Changes to Existing Law

26.510.21 26.510.22 101st Legislative Session 1249 2026 South Dakota Legislature House Bill 1249 HOUSE APPROPRIATIONS ENGROSSED Introduced by: Representative Kassin Underscores indicate new language. Overstrikes indicate deleted language. An Act to amend provisions pertaining to the School Finance Accountability Board, 1 and the process by which a recommendation of the board is approved. 2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA: 3 Section 1. That § 1-45-38 be AMENDED: 4 1-45-38. There is hereby created the School Finance Accountability Board within 5 the Department of Education. The board shall consist consists of five members appointed 6 by the Governor. The members shall serve a term of four years. 7 The board may recommend that the provisions of § 13-13-73.5 be waived for a 8 school district if the district can demonstrate that its lowest monthly general cash fund 9 cash balance percentage is the result of special circumstances. 10 The board may recommend that a penalty against a school district imposed under 11 § 13-13-73.9 be waived, in whole or in part, if the district can demonstrate that its failure 12 to comply with § 13-13-73.6 or 13-13-73.8 is due to special circumstances. The board 13 may recommend the Department of Education review the accreditation of a school district 14 that is found not to be complying with §§ 13-13-73.5, 13-13-73.6, or 13-13-73.8. 15 The School Finance Accountability Board shall promulgate rules pursuant to chapter 16 1-26 to establish the appeals process provided for in § 13-13-73.9, and to establish the 17 factors that may be considered in considering a waiver requested by a school district, 18 which shall include the impact of retirements. 19 The Joint Committee on Appropriations or the Interim Committee on Appropriations 20 shall review any waivers of § 13-13-73.5, 13-13-73.6, or 13-13-73.8 recommended by 21 the School Finance Accountability Board. For a waiver recommended by the board under 22 this section, the committee may provide any suggested change to the waiver. Not more 23 than thirty days following receipt of a suggested change from the committee, the board 24 may amend the recommended waiver in accordance with the suggested change and shall 25 resubmit the recommended waiver. The Joint Committee on Appropriations or the Interim 26 26.510.21 26.510.22 2 1249 Underscores indicate new language. Overstrikes indicate deleted language. Committee on Appropriations shall approve, amend, or deny any waiver recommended by 1 the board 2 A school district may request that the School Finance Accountability Board waive 3 any reduction to the district's state aid for general education, imposed under § 13-13-4 73.5, or the penalty imposed upon a school district, pursuant to § 13-13-73.9. 5 The board may: 6 (1) Reduce a school district's state aid for general education, as provided in § 13-13-7 73.5; 8 (2) Impose the penalty, as provided in § 13-13-73.9, upon a school district for failing 9 to comply with § 13-13-73.6 or 13-13-73.8; 10 (3) Require a review of the school district's accreditation if: 11 (a) The district's lowest general fund monthly cash balance exceeds the 12 district's allowable general fund cash balance; or 13 (b) The district has failed to comply with § 13-13-73.6 or 13-13-73.8; or 14 (4) Waive, in whole or in part: 15 (a) The reduction to a school district's state aid for general education required 16 under § 13-13-73.5, if the district demonstrates that the lowest monthly 17 general cash fund balance exceeded the allowable general fund cash 18 balance as the result of special circumstances; or 19 (b) A penalty imposed upon a school district by § 13-13-73.9, if the district 20 demonstrates that the district's failure to comply with § 13-13-73.6 or 13-21 13-73.8 was the result of special circumstances. 22 The board may condition any waiver granted to a school district pursuant to 23 subsection (4)(a) upon the school district's annual lowest general fund monthly cash 24 balance equaling an amount less than the district's allowable general fund cash balance, 25 for at least three years. If the school district's lowest general fund monthly cash balance 26 exceeds the district's allowable general fund cash balance at any point during the three 27 years, the board may rescind the waiver and impose the penalty required under § 13-13-28 73.5. 29 The board may condition any waiver granted to a school district pursuant to 30 subsection (4)(b) upon the school district increasing the district's average teacher 31 compensation in accordance with § 13-13-73.6 and paying each full-time equivalent 32 teacher a salary equal to the state minimum salary, as defined in § 13-13-73.8, for at 33 least three years. If a school district fails to increase the district's average teacher 34 compensation or fails to pay each full-time equivalent teacher a salary equal to the state 35 26.510.21 26.510.22 3 1249 Underscores indicate new language. Overstrikes indicate deleted language. minimum salary at any point during the three years, the board may rescind the waiver 1 and impose the penalty required under § 13-13-73.9. 2 The School Finance Accountability Board shall promulgate rules, pursuant to 3 chapter 1-26, to establish the process by which a school district may request a waiver, 4 pursuant to this section, and the factors that the board may consider in granting a waiver 5 request from a school district. The factors must address the impact of employee 6 retirements on the district. 