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26.537.20 101st Legislative Session 1051
2026 South Dakota Legislature
House Bill 1051
ENROLLED
AN ACT
ENTITLED An Act to revise property tax levies for school districts and to revise the
state aid to general and special education formulas.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
Section 1. That § 10-12-42 be AMENDED:
10-12-42. For taxes payable in 2027, and each year thereafter, the maximum
levy for the general fund of a school district is as follows:
(1) The maximum mill levy is four dollars and eighty -six and seven-tenths cents per
thousand dollars of taxable valuation, subject to the limitations on agricultural
property as provided in subdivision (2) and owner -occupied property as provided
in subdivision (3);
(2) The maximum mill levy on agricultural property for the school district is one dollar
and five and one-tenth cents per thousand dollars of taxable valuation.; and
(3) The maximum mill levy for an owner -occupied single-family dwelling pursuant to
§ 10-13-40 for the school district is zero dollars and sixty-six and nine-tenths cents
per thousand dollars of taxable valuation.
If the district's levies are less than the maximum levies as stated in this section,
the levies must maintain the same proportion to each other as represented in the
mathematical relationship at the maximum levies.
All levies in this section must be imposed on valuations where the median level of
assessment represents eighty -five percent of market value as determined by the
Department of Revenue. These valuations must be used for all school funding purposes.
If the district has imposed an excess levy pursuant to § 10-12-43, the three mill
levies must maintain the same proportion to each other as the maximum levies of this
section for taxes payable in 2026. The school district may elect to tax at less than the
maximum amounts set forth in this section.
Section 2. That § 13-13-10.1 be AMENDED:
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13-13-10.1. The education funding terms and procedures referenced in this
chapter are defined as follows:
(1) Nonresident students who are in the care and custody of the Department of Social
Services, the Unified Judicial System, the Department of Corrections, or other state
agencies and are attending a public school may be included in the fall enrollment
of the receiving district when enrolled in the receiving district;
(2) "Fall enrollment," is calculated as follows:
(a) Determine the number of kindergarten through twelfth grade students
enrolled in all schools operated by the school district on the last Friday of
September of the current school year;
(b) Subtract the number of students for whom the district receives tuition
except for:
(i) Nonresident students who are in the care and custody of a state
agency and are attending a public school district; and
(ii) Students who are being provided an education pursuant to § 13-28-
11; and
(c) Add the number of students for whom the district pays tuition.
When computing state aid to education for a school district pursuant to § 13-13-
73, the secretary of the Department of Education shall use the school district's fall
enrollment;
(3) "Target teacher ratio factor," is:
(a) For school districts with a fall enrollment of two hundred or less, the target
teacher ratio factor is 12;
(b) For districts with a fall enrollment of greater than two hundred, but less
than six hundred, the target teacher ratio factor is calculated as follows:
(i) Multiplying the fall enrollment by .00750; and
(ii) Adding 10.50 to the resulting product; and
(c) For districts with a fall enrollment of six hundred or greater, the target
teacher ratio factor is 15.
