We're rich! So says Rep. Bernie Hunhoff as he gazes upward at the towering pile of money in South Dakota's state budget reserves:
South Dakotans, your state trust & reserve funds grew $21 million in the last month to a total of $1.065 billion. Reserves and trust funds have grown $98.9 million since last June 30. Some of my friends on the right side of the aisle don't like it when I suggest that we are "flush with cash" -- but these are the latest actual numbers and I just don't know how else to explain it? [Bernie Hunhoff, Facebook post, 2014.04.02]
Folks have asked me where South Dakota would ever get the money to meet my moonshot goal of raising teacher pay by $10,000 to raise us from 51st to 34th in the nation in compensating teachers. With 9,200 teachers in South Dakota, my proposal would cost $92,000,000. At the rate Rep. Hunhoff says we filled our reserve in March, we could fill the "End the Embarrassment!" teacher compensation fund in four and a half months without raising any taxes or cutting any programs.
Or let's be even less ambitious: suppose we just wanted to raise teacher pay to the average per capita personal income. In its April 3 update on the South Dakota economy, the Bureau of Finance and Management reports that per capita income in South Dakota in 2013 was $45,558, 21st in the nation and 2.3% higher than the national per capita income of $44,543.
South Dakota per capita income: 21st in the nation, 2.3% higher than the national average.
South Dakota teacher pay: 51st in the nation, 29.8% lower than the national average.
Ending that embarrassing fiscal disconnect would require only two and a half Marches of reserve fund diversion. State reserves would still grow by tens of millions of dollars. The only people who would pay more taxes would be those 9,200 teachers, who would buy more stuff (sales tax), hire contractors (excise tax) to improve their homes (property tax), and convert that money gathering dust in Pierre into real economic stimulus in every school community in the state.
Joe Lowe, Sue Wismer, Lora Hubbel, you're listening, right?
They are saving that money for a rainy day, you know, when they get done removing any regulations left on banks and Wall Street and another bubble pops. They will need something to bail their state contributors out with.
And Cory, we would still be able to pay the couple of million dollars that it would take to expand medicaid and get another couple hundred million into the state economy through the healthcare system. That would also improve our overall health and lower the cost of healthcare in the long run.
Lanny, even though expanding medicare has some support in the legislature, I don't see Daugaard taking that step. Tea party would have a field day with that.
By the time the administrators get done dipping into the cookie jar, all the teachers will get is crumbs. I find it interesting that a class of college-trained professionals require such a heavy layer of management.
If you do succeed in raising the salaries for class room teachers, then the administrators will have to have more money too (always remember, "some pigs are more equal than others"...), and more money for their lackies, minions, buttboys and toadies.
Expect more weaponized drug dogs, prisons and assaults on civil liberties.
Cory - Was wondering what the 2015 total state budget is and how many years this surplus could last...
2 Qs: What's the breakdown as to how much is in reserve and how much is in trust? Are funds in trust as easy to pull into general funds expenditures as funds in reserve?
Mr. Cranky Old Dude is right. Those fatcat administrators will scrape off most of this reserve that should have gone to good teachers.
[...]If the voters in my district see fit to send me to Pierre this year, I'll be another voice from the right-side of the aisle that will work to prioritize education funding.
[Candidate Deutsch asked that I delete this comment, since it dealt with ongoing negotiations. I have chosen to delete the portion related to that topic but keep the portion that sparked the subsequent conversation, Deutsch's statement about a policy position relevant to the Legislature.]
Didn't you make some statements 2 years ago about consolidating your rural schools out of existence, Mr. Deutsch? If I recall, that's why you lost.
Don't get too excited folks, White Oak Global has taken over the failed Northern Beef Packers, and apparently with no financial investment available from EB-5 programs, they are going to have to go it alone.
Oh wait, the state has a whole bunch of money in reserve, a beef packing business sounds profitable for the state.
