South Dakota House Bill HB1291

South Dakota 2026 Regular Session

• Introduced: 2/4/26
• Refer: 2/4/26
• Report Pass: 2/9/26

Caption

Amend the process for calculating a school district's general fund base percentage.

Summary

HB1291 amends South Dakota’s school finance statutes to change how a school district’s “general fund base percentage” is calculated. The bill revises the definition in § 13-13-10.1, which is one of the core inputs used to determine a district’s allowable general fund cash balance. Under the bill, the base percentage would be set at 40% for districts with 200 or fewer students, 30% for districts with more than 200 but fewer than 600 students, and 25% for districts with 600 or more students. The bill also changes the enrollment measure used for this calculation by directing the Department of Education to use the lesser of the current year’s fall enrollment or the district’s fall enrollment from the previous two years. Because the general fund base percentage is tied to the allowable general fund cash balance, the bill would affect how much cash school districts may keep in their general funds before state funding calculations are impacted. The measure therefore has direct implications for district budgeting, reserve levels, and the state aid formula used to calculate education funding. It also preserves the broader statutory framework for fall enrollment, local need, target teacher compensation, and other education funding terms, while narrowing the specific method used for the cash-balance calculation. The available voting history suggests the bill drew mixed support in committee. A motion to amend passed 9-5, but the amended bill then failed on a do pass vote by 6-8. The committee later voted 8-6 to defer the bill to the 41st legislative day, indicating the proposal remained controversial and unresolved rather than advancing cleanly through committee. The main point of contention appears to be the fiscal and policy effect of changing the enrollment basis for the general fund base percentage. Supporters likely viewed the change as a way to update or stabilize the cash-balance formula, while opponents likely worried about how the revised calculation would affect district reserves, state aid, and local flexibility. Because no transcript is available, the specific arguments are not recorded, but the split votes indicate disagreement over school finance impacts and the fairness of using prior-year enrollment in the formula.

Impact

The bill would amend § 13-13-10.1 of the South Dakota Codified Laws, specifically the definition of “general fund base percentage” used in school finance calculations. That change would flow into the calculation of a district’s allowable general fund cash balance under the state education funding system, potentially altering how much money districts may retain in reserve and how state aid calculations interact with district finances. The bill does not appear to change the broader state aid formula, but it would change one of the statutory inputs that affects school district budgeting and cash-balance limits.

Sentiment

The committee record shows a divided and cautious reception. The amendment itself was approved, but the underlying bill did not receive enough support for a do pass recommendation, and the committee ultimately deferred it. That pattern suggests some interest in revising the formula, but not enough consensus to advance the bill as written. Overall, the sentiment appears mixed, with neither strong bipartisan support nor clear opposition dominating the discussion.

Contention

The central controversy is the method used to determine the general fund base percentage and, by extension, the allowable general fund cash balance. Opponents likely objected to using the lesser of current-year enrollment or the prior two years’ enrollment, which could reduce the base percentage for some districts and constrain reserves. Supporters likely argued the change would better reflect district size or improve the accuracy of the formula. The split votes on amendment, passage, and deferral indicate disagreement over fiscal effects on school districts, especially smaller districts that may be more sensitive to enrollment fluctuations.