HB 1205

 26.246.9  101st Legislative Session  1205
                                           2026 South Dakota Legislature
                                                   House Bill 1205
 Introduced by: Representative Uhre‑Balk
1 An Act to amend the manner of calculating state aid to general and special education
2funding.
3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
4 Section 1. That § 13-13-10.1 be AMENDED:
513-13-10.1. The education funding terms and procedures referenced in this
6     chapter are defined as follows:
7     (1)      Nonresident students who are in the care and custody of the Department of Social
8Services, the Unified Judicial System, the Department of Corrections, or other state
9agencies and are attending a public school may be included in the fall enrollment
10of the receiving district when enrolled in the receiving district;
11     (2)      "Fall enrollment," is calculated as follows:
12(a)     Determine the number of kindergarten through twelfth grade students
13enrolled in all schools operated by the school district on the last Friday of
14September of the current school year;
15(b)     Subtract the number of students for whom the district receives tuition
16except for:
17(i)    Nonresident students who are in the care and custody of a state
18agency and are attending a public school district; and
19(ii)   Students who are being provided an education pursuant to § 13-28-
2011; and
21(c)     Add the number of students for whom the district pays tuition.
22When computing state aid to education for a school district pursuant to § 13-13-
2373, the secretary of the Department of Education shall use the school district's fall
24enrollment;
25     (3)      "Target teacher ratio factor," is:
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1(a)    For school districts with a fall enrollment of two hundred or less, the target
2teacher ratio factor is 12;
3(b)    For districts with a fall enrollment of greater than two hundred, but less
4than six hundred, the target teacher ratio factor is calculated as follows:
5(i)    Multiplying the fall enrollment by .00750; and
6(ii)   Adding 10.50 to the resulting product; and
7(c)    For districts with a fall enrollment of six hundred or greater, the target
8teacher ratio factor is 15.
9The fall enrollment used for the determination of the target teacher ratio for a
10school district may not include any students residing in a residential treatment
11facility when the education program is operated by the school district;
12    (4)     "English learner (EL) adjustment," is calculated by multiplying 0.25 times the
13number of kindergarten-through-twelfth-grade students who, in the prior school
14year, scored below level four on the state-administered language proficiency
15assessment as required in the state's consolidated state application pursuant to
16§ 1111(b)(2)(G) of the Every Student Succeeds Act of 2015;
17    (5)     "Index factor," is the annual percentage change in the consumer price index for
18urban wage earners and clerical workers as computed by the Bureau of Labor
19Statistics of the United States Department of Labor for the year before the year
20immediately preceding the year of adjustment or three percent, whichever is less
21greater;
22    (6)     "Target teacher salary," for the school fiscal year beginning July 1, 2025, is
23$62,821.19. Each school fiscal year thereafter, the target teacher salary is the
24previous fiscal year's target teacher salary increased by the index factor;
25    (7)     "Target teacher benefits," is the target teacher salary multiplied by twenty-nine
26percent;
27    (8)     "Target teacher compensation," is the sum of the target teacher salary and the
28target teacher benefits;
29    (9)     "Overhead rate," is thirty-eight and seventy-eight-hundredths percent. Beginning
30in school fiscal year 2018, the overhead rate must be adjusted to take into account
31the sum of the amounts that districts exceed the other revenue base amount;
32    (10)    "Local need," is calculated as follows:
33(a)    Divide the fall enrollment by the target teacher ratio factor;
34(b)    If applicable, divide the English Learner adjustment pursuant to subdivision
35(4) by the target teacher ratio factor;
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1(c)    Add the results of subsections (a) and (b);
2(d)    Multiply the result of subsection (c) by the target teacher compensation;
3(e)    Multiply the product of subsection (d) by the overhead rate;
4(f)    Add the products of subsections (d) and (e) and subdivision (20); and
5(g)    When calculating local need at the statewide level, include the amounts set
6aside for costs related to technology in schools and statewide student
7assessments;
8(h)    When calculating local need at the statewide level, include the amounts set
9aside for sparse school district benefits, calculated pursuant to §§ 13-13-
1078 and 13-13-79; and
