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26.705.13 101st Legislative Session 1131
2026 South Dakota Legislature
House Bill 1131
Introduced by: Representative Peterson (Drew)
Underscores indicate new language.
Overstrikes indicate deleted language.
An Act to amend the process by which certain school districts calculate the general 1
fund base percentage. 2
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA: 3
Section 1. That § 13-13-10.1 be AMENDED: 4
13-13-10.1. The education funding terms and procedures referenced in this 5
chapter are defined as follows: 6
(1) Nonresident students who are in the care and custody of the Department of Social 7
Services, the Unified Judicial System, the Department of Corrections, or other state 8
agencies and are attending a public school may be included in the fall enrollment 9
of the receiving district when enrolled in the receiving district; 10
(2) "Fall enrollment," is calculated as follows: 11
(a) Determine the number of kindergarten through twelfth grade students 12
enrolled in all schools operated by the school district on the last Friday of 13
September of the current school year; 14
(b) Subtract the number of students for whom the district receives tuition 15
except for: 16
(i) Nonresident students who are in the care and custody of a state 17
agency and are attending a public school district; and 18
(ii) Students who are being provided an education pursuant to § 13-28-19
11; and 20
(c) Add the number of students for whom the district pays tuition. 21
When computing state aid to education for a school district pursuant to 22
§ 13-13-73, the secretary of the Department of Education shall use the school 23
district's fall enrollment; 24
(3) "Target teacher ratio factor," is: 25
26.705.13 2 1131
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Overstrikes indicate deleted language.
(a) For school districts with a fall enrollment of two hundred or less, the target 1
teacher ratio factor is 12; 2
(b) For districts with a fall enrollment of greater than two hundred, but less 3
than six hundred, the target teacher ratio factor is calculated as follows: 4
(i) Multiplying the fall enrollment by .00750; and 5
(ii) Adding 10.50 to the resulting product; and 6
(c) For districts with a fall enrollment of six hundred or greater, the target 7
teacher ratio factor is 15. 8
The fall enrollment used for the determination of the target teacher ratio 9
for a school district may not include any students residing in a residential 10
treatment facility when the education program is operated by the school 11
district; 12
(4) "English learner (EL) adjustment," is calculated by multiplying 0.25 times the 13
number of kindergarten -through-twelfth-grade students who, in the prior school 14
year, scored below level four on the state -administered language proficiency 15
assessment 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 18
urban wage earners and clerical workers as computed by the Bureau of Labor 19
Statistics of the United States Department of Labor for the year before the year 20
immediately preceding the year of adjustment or three percent, whichever is less; 21
(6) "Target teacher salary," for the school fiscal year beginning July 1, 2025, is 22
$62,821.19. Each school fiscal year thereafter, the target teacher salary is the 23
previous fiscal year's target teacher salary increased by the index factor; 24
(7) "Target teacher benefits," is the target teacher salary multiplied by twenty -nine 25
percent; 26
(8) "Target teacher compensation," is the sum of the target teacher salary and the 27
target teacher benefits; 28
(9) "Overhead rate," is thirty-eight and seventy-eight-hundredths percent. Beginning 29
in school fiscal year 2018, the overhead rate must be adjusted to take into account 30
the sum of the amounts that districts exceed the other revenue base amount; 31
(10) "Local need," is calculated as follows: 32
(a) Divide the fall enrollment by the target teacher ratio factor; 33
(b) If applicable, divide the English Learner learner adjustment pursuant to 34
subdivision (4) by the target teacher ratio factor; 35
26.705.13 3 1131
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(c) Add the results of subsections (a) and (b); 1
(d) Multiply the result of subsection (c) by the target teacher compensation; 2
(e) Multiply the product of subsection (d) by the overhead rate; 3
(f) Add the products of subsections (d) and (e) and subdivision (20); 4
(g) When calculating local need at the statewide level, include the amounts set 5
aside for costs related to technology in schools and statewide student 6
assessments; 7
(h) When calculating local need at the statewide level, include the amounts set 8
aside for sparse school district benefits, calculated pursuant to §§ 13-13-9
78 and 13-13-79; and 10
(i) When calculating local need at the statewide level, include the amounts set 11
aside for career and technical education calculated pursuant to §§ 13-13-12
81 and 13-13-82; 13
(11) "Alternative per student need," is calculated as follows: 14
(a) Add the total need for each school district for school fiscal year 2016, 15
including the small school adjustment and the English learner adjustment, 16
to the lesser of the amount of funds apportioned to each school district in 17
