Why South Dakota's Landmark Teacher Pay Law Failed

State has faded to 49th in average salary even after a 2016 tax increase intended for educators.

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Inflation, turnover, minimal increases in state aid to education, and pay raises absorbed by non-teaching staff: Those are the reasons for South Dakota’s lagging teacher pay, according to education experts and school officials.

The Legislature expected to infuse over $60 million into public K-12 education in the first year following 2016’s historic half-percent state sales tax increase. The tax hike was primarily meant to boost the state’s last-in-the-nation ranking for average teacher pay.

Expectation soon gave way to disappointment.

South Dakota rose to 47th in the nation for teacher pay thanks to the 2016 influx of funding, but has since fallen back to 49th, based on 2021-2022 state averages collected by the National Education Association. South Dakota’s average teacher salary in those rankings, about $51,000, ranks higher than only West Virginia and Mississippi (the rankings go to 51 because of the inclusion of the District of Columbia).

The Legislature adopted minimal increases in state aid to education in years immediately following the tax increase — as low as a 0.3% increase in one year. Then, last winter, lawmakers reduced the state sales tax from 4.5% to 4.2% until 2027.

Wider socioeconomic factors have also influenced the fall backward. The teaching profession has suffered massive turnover, driven by the COVID-19 pandemic and low pay. School districts have struggled to hire other positions — bus drivers, counselors and custodians — forcing the districts to choose between raises for teachers or other employees.

Inflation rates that rose to 5% and 8% in 2021 and 2022, respectively, only widened the gap — with school districts paying more in utilities, gas and other overhead costs.

Gov. Kristi Noem addressed lagging salary increases in her budget address earlier this month, criticizing school districts for the slow growth and proposing a 4% boost in state education funding. The state Department of Education is actively working on “accountability measures” to address the issue, she said without offering further specifics.

The Legislature’s decision to initially slow state aid increases after 2016 has been detrimental to the initiative’s success, said Jacqueline Sly, a former House of Representatives Education Committee chair from Rapid City who co-chaired the Blue Ribbon Task Force that proposed the tax-increase legislation.

Teacher salary projections made by the task force depended on 3% or higher annual increases in state aid.

“That got us off track right away,” Sly said. “That piece of it was really vital initially, because then we moved up on the ranking and then went back down and are at the bottom again.”

The Legislature tightened its belt after the 2016 sales tax increase in response to lower than expected sales tax revenue in 2017. That year saw a 0.3% increase in state aid to education. The following year was also a tight budget year, but an unexpected influx of revenue pushed the increase to 1%. Education funding received a 2.5% inflationary increase during the 2019 legislative session and 2% in 2020.

If there aren’t consistent increases, Sly said, the state will never make headway.

Demystifying state aid and teacher pay

The Blue Ribbon Task Force convinced the Legislature to revamp the state school funding formula, basing it on a statewide target for average teacher salary to prioritize the role of teachers in state funding. That target was set at $48,500 in 2016, and has increased each year by a percentage adopted by the Legislature.

The statewide average teacher salary has never reached those targets.

That’s because the state’s “target teacher salary” isn’t actually the state’s goal for average teacher pay. In reality, it’s a basis for the state’s public education funding formula. Before the 2016 legislation, the formula was based on a per-student allocation.

Funding determined by the “target teacher salary” formula update goes not just toward teacher salaries, but also toward overhead costs and salaries for other school workers — bus drivers, preschool teachers, librarians, administrators, custodians, food service workers and counselors. Schools also receive funding from their own local property taxes.

“There’s this misbelief that the target teacher salary means every district in the state should be paying that salary on average. That’s not the intention of that number,” said Rob Monson, executive director of the School Administrators of South Dakota. “That’s what is set to gather the dollars needed to fund the K-12 system.”

That’s not to say the “target” that now defines overall school funding isn’t also the average salary goal sought by educators. The South Dakota Education Association President Loren Paul said the “target teacher salary” is what educators are going after.

Currently, the statewide average teacher salary is far short of the current target of $59,659. Noem recommended a 4% increase in state aid for the coming legislative session, which, if approved, will increase the target to $62,045.