11(i)    When calculating local need at the statewide level, include the amounts set
12aside for career and technical education calculated pursuant to §§ 13-13-
1381 and 13-13-82;
14    (11)    "Alternative per student need," is calculated as follows:
15(a)    Add the total need for each school district for school fiscal year 2016,
16including the small school adjustment and the English learner adjustment,
17to the lesser of the amount of funds apportioned to each school district in
18the year preceding the most recently completed school fiscal year or school
19fiscal year 2015 pursuant to §§ 10-33-24, 10-35-21, 10-36-10, 10-43-77,
2011-7-73, 13-13-4, and 23A-27-25; and
21(b)    Divide the result of (a) by the September 2015 fall enrollment, excluding
22any adjustments based on prior year student counts;
23    (12)    "Alternative local need," may only be used by a school district created or
24reorganized before July 1, 2016, and is the alternative per student need multiplied
25by the fall enrollment, excluding any adjustments based on prior year student
26counts;
27    (13)    "Local effort," the amount of ad valorem taxes generated in a school fiscal year by
28applying the levies established pursuant to § 10-12-42. Beginning on July 1, 2017,
29local effort includes the amount of funds apportioned to each school district in the
30year preceding the most recently completed school fiscal year pursuant to §§ 10-
3133-24, 10-35-21 as provided by subdivision (15), 10-36-10, 10-43-77, 11-7-73,
3213-13-4, and 23A-27-25 and that exceeds the other revenue base amount;
33    (14)    "Other revenue base amount," is zero;
34    (15)    "Wind energy tax revenue," any wind energy tax revenue apportioned to school
35districts pursuant to § 10-35-21 from a wind farm producing power for the first
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1time before July 1, 2016, is considered local effort pursuant to subdivision (13) and
2other revenue base amount pursuant to subdivision (14). However, for, provided
3that any wind energy tax revenue apportioned to a school district from a wind farm
4producing power for the first time after June 30, 2016, one is apportioned to a
5school district as follows:
6(a)    One hundred percent must be is retained by the school district to which the
7tax revenue is apportioned for the first five years of producing power,
8eighty;
9(b)    Eighty percent for the sixth year, sixty;
10(c)    Sixty percent for the seventh year, forty;
11(d)    Forty percent for the eighth year, twenty;
12(e)    Twenty percent for the ninth year, and zero; and
13(f)    Zero percent thereafter.
14If a wind farm begins producing power for the first time between October first and
15December thirty-first in a calendar year, any revenues generated for that time
16period must be are retained by the school district and that time period may not be
17counted against the first five-year period;
18    (16)    "Per student equivalent," for funding calculations that are determined on a per
19student basis, the per student equivalent is calculated as follows:
20(a)    Multiply the target teacher compensation times the sum of one plus the
21overhead rate; and
22(b)    Divide subsection (a) by 15;
23    (17)    "Monthly cash balance," the total amount of money for each month in the school
24district's general fund, calculated by adding all deposits made during the month to
25the beginning cash balance and deducting all disbursements or payments made
26during the month;
27    (18)    "General fund base percentage," is determined as follows:
28(a)    Forty percent for a school district with a fall enrollment as defined in
29subdivision (2) of two hundred or less;
30(b)    Thirty percent for a school district with fall enrollment as defined in
31subdivision (2) of more than two hundred but less than six hundred; and
32(c)    Twenty-five percent for a school district with fall enrollment as defined in
33subdivision (2) greater than or equal to six hundred.
34When determining the general fund base percentage, the secretary of the
35Department of Education shall use the lesser of the school district's fall enrollment
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1as defined in subdivision (2) for the current school year or the school district's fall
2enrollment from the previous two years;
3    (19)    "Allowable general fund cash balance," the general fund base percentage multiplied
4by the district's general fund expenditures in the previous school year; and
5    (20)    "Alternative instruction participation adjustment," is calculated by multiplying 0.10
6times the number of children who participated in the prior school year in high
7school interscholastic activities sanctioned or sponsored by the South Dakota High
8School Activities Association, as permitted by § 13-36-7, while receiving
9alternative instruction pursuant to § 13-27-3, multiplied by the per student
10equivalent defined in this section.
