Changes to Existing Law

26.537.18 26.537.19 101st Legislative Session 1051 2026 South Dakota Legislature House Bill 1051 JOINT APPROPRIATIONS ENGROSSED This bill has been extensively amended (hoghoused) and may no longer be consistent with the original intention of the sponsor. Introduced by: The Chair of the House Committee on Appropriations at the request of the Bureau of Finance and Management Underscores indicate new language. Overstrikes indicate deleted language. An Act to revise property tax levies for school districts and to revise the state aid to 1 general formula and the special education formula. formulas. 2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA: 3 Section 1. That § 10-12-42 be AMENDED: 4 10-12-42. For taxes payable in 2026 2027, and each year thereafter, the 5 maximum levy for 5 the general fund of a school district is as follows: 6 (1) The maximum tax mill levy is five four dollars and twenty-one and one-tenth eighty-7 seven 7 eighty-six and four-tenths seven-tenths cents per thousand dollars of taxable valuation, 8 subject to 8 the limitations on agricultural property as provided in subdivision (2) of 9 this section 9 and owner-occupied property as provided in subdivision (3) of this 10 section; 10 11 (2) The maximum tax mill levy on agricultural property for the school district is one 12 dollar 11 and twelve and five-tenths five and two-tenths one-tenth cents per thousand dollars of 12 13 taxable valuation. If the district's levies are less than the maximum levies as stated 13 14 in this section, the levies must maintain the same proportion to each other as 14 15 represented in the mathematical relationship at the maximum levies; and 15 16 (3) The maximum tax mill levy for an owner-occupied single-family dwelling pursuant 17 to 16 § 10-13-40 for the school district is two zero dollars and fifty-one and eight-tenths 17 thirty-five eight-18 tenths sixty-six and five-tenths nine-tenths cents per thousand dollars of taxable valuation. 19 If the 18 district's levies are less than the maximum levies as stated in this section, 20 the 19 levies must maintain the same proportion to each other as represented in the 20 21 mathematical relationship at the maximum levies. 21 22 All levies in this section must be imposed on valuations where the median level of 22 23 assessment represents eighty-five percent of market value as determined by the 23 24 Department of Revenue. These valuations must be used for all school funding purposes. 24 25 26.537.19 2 1051 Underscores indicate new language. Overstrikes indicate deleted language. If the district has imposed an excess levy pursuant to § 10-12-43, the three mill 1 levies must 25 26.537.18 2 1051 Underscores indicate new language. Overstrikes indicate deleted language. maintain the same proportion to each other as represented in the 2 mathematical 1 relationship at the maximum levies in of this section. 2 section for taxes payable in 3 2026. The school district may elect to tax at less than the maximum amounts set forth 3 in 4 this section. 4 5 Section 2. That § 13-13-10.1 be AMENDED: 5 6 13-13-10.1. The education funding terms and procedures referenced in this 6 7 chapter are defined as follows: 7 8 (1) Nonresident students who are in the care and custody of the Department of Social 8 9 Services, the Unified Judicial System, the Department of Corrections, or other state 9 10 agencies and are attending a public school may be included in the fall enrollment 10 11 of the receiving district when enrolled in the receiving district; 11 12 (2) "Fall enrollment," is calculated as follows: 12 13 (a) Determine the number of kindergarten through twelfth grade students 13 14 enrolled in all schools operated by the school district on the last Friday of 14 15 September of the current school year; 15 16 (b) Subtract the number of students for whom the district receives tuition 16 17 except for: 17 18 (i) Nonresident students who are in the care and custody of a state 18 19 agency and are attending a public school district; and 19 20 (ii) Students who are being provided an education pursuant to § 13-28-20 13-28-21 11; and 21 22 (c) Add the number of students for whom the district pays tuition. 22 23 When computing state aid to education for a school district pursuant to § 13-13-73, 13-13-24 73, the 23 secretary of the Department of Education shall use the school district's fall 24 25 enrollment; 25 26 (3) "Target teacher ratio factor," is: 26 27 (a) For school districts with a fall enrollment of two hundred or less, the target 27 28 teacher ratio factor is 12; 28 29 (b) For districts with a fall enrollment of greater than two hundred, but less 29 30 than six hundred, the target teacher ratio factor is calculated as follows: 30 31 (i) Multiplying the fall enrollment by .00750; and 31 32 (ii) Adding 10.50 to the resulting product; and 32 33 26.537.19 3 1051 Underscores indicate new language. Overstrikes indicate deleted language. (c) For districts with a fall enrollment of six hundred or greater, the target 33 1 teacher ratio factor is 15. 34 26.537.18 3 1051 Underscores indicate new language. Overstrikes indicate deleted language. 2 The fall enrollment used for the determination of the target teacher ratio for a 3 school 1 district may not include any students residing in a residential treatment 4 facility 2 when the education program is operated by the school district; 3 5 (4) "English learner (EL) adjustment," is calculated by multiplying 0.25 times the 4 6 number of kindergarten-through-twelfth-grade students who, in the prior school 5 7 year, scored below level four on the state-administered language proficiency 6 8 assessment as required in the state's consolidated state application pursuant to 7 9 § 1111(b)(2)(G) of the Every Student Succeeds Act of 2015; 8 10 (5) "Index factor," is the annual percentage change in the consumer price index for 9 11 urban wage earners and clerical workers as computed by the Bureau of Labor 10 12 Statistics of the United States Department of Labor for the year before the year 11 13 immediately preceding the year of adjustment or three percent, whichever is less; 12 14 (6) "Target teacher salary," for the school fiscal year beginning July 1, 2025 2026, is 13 $62,821.19. 