The fall enrollment used for the determination of the target teacher ratio for a
school district may not include any students residing in a residential treatment
facility when the education program is operated by the school district;
(4) "English learner (EL) adjustment," is calculated by multiplying 0.25 times the
number of kindergarten -through-twelfth-grade students who, in the prior school
year, scored below level four on the state -administered language proficiency
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assessment as required in the state's consolidated state application pursuant to
§ 1111(b)(2)(G) of the Every Student Succeeds Act of 2015;
(5) "Index factor," is the annual percentage change in the consumer price index for
urban wage earners and clerical workers as computed by the Bureau of Labor
Statistics of the United States Department of Labor for the year before the year
immediately preceding the year of adjustment or three percent, whichever is less;
(6) "Target teacher salary," for the school fiscal year beginning July 1, 2026, is
$63,700.69. Each school fiscal year thereafter, the target teacher salary is the
previous fiscal year's target teacher salary increased by the index factor;
(7) "Target teacher benefits," is the target teacher salary multiplied by twenty -nine
percent;
(8) "Target teacher compensation," is the sum of the target teacher salary and the
target teacher benefits;
(9) "Overhead rate," is thirty-eight and eighty-hundredths percent. Beginning in school
fiscal year 2018, the overhead rate must be adjusted to take into account the sum
of the amounts that districts exceed the other revenue base amount;
(10) "Local need," is calculated as follows:
(a) Divide the fall enrollment by the target teacher ratio factor;
(b) If applicable, divide the English Learner adjustment pursuant to subdivision
(4) by the target teacher ratio factor;
(c) Add the results of subsections (a) and (b);
(d) Multiply the result of subsection (c) by the target teacher compensation;
(e) Multiply the product of subsection (d) by the overhead rate;
(f) Add the products of subsections (d) and (e) and subdivision (20);
(g) When calculating local need at the statewide level, include the amounts set
aside for costs related to technology in schools and statewide student
assessments;
(h) When calculating local need at the statewide level, include the amounts set
aside for sparse school district benefits, calculated pursuant to §§ 13-13-
78 and 13-13-79; and
(i) When calculating local need at the statewide level, include the amounts set
aside for career and technical education calculated pursuant to §§ 13-13-
81 and 13-13-82;
(11) "Alternative per student need," is calculated as follows:
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(a) Add the total need for each school district for school fiscal year 2016,
including the small school adjustment and the English learner adjustment,
to the lesser of the amount of funds apportioned to each school district in
the year preceding the most recently completed school fiscal year or school
fiscal year 2015 pursuant to §§ 10-33-24, 10-35-21, 10-36-10, 10-43-77,
11-7-73, 13-13-4, and 23A-27-25; and
(b) Divide the result of (a) by the September 2015 fall enrollment, excluding
any adjustments based on prior year student counts;
(12) "Alternative local need," may only be used by a school district created or
reorganized before July 1, 2016, and is the alternative per student need multiplied
by the fall enrollment, excluding any adjustments based on prior year student
counts;
(13) "Local effort," the amount of ad valorem taxes generated in a school fiscal year by
applying the levies established pursuant to § 10-12-42. Beginning on July 1, 2017,
local effort includes the amount of funds apportioned to each school district in the
year preceding the most recently completed school fiscal year pursuant to §§ 10-
33-24, 10-35-21 as provided by subdivision (15), 10-36-10, 10-43-77, 11-7-73,
13-13-4, and 23A-27-25 and that exceeds the other revenue base amount;
(14) "Other revenue base amount," is zero;
(15) "Wind energy tax revenue," any wind energy tax revenue apportioned to school
districts pursuant to § 10-35-21 from a wind farm producing power for the first
time before July 1, 2016, is considered local effort pursuant to subdivision (13) and
other revenue base amount pursuant to subdivision (14). However, for wind energy
tax revenue apportioned to a school district from a wind farm producing power for
the first time after June 30, 2016, one hundred percent must be retained by the
school district to which the tax revenue is apportioned for the first five years of
producing power, eighty percent for the sixth year, sixty percent for the seventh
year, forty percent for the eighth year, twenty percent for the ninth year, and zero
percent thereafter. If a wind farm begins producing power for the first time
between October first and December thirty -first in a calendar y ear, any revenues
generated for that time period must be retained by the school district and that time
period may not be counted against the first five-year period;
(16) "Per student equivalent," for funding calculations that are determined on a per
student basis, the per student equivalent is calculated as follows:
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(a) Multiply the target teacher compensation times the sum of one plus the
overhead rate; and
(b) Divide subsection (a) by 15;
(17) "Monthly cash balance," the total amount of money for each month in the school
district's general fund, calculated by adding all deposits made during the month to
the beginning cash balance and deducting all disbursements or payments made
during the month;
(18) "General fund base percentage," is determined as follows:
(a) Forty percent for a school district with a fall enrollment as defined in
subdivision (2) of two hundred or less;
(b) Thirty percent for a school district with fall enrollment as defined in
subdivision (2) of more than two hundred but less than six hundred; and
(c) Twenty-five percent for a school district with fall enrollment as defined in
subdivision (2) greater than or equal to six hundred.