John, good question that I'll try to answer using recent (Feb. 28) info from our LRC:
The Property Tax Reduction Fund totals $63 million, requires a simple majority to transfer to GF.
The Budget Reserve Fund totals $95, requires a 2/3 majority to transfer. (This and the PTRF are what we generally consider the Gen. Fund Reserve Funds)
Health Care Trust Fund totals $85 mill, requires a 2/3 vote to transfer.
Education Enhancement Trust Fund totals $334 million, requires 3/4th vote of leg. to transfer.
Dakota Cement Plant Fund totals $238 million, constitution does not provide for a way to transfer to general fund but allows for profits to go there.
John and all -- I'm certainly not suggesting that we raid the principal of any of the funds, my point is that every session we are sold the idea that we are in a financial crisis and we must absolutely not invest anything in people programs (education and health care) if it could be construed as an ongoing expense, because we are on the precipice of financial collapse.
So we spend money on things that we can easily do without (the wasteful and failed Manpower program is the best most recent example)
As you can see, if our general fund revenue sources absolutely collapsed (say a 10% drop every year ... something that hasn't happened in modern history) we'd still have many years to readjust the budget. Failing to invest smartly in programs that would pay dividends is the bigger threat; bogey-man budgeting is hurting our state's future.
No, Mr. Rorschach, that's what your party incorrectly claimed I said. It's nice when I go on a liberal site and offer a statement that I believe most people can agree with and I get attacked. Much appreciated.
Fred, I still trust your Democratic opponents more than your party to end South Dakota's generations-long embarrassment as the cheapest teacher-skates in the nation. But I applaud any effort you can make and pass locally to give your Watertown teachers more the compensation they deserve.
Thank you, Bernie. For some perspective, historically what percent of general fund expenditures being held in reserve has been considered prudent for South Dakota?
Mr. Bernie, how much did just those first two accounts you called our general reserves grow last month? I would not want to raid our trust funds either because they are trust funds, so if we want to reward good teachers with raises we should look at the reserves for our general funds right? How much do they grow each month because that would tell us how much of a raise we could give our good teachers from this pot.
"reward good teachers with raises"
sounds good grud. what is a definition of a good teacher?
Owen, we all know that the school boards can and do define what good teachers are. Everybody can name the good teachers in their schools. Everybody can name a bad one. The local school boards should decide.
Part of a discussion at the table I was sitting at Friday night in Brookings: the Sioux Falls school district has 26 administrators with 6 figure incomes, many of them make more than the governor. What the school board chooses to do with their money is up to them. It's local control. If they want to pay the teachers more they need to trim the fat in their administration.
Yes grudz, and we, as well as the school boards, all know of teachers in SD who left the profession because the pay is so atrocious. If they didn't leave maybe the school districts would never have to hire or at least keep a bad teacher.
What is the ratio of administrators to staff personnel in the SF School District, Anne Beal, and how does it compare to ratios in private sector organizations? Has the SF school board been lax in its responsibility to get the most value of taxpayer money that it can/
Excellent point John. I just did a quick count and the city of Sioux Falls has 35 administrators making 6 figure incomes, but that does not mean that we don't pay our fire and police personnel decently as well as other city employees. I did not stop to figure out the ones who are paid hourly rather than annual salary, but the listing is for nearly 1600 city employees.
One year of savings is prudent, the state of SD is only a fourth of the way there. We have 1 billion in savings and have a 4 billion budget. I work for a small South Dakota city and we have one years of expenses in our emergency fund.
Thanks, P.S. I'd be more inclined to think that, given $2 billion of the budget is accounted for by the feds, a 1 year reserve for SD's share would be $2 billion, putting us halfway there. My general sense is that a 1-year reserve is awfully high, not necessarily for a small city that could be subjected to an overwhelming emergency, but for a state with a much broader and more time-tested economic base. But prudence is in the eye of the beholder, so I'd be more inclined to go with historical levels of reserves if that kind of information were available somewhere.