15 $62,821.19 $63,700.69. Each school fiscal year thereafter, the target teacher 16 salary is the 14 previous fiscal year's target teacher salary increased by the index 17 factor; 15 18 (7) "Target teacher benefits," is the target teacher salary multiplied by twenty-nine 16 19 percent; 17 20 (8) "Target teacher compensation," is the sum of the target teacher salary and the 18 21 target teacher benefits; 19 22 (9) "Overhead rate," is thirty-eight and seventy-eight-hundredths eighty-hundredths 20 23 percent. Beginning in school fiscal year 2018, the overhead rate must be adjusted 21 24 to take into account the sum of the amounts that districts exceed the other revenue 22 25 base amount; 23 26 (10) "Local need," is calculated as follows: 24 27 (a) Divide the fall enrollment by the target teacher ratio factor; 25 28 (b) If applicable, divide the English Learner adjustment pursuant to subdivision 26 29 (4) by the target teacher ratio factor; 27 30 (c) Add the results of subsections (a) and (b); 28 31 (d) Multiply the result of subsection (c) by the target teacher compensation; 29 32 (e) Multiply the product of subsection (d) by the overhead rate; 30 33 (f) Add the products of subsections (d) and (e) and subdivision (20); 31 (g) When calculating local need at the statewide level, include the amounts set 32 aside for costs related to technology in schools and statewide student 33 assessments; 34 26.537.18 26.537.19 4 1051 Underscores indicate new language. Overstrikes indicate deleted language. (h) (g) When calculating local need at the statewide level, include the amounts set 1 aside for sparse school district benefits, calculated pursuant costs related to §§ 13-13-2 78 technology in schools and 13-13-79; and statewide student 2 assessments; 3 (i) (h) When calculating local need at the statewide level, include the amounts set 4 aside for sparse school district benefits, calculated pursuant to §§ 13-13-5 78 and 13-13-79; and 6 (i) When calculating local need at the statewide level, include the amounts set 7 aside for career and technical education calculated pursuant to §§ 13-13-5 13-13-8 81 and 13-13-82; 6 9 (11) "Alternative per student need," is calculated as follows: 7 10 (a) Add the total need for each school district for school fiscal year 2016, 8 11 including the small school adjustment and the English learner adjustment, 9 12 to the lesser of the amount of funds apportioned to each school district in 10 13 the year preceding the most recently completed school fiscal year or school 11 14 fiscal year 2015 pursuant to §§ 10-33-24, 10-35-21, 10-36-10, 10-43-77, 12 15 11-7-73, 13-13-4, and 23A-27-25; and 13 16 (b) Divide the result of (a) by the September 2015 fall enrollment, excluding 14 17 any adjustments based on prior year student counts; 15 18 (12) "Alternative local need," may only be used by a school district created or 16 19 reorganized before July 1, 2016, and is the alternative per student need multiplied 17 20 by the fall enrollment, excluding any adjustments based on prior year student 18 21 counts; 19 22 (13) "Local effort," the amount of ad valorem taxes generated in a school fiscal year by 20 23 applying the levies established pursuant to § 10-12-42. Beginning on July 1, 2017, 21 24 local effort includes the amount of funds apportioned to each school district in the 22 25 year preceding the most recently completed school fiscal year pursuant to §§ 10-23 10-26 33-24, 10-35-21 as provided by subdivision (15), 10-36-10, 10-43-77, 11-7-73, 24 27 13-13-4, and 23A-27-25 and that exceeds the other revenue base amount; 25 28 (14) "Other revenue base amount," is zero; 26 29 (15) "Wind energy tax revenue," any wind energy tax revenue apportioned to school 27 30 districts pursuant to § 10-35-21 from a wind farm producing power for the first 28 31 time before July 1, 2016, is considered local effort pursuant to subdivision (13) and 29 32 other revenue base amount pursuant to subdivision (14). However, for wind energy 30 33 tax revenue apportioned to a school district from a wind farm producing power for 31 34 the first time after June 30, 2016, one hundred percent must be retained by the 32 35 26.537.19 5 1051 Underscores indicate new language. Overstrikes indicate deleted language. school district to which the tax revenue is apportioned for the first five years of 33 1 producing power, eighty percent for the sixth year, sixty percent for the seventh 34 2 year, forty percent for the eighth year, twenty percent for the ninth year, and zero 35 26.537.18 5 1051 Underscores indicate new language. Overstrikes indicate deleted language. 3 percent thereafter. If a wind farm begins producing power for the first time 1 4 between October first and December thirty-first in a calendar year, any revenues 2 5 generated for that time period must be retained by the school district and that time 3 6 period may not be counted against the first five-year period; 4 7 (16) "Per student equivalent," for funding calculations that are determined on a per 5 8 student basis, the per student equivalent is calculated as follows: 6 9 (a) Multiply the target teacher compensation times the sum of one plus the 7 10 overhead rate; and 8 11 (b) Divide subsection (a) by 15; 9 12 (17) "Monthly cash balance," the total amount of money for each month in the school 10 13 district's general fund, calculated by adding all deposits made during the month to 11 14 the beginning cash balance and deducting all disbursements or payments made 12 15 during the month; 13 16 (18) "General fund base percentage," is determined as follows: 14 17 (a) Forty percent for a school district with a fall enrollment as defined in 15 18 subdivision (2) of two hundred or less; 16 19 (b) Thirty percent for a school district with fall enrollment as defined in 17 20 subdivision (2) of more than two hundred but less than six hundred; and 18 21 (c) Twenty-five percent for a school district with fall enrollment as defined in 19 22 subdivision (2) greater than or equal to six hundred. 