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Thursday, January 29, 2009

Olson Capital Outlay Bill Gives Schools Flexibility... Or Does It?

Senator Russell Olson has filed Senate Bill 91, the measure he promised during the campaign to allow South Dakota's school districts more flexibility in spending their capital outlay dollars. Capital outlay dollars are restricted by statute to land, building, and equipment expenditures. Current law also allows the use of capital outlay dollars to cover textbooks, instructional software, and 15% of transportation costs. Senator Olson's proposal would allow schools to spend up to 45% of their capital outlay funds on transportation, motor fuel, utilities, energy costs, and insurance on property and casualty (how the insurance provision got in there alongside energy costs, I can't say). The bill sunsets in five years: in 2014, the transportation spending limit reverts to 15%, and the other spending allowances disappear.

But notice: there's a catch! SB 91 gives this spending flexibility only to schools "with a current tax levy for the capital outlay fund that is equal to or less than its tax levy for the capital outlay fund in school fiscal year 2008." In other words, schools only get the flexibility if they don't raise their taxes.

Now I like the idea of flexibility in spending school dollars. (I'm curious: why do we have these separate buckets for tax dollars and restrictions on their spending in the first place?) But the cap on the capital outlay levy seems to restrict a school district's ability to raise funds if necessary. Administrators, school boards, is that trade-off worth it?

Representative Mitch Fargen (D-8/Flandreau) appears to think so: he's signed on to SB 91 as a co-sponsor. That's interesting, because the levy cap seems to reflect Sen. Olson's thinking that education has all the money it needs (see question #3 in the link) and doesn't deserve any increases. We'll see how this bill plays out.


  1. Well, since Madison raised its capital outlay levy to as high as it can and I'm sure won't lower it ever, we are fine. All this does is keep the schools from raising the capital outlay fund levy simly in order to absorb the extra expense allowed here.

    I think Madison already has its capital outlay completely allocated for updating the high school, paying off the elementary, and there is that new gym still in the minds of many, I'm sure. Probalby doesn't leave any extra for other itmes. But there are evidently schools who do have surplus in their capital outlay funds and could benefit from using these funds for things that would free up more general fund money for things like, oh, teacher salaries for instance.

  2. A half-dozen years ago, Madison Central School District DID reduce its Capital Outlay mill levy from 3% to 2.45% as a good faith gesture in an effort to reduce the property tax effects from that year's opt out effort. The opt out failed that year, the capital outlay fund lost $200,000 as a result of reducing the levy, so it was increased the next year to raise funds for the new grade school. Moving some expenses from general fund to capital outlay doesn't give us more money, but it does allow a different pot to be tapped if there's money in that pot.


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