When determining the general fund base percentage, the secretary of the
Department of Education shall use the lesser of the school district's fall enrollment
as defined in subdivision (2) for the current school year or the school district's fall
enrollment from the previous two years;
(19) "Allowable general fund cash balance," the general fund base percentage multiplied
by the district's general fund expenditures in the previous school year; and
(20) "Alternative instruction participation adjustment," is calculated by multiplying 0.10
times the number of children who participated in the prior school year in high
school interscholastic activities sanctioned or sponsored by the South Dakota High
School Activities Association, as permitted by § 13-36-7, while receiving
alternative instruction pursuant to § 13-27-3, multiplied by the per student
equivalent defined in this section.
Section 3. That § 13-37-16 be AMENDED:
13-37-16. For taxes payable in 2027, and each year thereafter, the school board
shall levy no more than one dollar and forty -four and nine -tenths cents per thousand
dollars of taxable valuation, as a special levy in addition to all other levies authorized by
law for the amount so determined to be necessary, and the levy must be spread against
all of the taxable property of the district. The proceeds derived from the levy constitute a
school district special education fund of the district for the payment of costs for the special
education of all children in need of special education or special education and related
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services who reside within the district pursuant to the provisions of §§ 13-37-8.4 to 13-
37-8.10, inclusive.
The levy in this section is based on valuations where the median level of
assessment represents eighty -five percent of market value as determined by the
Department of Revenue. The total amount of taxes that would be generated at the levy
pursuant to this section is considered local effort. Money in the special education fund may
be expended for the purchase or lease of any assistive technology that is directly related
to special education and specified in a student's individualized education plan. This section
does not apply to real property improvements.
Section 4. That § 13-13-72.1 be AMENDED:
13-13-72.1. In 2028 and each year thereafter, any adjustments in the levies
specified in § 10-12-42 made pursuant to §§ 13-13-71 and 13-13-72 shall be based on
maintaining the relationship between statewide local effort as a percentage of statewide
local need in the fiscal year succeeding the fiscal year in which the adjustment is made.
For school fiscal years 2017 to 2022, inclusive, the propo rtion of local need paid by local
effort and state aid shall be adjusted annually to reflect adjustments in local effort due to
the implementation of the other revenue base amount as defined in § 13-13-10.1.
However, if the levies specified in § 10-12-42 are not adjusted to maintain this
relationship, the target teacher salary, as defined in § 13-13-10.1 shall be reduced to
maintain the relationship between statewide local effort as a percentage of statewide local
need.
Section 5. That § 13-37-35.1 be AMENDED:
13-37-35.1. Terms used in chapter 13-37 mean:
(1) "Level one disability," a mild disability;
(2) "Level two disability," cognitive disability or emotional disorder;
(3) "Level three disability," hearing impairment, deafness, visual impairment, deaf -
blindness, orthopedic impairment, or traumatic brain injury;
(4) "Level four disability," autism;
(5) "Level five disability," multiple disabilities;
(5A) "Level six disability," prolonged assistance;
(6) "Index factor," is the annual percentage change in the consumer price index for
urban wage earners and clerical workers as computed by the Bureau of Labor
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Statistics of the United States Department of Labor for the year before the year
immediately preceding the year of adjustment, or three percent, whichever is less;
(7) "Local effort," an amount calculated for taxes payable in 2027 and thereafter using
a special education levy of one dollar and twenty -four and nine -tenths cents per
one thousand dollars of valuation;
(8) "Allocation for a student with a level one disability," for the school fiscal year
beginning July 1, 2026, is $7,984.00. For each school year thereafter, the allocation
for a student with a level one disability must be the previous fiscal year's allocation
for the child increased by the index factor;
(9) "Allocation for a student with a level two disability," for the school fiscal year
beginning July 1, 2026, is $16,180.00. For each school year thereafter, the
allocation for a student with a level two disability must be the previous fiscal year's
allocation for the child increased by the index factor;
(10) "Allocation for a student with a level three disability," for the school fiscal year
beginning July 1, 2026, is $21,340.00. For each school year thereafter, the
allocation for a student with a level three disability must be the previous fiscal
year's allocation for the child increased by the index factor;
(11) "Allocation for a student with a level four disability," for the school fiscal year
beginning July 1, 2026, is $18,281.00. For each school year thereafter, the
allocation for a student with a level four disability must be the previous fiscal year's
