilot has only ever flown a helicopter. As Governor Mellette once said, “The province of legislation is… to promote a common education, which is the preserver of all.” How can we guarantee any kind of common, locally sensitive education in South Dakota, when out-of-state educators are routinely assigned to our schools without meaningful checks taking place?

Gratuitous Tax Rises

It is suggested in the Blue Ribbon report, that in order to attract our best teachers, and effectively compete in the national employment market, we need to provide teachers with an average annual salary of $48,000, which is up from the current level of $40,000. To back up this viewpoint, the Task Force provides many pages of illustrative pie charts and statistics although disappointingly, these statistics have been handpicked to fit a politically pre-determined narrative supporting what can essentially be referred to as the ‘monetary rape’ of South Dakotans in order to access competitive education for our children.

I believe other charts— which appear to have been deliberately left out of the report— would support very different conclusions that could negate the need for tax rises. For instance, it could be shown that funding allocation from the General Fund for Education, which includes both K-12 and Higher Education, has swung by over 4% toward Higher Education across the last decade (4% of $352 million is $14 million). Our K-12 system cannot sustain continuing growing favoritism in the General Fund toward Higher Education initiatives, prioritized over our residents’ children’s learning.

In fact, the Task Force has made decidedly dodgy use of statistics throughout their report. For example, the argument is made that education spending in South Dakota has fallen behind that of other sectors of government that are of comparable importance, such as healthcare. But in making this comparison, the year 1996 was picked, for reasons undisclosed, as the baseline for the assessment of the state’s recent, supposedly disappointing, annual growth in the level of educational spending. Could it be possible that this year was selected in order to make use of our explosive growth—of over 279%—in Medicaid spending after that point as an excuse to spend more in Education? Anyway, is it really the case that since we are getting bloodied in Medicaid, we should be fair and allow ourselves to go into deeper debt distress in the realm of education too?

Returning to the statistics, the report recognizes that per student spending on capital outlay is significantly higher in South Dakota than it is in other states; in fact, it is $405 dollars more than the national average. Of course, this should lead us back to the pressing question asked by Governor Daugaard when first setting up the Task Force: Why it is that the state spends more on education, but receives less return in terms of school standards? But the report makes no attempt to answer this pressing question. Perhaps the body lacked the motivation to propose constructive and meaningful reforms, when the ‘easier’ alternative of simply recommending tax increases, with commensurate opportunities for the distribution of pork to interest groups, was readily available. ‘Big government’ enthusiasts across the nation appear to have adopted the knee-jerk reaction of increasing taxes whenever they are faced with a problem, no matter the context of the situation.

By comparison, no alternative recommendations were suggested by the Blue Ribbon Task Force for what would be a more helpful policy of reallocating state funds. Instead of pouring millions of additional taxpayer dollars into increased education spending, we should be cutting out some of the extravagances in our state education system and redistributing the resources currently being wasted. The Governor has vowed to make ‘bold’ decisions, based on the people’s demand for better education in our high schools, so I’ll make a few suggestions that wouldn’t be considered anything less than bold.

First, in the report it is determined that we have 14 students per teacher in South Dakota, which is a ratio to be proud of nationwide. It is the wish of the Task Force to preserve that ratio. I agree with the desirability of this objective. However, it must also be recognized that this may not be an achievable goal as a result of the so-called ‘educational crisis’ based on teacher shortages for K-12. (To give the reader some perspective, it should be noted that our ratio is far superior to the 20 to 1 teacher that exists nationally, or the 23 students to 1 teacher in Minnesota.) It might be more realistic for us to manage an increase in the ratio, possibly scaled, so that older students have larger class sizes than younger ones. If South Dakota budgeted on a ratio of eighteen students to one teacher, this would still be superior to the national average, and this alone would allow us to achieve the Task Force’s objective singlehandedly by refocusing funds. Consider it as being 22% fewer teachers to teach the same amount of kids. If its 9,300 teachers at $40,000 then that makes $372 million. Reallocate 22% and that is nearly $82 million. That would give us an average teaching salary of over $48,000.