7 The Department of Education shall annually report to the Governor and the 3 8 Legislature the information collected pursuant to §§ 13-8-47 and 13-13-73.6. 4 9 Section 2. That a NEW SECTION be added to chapter 1-45: 5 The School Finance Accountability Board shall promulgate rules, pursuant to 6 chapter 1-26, to establish: 7 (1) The process by which a school district may request a waiver, pursuant to § 13-13-8 73.5 or 13-13-73.9; 9 (2) The documentation that a school district must present in order to demonstrate that 10 the district's failure to comply with § 13-13-73.5, 13-13-73.6, or 13-13-73.8 was 11 the result of special circumstances; and 12 (3) The factors that the board may use in determining whether a district's failure to 13 comply with § 13-13-73.5, 13-13-73.6, or 13-13-73.8 was the result of special 14 circumstances. 15 Any factors established by the board pursuant to subdivision (3) must include the 16 impact of the retirement of school district personnel on the district's general fund monthly 17 cash balance and average teacher salary. 18 Section 3. That § 13-13-73.5 be AMENDED: 19 10 13-13-73.5. Beginning on July 1, 2018, a If a school district's lowest general fund 20 11 monthly cash balance exceeds the district's allowable general fund cash balance, the 21 12 Department of Education shall reduce a school district's state aid for general education, 22 13 as calculated pursuant to § 13-13-73 shall be reduced, by subtracting an amount equal to 23 14 the difference of the district's allowable general fund cash balance subtracted from the 24 15 district's lowest general fund monthly cash balance. If the result difference is less than 25 16 zero, the reduction equals to the district's state aid for general education is zero. 26 17 A school district created or reorganized after July 1, 2016, is exempt from the 27 18 reduction provided by this section for a period of three years immediately following its 28 19 creation. 29 20 Section 4. 3. That § 13-13-73.9 be AMENDED: 30 26.510.21 4 1249 Underscores indicate new language. Overstrikes indicate deleted language. 21 13-13-73.9. The Department of Education must decrease state aid to general 1 22 education funding to the school district in the following fiscal year by five hundred dollars 2 23 for each full-time equivalent teacher employed in the school district if: 3 24 (1) The school district does not increase the school district's average teacher 4 25 compensation in accordance with § 13-13-73.6; or 5 26 (2) The school district does not pay each full-time equivalent teacher a salary at least 6 27 equal to the state minimum salary as defined in § 13-13-73.8. 7 28 A school district may request a waiver from any penalty imposed under this section 8 29 from the School Finance Accountability Board. 9 30

26.510.22 26.510.23 101st Legislative Session 1249 2026 South Dakota Legislature House Bill 1249 HOUSE APPROPRIATIONS ENGROSSED Introduced by: Representative Kassin Underscores indicate new language. Overstrikes indicate deleted language. ENROLLED AN ACT ENTITLED An Act to amend provisions pertaining to the School Finance Accountability Board, 1 and the process by which a recommendation of the board is approved. 2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA: 3 Section 1. That § 1-45-38 be AMENDED: 4 1-45-38. There is hereby created the School Finance Accountability Board within 5 the Department of Education. The board shall consist consists of five members appointed 6 by the Governor. The members shall serve a term of four years. 7 The board may recommend that the provisions of § 13-13-73.5 be waived for a 8 school district if the district can demonstrate that its lowest monthly general cash fund 9 cash balance percentage is the result of special circumstances. 10 The board may recommend that a penalty against a school district imposed under 11 § 13-13-73.9 be waived, in whole or in part, if the district can demonstrate that its failure 12 to comply with § 13-13-73.6 or 13-13-73.8 is due to special circumstances. The board 13 may recommend the Department of Education review the accreditation of a school district 14 that is found not to be complying with §§ 13-13-73.5, 13-13-73.6, or 13-13-73.8. 15 The School Finance Accountability Board shall promulgate rules pursuant to chapter 16 1-26 to establish the appeals process provided for in § 13-13-73.9, and to establish the 17 factors that may be considered in considering a waiver requested by a school district, 18 which shall include the impact of retirements. 19 The Joint Committee on Appropriations or the Interim Committee on Appropriations 20 shall review any waivers of § 13-13-73.5, 13-13-73.6, or 13-13-73.8 recommended by 21 the School Finance Accountability Board. For a waiver recommended by the board under 22 this section, the committee may provide any suggested change to the waiver. Not more 23 than thirty days following receipt of a suggested change from the committee, the board 24 may amend the recommended waiver in accordance with the suggested change and shall 25 resubmit the recommended waiver. The Joint Committee on Appropriations or the Interim 26 26.510.22 2 1249 Underscores indicate new language. Overstrikes indicate deleted language. Committee on Appropriations shall approve, amend, or deny any waiver recommended by 1 the board 2 A school district may request that the School Finance Accountability Board waive 3 any reduction to the district's state aid for general education, imposed under § 13-13-4 73.5, 13-13-73.5, or the penalty imposed upon a school district, pursuant to § 13-13-73.9. 