Amend the other revenue base amount available to certain school districts.
HB1183 amends South Dakota’s school finance definitions in § 13-13-10.1, which is part of the state’s education funding formula. The bill focuses on the “other revenue base amount” used in calculating local effort and state aid for certain school districts. Under current law, that base amount phases down to zero for most districts by July 1, 2022, but the bill would create a new exception for small districts: if a district has 250 or fewer students, 250 square miles or less in area, and is not a sparse school district, its other revenue base amount would be set at 25% of the prior benchmark amount rather than zero.
The measure also preserves the existing rules for districts using the alternative local need calculation, newly created or reorganized districts, and districts affected by dissolution and annexation. In addition, the bill retains the current treatment of wind energy tax revenue and the broader definitions used to calculate local need, target teacher ratios, general fund cash balance limits, and other components of school aid. In practical terms, the bill would increase the amount of revenue recognized in the funding formula for a narrow class of small districts, which could affect how much state aid they receive and how much local revenue is counted against them.
The likely fiscal impact is targeted rather than statewide. Because the bill applies only to a subset of small, non-sparse districts, it would not broadly rewrite the education funding system, but it would alter the state aid calculation for those districts by restoring part of the other revenue base amount. That could improve funding stability for qualifying districts and reduce the extent to which certain outside revenue sources offset state aid.
The general sentiment in the available legislative history appears neutral to mildly favorable in concept, but the bill did not advance in the recorded vote. On February 10, 2025, it was tabled by a 15-0 vote, indicating unanimous committee action to set it aside rather than move it forward at that time. No committee transcript is available, so there is no recorded debate explaining the rationale.
The main point of contention, based on the text itself, is the policy choice to treat a narrow category of small districts differently from other districts that have already seen their other revenue base amount reduced to zero. Supporters would likely view the bill as a targeted adjustment for small districts with limited enrollment and geography, while opponents could question whether the exception is equitable or necessary given the existing funding formula and the treatment of other district types.
HB1183 would amend South Dakota’s school finance statutes by changing how the Department of Education calculates the “other revenue base amount” for certain school districts under § 13-13-10.1. The bill creates a new 25% base amount for districts with 250 or fewer students, 250 square miles or less, and not classified as sparse school districts, while leaving the rest of the funding formula intact. This would affect the calculation of local effort and state aid to education for qualifying districts, and could increase their aid eligibility or reduce the amount of outside revenue offsetting state support.
The available record suggests the bill was not controversial enough to generate recorded debate, but it also did not receive momentum. The committee vote on February 10, 2025 was 15-0 to table the bill, which indicates unanimous agreement to set it aside at that stage. With no transcript available, the overall sentiment can only be inferred from the vote and the bill’s narrow, technical nature: it appears to have been treated as a targeted funding adjustment rather than a broadly supported priority.
The central policy issue is whether small, non-sparse districts should receive a special exception to the phaseout of the other revenue base amount. The bill would benefit a limited group of districts, so any disagreement would likely center on fairness, fiscal cost, and whether the existing formula already adequately accounts for district size and geography. Because the bill was tabled unanimously and no discussion transcript is available, there is no direct record of named proponents or opponents, but the likely tension is between advocates for small-district funding stability and those favoring uniform application of the current formula.