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Letter from the Secretary
SD Department of Education Nov. 2016  
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School Finance Accountability Board to meet Nov. 4

The School Finance Accountability Board, or SFAB, will hold its third meeting Nov. 4 at 1 p.m. CDT via teleconference and Skype. This board was established by Senate Bill 131 which also included the new school funding formula. Find more information, including past meeting minutes and supporting documents, on the Department of Education website. An agenda with call-in information for the Nov. 4 meeting is also available.

At the November meeting the board will review requested drafts of administrative rules and waiver request forms, as well as establish a timeline for considering district waiver requests.

Teacher compensation accountabilities
The law outlining South Dakota’s new school funding formula (SB131) calls for a process by which a school district may request that a penalty (imposed as a result of not meeting the formula’s two accountabilities regarding teacher compensation) be waived. As part of its duties, the SFAB is authorized to promulgate rules regarding the appeals process and to establish factors that may be considered when a school district submits a waiver request.

In August 2016, as part of FY2016 annual financial reports, school districts submitted baseline teacher compensation data for school year 2015-16. This baseline data will be compared to the teacher compensation data that districts will report with FY2017 annual financial reports. If the total amount of the increase meets both the total dollar amount and the percentage increase in average teacher compensation required by the new law, a district will be determined to have met the accountabilities outlined in the new formula. If a district does not meet both accountabilities, it will be the district’s responsibility to explain discrepancies to the SFAB.

District accountability targets for FY2017, based on the baseline teacher compensation data, are available on the Department of Education website.

Fund balance penalty
The new law also imposes cash balance caps, on a tiered system based on enrollment. The “percentage cash balance” will be calculated by dividing the lowest monthly cash fund balance of the previous 12 months by the total general fund expenditures for that year. The purpose of this mechanism is to ascertain the cash level that, over the course of a year, is never used.

Penalties will be applied beginning in FY 2019, based on FY 2018 general fund cash balances reported as per SDCL 13-8-47. A district will be able to make a request to the SFAB to waive a cash balance penalty if it can demonstrate that its lowest monthly general fund cash balance percentage is the result of special circumstances.

Any waivers recommended by the SFAB will have to be approved by the South Dakota Legislature’s Joint Committee on Appropriations or the Interim Committee on Appropriations.


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