5 The board may: 6 (1) Reduce a school district's state aid for general education, as provided in § 13-13-7 73.5; 8 13-13-73.5; (2) Impose the penalty, as provided in § 13-13-73.9, upon a school district for failing 9 to comply with § 13-13-73.6 or 13-13-73.8; 10 (3) Require a review of the school district's accreditation if: 11 (a) The district's lowest general fund monthly cash balance exceeds the 12 district's allowable general fund cash balance; or 13 (b) The district has failed to comply with § 13-13-73.6 or 13-13-73.8; or 14 (4) Waive, in whole or in part: 15 (a) The reduction to a school district's state aid for general education required 16 under § 13-13-73.5, if the district demonstrates that the lowest monthly 17 general cash fund balance exceeded the allowable general fund cash 18 balance as the result of special circumstances; or 19 26.510.23 2 1249 HB1249 ENROLLED (b) A penalty imposed upon a school district by § 13-13-73.9, if the district 20 demonstrates that the district's failure to comply with § 13-13-73.6 or 13-21 13-73.8 13-13-73.8 was the result of special circumstances. 22 The board may condition any waiver granted to a school district pursuant to 23 subsection (4)(a) upon the school district's annual lowest general fund monthly cash 24 balance equaling an amount less than the district's allowable general fund cash balance, 25 for at least three years. If the school district's lowest general fund monthly cash balance 26 exceeds the district's allowable general fund cash balance at any point during the three 27 years, the board may rescind the waiver and impose the penalty required under § 13-13-28 73.5. 29 13-13-73.5. The board may condition any waiver granted to a school district pursuant to 30 subsection (4)(b) upon the school district increasing the district's average teacher 31 compensation in accordance with § 13-13-73.6 and paying each full-time equivalent 32 teacher a salary equal to the state minimum salary, as defined in § 13-13-73.8, for at 33 least three years. If a school district fails to increase the district's average teacher 34 compensation or fails to pay each full-time equivalent teacher a salary equal to the state 35 26.510.22 3 1249 Underscores indicate new language. Overstrikes indicate deleted language. minimum salary at any point during the three years, the board may rescind the waiver 1 and impose the penalty required under § 13-13-73.9. 2 The School Finance Accountability Board shall promulgate rules, pursuant to 3 chapter 1-26, to establish the process by which a school district may request a waiver, 4 pursuant to this section, and the factors that the board may consider in granting a waiver 5 request from a school district. The factors must address the impact of employee 6 retirements on the district. 7 The Department of Education shall annually report to the Governor and the 8 Legislature the information collected pursuant to §§ 13-8-47 and 13-13-73.6. 9 Section 2. That § 13-13-73.5 be AMENDED: 10 13-13-73.5. Beginning on July 1, 2018, a If a school district's lowest general fund 11 monthly cash balance exceeds the district's allowable general fund cash balance, the 12 Department of Education shall reduce a school district's state aid for general education, 13 as calculated pursuant to § 13-13-73 shall be reduced, 13-13-73, by subtracting an amount equal to 14 the difference of the district's allowable general fund cash balance subtracted from the 15 district's lowest general fund monthly cash balance. If the result difference is less than 16 zero, the reduction equals to the district's state aid for general education is zero. 17 26.510.23 3 1249 HB1249 ENROLLED A school district created or reorganized after July 1, 2016, is exempt from the 18 reduction provided by this section for a period of three years immediately following its 19 creation. 20 Section 3. That § 13-13-73.9 be AMENDED: 21 13-13-73.9. The Department of Education must decrease state aid to general 22 education funding to the school district in the following fiscal year by five hundred dollars 23 for each full-time equivalent teacher employed in the school district if: 24 (1) The school district does not increase the school district's average teacher 25 compensation in accordance with § 13-13-73.6; or 26 (2) The school district does not pay each full-time equivalent teacher a salary at least 27 equal to the state minimum salary as defined in § 13-13-73.8. 28 A school district may request a waiver from any penalty imposed under this section 29 from 26.510.23 4 1249 HB1249 ENROLLED An Act to amend provisions pertaining to the School Finance Accountability Board. 30 Board, and the process by which a recommendation of the board is approved. I certify that the attached Act originated in the: House as Bill No. 1249 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. 1249 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