by Carrie Moritz,
Garretson Gazette
On Wednesday, January 25, the Garretson School Board met in special meeting to discuss and decide whether to pursue a new, 5-year, $500,000 opt out for district taxpayers. After a presentation by Superintendent Guy Johnson and several questions from school board members, they voted unanimously to move ahead with the measure.
They will, however, put it to a public vote, to ensure they have the blessing of the district voters behind them. That vote will be held on Tuesday, March 21, 2023 from 7:00 a.m. to 7:00 p.m. at the American Legion dugout.
An opt out gives the school district the ability to levy an extra amount on property taxes, which helps to cover any spending in the General Fund that is not covered by the state's per-student formula. The South Dakota state legislature put a cap on the amount that not only can be taxed, but also can be placed into reserves for "future spending." Districts have to opt out of the cap in order to increase levies.
The General Fund covers any spending that is geared towards operations and regular school finances, 82% of which goes towards salaries, payroll, and benefits for all teachers and staff.
The property tax limit kneecaps districts such as Garretson's, which has been on the border between a small-sized school and a medium-sized school for the past decade, has a smaller footprint with fewer taxpayers, and has a lot of agricultural land, which is taxed lower than owner-occupied and commercial land.
The first opt-out in March 2016, which passed with a 56.7% majority of the vote, set several balls rolling for the community, which resulted in a new housing development, new businesses, and several new residents coming into town. The goal in 2016 was to utilize only as much of the opt out as was necessary for the five years, and to work towards increasing the population of the school to 500 students. (A second opt out vote in May 2021 was embroiled in controversy, as fewer than half the voters from 2016 turned out and it passed by only one vote. Due to this and other inconsistencies, that vote was not certified by the school board. Garretson School District has been operating without an opt out for the past two years.)
The first goal from 2016 was met, with the school district only utilizing $350,000 of the max $500,000 for the last two years of the opt out. Pandemic-related funds shored up the district for 2021-22 and 2022-23, but it is again operating at a deficit of approximately $600,000 per year.
The second goal was well on its way, with the school district counting 492 students in October 2019. However, the past three years have seen a population decline in the district with the October 2020 count at 462 and October 2022 count at 444 students, respectively.
While there are many different speculations as to why there was such a large decrease, Superintendent Johnson was very practical in his answers to the board for the necessity of the opt out.
"At this point, we have about 42% of the districts in the state operating under an opt out right now," he said during the meeting. "There could be arguments made about the school funding formula but that's not really appropriate at this time to go into that debate."
He explained that in order to have the funds to pay ongoing bills and expenses, the school must have approximately 15% of total income in reserve between property tax payouts. Any less than that, and they may end up defaulting or paying bills late.
When asked by school board member Tana Clark about the potential to "sweep" monies from the Capital Outlay fund (which is used to pay for property maintenance and upgrades, such as the HVAC system and the Athletic Complex), Johnson pointed out that yes, up to 45% of that fund can be transferred, and they do currently sweep some funds each year.
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"Now, the danger in that, is that means you're going to neglect your buildings," he said. "You're going to neglect your curriculum, your technology, your actual facilities." He pointed out that the "property rich" districts with a large tax base are those who benefit from that 45% sweep. If the building or facilities were to be neglected, it would cost more in the long run to fix. Currently, the newest parts of the building are twenty years old, and the Athletic Complex is already seven years overdue for an overhaul and is beginning to put student safety at risk, which means its construction can no longer be put off.
If the school board or the public were to eschew the opt out and vote no, Superintendent Johnson had some dire predictions for the board to consider. Staffing in the school would be required to decrease, which not only eliminates programming options, it may cause class sizes to increase to well over 30 students or even force the district to combine grades.
He pointed out that parents do not tolerate class sizes that large, and it could create a negative feedback loop that could cause the school to continue to decline in population. This would have a negative effect on the community, which has been growing and is otherwise slated to continue to increase in population over the next decade.
During the meeting, Supt. Johnson reminded the board of the larger class size experiment that occurred a few years ago.
"We did that experiment where we had 25 or 26 kids in second grade...and consolidated it down into one section," he said. "Guess how old all the new kids in the district were that year? By the end of that year, we were up to 31 students and many of them that moved in had special needs. I can tell you that by the reaction of many of our parents at that time, they simply won't tolerate class sizes of 31-32 students, and rightly so."
Conversation among attendees after the meeting continued to point out the negative effects, noting that layoffs would decrease teacher and student morale.
"It would raise the question, well why were they laid off and I wasn't," said one participant, a teacher who did not wish to be named.
Superintendent Johnson informed the school board that the district has worked hard to decrease costs in other areas over the past seven years, including with upgrades to the lighting and HVAC to more efficient systems. In all, they've managed to save approximately $71,000 per year compared to 2015.
However, Supt. Johnson said, those savings have gone straight back into programming for students, and the opt out "would only be to maintain the current staff and programming that we have in the schoolhouse right now."
"Our community supports our school and our kids very very well," Superintendent Johnson said. He said that putting it to the public for a vote was not in question, as the voters and taxpayers have a right to have their say. He was hopeful voters would again see the need for the opt out to pass, and give the community time to catch up after the pandemic and continue to grow.
Discussion among the school board centered upon how much it would cost the average taxpayer with the increase, which would be $0.624 per $1,000 for agriculture land, $1.396 per $1,000 of owner-occupied property, and $2.89 per $1,000 for commercial property. This equates to an extra $139.60 per $100,000 for a residential household.
Despite his stance against increased taxes and knowing that he would be one of the most heavily impacted people in the room, Board President Shannon Nordstrom stated that passing the opt out was a no-brainer.
"We have a good district and good people," he said. "I hope the community remembers we didn't take a penny more than we needed with the last opt out."
Board member Jodi Gloe pointed out that many of the new residents, especially those in the new development, are GHS alumni with young families who are moving back to town.
"It speaks to the experience people must have had in our school and our community, that these young folks are moving back," she said.
Future public meetings are being planned for district voters, and will be published as soon as they are known. Those meetings will likely be similar to those held in 2015 and early 2021, which allowed attendees to ask questions and voice their concerns. The public vote will be held on Tuesday, March 21 at the Legion from 7:00 a.m. to 7:00 p.m.
School Opt out Clarification
published 2/9/23
A clarification on the tax rates presented in last week's article regarding property tax increases: the Gazette worked from a document presented to the school board that was downloadable from the school website, which listed the following amounts for what a $500,000 opt out would mean for property owners in the district.
The document stated the increase would be $0.624 per $1,000 for agriculture land, $1.396 per $1,000 of owner-occupied property, and $2.89 per $1,000 for commercial property. While these numbers are not necessarily incorrect, they do come with caveats, such as changes in valuation each year. This is an estimation of the increase, not hard and fast numbers.
Ag land is taxed using a formula that is based upon an 8-year Olympic average/gross revenue of productivity and a capitalization rate, which does mean that the value changes each year, and the number given above is for an increase over and above 2022 rates on productive crop land. A document for those rates can be found at https://dor.sd.gov/media/g01dvn1r/minnehaha_2023-assessment.pdf.
School districts in South Dakota are funded through a combination of federal, state and local monies, and tax levies are set by the South Dakota Legislature.