20 23 When determining the general fund base percentage, the secretary of the 21 24 Department of Education shall use the lesser of the school district's fall enrollment 22 25 as defined in subdivision (2) for the current school year or the school district's fall 23 26 enrollment from the previous two years; 24 27 (19) "Allowable general fund cash balance," the general fund base percentage multiplied 25 28 by the district's general fund expenditures in the previous school year; and 26 29 (20) "Alternative instruction participation adjustment," is calculated by multiplying 0.10 27 30 times the number of children who participated in the prior school year in high 28 31 school interscholastic activities sanctioned or sponsored by the South Dakota High 29 32 School Activities Association, as permitted by § 13-36-7, while receiving 30 33 alternative instruction pursuant to § 13-27-3, multiplied by the per student 31 34 equivalent defined in this section. 32 Section 3. That § 13-37-16 be AMENDED: 33 26.537.18 35 26.537.19 6 1051 Underscores indicate new language. Overstrikes indicate deleted language. Section 3. That § 13-37-16 be AMENDED: 1 13-37-16. For taxes payable in 2026 2027, and each year thereafter, the school 1 2 board shall levy no more than one dollar and forty-six and two-tenths forty-two forty-four and nine-2 nine-3 tenths cents per thousand dollars of taxable valuation, as a special levy in addition to all 3 4 other levies authorized by law for the amount so determined to be necessary, and the levy 4 5 must be spread against all of the taxable property of the district. 5 The proceeds derived 6 from the levy constitute a school district special education 6 fund of the district for the 7 payment of costs for the special education of all children in need 7 of special education or 8 special education and related services, services who reside within the 8 district, district pursuant to the 9 provisions of §§ 13-37-8.4 to 13-37-8.10, inclusive. 9 10 The levy in this section is based on valuations where the median level of 10 11 assessment represents eighty-five percent of market value as determined by the 11 12 Department of Revenue. The total amount of taxes that would be generated at the levy 12 13 pursuant to this section is considered local effort. Money in the special education fund may 13 14 be expended for the purchase or lease of any assistive technology that is directly related 14 15 to special education and specified in a student's individualized education plan. This section 15 16 does not apply to real property improvements. 16 17 Section 4. That § 13-13-72.1 be AMENDED: 18 13-13-72.1. Any In 2028 and each year thereafter, any adjustments in the levies 19 specified in § 10-12-42 made pursuant to §§ 13-13-71 and 13-13-72 shall be based on 20 maintaining the relationship between statewide local effort as a percentage of statewide 21 local need in the fiscal year succeeding the fiscal year in which the adjustment is made. 22 For school fiscal years 2017 to 2022, inclusive, the proportion of local need paid by local 23 effort and state aid shall be adjusted annually to reflect adjustments in local effort due to 24 the implementation of the other revenue base amount as defined in § 13-13-10.1. 25 However, if the levies specified in § 10-12-42 are not adjusted to maintain this 26 relationship, the target teacher salary, as defined in § 13-13-10.1 shall be reduced to 27 maintain the relationship between statewide local effort as a percentage of statewide local 28 need. 29 Section 5. That § 13-37-35.1 be AMENDED: 17 30 13-37-35.1. Terms used in chapter 13-37 mean: 18 31 (1) "Level one disability," a mild disability; 19 32 26.537.19 7 1051 Underscores indicate new language. Overstrikes indicate deleted language. (2) "Level two disability," cognitive disability or emotional disorder; 20 1 (3) "Level three disability," hearing impairment, deafness, visual impairment, deaf-21 deaf-2 blindness, orthopedic impairment, or traumatic brain injury; 22 3 (4) "Level four disability," autism; 23 4 (5) "Level five disability," multiple disabilities; 24 5 (5A) "Level six disability," prolonged assistance; 25 6 (6) "Index factor," is the annual percentage change in the consumer price index for 26 7 urban wage earners and clerical workers as computed by the Bureau of Labor 27 8 Statistics of the United States Department of Labor for the year before the year 28 9 immediately preceding the year of adjustment, or three percent, whichever is less; 29 10 (7) "Local effort," must be an amount calculated for taxes payable in 2026 2027 and 11 thereafter 30 using a special education levy of one dollar and twenty-six and two-tenths twenty-31 two two-12 tenths twenty-four and nine-tenths cents per one thousand dollars of valuation; 32 13 (8) "Allocation for a student with a level one disability," for the school fiscal year 33 14 beginning July 1, 2025, is $7,650.45 2026, is $7,874.00. $7,984.00. For each school year 15 thereafter, the allocation for a student with a level one disability must be the 16 previous fiscal year's allocation for the child increased by the index factor; 17 (9) "Allocation for a student with a level two disability," for the school fiscal year 18 beginning July 1, 2025, is $16,759.91 2026, is $16,180.00. For each school year 19 thereafter, the allocation for a student with a level two disability must be the 20 previous fiscal year's allocation for the child increased by the index factor; 21 (10) "Allocation for a student with a level three disability," for the school fiscal year 22 beginning July 1, 2025, is $23,139.68 2026, is $21,340.00. For each school year 23 thereafter, the allocation for a student with a level three disability must be the 24 previous fiscal year's allocation for the child increased by the index factor; 25 (11) "Allocation for a student with a level four disability," for the school fiscal year 26 beginning July 1, 2025, is $18,053.89 2026, is $18,281.00. For each