P - Present
E - Excused
A - Absent
Roll Call
P Ahlers
P Burg
E Bartling
P Dennert
P Hundstad
P Wismer
P Novstrup (Al)
P Brown
P Carson
P Deadrick
P Peters
P Wink
P Haverly
P Putnam
P Hunhoff (Jean), Chair
P Tidemann, Vice-Chair
OTHERS PRESENT: See Original Minutes
The meeting was called to order by Senator Jean Hunhoff.
Document 1A _ Governor's Recommended FY11 Major Items Budget Summary
This document summarizes each agencys major budget items by fund source along with any FTE
action.
Mr. Schoenfeld told the Committee the trust funds and education enhancement funds were not
included in the subtotal of the selected funds. Condition statements were not requested for the
items listed on pages 3-7.
Document 1C _ FY1020 and FY2011 Preliminary Sources and Uses Scorecard
Ms. Mehlhaff explained that that this document was a list of bills that appropriated state, federal or
other funds, bills that would affect revenues, and bills with other possible impacts to state finances
or the appropriations process.
Mr. Schoenfeld said for purposes of illustration, revenues are estimated at 3% growth in FY12 and
a 6% growth in FY13. Again for illustration purposes, expenses are estimated at a 4% growth in
FY12 and a 6% growth in FY13.
Office of Curriculum, Career and Technical Education
The Governor recommends total funding of $33,403,142 and 15.0 FTEs for the Office of
Curriculum, Career and Technical Education for FY11. This includes a recommended increase in
appropriation from the general fund of $2,698,831 and a decreased appropriation of $72,217 in
federal fund expenditure authority.
Ms. Tamara Darnall, Director for the Office of Finance and Management, told the committee that
the recommended budget changes for FY11 include:
1 . A decrease of $76,248 for the reduction of 2.0 FTEs (moving 1.0 FTEs to the Office of
Finance and management and elimination 1.0 FTE due to the ending of the Reading First
grant);
2 . A decrease of $2,943 for zero-based space billing reflecting the move to the state library;
3 . An increase of $3,308 for the Bureau of Information and Telecommunications (BIT)
billing; and
4 . An increase of $5,693 for the employer's portion of the state health insurance plan.
Representative Tidemann asked about the impact to the career and technical courses due to the
legislative change requiring students to remain in school until age 18. Mr. Thomas Oster,
Secretary for the Department of Education (DOE), stated that the department does not know the
full impact of the change since it was implemented on July 1, 2009. However, the DOE has seen an
increase in the amount of courses offered and the number of students taking the courses over the
years.
The committee discussed the difference of courses offered online versus via the DDN. Mr. Mark
Wilson, Director of the Career and Technical Education, said that schools apply to become an
online provider for online courses with the South Dakota Virtual School. Secretary Oster informed
the committee that the South Dakota Virtual School is free to the state and schools unless the
schools have a student taking an online course. Then, either the student or the school pays for the
services. He stated that the DDN courses are offered by Northern State University (NSU) and there
is an allocation from the DOE to offer classes to the public schools. The classes allow for two-way
audio and visual interactions.
Postsecondary Technical Institutes
For State Aid to Postsecondary Technical Education for FY11 the Governor recommends an
appropriation of $20,814,229 from the general fund, an increase of $2,696,804 or 13.6%. This
appropriation is distributed to the four postsecondary technical institutes based upon tuition
received by each institute.
Ms. Darnall stated that the technical institutes have experienced a large increase in student
numbers. Depending on the technical institute, there is a 13% to 33% increase at the institute. The
average increase for all technical institutes is 18%. This increase is in part due to the Department of
Labor (DOL) request to have the technical institutes be the first responder to the state
unemployment issue.
Last year, the DOE and the technical institutes created a distribution process based on a funding
formula similar to the K-12 state aid formula. This formula went through and was approved in the
rules process.
In response to Representative Tidemann's question, Ms. Darnall stated that there are 5,950 students
enrolled at the technical institutes.
Mr. Wilson explained the distribution formula and the process used to determine the FY11 budget
request.
Representative Wink asked if the students pay different fees depending on the type of course. Mr.
Wilson stated that the technical institutes have a set state tuition and fee amount. Certain high cost
programs will charge an additional local fee to address the increased cost for the course.
Representative Tidemann asked about the Adult Farm program at Mitchell Technical Institute
(MTI). Mr. Greg Von Wald, President of MTI, said that the rule provides the base funding for
the Adult Farm program. The MTI has about five major contributors to this program that have
committed funding for three years. The institute has advertised to hire an additional instructor for
the program. Mitchell Technical Institute intends to have a total of five instructors in three years.
The program will be expanded online and MTI is currently in the process of determining how to
deliver courses at other sites.
Representative Peters asked about the federal stimulus funds from the DOL. Ms. Deb Sheppard,
President of Lake Area Technical Institute, stated that the stimulus money was awarded to the DOL
and dispersed to the technical institutes in a lump sum based on specific projects which the
technical institutes identified as pressing needs in the local region. These projects have been
completed. Now, the stimulus funds follow students that take high-need courses. The technical
institutes only offer a high-need course if enough students are registered for the program.
Senator Haverly requested the DOE provide information on the stimulus funds provided to the technical institutes, including total amount distributed to each institute and how expended.