Second, there has been well-founded criticism, not least from the state’s schools, of recent extravagant increases in the salaries of university professors within South Dakota’s Higher Education. In a Rapid City Journal article, published on the 16th of December by correspondent Bob Mercer, it was stated that even “…officials in the state Bureau of Finance and Management thought the 3.2 percent for university faculty was “generous” when inflation has been below 1 percent in the past year.” It is too late, of course, to reverse these increases, but future pay raises should be commensurately less extravagant.

Third, we should reduce the unhealthy dependency of Northern State University (NSU) and Dakota State University (DSU) on General Fund revenue. Northern State University and Dakota State University are, in stark contrast to equivalent institutions elsewhere in the state, such as South Dakota State University (SDSU), the University of South Dakota (USD), and the Black Hills State University (BHSU), gravely dependent on state taxpayer revenue in their current operations. Drilling into the detail, it may be shown that whilst SDSU and BHSU today receive roughly the same amount from their state general funds as they do from tuition revenue, in the case of NSU and DSU, the General Fund contributes no less than double the amount that comes from tuition. Reforms are obviously needed to address this disparity.

Semi-privatizing or privatizing NSU and DSU completely over a three-year time frame would necessarily raise the contribution made to operations by tuition costs and force both institutions to dramatically reorganize in order to keep their student offering competitive. The potential saving for the state is dramatic: over $7.5 million of annual revenue could be reallocated from DSU and over $10.5 million from NSU.

(Incidentally, I recognize that the University of South Dakota is not as financially well-off as either SDSU or BSHU. But it does have a rather healthy endowment. In fact, it has more than double that of SDSU, even though fewer students are enrolled. I believe we should have a benchmark that pulls funds from colleges back to facilitate equal General Fund contribution for tuition revenue. This would have the benefit of forcing bloated institutions to undertake reforms. USD would painfully use its burgeoning endowment while they face the transition to a more financially fit model. That would add $12 million back to the General Fund each year.)

Fourth, South Dakota higher education institutions should be compelled to abstain from the ‘arms race’ in spending on non-educational facilities to compete for students nationally. Instead, a low cost, no-frills approach to tuition should be adopted. It should be recognized that keeping public college tuition costs as low as possible (without making unnecessary General Fund sacrifices) is a higher priority than college campus expansion. That is the accountability that must be displayed to the taxpayers.

This no-frills approach could certainly ultimately lead to lower student tuition fees. The ambition should be to slash public college tuition costs by 30% for all South Dakotan children by 2020, thereby removing obstacles preventing our students from attending. This fits very much with the ideals of the great former Governor Arthur Mellette –“All pupils who have thus finished the academic course of instruction should be admitted to the higher educational institutions of the State by a certificate from the county authority and without further examination. We believe that under such a system the attendance in the higher institutions will be largely and rapidly increased, and their running expenses to the State will be greatly diminished.”

Fifth, we should place emphasis within our state universities, on serving the needs of local people as opposed to those who come from outside of South Dakota. At SDSU, 36% of students today come from out-of-state, and 7% of the students are international. These students pay only about $1000 extra in annual tuition a year to attend, yet benefit from our state subsidies provided to the university.

As an illustration of what draws my ire, imagine an average, hard-working South Dakotan family paying even more in sales tax, as the Blue Ribbon Task Force currently recommends, so that Mike or Mallory, from Massachusetts, can attend a college that is heavily subsidized through their tax dollars and then return to Massachusetts upon graduation. This is far from smart. We should clearly be addressing the need to raise out-of-state tuition if we want to resolve the issue of South Dakotans indebting themselves to educate someone else’s children rather than their own.