school year 27 thereafter, the allocation for a student with a level four disability must be the 28 previous fiscal year's allocation for the child increased by the index factor; 29 (12) "Allocation for a student with a level five disability," for the school fiscal year 30 beginning July 1, 2025, is $37,039.28 2026, is $38,590.00. For each school year 31 thereafter, the allocation for a student with a level five disability must be the 32 previous fiscal year's allocation for the child increased by the index factor; 33 (12A) "Allocation for a student with a level six disability," for the school fiscal year 34 26.537.18 7 beginning July 1, 2025, is $11,838.15 2026, is $12,378.00. For each school year 35 26.537.19 8 1051 Underscores indicate new language. Overstrikes indicate deleted language. thereafter, the allocation for a student with a level one six disability must be the 1 previous fiscal year's allocation for the child increased by the index factor; 2 (9) "Allocation for a student with a level two disability," for the school fiscal year 3 beginning July 1, 2025, is $16,759.91 2026, is $15,957.00. For each school year 4 thereafter, the allocation for a student with a level two disability must be the 5 previous fiscal year's allocation for the child increased by the index factor; 6 (10) "Allocation for a student with a level three disability," for the school fiscal year 7 beginning July 1, 2025, is $23,139.68 2026, is $21,045.00. For each school year 8 thereafter, the allocation for a student with a level three disability must be the 9 previous fiscal year's allocation for the child increased by the index factor; 10 (11) "Allocation for a student with a level four disability," for the school fiscal year 11 beginning July 1, 2025, is $18,053.89 2026, is $18,029.00. For each school year 12 thereafter, the allocation for a student with a level four disability must be the 13 previous fiscal year's allocation for the child increased by the index factor; 14 (12) "Allocation for a student with a level five disability," for the school fiscal year 15 beginning July 1, 2025, is $37,039.28 2026, is $38,058.00. For each school year 16 thereafter, the allocation for a student with a level five disability must be the 17 previous fiscal year's allocation for the child increased by the index factor; 18 (12A) "Allocation for a student with a level six disability," for the school fiscal year 19 beginning July 1, 2025, is $11,838.15 2026, is $12,207.00. For each school year 20 thereafter, the allocation for a student with a level six disability must be the 21 previous fiscal year's allocation for the child increased by the index factor; 22 (13) "Child count," is the number of students in need of special education or special 23 3 education and related services, according to criteria set forth in rules promulgated 24 4 pursuant to §§ 13-37-1.1 and 13-37-46, and submitted to the Department of 25 5 Education; 26 6 (14) "Fall enrollment," the number of kindergarten-through-twelfth-grade students 27 7 enrolled in all schools operated by the school district on the last Friday of 28 8 September of the previous school year minus, less the number of students for 29 9 whom the district receives tuition, except any nonresident student who is in the 30 10 care and custody of a state agency and is attending a public school and any student 31 11 for whom tuition is being paid pursuant to § 13-28-42.1, plus the number of 32 12 students for whom the district pays tuition; 33 13 (15) "Nonpublic school," a sectarian organization or entity accredited by the secretary of 34 14 education for the purpose of instructing children of compulsory school age. This 35 26.537.18 8 1051 Underscores indicate new language. Overstrikes indicate deleted language. 15 definition excludes any school that receives a majority of its revenues from public 1 16 funds; 2 17 (16) "Nonpublic fall enrollment," the number of children under age eighteen, who are 3 18 approved for alternative instruction pursuant to § 13-27-3 on the last Friday of 4 19 September of the previous school year plus: 5 20 (a) For nonpublic schools located within the boundaries of a public school 6 21 district with a fall enrollment of six hundred or more on the last Friday of 7 22 September of the previous school year, the number of kindergarten-8 kindergarten-23 through-twelfth-grade students enrolled on the last Friday of September of 9 24 the previous regular school year in all nonpublic schools located within the 10 25 boundaries of the public school district; 11 26 (b) For nonpublic schools located within the boundaries of a public school 12 27 district with a fall enrollment of less than six hundred on the last Friday of 13 28 September of the previous school year, the number of resident 14 29 kindergarten-through-twelfth-grade students enrolled on the last Friday of 15 30 September of the previous school year in all nonpublic schools located 16 31 within this state; 17 32 (17) "Special education fall enrollment," fall enrollment plus nonpublic fall enrollment; 18 33 (18) "Local need," an amount to be determined as follows: 19 34 26.537.19 9 1051 Underscores indicate new language. Overstrikes indicate deleted language. (a) Multiply the special education fall enrollment by 0.1062 0.1084 and multiply 20 1 the result by the allocation for a student with a level one disability; 21 2 (b) Multiply the number of students having a level two disability as reported on 22 3 the child count for the previous school fiscal year by the allocation for a 23 4 student with a level two disability; 24 5 (c) Multiply the number of students having a level three disability as reported 25 6 on the child count for the previous school fiscal year by the allocation for a 26 7 student with a level three disability; 27 8 (d) Multiply the number of students having a level four disability as reported on 28 9 the child count for the previous school fiscal year by the allocation for a 29 10 student with a level four disability; 30 11 (e) Multiply the number of students having a level five disability as reported on 31 12 the child count for the previous school fiscal year by the allocation for a 32 13 student with a level five disability; 33 26.537.18 9 1051 Underscores indicate new language. Overstrikes indicate deleted language. 