Ms. Darnall said that the recommended budget changes for FY11 include:
5 . A decrease of $76,248 for the reduction of 2.0 FTEs (move 1.0 FTE to the Office of
Finance and Management and eliminate 1.0 FTE in the Office of Education Services and
Resources);
6 . A swap of general funds for ARRA funds (decrease of $341,219 in general funds);
7 . An increase of $860,096 in federal flow through grants for the Title 1 program;
8 . An increase of $250,000 in federal funds for the 21st Community Learning Center;
9 . An increase of $250,000 for a Wellmark Foundation grant for the Coordinated School
Health;
10 . A decrease of $9,128,285 in ARRA fund authority;
11 . A decrease of $14,249 for zero-based space billing reflecting the move to the state library;
12 . An increase for the BIT billing rate; and
13 . An increase of $21,070 for the employer's portion of the state health insurance plan.
Ms. Darnall noted that the state needs to have the same amount committed annually to the Birth to
Three Program. The program can still be maintained at the same funding level with the ARRA
funds.
In response to Senator Hunhoff's questions, Ms. Darnall stated that the expenses for the Birth to
Three program were lower last fiscal year. With the changes that occurred last year, the DOE is
trending to be on budget to end FY10.
Education Service Agencies
For FY11, the Governor recommends a total appropriation of $500,000 in general funds and no
FTEs. This is the same funding as in FY10.
Ms. Darnall noted that the Education Service Agencies (ESA) received a fairly significant budget
cut last year in the amount of $1.5 million. The department was asked to maintain the same budget
for FY11.
Senator Hunhoff asked if the schools contribute to the ESA funding. Secretary Oster stated that the ESAs were originally funded at $2 million. With the budget cut last year, the schools use the ARRA funds to support the ESA services and materials. As a result of the budget cut, one ESA dissolved. The ARRA funds are only allowed to be used in the 2009-2010 and 2010-2011 school
years. After the ARRA funds are eliminated, it will be difficult for the schools to contract with the
ESAs.
Representative Tidemann asked for three functions and impacts the ESA have on the schools. Mr.
Wade Pogany, Director of the Education Service Agencies, responded that the ESA provide
essential services including:
14 . Planning, monitoring, and intervention services helping every school that is placed on
NCLB school improvement to provide a plan on how to be removed from the NCLB school
improvement list;
15 . Becoming the vehicle to provide professional development to schools; and
16 . The money spent on the ESAs is contributed three-fold in in-kind services. The money
directly provided to the ESA is an in-kind contribution from the co-ops. The co-ops also
pay for the cars, fuels, lights, etc. for the ESA.
In response to Representative Deadrick's question, Mr. Pogany stated that originally there were
seven ESAs, but ESA 4 at Northern State University was dissolved into ESA 1, ESA 2, and ESA
5. The ESA was dissolved because NSU did not have a co-op as a base funding source and relied
solely on state funding. When the state funding was eliminated, NSU was not able to support the
program.
Secretary Oster said, in response to Representative Hunhoff's question, that not all small schools
can afford to hire a specialty teacher. The smaller schools pooled together money and hired one
specialist through a co-op that would provide the services to the area. Mr. Pogany stated that the
ESAs were created as an arm of the DOE to meet the needs created from No Child Left Behind
(NCLB). The ESA co-ops have become quasi-entrepreneurial in finding other local needs to be
met.
Mr. Pogany said that individual school districts that created the co-op own the co-op. Every school
district has an ESA, but not every district has a co-op. The DOE gives a grant to the co-op to
provide the services required under NCLB.
Secretary Oster said that about 95% of the co-op money is federal flow through special education
money. The schools may decide to place a small amount of general funds to work on a special
project.
State Library
For FY11, the Governor recommends funding of $1,863,603 from the general fund, $1,192,770 in
federal fund expenditure authority, and $186,083 in other fund expenditure authority.
Ms. Darnall said that the recommended budget changes for FY11 include:
17 . A decrease of $237,817 for the zero-based space billing reflecting the move to the state
library;
Representative Ahlers requested a copy of the zero-based space billing.
Ms. Darnall stated, in response to Representative Wismer's question, that the overall budget has a
decrease in space billing. Currently, the State Library is paying a space billing rate for both floors
of the library and the DOE is paying for the space occupied on the top floor of the Kneip Building.
The department will pay less for space billing when the DOE moves and occupies the top floor of
the State Library.
Senator Hunhoff asked about the services to state employees. Mr. Dan Siebersma, Director of the
State Library, said that the State Library has an outstanding research staff that is willing to help any
legislator or state employee research a topic to help make informed decisions. If a local library is
not able to provide the requested information, they can ask the State Library and information is
forwarded to the local library.
Representative Peters requested a breakdown of the expenses for the individual other fund sources.
Senator Hunhoff asked about schools contemplating consolidation in FY11. Secretary Oster stated
that no school district has contacted the DOE with an intent to consolidate for FY11. However, two
schools are in the process of dissolving and attaching, but the schools would not be eligible for the
consolidation incentives.
MOTION: ADJOURN
Moved by: Deadrick
Second by: Haverly
Action: Prevailed by voice vote.
Barb Bjorneberg and Lisa Shafer