South Dakota Lawmakers Soften Budget Cuts for Schools, Health Care Facilities (SD)

March 30, 2011

PIERRE, S.D. — South Dakota lawmakers gave final approval Wednesday to measures that will reduce the size of budget cuts for school districts and some health care facilities.

Gov. Dennis Daugaard is seeking to cut nearly every state agency by 10 percent next year to fix a $127 million budget gap. His proposal includes cutting 10 percent from state aid to school districts and reimbursements to doctors, nursing homes, hospitals and others that provide medical services to poor people in the Medicaid program.

With the governor’s blessing, the House and Senate passed several bills that will give schools and medical facilities one-time money to help protect them from the full force of next year’s budget cuts. The measures also allow ongoing state spending next year to fall as planned in Daugaard’s budget-balancing plan.

T wo bills dealing with school finances will reduce the effective cut to school districts to 6.6 percent.

Another bill will soften the blow for medical facilities, with nursing homes and facilities for developmentally disabled people getting the smallest cuts because they depend heavily on Medicaid as a big part of their overall revenue.

Wayne Lueders, executive director of the South Dakota Associated School Boards, said the 6.6 percent cut is an improvement from the proposed 10 percent hit, but schools will still be short of money. Once spending per student is cut next year, it will take many years to build state school aid back to current levels, he said.

Sandy Arseneault, president of the South Dakota Education Association, said the teachers’ organization is pleased with the Legislature’s action. But even the reduced cut will mean some school programs will be trimmed, particularly for students who need a little extra help in class, she said.

"We’re grateful the cuts are being softened," Arseneault said. "But I still believe the cuts are going to affect schools greatly."

David Hewett of the South Dakota Association of Healthcare Organizations said hospitals will get approximately a full 10 percent cut in Medicaid because not much of their revenue comes from that program.

However, health care organizations and the state must work to provide long-term incentives that encourage efficient and effective medical care, Hewett said. Those incentives, for Medicaid and other programs, should focus on preventing illness and managing high-cost cases, he said.

Ken Senger, also with the Association of Healthcare Organizations, said some nursing homes wil l get only a 1.8 percent cut because they provide critical services in particular areas and depend heavily on Medicaid to pay for most of their patients.

"A 10 percent cut for some nursing facilities could have been catastrophic," Senger said.

The Senate voted unanimously to approve a measure that will provide an extra $12.2 million for Medicaid providers. That money is available from savings this year because the number of people on Medicaid has not risen as much as expected. The money will be carried over to the next budget year to give Medicaid providers a one-time bonus to help offset the cuts proposed by the governor.

The financial help for schools came in two bills.

South Dakota uses a combination of state aid and local property taxes to fund the general operating expenses of school districts. The funding system requires general spending of a certain amount per student, $4,804 this year, from a combination of property taxes and state aid. After a school district collects property taxes using a standard statewide levy, it receives enough state aid to bring total spending up to $4,804.

Daugaard’s original proposal would have cut state aid and property taxes to reduce total support by 10 percent.

The Senate voted 29-3 Wednesday to approve a bill that freezes local school property taxes at roughly current rates, which trims the cut to 8.6 percent. The House then voted 69-1 to give schools an extra $12 million that will come from unexpectedly high tax collections this year.

House Republican Leader David Lust of Rapid City said lawmakers heard the pleas of school officials who said a 10 percent cut would be too severe. Lawmakers used what money they could fi nd to soften the blow of the budget cuts, he said.

House Democratic Leader Bernie Hunhoff of Yankton said the reduction in the cut to education aid is a step in the right direction, but the Legislature should have avoided any cuts to schools. The Republican governor is wrong to try to balance the budget in just one year without using reserves, Hunhoff said.