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Monday, February 1, 2010

HB 1150: Reduce Small Schools' Funding for Open Enrollees

HB 1150 is a bit of a headscratcher. Sponsored by Rep. Peters and Senator Gray, and backed by our Rep. Lange, HB 1150 reduces the state aid small schools get for each student who open enrolls in their district.

In South Dakota, you can pick your school district. If you live in Madison, but you'd rather send your kids to Chester or Rutland (or vice versa), you can (with the approval of the school boards involved). When you kids enroll at Rutland in the fall, Rutland qualifies for another $4665 in state aid for each open enrollee. Madison loses the same amount.

HB 1150 doesn't change that per-student allocation. The money stays with the kids. And that makes sense: more students means more books, more chalk, more barf clean-up sprinkle.

HB 1150 does change the small-school adjustment. Right now, the state gives medium school districts with enrollment of 200 or less (like Rutland and Oldham-Ramona) an additional $847 per student. School districts enrolling between 200 and 600 students get a similar adjustment proportionate to and declining with enrollment. Large districts with 600 and above (like Madison) get no such boost.

HB 1150 says the state will calculate the small-school adjustment for open-enrolled students based on the enrollment of the school they attend or the school they left, whichever is greater. What does that mean?
  1. If a student open-enrolls out of one small district into another (say, from Rutland to Oldham-Ramona), no change: the district getting the student still gets the full $847 small-school adjustment.
  2. If a student open-enrolls from a medium district to a small district (say, from Arlington or Colman-Egan to Rutland), the small school still gets an adjustment for that student, but the amount is based on the formula for the medium school the student came from. That reduces the aid Rutland gets for a student open-enrolling from Colman-Egan by about $120.
  3. If a student open-enrolls from a large district to a small district (say from Madison to Rutland), the small school adjustment disappears. For instance, a Madison student open-enrolling in Rutland still brings the base $4665 in state aid, but not the additional $847 of the small-school adjustment.
Have Pat Powers check my numbers. Then, school-choice advocates, you might want to get cranky.* HB 1150 seems to penalize small-school success. It reduces the bonus offered to Rutland, Oldham-Ramona, and other small schools good enough to recruit enrollees from larger districts by up to 16%.

Of course, this bill has no impact on Chester and Madison, neither of which gets the small-school bonus for cherry-picking each other's basketball players—er, I mean, students.

This bill does raise the question of whether the small-school adjustment is fair in the first place. Smaller schools do cost more to run per student. Are small schools and small communities valuable enough to South Dakota that we will foot the bill for some inefficiency? Or do we just not have the money to support small schools?

Parting numbers: If I'm reading enrollment numbers correctly, about 120 of our 160 school districts receive some small-school adjustment. Those schools teach just 27% of our students. Ignoring geography, we could consolidate those 120 districts into about 50 with an enrollment of 600. The back of my envelope says the resulting complete elimination of the small-school adjustment would save the state about $18 million a year... in return for closing school districts in 70 communities.

*School choice advocates might also be cheesed over the hoghousing of SB 63, the charter schools bill. Our Senator Russell Olson joined a unanimous vote in deleting all the provisions about allowing charter schools statewide and narrowed the bill to allow only the Native American pilot charter school... if we can get a grant from Uncle Sam. (What did I say about blame for the federal deficit last week?)


  1. Cory is mostly on track. The bill has no purpose other than to impoverish small schools, period. The fact that the bill is somehow floated on a lagoon of misperceptions about the concept of "fairness" adds much insult to injury.

    For starters, Cory refers to the small school factor as a "bonus", which implies unfairness of course, but due to the significantly higher per-pupil costs to educate children at smaller schools, this additional money only partially offsets the real costs of educating that student.

    The real bombshell is that these higher costs per pupil are supported almost entirely by local effort, not state tax dollars. The total state aid dollars paid per pupil to Oldham-Ramona (one of the smallest districts) in 2007-08 was lower than the total per pupil state aid paid to Brookings or Madison.

    The fact that legislation such as HB 1150 goes forward in spite of this either reflects a stunning ignorance on the part of sponsors, or if these facts are indeed understood, a thinly veiled (passive aggressive) attempt to undermine open enrollment going the "wrong" direction.

  2. "HB 1150 seems to penalize small-school success."

    Another interpretation is that it punishes inefficiency...

  3. True enough Tony. I guess the question is do we value public school choice (via open enrollment) or not? Go ahead and make the argument that we must "improve" the system by limiting people's choices and the competition between schools for open enrolled students but I don't believe it.
    Rutland has not survived as an independent school district by accident. No employee or patron of our school takes anything for granted. We work hard to maintain the excellence of our programs within a very unique educational setting that many families in the area find attractive.
    A child is not a widget that must be "produced" for the lowest cost possible. We attract open enrolled students and then proceed to spend a few thousand extra dollars of our own money to educate them. Why does the cold, paternalistic hand of state government wish to suffocate this "unnecessary school excellence"?