14 (f) Multiply the number of students having a level six disability as reported on 1 15 the child count for the previous school fiscal year by the allocation for a 2 16 student with a level six disability; 3 17 (g) When calculating local need at the statewide level, include the amount set 4 18 aside for extraordinary expenses defined in § 13-37-40; 5 19 (h) When calculating local need at the statewide level, include the amount set 6 20 aside for the South Dakota School for the Blind and Visually Impaired; and 7 21 (i) Sum the results of subdivisions (18)(a) to (h), inclusive; and 8 22 (19) "Effort factor," the school district's special education tax levy in dollars per thousand 9 23 divided by $1.262 $1.229. $1.249. The maximum effort factor is 1.0. 10 24

26.537.19 26.537.20 101st Legislative Session 1051 2026 South Dakota Legislature House Bill 1051 JOINT APPROPRIATIONS ENGROSSED This bill has been extensively amended (hoghoused) and may no longer be consistent with the original intention of the sponsor. Introduced by: The Chair of the House Committee on Appropriations at the request of the Bureau of Finance and Management Underscores indicate new language. Overstrikes indicate deleted language. ENROLLED AN ACT ENTITLED An Act to revise property tax levies for school districts and to revise the state aid to 1 general and special education formulas. 2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA: 3 Section 1. That § 10-12-42 be AMENDED: 4 10-12-42. For taxes payable in 2026 2027, and each year thereafter, the 5 maximum levy for the general fund of a school district is as follows: 6 (1) The maximum tax mill levy is five four dollars and twenty-one and one-tenth 7 eighty-six and seven-tenths cents per thousand dollars of taxable valuation, 8 subject to the limitations on agricultural property as provided in subdivision (2) of 9 this section and owner-occupied property as provided in subdivision (3) of this 10 section; 11 (3); (2) The maximum tax mill levy on agricultural property for the school district is one 12 dollar and twelve and five-tenths five and one-tenth cents per thousand dollars of 13 taxable valuation. If the district's levies are less than the maximum levies as stated 14 in this section, the levies must maintain the same proportion to each other as 15 represented in the mathematical relationship at the maximum levies; valuation.; and 16 (3) The maximum tax mill levy for an owner-occupied single-family dwelling pursuant 17 to § 10-13-40 for the school district is two zero dollars and fifty-one and eight-18 tenths sixty-six and nine-tenths cents per thousand dollars of taxable valuation. 19 If the district's levies are less than the maximum levies as stated in this section, 20 the levies must maintain the same proportion to each other as represented in the 21 mathematical relationship at the maximum levies. 22 All levies in this section must be imposed on valuations where the median level of 23 assessment represents eighty-five percent of market value as determined by the 24 Department of Revenue. These valuations must be used for all school funding purposes. 25 26.537.19 2 1051 Underscores indicate new language. Overstrikes indicate deleted language. If the district has imposed an excess levy pursuant to § 10-12-43, the three mill 1 levies must maintain the same proportion to each other as represented in the 2 mathematical relationship at the maximum levies in of this section for taxes payable in 3 2026. The school district may elect to tax at less than the maximum amounts set forth in 4 this section. 5 Section 2. That § 13-13-10.1 be AMENDED: 6 26.537.20 2 1051 HB1051 ENROLLED 13-13-10.1. The education funding terms and procedures referenced in this 7 chapter are defined as follows: 8 (1) Nonresident students who are in the care and custody of the Department of Social 9 Services, the Unified Judicial System, the Department of Corrections, or other state 10 agencies and are attending a public school may be included in the fall enrollment 11 of the receiving district when enrolled in the receiving district; 12 (2) "Fall enrollment," is calculated as follows: 13 (a) Determine the number of kindergarten through twelfth grade students 14 enrolled in all schools operated by the school district on the last Friday of 15 September of the current school year; 16 (b) Subtract the number of students for whom the district receives tuition 17 except for: 18 (i) Nonresident students who are in the care and custody of a state 19 agency and are attending a public school district; and 20 (ii) Students who are being provided an education pursuant to § 13-28-21 11; 13-28-11; and 22 (c) Add the number of students for whom the district pays tuition. 23 When computing state aid to education for a school district pursuant to § 13-13-24 73, 13-13-73, the secretary of the Department of Education shall use the school district's fall 25 enrollment; 26 (3) "Target teacher ratio factor," is: 27 (a) For school districts with a fall enrollment of two hundred or less, the target 28 teacher ratio factor is 12; 29 (b) For districts with a fall enrollment of greater than two hundred, but less 30 than six hundred, the target teacher ratio factor is calculated as follows: 31 (i) Multiplying the fall enrollment by .00750; and 32 (ii) Adding 10.50 to the resulting product; and 33 26.537.19 3 1051 Underscores indicate new language. Overstrikes indicate deleted language. (c) For districts with a fall enrollment of six hundred or greater, the target 1 teacher ratio factor is 15. 