(The argument that the current extra tuition payment for out-of-state students already covers their missing tax contribution is, of course, flawed two-dimensional thinking, given the sheer level of state subsidy that exists for higher education in South Dakota. Remember tax dollars contribute twice as much as tuition fees to the running of NSU alone. The current extra contribution of $1000 in no way covers this expense. If it did, of course, then this would imply that the state government could pull out all general funding of its higher institutions, and this would only require South Dakotan students’ tuition fees to rise by $1000, which is nonsense.)

Another question, by the way, that should be asked is why our own homegrown rural students choose to attend Agricultural Colleges outside of South Dakota, if they wish to farm or ranch our unique South Dakota soil. A funding priority should be placed on our higher education institutions to promote the state that we actually are, over the cosmopolitan state that some others may wish us to be.

Finally, we should also seek to make savings outside of the area of education. For 2016, according to the Governor’s budget, an increase in $30 million dollars to South Dakota Executive Management funding, in relation to Governor Daugaard’s own office and cabinet staff, has been recommended. That is over a 10% increase that I would scrutinize, particularly when compared to the Governor’s recommended 1.5% increase in all education.

To give one more example, the Corn/ Soybean/Wheat check-off fund should be partially redirected to absorb the expense of the Agricultural Experimentation Station. That will save the state no less than $10 million a year. (Each fund will add enough to the per bushel cost to cover 40% of the total Agricultural Experimental Station’s expense. At the end of the year, we should then review their respective actual share of grain production of South Dakota. That review will result in a producer refund check, where necessary, taken from any fund that did not require allocated funds to contribute their fair share.) Since grain producers are the direct beneficiaries of the Agricultural Station, it seems suitable for those producers to take on the cost of this facility.

These funding changes, without changing the student ratio, would result in a potential annual saving of over $40 million to apply to K-12 teacher salaries.

So the way to get to the $75 million target, set by the Blue Ribbon Task Force, should be founded on reallocation of money from the General Fund; we should also make hard but necessary decisions and consider avoiding expansion of other programs that South Dakotans may want, but do not need. Paying our K-12 teachers an adequate salary is more important than expanding the scope of the state government’s assumed responsibility over the people.

Other legislators have been promoting options without a tax raise. Currently, State Representative Lance Russell is proposing an excellent bill that would redirect South Dakota lottery revenues to pay for the salary increases and thereby entirely fund the proposed teacher salary enhancement fund (TSEF).

I also believe the funding for the teacher pay raises that this Task Force was established to rake in should be also be targeted toward benefiting those teachers currently on lower salaries (say those earning less than $50,000 a year). Of course, this is grossly above the $40,000 a year current average level, which is the rallying cry of the Blue Ribbon Task Force. Such targeting will have the effect of allocating our dollars to the teachers who are most in need of pay increases, whilst still raising the headline state average effectively.

It is often a good idea, particularly in matters related to fiscal prudence, to look back to the founders of our state for guidance. As a figure none other than Doane Robinson explained, “The limitations upon taxation for State purposes made it exceeding difficult to finance the necessary operations of the young state.” It was this necessary discipline, which these limitations imposed on South Dakota at its founding, that gave us our tradition of fiscal responsibility and spending restraint. So repeat after our first Governor: “The present school system is too expensive, inefficient and lacking in that unity and system so necessary in educational matters in order to obtain the greatest public benefit from the public schools for this most important public institution.” – Governor Arthur Mellette. 

This Blue Ribbon Task Force was not up to the task of recommending the sort of hard political decisions that South Dakota urgently needs to take. Instead, it recommended an “easy” solution – we will all pay more for our education system through taxes; and when they can’t make those dollars stretch far enough… another study like this will show how you didn’t dig deep enough yet again.

Say no to the tax and spend, Blue Ribbon Task Force – and identify educated solutions instead!

{ 1 comment… read it below or add one }

Deena Walraven January 16, 2016 at 4:38 PM

This was an awesome article. I loved it and learned a lot from it. Deena wLraven


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