  4. "Another interpretation is that it punishes inefficiency..."

    That does not fly with the fact that small-schooled students perform better at college than the big-schooled students. The real efficiency is found in home schools. Perhaps they should get a cut of the pie.

    Steve Sibson

  5. Cory - I love the quality of debate you raise with your posts (most of the time :)), and this topic is no exception. Having been there represeting small schools in the senate when this was created, and back again 10 years later to see how it worked out, here's my perspective.

    This bill - I believe - says in effect that the value of the student is fixed by where they reside, not where they go to school. So for example, a student that gets on a bus that Waverly loads at the Watertown Boys and Girls Club (adjoining the Watertown school) doesn't become a more expensive student just for taking the bus ride. Those couple of steps up the bus shouldn't change the value/cost of the student to the state system as a whole.

    The principles underlying the small school factor are often misdescribed, and ignore a fundamental flaw (and this one is straight math and economics - not policy disputes). The formula came as a way for the Governor to get enough votes to pass the revision to state aid. It was not based on any other consideration -we got the latest printouts each Friday, decided over the weekend if enough of our districts were winners or loosers, and voted accordingly the next week.

    The flaw in the formula is that over 80% of the school budget is labor, and labor cost is driven by available job options and housing costs. It is substantially cheaper to live in and own a home in Rutland than Madison, or Waubay than Watertown. Labor costs more (especially because of the housing costs, in our larger communities), but the formula incorrectly assumes that labor costs more in the smaller communities. If you re-ran the model, and allowed for real math on labor costs, the small school factor should actually be a "big school factor". If the math had been done correctly, rather than politically, the forumla would not have had the vosts to change in 1995. The origianl "winners" were the small schools. In fact, the biggest advocate in my district was Florence (they still have the same Supt - who is a very good one), and in 1995 he liked the new formula because Florence won. Today he is a witness for the schools against the state challenging the forumla! 15 years and nothing has changed - we all do the math and determine "fair" by whether we win or loose.

    --Lee Schoenbeck

  6. Small schools have a higher per-pupil cost. This is not debatable because it is based on fact. Rather than complex, hypothetical labor cost and housing theories simply look at the actual cost per ADM rankings for school districts in SD. The larger districts have lower per-pupil costs. Whether or not this was the reason for the small school factor in the first place is irrelevant now that we have many years of actual expenditure data to look at.
    We don't have to "rerun the model" because we have real data that gives us the answer. The smoke and mirrors approach that Mr. Schoenbeck takes is a shameless, Orwellian attempt to redefine reality to justify a new policy direction.

  7. Hey Supt Cowboy - I am not any part of making policy and when you want to ignore math and economics - they name is Orwelll :)
    I won't even argue you with you, as I have not seen the spread sheets in several years about the cost per ADM. But,just calling me names doesn't change how and why the committee ceated this camel. Now you have a good day.
    --Lee Schoenbeck

    PS by the way, I happen to be one of those people that believes we should try and keep most of our smaller schools open (when you consider distance) and all (if locals are committed to carrying the extra freight) - Rosholt being a great example.

  8. Michael Black2/01/2010 3:51 PM

    Cory, I'm surprised and disappointed that you want to close and consolidate small districts to save money. The problem with your math is that you have not taken into account higher transportation costs and the need to build new schools in these new districts to house the larger number of students. Sports is just a small part of open enrollment. I've seen it benefit many kids regardless if they played basketball or not.

  9. Steve and Ramblin'-

    I make no claim to the quality of the education provided by small or large schools. I'm only considering how much it costs per student to "educate". However, it does make sense that larger schools could provide "education" at a lower dollar point simply because of scale.

    Ramblin', you said:
    "Why does the cold, paternalistic hand of state government wish to suffocate this "unnecessary school excellence"?"

    You're begging the question here. The state has not said that it is trying to suffocate small schools. The goal is to minimize cost. Currently a premium is paid to smaller and medium sized schools to educate the student.

    Ramblin' said:
    "Rutland has not survived as an independent school district by accident. No employee or patron of our school takes anything for granted. We work hard to maintain the excellence of our programs within a very unique educational setting that many families in the area find attractive.
    A child is not a widget that must be "produced" for the lowest cost possible. We attract open enrolled students and then proceed to spend a few thousand extra dollars of our own money to educate them."

    It, in my opinion, is fantastic that Rutland is willing to contribute extra money to education. However, this explicitly shows that it costs more to educate a student at a small school than a large school.