2 The fall enrollment used for the determination of the target teacher ratio for a 3 school district may not include any students residing in a residential treatment 4 facility when the education program is operated by the school district; 5 (4) "English learner (EL) adjustment," is calculated by multiplying 0.25 times the 6 number of kindergarten-through-twelfth-grade students who, in the prior school 7 year, scored below level four on the state-administered language proficiency 8 26.537.20 3 1051 HB1051 ENROLLED assessment as required in the state's consolidated state application pursuant to 9 § 1111(b)(2)(G) of the Every Student Succeeds Act of 2015; 10 (5) "Index factor," is the annual percentage change in the consumer price index for 11 urban wage earners and clerical workers as computed by the Bureau of Labor 12 Statistics of the United States Department of Labor for the year before the year 13 immediately preceding the year of adjustment or three percent, whichever is less; 14 (6) "Target teacher salary," for the school fiscal year beginning July 1, 2025 2026, is 15 $62,821.19 $63,700.69. Each school fiscal year thereafter, the target teacher 16 salary is the previous fiscal year's target teacher salary increased by the index 17 factor; 18 (7) "Target teacher benefits," is the target teacher salary multiplied by twenty-nine 19 percent; 20 (8) "Target teacher compensation," is the sum of the target teacher salary and the 21 target teacher benefits; 22 (9) "Overhead rate," is thirty-eight and seventy-eight-hundredths eighty-hundredths 23 percent. Beginning in school fiscal year 2018, the overhead rate must be adjusted 24 to take into account the sum of the amounts that districts exceed the other revenue 25 base amount; 26 (10) "Local need," is calculated as follows: 27 (a) Divide the fall enrollment by the target teacher ratio factor; 28 (b) If applicable, divide the English Learner adjustment pursuant to subdivision 29 (4) by the target teacher ratio factor; 30 (c) Add the results of subsections (a) and (b); 31 (d) Multiply the result of subsection (c) by the target teacher compensation; 32 (e) Multiply the product of subsection (d) by the overhead rate; 33 (f) Add the products of subsections (d) and (e) and subdivision (20); 34 26.537.19 4 1051 Underscores indicate new language. Overstrikes indicate deleted language. (g) When calculating local need at the statewide level, include the amounts set 1 aside for costs related to technology in schools and statewide student 2 assessments; 3 (h) When calculating local need at the statewide level, include the amounts set 4 aside for sparse school district benefits, calculated pursuant to §§ 13-13-5 78 13-13-78 and 13-13-79; and 6 (i) When calculating local need at the statewide level, include the amounts set 7 aside for career and technical education calculated pursuant to §§ 13-13-8 81 13-13-81 and 13-13-82; 9 (11) "Alternative per student need," is calculated as follows: 10 26.537.20 4 1051 HB1051 ENROLLED (a) Add the total need for each school district for school fiscal year 2016, 11 including the small school adjustment and the English learner adjustment, 12 to the lesser of the amount of funds apportioned to each school district in 13 the year preceding the most recently completed school fiscal year or school 14 fiscal year 2015 pursuant to §§ 10-33-24, 10-35-21, 10-36-10, 10-43-77, 15 11-7-73, 13-13-4, and 23A-27-25; and 16 (b) Divide the result of (a) by the September 2015 fall enrollment, excluding 17 any adjustments based on prior year student counts; 18 (12) "Alternative local need," may only be used by a school district created or 19 reorganized before July 1, 2016, and is the alternative per student need multiplied 20 by the fall enrollment, excluding any adjustments based on prior year student 21 counts; 22 (13) "Local effort," the amount of ad valorem taxes generated in a school fiscal year by 23 applying the levies established pursuant to § 10-12-42. Beginning on July 1, 2017, 24 local effort includes the amount of funds apportioned to each school district in the 25 year preceding the most recently completed school fiscal year pursuant to §§ 10-26 33-24, 10-33-24, 10-35-21 as provided by subdivision (15), 10-36-10, 10-43-77, 11-7-73, 27 13-13-4, and 23A-27-25 and that exceeds the other revenue base amount; 28 (14) "Other revenue base amount," is zero; 29 (15) "Wind energy tax revenue," any wind energy tax revenue apportioned to school 30 districts pursuant to § 10-35-21 from a wind farm producing power for the first 31 time before July 1, 2016, is considered local effort pursuant to subdivision (13) and 32 other revenue base amount pursuant to subdivision (14). However, for wind energy 33 tax revenue apportioned to a school district from a wind farm producing power for 34 the first time after June 30, 2016, one hundred percent must be retained by the 35 26.537.19 5 1051 Underscores indicate new language. Overstrikes indicate deleted language. school district to which the tax revenue is apportioned for the first five years of 1 producing power, eighty percent for the sixth year, sixty percent for the seventh 2 year, forty percent for the eighth year, twenty percent for the ninth year, and zero 3 percent thereafter. If a wind farm begins producing power for the first time 4 between October first and December thirty-first in a calendar year, any revenues 5 generated for that time period must be retained by the school district and that time 6 period may not be counted against the first five-year period; 7 (16) "Per student equivalent," for funding calculations that are determined on a per 8 student basis, the per student equivalent is calculated as follows: 9 26.537.20 5 1051 HB1051 ENROLLED (a) Multiply the target teacher compensation times the sum of one plus the 10 overhead rate; and 11 (b) Divide subsection (a) by 15; 12 (17) "Monthly cash balance," the total amount of money for each month in the school 13 district's general fund, calculated by adding all deposits made during the month to 14 the beginning cash balance and deducting all disbursements or payments made 15 during the month; 16 (18) "General fund base percentage," is determined as follows: 17 (a) Forty percent for a school district with a fall enrollment as defined in 18 subdivision (2) of two hundred or less; 19 (b) Thirty percent for a school district with fall enrollment as defined in 20 subdivision (2) of more than two hundred but less than six hundred; and 21 (c) Twenty-five percent for a school district with fall enrollment as defined in 22 subdivision (2) greater than or equal to six hundred. 