I don't question the salaries, as I'm sure some widely accepted pay scales are used when school boards figure them out. To Anne Beal's point about "fat", I'm wondering who has oversight and knowledge enough to determine how many, if any, administrators could be let go without damaging the district's operations.
One thing that needs to be considered are the qualifications and responsibilities that each of the school staff must have. The only requirements to be governor are, as far as I know, are to be a U.S. citizen, complete high school, maybe a minimum age, and to be elected. It is easy to look at numbers and to judge (negatively) the administrators. To look at the job requirements and responsibilities takes more work, and may give a different perspective.
John, your view of the general fund is pretty much the thinking of legislators from both parties who are up on the budget. A generation ago we had NO reserves and NO trust funds, and we basically built a year to year reserve by a general agreement to underestimate revenues and overestimate expenses every year, always causing a carry-over. In the 1990s it was generally agreed (though not in statute) that it would be good to have a reserve of 5% of the general fund. This year we agreed, as reserves and trusts swelled, that 10% is probably more than adequate so I think that will be the benchmark moving forward. I'm not as big a fan of trust funds as some our — I think every generation should have the privilege and the buy-in of taking care of their responsibilities -- but some are ok, and I know I'm in the minority there. Still, they should be recognized as monies available for a very very rainy day, which we hope to never see.
Mr. Bernie what was the growth of the budget reserves not counting those lockbox trusts over the last month? Do they grow so much we can give good teachers raises if we make it so the budget reserve growths can be dedicated to that?
Their growth depends on how much we shrink them in the middle of the budget year when we meet. We make adjustments, and if it looks like there are extra funds (which there almost always are) then we identify them as one-time monies and use them for new boondoggles like the Manpower program, or for one-time expenditures like infrastructure, mountain pine beetle battles, new parks, etc. That's been a part of the debate ... the way we budget so miserly, we are always rich in one-time funds and short on ongoing monies, at least as the governor's budget office defines ongoing monies.
Thank you Mr. Bernie. I was trying to understand the headline of this blogging which says that these funds grew $21 million last month and now I know how.
bernie, Wasn't the legislative session after the last gubernatorial election, pretty much a "rainy day" and so we cut the school funding drastically? Granted it was not quite as drastic as the Governor had asked for, but it was still ridiculous when by the end of that following fiscal year, we had a surplus just like this year. Please explain how hard it has to rain to be a rainy day.
The $21 million grew because the funds presently identified as trust and reserve funds are invested, and the stock market went up. The principal of the reserve funds can only grow from transfers, so the $21 million wasn't a result of transfers but growth. Sorry if I misunderstood your original query.
Lanny, as many people warned, it was not necessary or smart to cut the schools 8.6%. They were already underfunded, and it caused a huge problem for the school districts. The teacher shortage worsened overnight, and costs started shifting to property taxpayers. Plus important workforce development programs were cut. Our revenues dipped very slightly (albeit thanks to the stimulus monies from Washington), and we got a big bounce from a booming farm economy. So the cuts weren't necessary and did great damage.
bernie, Is that 1.065 billion dollars the only money which the State of South Dakota has, or are there other funds that are not included in this? What about the General fund? Isn't that separate?
The general fund was in this 1.065 billion dollars. Mr. Bernie said that there are 5 pieces of it and part if it is the general fund and it grew 21 million.
Here are a couple of Governor Daugaard's quotes in the press before the 2010 election. Hopefully everyone here, even grudz will find them interesting.
Issue Positions (Political Courage Test)
Dennis Daugaard refused to tell citizens where he stands on any of the issues addressed in the 2010 Political Courage Test, despite repeated requests from Vote Smart, national media, and prominent political leaders.