“Four percent is good,” Paul said. “With the shortage of educators, we could always use a little bit more. We are gaining on states, but we haven’t overtaken anybody yet. A little more would help. Five percent would be great.”

Accountability standards are ‘outdated’

The 2016 legislation sent 63% of the tax increase to public schools, 34% to property tax relief and 3% to raise instructor pay at the state’s technical colleges. Of the money that went to public schools, 85% had to be used to increase teacher salaries in that first year.

The legislation did not mandate that future increases in state aid would go to teachers. But the legislation did create a School Finance Accountability Board to track if state aid increases went toward teacher salaries.

Based on the law, school districts only have to compensate their teachers, on average, more than they did in 2017 — meaning if a school district failed to increase its average teacher compensation for nearly seven years since then, it wouldn’t be penalized for it. Compensation, in contrast to pay alone, includes the monetary value of benefits, such as health care coverage.

The Rapid City School District’s average teacher pay, for example, increased 2.5% between fiscal years 2017 and 2023. Its average teacher compensation has increased just over 7%. That put the district below the target salary goal, but nonetheless kept it out of the accountability board’s crosshairs.

If consistent improvement was the goal, Paul said, defining success as better than 2017 has become an inadequate metric.

That’s “outdated,” Paul said. The organization is “anxiously awaiting” the state Department of Education’s new accountability measures.

The teacher-pay law was originally effective through June 2021, but was extended through June 2024 nearly two years ago. Sly said the task force’s intention was to have legislators reevaluate and reset the accountability measure in 2022, not simply extend it.

The South Dakota Education Association, which Paul serves as president, had asked legislators to extend the board’s authority.

“My dream would be to have something more updated than what we have because comparing to 2017 pay is no longer relevant,” Paul said.

Average teacher pay percent increases have kept pace with the increases in state aid for about half of South Dakota’s districts, Paul said. But he added that the districts whose average teacher pay increases are lower, even around 2% or 4% since 2017, “have something to answer for” to their constituents.

Inflation & turnover impact average teacher salaries

Willow Lake Superintendent Chris Lee tracked salaries for teachers who’ve remained in the district from the 2015-2016 school year (before the Blue Ribbon Task Force legislation) through the 2022-2023 school year. Those teachers received an average of 37.9% increases in salaries — higher than the 28.7% increase in state aid approved by the Legislature in that same timeframe.

The district’s average teacher salary overall has increased 27.8% in that same timeframe. That’s because new teachers who start at lower base salaries bring that average salary down. The district’s entry-level teacher salary increased 26.13% in the same time period.

“That’s the danger of averages,” Lee said. “I don’t think there’s a district out there pocketing money. We’re doing everything we can to try and keep the best teachers in our classrooms and keep the kids fed and pay a substitute when it’s necessary. Some days we’re getting by with bale wire and duct tape.”

Lee’s small eastern South Dakota district had to answer to the state’s School Finance Accountability Board for that in 2018. After two long-tenured teachers retired, the district’s average teacher salary dropped below the 2017 benchmark.

The 2016 legislation's supporters intended that when older teachers retire, school districts would reinvest the money from retiring teacher salaries into the salary pool to increase the district’s overall average.

That’s easy on paper, but not in real life, Lee said.

Average teacher pay doesn’t consider other positions needed to keep a school running, Lee said. Many of those positions have seen higher raises because schools wouldn’t be able to hire for the positions without them.

Salary spending on bus drivers in Willow Lake, for example, increased 86% from 2017 to 2022 — far outpacing the 8.5% increase in teacher salary expenditures during that time. Even then, Lee has to sometimes fill in and drive a bus route himself.

Across the state, school districts increased salary spending on teachers by 16% from 2017 to 2022, which failed to keep pace with inflation. Transportation salaries (bus drivers) increased by 25%, while pay for student and staff services (counselors or curriculum directors) increased by 29% and “other support services” (such as librarians) saw an increase of 32%.

“The percentage-wise raises were more than teachers, but those people are just as important,” Lee said. “You can’t get kids to school without bus drivers. Those raises need to come out of that same piece of pie.”

Statewide spending on administrative services, which includes superintendent salaries, increased by 23% during that time — seven percentage points higher than spending on teacher salaries.

Those spending decisions didn’t come from the administrators themselves, according to Monson, of the School Administrators of South Dakota. District spending is set by elected school boards.