the year preceding the most recently completed school fiscal year or school 18
fiscal year 2015 pursuant to §§ 10-33-24, 10-35-21, 10-36-10, 10-43-77, 19
11-7-73, 13-13-4, and 23A-27-25; and 20
(b) Divide the result of (a) by the September 2015 fall enrollment, excluding 21
any adjustments based on prior year student counts; 22
(12) "Alternative local need," may only be used by a school district created or 23
reorganized before July 1, 2016, and is the alternative per student need multiplied 24
by the fall enrollment, excluding any adjustments based on prior year student 25
counts; 26
(13) "Local effort," the amount of ad valorem taxes generated in a school fiscal year by 27
applying the levies established pursuant to § 10-12-42. Beginning on July 1, 2017, 28
local effort includes the amount of funds apportioned to each school district in the 29
year preceding the most recently completed school fiscal year pursuant to §§ 10-30
33-24, 10-35-21 as provided by subdivision (15), 10-36-10, 10-43-77, 11-7-73, 31
13-13-4, and 23A-27-25 and that exceeds the other revenue base amount; 32
(14) "Other revenue base amount," is zero; 33
(15) "Wind energy tax revenue," any wind energy tax revenue apportioned to school 34
districts pursuant to § 10-35-21 from a wind farm producing power for the first 35
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time before July 1, 2016, is considered local effort pursuant to subdivision (13) and 1
other revenue base amount pursuant to subdivision (14). However, for wind energy 2
tax revenue apportioned to a school district from a wind farm producing power for 3
the first time after June 30, 2016, one hundred percent must be retained by the 4
school district to which the tax revenue is apportioned for the first five years of 5
producing power, eighty percent for the sixth year, sixty percent for the seventh 6
year, forty percent for the eighth year, twenty percent for the ninth year, and zero 7
percent thereafter. If a wind farm begins producing power for the first time 8
between October first and December thirty -first in a calendar year, any revenues 9
generated for that time period must be retained by the school district and that time 10
period may not be counted against the first five-year period; 11
(16) "Per student equivalent," for funding calculations that are determined on a per 12
student basis, the per student equivalent is calculated as follows: 13
(a) Multiply the target teacher compensation times the sum of one plus the 14
overhead rate; and 15
(b) Divide subsection (a) by 15; 16
(17) "Monthly cash balance," the total amount of money for each month in the school 17
district's general fund, calculated by adding all deposits made during the month to 18
the beginning cash balance and deducting all disbursements or payments made 19
during the month; 20
(18) "General fund base percentage," is determined as follows: 21
(a) Forty percent for a school district with a fall enrollment as defined in 22
subdivision (2) of two hundred or less; 23
(b) Thirty percent for a school district with fall enrollment as defined in 24
subdivision (2) of more than two hundred but less than six hundred; and 25
(c) Twenty-five percent for a school district with fall enrollment as defined in 26
subdivision (2) greater than or equal to six hundred. 27
When determining the general fund base percentage, the secretary of the 28
Department of Education shall use the lesser of the school district's fall enrollment 29
as defined in subdivision (2) for the current school year or the school district's fall 30
enrollment from the previous two years the percentage used to determine a school 31
district's allowable general fund cash balance, which is arrived at using the lesser 32
of the school district's fall enrollment for the current school year or the school 33
district's average fall enrollment from the previous two school years, and is: 34
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Overstrikes indicate deleted language.
(a) For a school district with a fall enrollment of two hundred students or fewer, 1
forty percent; 2
(b) For a school district with a fall enrollment that is greater than two hundred 3
students but fewer than six hundred students, a percentage equal to forty-4
five minus the product of the fall enrollment multiplied by 0.025; and 5
(c) For a school district with a fall enrollment that is six hundred students or 6
greater, twenty-five percent; 7
(19) "Allowable general fund cash balance," the general fund base percentage multiplied 8
by the district's general fund expenditures in the previous school year the 9
maximum amount of money a school district may have in the district's general 10
fund, as calculated by multiplying the district's general fund expenditures in the 11
previous school year by the general fund base percentage; and 12
(20) "Alternative instruction participation adjustment," is calculated by multiplying 0.10 13
times the number of children who participated in the prior school year in high 14
school interscholastic activities sanctioned or sponsored by the South Dakota High 15
School Activities Association, as permitted by § 13-36-7, while receiving 16
alternative instruction pursuant to § 13-27-3, multiplied by the per student 17
equivalent defined in this section. 18