23 When determining the general fund base percentage, the secretary of the 24 Department of Education shall use the lesser of the school district's fall enrollment 25 as defined in subdivision (2) for the current school year or the school district's fall 26 enrollment from the previous two years; 27 (19) "Allowable general fund cash balance," the general fund base percentage multiplied 28 by the district's general fund expenditures in the previous school year; and 29 (20) "Alternative instruction participation adjustment," is calculated by multiplying 0.10 30 times the number of children who participated in the prior school year in high 31 school interscholastic activities sanctioned or sponsored by the South Dakota High 32 School Activities Association, as permitted by § 13-36-7, while receiving 33 alternative instruction pursuant to § 13-27-3, multiplied by the per student 34 equivalent defined in this section. 35 26.537.19 6 1051 Underscores indicate new language. Overstrikes indicate deleted language. Section 3. That § 13-37-16 be AMENDED: 1 13-37-16. For taxes payable in 2026 2027, and each year thereafter, the school 2 board shall levy no more than one dollar and forty-six and two-tenths forty-four and nine-3 tenths nine-tenths cents per thousand dollars of taxable valuation, as a special levy in addition to all 4 other levies authorized by law for the amount so determined to be necessary, and the levy 5 must be spread against all of the taxable property of the district. The proceeds derived 6 from the levy constitute a school district special education fund of the district for the 7 payment of costs for the special education of all children in need of special education or 8 special education and related 26.537.20 6 1051 HB1051 ENROLLED services who reside within the district pursuant to the 9 provisions of §§ 13-37-8.4 to 13-37-8.10, inclusive. 10 The levy in this section is based on valuations where the median level of 11 assessment represents eighty-five percent of market value as determined by the 12 Department of Revenue. The total amount of taxes that would be generated at the levy 13 pursuant to this section is considered local effort. Money in the special education fund may 14 be expended for the purchase or lease of any assistive technology that is directly related 15 to special education and specified in a student's individualized education plan. This section 16 does not apply to real property improvements. 17 Section 4. That § 13-13-72.1 be AMENDED: 18 13-13-72.1. Any In 2028 and each year thereafter, any adjustments in the levies 19 specified in § 10-12-42 made pursuant to §§ 13-13-71 and 13-13-72 shall be based on 20 maintaining the relationship between statewide local effort as a percentage of statewide 21 local need in the fiscal year succeeding the fiscal year in which the adjustment is made. 22 For school fiscal years 2017 to 2022, inclusive, the proportion of local need paid by local 23 effort and state aid shall be adjusted annually to reflect adjustments in local effort due to 24 the implementation of the other revenue base amount as defined in § 13-13-10.1. 25 However, if the levies specified in § 10-12-42 are not adjusted to maintain this 26 relationship, the target teacher salary, as defined in § 13-13-10.1 shall be reduced to 27 maintain the relationship between statewide local effort as a percentage of statewide local 28 need. 29 Section 5. That § 13-37-35.1 be AMENDED: 30 13-37-35.1. Terms used in chapter 13-37 mean: 31 (1) "Level one disability," a mild disability; 32 26.537.19 7 1051 Underscores indicate new language. Overstrikes indicate deleted language. (2) "Level two disability," cognitive disability or emotional disorder; 1 (3) "Level three disability," hearing impairment, deafness, visual impairment, deaf-2 blindness, deaf-blindness, orthopedic impairment, or traumatic brain injury; 3 (4) "Level four disability," autism; 4 (5) "Level five disability," multiple disabilities; 5 (5A) "Level six disability," prolonged assistance; 6 (6) "Index factor," is the annual percentage change in the consumer price index for 7 urban wage earners and clerical workers as computed by the Bureau of Labor 8 26.537.20 7 1051 HB1051 ENROLLED Statistics of the United States Department of Labor for the year before the year 9 immediately preceding the year of adjustment, or three percent, whichever is less; 10 (7) "Local effort," must be an amount calculated for taxes payable in 2026 2027 and 11 thereafter using a special education levy of one dollar and twenty-six and two-12 tenths twenty-four and nine-tenths cents per one thousand dollars of valuation; 13 (8) "Allocation for a student with a level one disability," for the school fiscal year 14 beginning July 1, 2025, is $7,650.45 2026, is $7,984.00. For each school year 15 thereafter, the allocation for a student with a level one disability must be the 16 previous fiscal year's allocation for the child increased by the index factor; 17 (9) "Allocation for a student with a level two disability," for the school fiscal year 18 beginning July 1, 2025, is $16,759.91 2026, is $16,180.00. For each school year 19 thereafter, the allocation for a student with a level two disability must be the 20 previous fiscal year's allocation for the child increased by the index factor; 21 (10) "Allocation for a student with a level three disability," for the school fiscal year 22 beginning July 1, 2025, is $23,139.68 2026, is $21,340.00. For each school year 23 thereafter, the allocation for a student with a level three disability must be the 24 previous fiscal year's allocation for the child increased by the index factor; 25 (11) "Allocation for a student with a level four disability," for the school fiscal year 26 beginning July 1, 2025, is $18,053.89 2026, is $18,281.00. For each school year 27 