In light of the Sioux Falls School District’s proposal to build three elementary schools in the next few years, a reader asks:
“From where does the school district get its money to build and renovate? Is it part of the $ that they get per student? Why can’t they take this money, earmarked for building funds, and give their teachers and staff a decent living wage?”
Here’s my answer:
The money school boards get for construction comes from their Capital Outlay (CO) levy, a tax on property owners in the district. School boards may levy up to $3 per $1,000 of assessed valuation. About 2/5 of all districts in the state charge the full $3; Sioux Falls charged $2.405 in 2011.
CO is separate from the General Fund (GF), which mostly pays for salaries. GF money comes from several places:
- the per-student allocation set by the Legislature, which is $4,491 this year and comes from property taxes and various state revenue sources, such as sales taxes, trust funds and video lottery;
- the district’s $7.5 million opt out, which is paid by local property owners;
- and a variety of more obscure sources that depend on other activity within the school district boundaries, such as bank franchise taxes, wind farm taxes and traffic tickets.
The Legislature in recent years has blurred the line between CO and GF. They’ve temporarily allowed school boards to spend CO funds on certain GF costs. So while it’s possible to take away money meant for school construction and give it to teachers, that flexibility is set to expire soon; at the same time, it’s risky to deplete your construction funds.
If the school board really wants to increase teacher pay, they could:
- jack up the opt out even higher (easy enough);
- lobby the Legislature for more per-student funding (somewhat effective); or
- initiate a ballot measure that would increase the state sales tax (ineffective)
Also worth noting when we’re talking about the Sioux Falls district is there is a six-year collective bargaining agreement in place, which ties increases in teacher pay to increases in the state’s per-student allocation. There is no expectation that the board give its teachers any more money than they’ve bargained for.