As more schools opt out, others face pinch for federal funds

The increasing number of South Dakota school districts that are opting out of the state property tax freeze to make up for cuts in state aid is putting a burden on some other districts that rely heavily on federal funding.

Districts whose local revenue is limited by a federal area such as an Air Force Base or American Indian reservation that isn’t taxed can get federal “Impact Aid.” However, to qualify for full funding their tax rates must be 95 percent of the state average or the average of similar-size districts.

At least 71 of South Dakota’s 152 school districts have approved an opt-out for the 2012 tax year, according to media reports. As more districts raise taxes through opt-outs, the state average goes up, and Impact Aid districts must raise their own rates or risk losing their federal dollars.

“It’s about impossible to maintain the funding without an opt-out,” said Maxine Schochenmaier, a consultant for South Dakota school districts that receive Impact Aid.

Voters in the Wagner Community School District will decide Sept. 6 on a 10-year opt-out that would raise taxes by up to $300,000 per year. Far more money than that is at stake. Superintendent Susan Smit said that without the opt-out, the district would fall below the 95 percent threshold, costing it about $3 million per year.

“Because so many schools in South Dakota have opted out, we no longer qualify,” she said. “The federal government isn’t going to pay more unless we pay our share.”

The South Central School District lost $400,000 last year when its mill levy fell below the minimum required to qualify as a heavily impacted district. Voters approved a 10-year, $200,000 opt-out this month in response. At Andes Central, a 10-year, $300,000 opt-out approved this year will protect $950,000 in annual Impact Aid, Superintendent Darrell Mueller said.

Read more posts in News Articles • Tagged as , • Permalink