thereafter, the allocation for a student with a level four disability must be the 28 previous fiscal year's allocation for the child increased by the index factor; 29 (12) "Allocation for a student with a level five disability," for the school fiscal year 30 beginning July 1, 2025, is $37,039.28 2026, is $38,590.00. For each school year 31 thereafter, the allocation for a student with a level five disability must be the 32 previous fiscal year's allocation for the child increased by the index factor; 33 (12A) "Allocation for a student with a level six disability," for the school fiscal year 34 beginning July 1, 2025, is $11,838.15 2026, is $12,378.00. For each school year 35 26.537.19 8 1051 Underscores indicate new language. Overstrikes indicate deleted language. thereafter, the allocation for a student with a level six disability must be the 1 previous fiscal year's allocation for the child increased by the index factor; 2 (13) "Child count," is the number of students in need of special education or special 3 education and related services, according to criteria set forth in rules promulgated 4 pursuant to §§ 13-37-1.1 and 13-37-46, and submitted to the Department of 5 Education; 6 (14) "Fall enrollment," the number of kindergarten-through-twelfth-grade students 7 enrolled in all schools operated by the school district on the last Friday of 26.537.20 8 1051 HB1051 ENROLLED September of the previous school year minus, year, less the number of students for 9 whom the district receives tuition, except any nonresident student who is in the 10 care and custody of a state agency and is attending a public school and any student 11 for whom tuition is being paid pursuant to § 13-28-42.1, plus the number of 12 students for whom the district pays tuition; 13 (15) "Nonpublic school," a sectarian organization or entity accredited by the secretary of 14 education for the purpose of instructing children of compulsory school age. This 15 definition excludes any school that receives a majority of its revenues from public 16 funds; 17 (16) "Nonpublic fall enrollment," the number of children under age eighteen, who are 18 approved for alternative instruction pursuant to § 13-27-3 on the last Friday of 19 September of the previous school year plus: 20 (a) For nonpublic schools located within the boundaries of a public school 21 district with a fall enrollment of six hundred or more on the last Friday of 22 September of the previous school year, the number of kindergarten-23 through-twelfth-grade kindergarten-through-twelfth-grade students enrolled on the last Friday of September of 24 the previous regular school year in all nonpublic schools located within the 25 boundaries of the public school district; 26 (b) For nonpublic schools located within the boundaries of a public school 27 district with a fall enrollment of less than six hundred on the last Friday of 28 September of the previous school year, the number of resident 29 kindergarten-through-twelfth-grade students enrolled on the last Friday of 30 September of the previous school year in all nonpublic schools located 31 within this state; 32 (17) "Special education fall enrollment," fall enrollment plus nonpublic fall enrollment; 33 (18) "Local need," an amount to be determined as follows: 34 26.537.19 9 1051 Underscores indicate new language. Overstrikes indicate deleted language. (a) Multiply the special education fall enrollment by 0.1062 0.1084 and multiply 1 the result by the allocation for a student with a level one disability; 2 (b) Multiply the number of students having a level two disability as reported on 3 the child count for the previous school fiscal year by the allocation for a 4 student with a level two disability; 5 (c) Multiply the number of students having a level three disability as reported 6 on the child count for the previous school fiscal year by the allocation for a 7 student with a level two disability; (c) Multiply the number of students having a level three disability as reported on the child count for the previous school fiscal year by the allocation for a student with a level three disability; 8 26.537.20 9 1051 HB1051 ENROLLED (d) Multiply the number of students having a level four disability as reported on 9 the child count for the previous school fiscal year by the allocation for a 10 student with a level four disability; 11 (e) Multiply the number of students having a level five disability as reported on 12 the child count for the previous school fiscal year by the allocation for a 13 student with a level five disability; 14 (f) Multiply the number of students having a level six disability as reported on 15 the child count for the previous school fiscal year by the allocation for a 16 student with a level six disability; 17 (g) When calculating local need at the statewide level, include the amount set 18 aside for extraordinary expenses defined in § 13-37-40; 19 (h) When calculating local need at the statewide level, include the amount set 20 aside for the South Dakota School for the Blind and Visually Impaired; and 21 (i) Sum the results of subdivisions (18)(a) to (h), inclusive; and 22 (19) "Effort factor," the school district's special education tax levy in dollars per thousand 23 divided by $1.262 $1.249. The maximum effort factor is 1.0. 24 26.537.20 10 1051 HB1051 ENROLLED An Act to revise property tax levies for school districts and to revise the state aid to general and special education formulas. I certify that the attached Act originated in the: House as Bill No. 1051 Chief Clerk of the House Speaker of the House Attest: Chief Clerk of the House President of the Senate Attest: Secretary of the Senate House Bill No. 1051 File No. ____ Chapter No. ______ Received at this Executive Office this _____ day of _____________, 2026 at ____________M. By for the Governor The attached Act is hereby approved this ________ day of ______________, A.D., 2026 Governor STATE OF SOUTH DAKOTA, ss. Office of the Secretary of State Filed ____________, 2026 at _________ o'clock __M. Secretary of State By Asst. Secretary of State