11 Section 2. That § 13-37-35.1 be AMENDED:
1213-37-35.1. Terms used in chapter 13-37 mean:
13     (1)    "Level one disability," a mild disability;
14     (2)    "Level two disability," cognitive disability or emotional disorder;
15     (3)    "Level three disability," hearing impairment, deafness, visual impairment, deaf-
16blindness, orthopedic impairment, or traumatic brain injury;
17     (4)    "Level four disability," autism;
18     (5)    "Level five disability," multiple disabilities;
19     (5A) "Level six disability," prolonged assistance;
20     (6)    "Index factor," is the annual percentage change in the consumer price index for
21urban wage earners and clerical workers as computed by the Bureau of Labor
22Statistics of the United States Department of Labor for the year before the year
23immediately preceding the year of adjustment, or three percent, whichever is less
24greater;
25     (7)    "Local effort," must be calculated for taxes payable in 2026 and thereafter using a
26special education levy of one dollar and twenty-six and two-tenths cents per one
27thousand dollars of valuation;
28     (8)    "Allocation for a student with a level one disability," for the school fiscal year
29beginning July 1, 2025, is $7,650.45. For each school year thereafter, the allocation
30for a student with a level one disability must be the previous fiscal year's allocation
31for the child increased by the index factor;
32     (9)    "Allocation for a student with a level two disability," for the school fiscal year
33beginning July 1, 2025, is $16,759.91. For each school year thereafter, the
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1allocation for a student with a level two disability must be the previous fiscal year's
2allocation for the child increased by the index factor;
3     (10) "Allocation for a student with a level three disability," for the school fiscal year
4beginning July 1, 2025, is $23,139.68. For each school year thereafter, the
5allocation for a student with a level three disability must be the previous fiscal
6year's allocation for the child increased by the index factor;
7     (11) "Allocation for a student with a level four disability," for the school fiscal year
8beginning July 1, 2025, is $18,053.89. For each school year thereafter, the
9allocation for a student with a level four disability must be the previous fiscal year's
10allocation for the child increased by the index factor;
11     (12) "Allocation for a student with a level five disability," for the school fiscal year
12beginning July 1, 2025, is $37,039.28. For each school year thereafter, the
13allocation for a student with a level five disability must be the previous fiscal year's
14allocation for the child increased by the index factor;
15     (12A)"Allocation for a student with a level six disability," for the school fiscal year
16beginning July 1, 2025, is $11,838.15. For each school year thereafter, the
17allocation for a student with a level six disability must be the previous fiscal year's
18allocation for the child increased by the index factor;
19     (13) "Child count," is the number of students in need of special education or special
20education and related services according to criteria set forth in rules promulgated
21pursuant to §§ 13-37-1.1 and 13-37-46 submitted to the Department of Education;
22     (14) "Fall enrollment," the number of kindergarten-through-twelfth-grade students
23enrolled in all schools operated by the school district on the last Friday of
24September of the previous school year minus the number of students for whom
25the district receives tuition, except any nonresident student who is in the care and
26custody of a state agency and is attending a public school and any student for
27whom tuition is being paid pursuant to § 13-28-42.1, plus the number of students
28for whom the district pays tuition;
29     (15) "Nonpublic school," a sectarian organization or entity accredited by the secretary of
30education for the purpose of instructing children of compulsory school age. This
31definition excludes any school that receives a majority of its revenues from public
32funds;
33     (16) "Nonpublic fall enrollment," the number of children under age eighteen, who are
34approved for alternative instruction pursuant to § 13-27-3 on the last Friday of
35September of the previous school year plus:
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1(a)   For nonpublic schools located within the boundaries of a public school
2district with a fall enrollment of six hundred or more on the last Friday of
3September of the previous school year, the number of kindergarten-
4through-twelfth-grade students enrolled on the last Friday of September of
5the previous regular school year in all nonpublic schools located within the
6boundaries of the public school district;
7(b)   For nonpublic schools located within the boundaries of a public school
8district with a fall enrollment of less than six hundred on the last Friday of
9September     of   the   previous   school   year,   the   number  of     resident
10kindergarten-through-twelfth-grade students enrolled on the last Friday of
11September of the previous school year in all nonpublic schools located
12within this state;
13     (17) "Special education fall enrollment," fall enrollment plus nonpublic fall enrollment;
14     (18) "Local need," an amount to be determined as follows:
15(a)   Multiply the special education fall enrollment by 0.1062 and multiply the
16result by the allocation for a student with a level one disability;
17(b)   Multiply the number of students having a level two disability as reported on
18the child count for the previous school fiscal year by the allocation for a
19student with a level two disability;
20(c)   Multiply the number of students having a level three disability as reported
21on the child count for the previous school fiscal year by the allocation for a
22student with a level three disability;
23(d)   Multiply the number of students having a level four disability as reported on
24the child count for the previous school fiscal year by the allocation for a
25student with a level four disability;
26(e)   Multiply the number of students having a level five disability as reported on
27the child count for the previous school fiscal year by the allocation for a
28student with a level five disability;
29(f)   Multiply the number of students having a level six disability as reported on
30the child count for the previous school fiscal year by the allocation for a
31student with a level six disability;
32(g)   When calculating local need at the statewide level, include the amount set
33aside for extraordinary expenses defined in § 13-37-40;
34(h)   When calculating local need at the statewide level, include the amount set
35aside for the South Dakota School for the Blind and Visually Impaired; and
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1(i)    Sum the results of subdivisions (18)(a) to (h), inclusive; and
2     (19) "Effort factor," the school district's special education tax levy in dollars per thousand
3divided by $1.262. The maximum effort factor is 1.0.
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