“If they thought the superintendent was paid too much, they wouldn’t have put it in contract,” Monson said.

A number of school districts have had to dip into their building and maintenance or reserve funds to cover operations and pay teachers more. That’s a “red flag” that state funding “is not adequate,” Sly said.

Lee thinks there are several avenues to explore for funding: Earmarking a certain amount of education funding increases to teacher pay, which was introduced but failed during the 2018 legislative session; finding other tax revenue for schools, such as from recently approved sports betting; or tweaking the school funding formula to address issues such as funding for English-as-second-language students.

Districts receive extra state aid if they have English-as-a-second-language students who score below a certain number on the language acquisition assessment.

“There are a lot of students that fall into that English-learning category where they’re receiving services and it costs districts money, but the districts aren’t being funded because the student doesn’t score low enough for extra funding,” Lee explained.

Over 5% of South Dakota’s public school students this school year are English language learners, according to the state Department of Education.

Legislative course correction

For the most part, school districts and school boards are trying to match state aid increases with teacher salary increases, Monson said.

It’s nearly impossible to increase teacher salaries beyond that, Sly said.

“At the beginning, when we didn’t as a state fulfill that obligation to fund schools more, then the other states were zooming ahead on teacher pay,” Sly said. “There has to be a significant amount of money put into that to make that change.”

The Blue Ribbon Task Force based its formula on 3%-a-year increases, Sly said. The statute requires the Legislature provide schools a funding increase of 3% or inflation, whichever is lower — a mandate that’d been in law for decades before the task force met.

If the Legislature had stuck to a 3% increase in state funding each year since its 2016 legislation, the target teacher salary would be $59,648 for the 2023-2024 school year. Given the 6% and 7% increases in state aid approved by the Legislature in 2022 and 2023, respectively, the state has managed to get back on track with the 3%-a-year projections for the “target teacher salary” — since the target teacher salary this year was $59,659.

That doesn’t mean the actual average teacher salary has hit that mark. The latest data puts statewide average teacher salary at $53,217 during the 2022-2023 school year.

And teachers are falling behind inflation. To keep pace with the buying power of their 2017 average salaries, South Dakota teachers would need to make an average of about $59,000 today, according to the U.S. Bureau of Labor Statistics.

Part of the problem, Sly added, is that legislators often lump education funding into what they call “The Big Three” with health providers and state employee salary increases.

If all three areas get the same state funding increase, state employees get the better end of the deal since the money goes directly into their salaries or benefits.

Sly said the three don’t have to receive the same percentage increase in funding.

“That’s not the law,” Sly said. “That’s just an assumption. Then they’re fearful that if they do it for schools they have to do it for others.”

The Legislature approved pay increases of 7% for state employees last session, in line with its boost to school funding. Lawmakers also backed a 100% cost reimbursement rate for community support providers that rely on government funding, such as nursing homes. Other Medicaid providers, such as hospitals, received a 5% increase.

In 2019, the Legislature approved a 10% boost to the state’s Medicaid reimbursement rate for nursing homes, while education funding and state employees received inflationary increases of 2.5%.

Sly said she wants the Legislature to reevaluate school funding and teacher pay and make adjustments “so as a system it works rather than having to redo the whole thing.” The funding formula and requirements set forth by the 2016 legislation have largely gone untouched.

Some school districts are doing fine, while others are struggling to keep their heads above water, Sly said, adding it’s the Legislature’s job to find out why and address it.

“You can’t just throw money at something. It has to be with intention,” Sly said. “Does everybody need more money? Is it just certain districts? And then find out why they’re not making it. I don’t think it’s a good idea to ask for more money without asking why and finding where those needs are.”

Anyone who believed teacher pay was “fixed” by the 2016 Blue Ribbon legislation was “sorely mistaken,” Monson said.

“Any time you want to raise all boats you have to fill the pond,” Monson said. “If we want to do better than keep up, then we’re going to have to go above what is the inflationary factor.”

South Dakota Searchlight is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. South Dakota Searchlight maintains editorial independence. Contact Editor Seth Tipper for questions: info@southdakotasearchlight.com. Follow South Dakota Searchlight on Facebook and Twitter.

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