allocation for the child increased by the index factor;
(12) "Allocation for a student with a level five disability," for the school fiscal year
beginning July 1, 2026, is $38,590.00. For each school year thereafter, the
allocation for a student with a level five disability must be the previous fiscal year's
allocation for the child increased by the index factor;
(12A) "Allocation for a student with a level six disability," for the school fiscal year
beginning July 1, 2026, is $12,378.00. For each school year thereafter, the
allocation for a student with a level six disability must be the previous fiscal year's
allocation for the child increased by the index factor;
(13) "Child count," the number of students in need of special education or special
education and related services, according to criteria set forth in rules promulgated
pursuant to §§ 13-37-1.1 and 13-37-46, and submitted to the Department of
Education;
(14) "Fall enrollment," the number of kindergarten -through-twelfth-grade students
enrolled in all schools operated by the school district on the last Friday of
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September of the previous school year, less the number of students for whom the
district receives tuition, except any nonresident student who is in the care and
custody of a state agency and is attending a public school and any student for
whom tuition is being paid pursuant to § 13-28-42.1, plus the number of students
for whom the district pays tuition;
(15) "Nonpublic school," a sectarian organization or entity accredited by the secretary of
education for the purpose of instructing children of compulsory school age. This
definition excludes any school that receives a majority of its revenues from public
funds;
(16) "Nonpublic fall enrollment," the number of children under age eighteen, who are
approved for alternative instruction pursuant to § 13-27-3 on the last Friday of
September of the previous school year plus:
(a) For nonpublic schools located within the boundaries of a public school
district with a fall enrollment of six hundred or more on the last Friday of
September of the previous school year, the number of kindergarten -
through-twelfth-grade students enrolled on the last Friday of September of
the previous regular school year in all nonpublic schools located within the
boundaries of the public school district;
(b) For nonpublic schools located within the boundaries of a public school
district with a fall enrollment of less than six hundred on the last Friday of
September of the previous school year, the number of resident
kindergarten-through-twelfth-grade students enrolled on the last Friday of
September of the previous school year in all nonpublic schools located
within this state;
(17) "Special education fall enrollment," fall enrollment plus nonpublic fall enrollment;
(18) "Local need," an amount to be determined as follows:
(a) Multiply the special education fall enrollment by 0.1084 and multiply the
result by the allocation for a student with a level one disability;
(b) Multiply the number of students having a level two disability as reported on
the child count for the previous school fiscal year by the allocation for a
student with a level two disability;
(c) Multiply the number of students having a level three disability as reported
on the child count for the previous school fiscal year by the allocation for a
student with a level three disability;
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(d) Multiply the number of students having a level four disability as reported on
the child count for the previous school fiscal year by the allocation for a
student with a level four disability;
(e) Multiply the number of students having a level five disability as reported on
the child count for the previous school fiscal year by the allocation for a
student with a level five disability;
(f) Multiply the number of students having a level six disability as reported on
the child count for the previous school fiscal year by the allocation for a
student with a level six disability;
(g) When calculating local need at the statewide level, include the amount set
aside for extraordinary expenses defined in § 13-37-40;
(h) When calculating local need at the statewide level, include the amount set
aside for the South Dakota School for the Blind and Visually Impaired; and
(i) Sum the results of subdivisions (18)(a) to (h), inclusive; and
(19) "Effort factor," the school district's special education tax levy in dollars per thousand
divided by $1.249. The maximum effort factor is 1.0.
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An Act to revise property tax levies for school districts and to revise the state aid to general
and special education formulas.
I certify that the attached Act originated in
the:
House as Bill No. 1051
Chief Clerk of the House
Speaker of the House
Attest:
Chief Clerk of the House
President of the Senate
Attest:
Secretary of the Senate
House Bill No. 1051
File No. ____
Chapter No. ______
Received at this Executive Office
this _____ day of _____________,
2026 at ____________M.
By
for the Governor
The attached Act is hereby
approved this ________ day of
______________, A.D., 2026
Governor
STATE OF SOUTH DAKOTA,
ss.
Office of the Secretary of State
Filed ____________, 2026
at _________ o'clock __M.
Secretary of State
By
Asst. Secretary of State