Since Governor Rounds refused to take the Political Courage Test prior to the 2010 governor's race, you can see his responses to prior tests at the following website. Some pretty interesting positions for a governor to take, if he is actually for all the people and not just the extreme right.
http://votesmart.org/candidate/political-courage-test/11218/dennis-daugaard/
Daugaard with the Daily Republic
http://www.mitchellrepublic.com/event/article/id/46028/
http://www.victoriaadvocate.com/news/2010/sep/14/bc-sd-daugaard-education1st-ld-writethru/?uhv&noprompt=www
Daugaard, the state's lieutenant governor, said he wants to expand career and technical education, reduce state regulations and increase state funding for K-12 education when the money is available.
The Legislature this year decided not to increase the state's financial support for schools as part of a budget-balancing move that included $19 million in overall state government spending cuts.
"The near-term budget challenges mean there may not be extra money for a couple of years, but I know better times will come, and when that happens I will advocate for more investments in education," Daugaard said during a news conference in Sioux Falls.
http://www.kdlt.com/index.php?option=com_content&task=view&id=5073&Itemid=57
If elected, Republican Dennis Daugaard plans to focus on three areas: putting extra emphasis on math and science, giving local school districts more control, and committing to funding schools. He says schools should get both the first and last dollar when the budget is written.
"After all, that's the long-term future of our state, and so to the point that South Dakota has exess resources, we should spend them on education." said Daugaard.
http://www.sddp.org/2010/12/broken-promise-broken-law-marks-new-attack-in-gop-war-on-education/
PI
PlanningStudent. Your figure is much higher than what I have been told for organizations: the guideline I have been told is 4 to 6 months. That would mean SD has stocked away two to three what is needs.
I have two issues wit reserves: 1) that money was collected to DO something for the state - not sit in bank accounts (tax money is not given to the state to "hold on to"), and 2) when the budget did have that rainy day, drastic cuts were made in lieu of tapping significant reserves. If a reserve is never intended to be sued, even in drastic times, then it is not a reserve.
Well said Mr O'Brien.
Lanny, I'm not the budget expert in Pierre and you guys are dragging me deep into the weeds here so any smarter lawmakers should please correct me ... saying that, your suspicions are correct. Yes, there are also many other funds ... dozens, maybe several hundred other funds ... too numerous for anyone but the 30-member budget office to even begin to track. Most are committed to a specific purpose (aeronautics fund, Futures Fund, Medicaid reserve fund ... a new one) and as far as I can tell, and my understanding is, that they are mostly swelling to overflowing but it would be a gigantic task to get to the bottom of that, and Pierre camouflages them with complexities in my opinion to prevent lawmakers from asking too many questions.
". . .to the point that South Dakota has exess resources, we should spend them on education." said Daugaard. Daugaard's belief apparently is that education should be funded from the state's surplus, not from its substance. A revealing display of the Governor's values and priorities, indeed.
Thanks John, and that is my point in exposing these two corrupt politicians that took over our State government in 2002 when two good guys got throwing a little mud. I have loaded my gun with as much ammo as I can muster to defeat both MMR and DD in 2014. I hope Dems , Repubs and Independents alike no matter their persuasion, liberal, conservative or neutral will wake up after 12 years of this corruption and throw these two creeps or bums, "my words and assessment", out of office for good.
This is an excellent discussion going on here, after rereading Cory's original thread and the follow up comments, it occurred to me that South Dakota is often referred to as one of the top ten welfare states in the country.
Is the source for building this reserve and other unknown special accounts coming from the federal government? I was always under the impression that federal money to states were for a specific purpose and not for savings or reserves, correct me if I'm wrong.
If this reserve account is being bloated by federal money it seems to me that South Dakotans are being deprived of federal services or state improvements.
Great point Roger. And that is what makes the Governor's turning down of the federal medicaid assistance by rather than investing 2 million of State money to get back 200 million of Federal money, and then in return getting full healthcare coverage for every South Dakotan and in the process lower the cost of healthcare in the State, so ironic. And all to spite a President because the ultra conservatives say he should.