    Now, Ramblin', I love school choice for students. It's one of the few mechanisms that exists to add support to outstanding schools. However, it should be on a level playing field. And, if the quality of education is vastly superior in Rutland, the school should be capable of attracting enough students to support it without the additional small school support funds. If this is not the case... then... perhaps you are overrating the value of the education. (you made the claim)

  10. Read again, Michael: I didn't say I want to close small schools. I outlined what cost savings might (might) be had and said this is the conversation we need to have. Teaching students at smaller schools appears to cost more. The big question is: are we willing to pay that cost to benefit kids in small communities?

    Lee, thanks for the view behind the sausage-making curtain! I am intrigued by the labor-cost argument. Labor is the biggest ticket item for every school district, so one would think cheaper labor would help schools keep costs down.

    But Rutland has had some of the lowest teacher wages in the state, and they still appear to have to spend more per student than bigger districts. Besides, smaller schools don't get to take full advantage of those lower labor costs: many (at least the non-sparse ones) still have to compete with larger communities within reasonable commute distance for labor. And housing may be cheaper in Rutland... but I suspect a number of their teachers still build houses in the "pricier" Madison market.

    I would love to see that complex calculation of labor and housing costs by ZIP and see to what extent that might lower costs for small rural schools hiring teachers. But Carl is pointing to the real numbers in his school ledger. Either Carl is spending Rutland's money like a drunken sailor (I suspect the board and taxpayers would have caught on by now) or running small schools really does cost more per pupil.

    And again, the question before the Legislature (and the rest of us): are small schools worth the extra expense? Lee says mostly yes. Carl says heck yes! Steve wants to shut down all schools and hand out vouchers (or, more likely, eliminate all taxes and return to the state of nature). How about the rest of you?

  11. Where is the cost data on these schools? A few years ago, a published report indicated that Sioux Falls and Rapid City had some of the highest costs per student. Their explanation then was that they provided more and better education opportunities.

    If consolidation needs to be done, it is consolidation of administration. If the state would actually pay teachers or allow them to be paid for putting together good courses, courses by internet or whatever might be better.

    South Dakota thinks it should get all or a large share of anything any teacher or professor puts together to the point it cuts communication between students and professors. Profs will say, "If you have a good idea, don't talk to me about it, because as soon as you do, South Dakota owns part of it."

    I'm not sure, but it seems that incentives for improvement in education at all levels is diminished by the State's desire to control and profit.

  12. There is but one reason why small schools are more expensive..."government regulation". Special Ed students can break a small school and from what I hear, they are breaking at least one in South Dakota. But then a big school like Mitchell has a huge surplus in their Special Ed fund and jumped on the opportunity to transfer money out of Special Ed to buy texbooks.

    Big government bennefits the big, and hurts the small. It happens in the private and the public sectors.

    Steve Sibson

  13. Charlie Johnson2/01/2010 11:42 PM

    Small schools are worthwhile, important, necessary, and crucial to many students, parents, and communities in South Dakota. If they are not why do school districts provide educational opportunties to colony children on site. Why is it wrong to have small enrollments in public schools, but we think nothing of providing teachers for home schooling at local colonies. Perhaps parochial or Chrstian schools are missing the boat for not demanding that public funds pay for their teaching staff.

    Now back to the issue of taxation. Actually small schools with larger amounts of assessed value per student cover the extra costs per student in larger districts with less assessed value per pupil. School districts like Rutland actually cover the property tax burden in larger districts such as Sioux Falls where the amount of assessed value per student may be less than the state average. As I understand the funding formula, each student is worth so many dollars in state aid. Each schol district helps to meet that number by the amount of property tax dollars generated locally. The state then steps in to meet the difference.

    Smaller schools in most cases can, will, and most often do opt out to provide further opportunity for their students. Actually they are opting out to cover the dollars they are already paying out in the school aid formula to cover the tax burden in larger enrollment school districts.

    Small schools carry their weight in what they provide for their students, what they provide for the state tax coffer, and what provide for their community. Be not only glad but also proud that they are willing to stand up for what they believe in.

  14. Why are you all fighting over the welfare money for schools? It seems more than a little petty to be arguing over money that isn't rightfully theirs in the first place. If Cory is the result of public education, maybe we should rethink the value of it in the first place.

    -- Scott Burton

  15. Ha ha. Scott, you came from the same public school I did. Besides, this argument is not about me.

    You mischaracterize school funding as welfare. "Money that isn't rightfully theirs"? Do you say the same about state funding for police and roads? We're talking about education, one of the fundamental duties our constitution assigns to the state. Deciding how to fulfill a constitutional duty is far from "petty."


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