MOTION:
TO APPROVE THE MINUTES OF JANUARY 24, 2002
Moved by: Klaudt
Second by: Madden
Action: Prevailed by voice vote.
Department of Education and Cultural Affairs - State Aid Formula
Mark Zickrick., Senior Fiscal Analyst, Legislative Research Council, staffed the meeting.
Ray Christensen, Secretary, Department of Education and Cultural Affairs gave opening remarks and
introduced staff.
Stacy Krusemark, Director, Office of Finance and Management, DECA, distributed a handout titled
General State Aid to Education (Document #1). He outlined the department's current budget,
FY2003 proposed budget, and projected FY2004 budget, along with providing mill levy information
and ADM estimates.
Representative Richter asked what would happen if statewide property valuation would increase at
4 percent instead of the estimated 3 percent. Susan E. Woodmansey, Office of Finance and
Management, DECA, indicated that levies would probably have to be readjusted lower. Ms.
Woodmansey said she would provide the committee with a breakdown on property valuations for
the last three years. Secretary Christensen cautioned that decreasing mill levies this year could result
in having to increase mill levies next year.
Senator Drake questioned the effect of overestimating property valuations . Ms. Woodmansey
indicated that if the valuation was estimated at 5 per cent but actually grew at 3 per cent, state aid
would pick up the difference. She said that, inversely, if the valuation was estimated at 3 per cent
but actually grew by 5 per cent, property taxes would have to pick up the difference.
In response to questions from Representative Adelstein and Representative Clark, Secretary
Christensen explained a character development program that will be developed by DECA. The
program will be funded through a three-year federal grant and is similar to the 4-H Character Counts
program. Secretary Christensen said he would provide information to the committee as to the
amount of classroom time that would be spent on this program.
Ms. Woodmansey distributed a handout titled Special Education State Aid Summary - FY 2003
(Document #2). She said the 136,970 ADM count was approximately 11,000 greater than the ADM
number given for the general state aid to education fund request as Christian parochial and home
school counts have been included. She said that the estimated rollover from FY02 to FY03 is
expected to be $1,000,000. She said she would provide Senator Drake with information on the
difference in the transition formula fund from year to year.
Representative Klaudt questioned where the $1,000,000 in rollover funds came from, as this amount
didn't appear in the department's original budget request as outlined in the FY2003 Governor's
Rolling Budget Book. Mr. Krusemark explained that when the original budget was put together, the
child count wasn't known. Ms. Woodmansey explained that although the child count numbers are
lower, the budget request has increased due to where the changes occurred. She said she would
provide the committee with more information about these changes.
Senator Putnam questioned funding available for extraordinary care. Mr. Krusemark explained that
5.75 per cent is set aside statutorily for the extraordinary care needs and that this fiscal year the
department will have to dip into this fund. He said by state statute, another 5.75 per cent should be
rolled over to next year, but that this money is not available to roll over, as there is a shortfall.
Senator Putnam questioned whether claims were being funded. Ms. Woodmansey said that the board
looks at each application and funds the majority of them.
Senator Apa requested a breakdown on rollover funds and extraordinary cost fund requests for the
last five years, which Ms. Woodmansey said the department would provide.
In response Representative Clark, Ms. Woodmansey said that the state only pays for South Dakota
special needs children. She didn't have any information on the number of families with special
needs children who have moved into South Dakota.
In response to Senator Putnam, Secretary Christensen said that the Cutler - Gabriel amendment was
put into place to protect the local taxpayer, but it causes volatility, and that taxpayers are going to
get upset at the increase in mill levies in the future. Senator Putnam replied that taxpayers are
already complaining, but that the Cutler - Gabriel amendment is fair.
A handout titled FY03 estimated costs for operating the DDN (Document #4) was distributed. Mr.
Krusemark explained although the FY03 general fund request for Digital Dakota Network (DDN)
costs was for $8,191,325, the estimated cost is now $9,439,055, a difference of ($1,247,730). In
response to Representative Richter, Mr. Krusemark explained that there is leftover state aid of
approximately $9 million that could be used to fill in this budget shortfall.
Mr. Krusemark then answered questions concerning the $9 million available funds in state aid. He
explained that approximately $1.2 million could be used to cover the FY03 DDN shortfall. He said
that these funds could also be used to cover TTL training costs and that these costs were
approximately $6 million last summer. Secretary Christensen explained that the department has
received at least twice as many requests from schools for this type of training as last year, and that
the schools have been told TTL funding will depend on decisions made this legislative session. He
said TTL training can be cut or eliminated if the legislature so decides. Representative Richter said
the committee is supportive of TTL. Secretary Christensen agreed with Senator Duxbury that
potentially the 1.2 million shortfall and TTL training costs as high as $12 million could be subtracted
from the $9 million in leftover state aid funds. Secretary Christensen also said the department is
seeking grant monies for the statewide student information system and that no commitments have
been made.
Mr. Krusemark indicated that last year's TTL funding was paid for with federal funds within the
DECA administration budget. Senator Drake requested additional information on these federal
funds and whether they could be used to offset TTL costs.
In response to Senator Apa, Secretary Christensen explained that schools are paying for the cost data
center right now, that some schools are not happy with the system, and that a statewide system will
help.
Otto Doll, Director, Bureau of Information and Technology, explained the BIT contracts with DECA
for ongoing operating expenses, and said he would provide Representative Klaudt with further
information on these costs.
In response to a question from Representative Clark, Secretary Christensen explained the activities
of a new grant writer position in the agency and explained that any available federal grants have a
ton of strings.
In response to Representative Klaudt, Secretary Christiansen explained that it will be some time until
the rules are written for a recent 1,500 page federal legislative document making federal funds
available, July 1, 2002 at the soonest.
Senator Kleven said that several agencies have told the committee of a Bureau of Information and
Technology rate increase last February, and questioned how this rate increase showed up in the
budget. Mr. Doll replied that there had been both an increase and a decrease in rates with a net effect
of no change for most agencies and further explained how BIT manages rates relative to an 87 rule.
In response to Representative Adelstein, Mr. Krusemark said he would provide information for the
committee on actual contracts for DDN costs. He also explained the seasonal archeology program
in response to a question from Representative Clark.
MOTION:
ADJOURN
Moved by: Klaudt
Second by: Apa
Action: Prevailed by voice vote.
Rena K. Ortbahn
____________________________
Committee SecretaryBob Drake, Chair
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