South Dakota
Bill to bring every school district opt-out to an election fails in SD
Thirty-nine legislators voted against a bill Feb. 4 in the South Dakota House of Representatives that would’ve brought every single school district opt-out to a public vote.
After Senate Bill 85 failed to pass, with 29 lawmakers voting for it and two excused, bill sponsor Rep. John Hughes, R-Sioux Falls, said he intended the bill to be reconsidered in the coming days, meaning the bill could’ve been heard again Feb. 5.
But by the time the House reconvened that day with SB 85 on the docket, Hughes didn’t choose to move to have the bill reconsidered.
He told the Argus Leader, in emails shortly after the bill was mentioned on the House floor, that it wouldn’t be reconsidered, and it’s most likely the case that the bill will remain dead. But that other bills affecting opt-outs are pending, and amendments could come forward.
Opt-outs allow school districts to raise additional operating funds beyond what they get in their existing tax levy, and in state aid, by “opting out” of those limitations to collect more taxes from property owners in the district.
“Only time will tell how this issue works itself out and whether a mandatory referral requirement will reappear in some other bill,” Hughes told the Argus Leader.
Bill sponsor skeptical of trust in school administrators
Hughes would’ve had an uphill battle to change minds and flip votes, as many of the legislators who spoke in opposition to the bill staunchly defended education, local control and the financial decisions made by superintendents, school boards and school districts.
Those legislators cited the fact that only 14 districts passed opt-outs over the last year, with five of those being referred to an election, and all five passing.
SB 85 is one of 19 recommendations brought by the comprehensive property tax task force that met over the summer. Sen. Sue Peterson, R-Sioux Falls, brought both the bill and the recommendation, both opposed by the Sioux Falls School District (SFSD). Peterson said it was not a “silver bullet,” but part of the solution to solve the property tax problem in the state.
Peterson has also brought SB 223, which would require petitioners to gather only 50 signatures in 40 days to refer an opt-out to an election. The bill has been referred to the Senate State Affairs committee.
Hughes noted Feb. 4 that last year’s resolution to convene the task force was approved by 64 Representatives.
“One thing we have all seen from the floor vote on SB 85, the House in 2025-2026 thus far is talking out of both sides of its mouth on property tax reform and relief, and the voters should take that into consideration in June and November, if this session continues its present course on property taxes, and that we should just ‘trust the school administrations’ in South Dakota,” Hughes said in a statement Feb. 5.
Sioux Falls was a focal point of the bill
In House debate Feb. 4 and in the bill’s prior hearings, it was clear the most recent opt-out passed by the SFSD Board of Education, and the inability of petition circulators to gather enough signatures to bring the proposal to a vote, was a flashpoint that led to the bill’s creation.
That opt-out for $2.1 million over 10 years — or $21 million — needed 5,490 signatures to be referred to voters, but only 2,302 signatures were turned in by the deadline, in 20 days.
One of the most outspoken petitioners, Misty Furness, noted the cost for the district to hold an opt-out election — $63,000 — is far less than $21 million, and said SB 85 is about giving taxpayers a voice.
Peterson said Jan. 22 in the bill’s first hearing in the Senate Education committee that it shouldn’t be the responsibility of voters to gather petition signatures to prevent districts from spending over the limits that have been set for them.
During the Sioux Falls school board’s work session Feb. 4, shortly before the House started debating SB 85, school board president Nan Kelly said the bill wouldn’t solve the property tax issue “in any real meaningful way,” and said opt-outs have historically been used to fill the gap between what’s available in state and local funding, and what’s needed.
District business manager Todd Vik noted the Legislature increased state aid to education at only 1.25% last year and is proposing no increase this year, and said SB 85 will make it “much more difficult to opt out.”
Kelly said the bill sets a “very dangerous precedent” and could lead to similar legislation being proposed for cities and counties.
That’s something SFSD lobbyist Sam Nelson brought up in his testimony against the bill in the House Education committee Feb. 2, arguing that if proponents believed SB 85 was good for schools, it should be good for all local units of government, including the general bill and special appropriations passed by legislators.
Part of the reason opt-outs are in place is that “for years, we have not adequately funded public education, which is your constitutional obligation to do,” Nelson told the House Education committee on Feb. 2.
He noted that people who disagree with opt-outs or other decisions made by school board members have two ways to deal with it: showing up at school board meetings and making public comments, or “one of the greatest referendum tools,” the ballot box.
Rep. Brian Mulder, R-Sioux Falls, said he’d heard from SFSD that only one person made public comments on the budget cycle, and only two people emailed Superintendent Jamie Nold about the budget, noting that people already have the opportunity to influence school board and district decisions.
Districts ‘glibly ignore spending limits,’ proponents argue
In prior committee hearings, SB 85 was endorsed by lobbyists for the Freedom Foundation and Americans for Prosperity.
Legislators who spoke in favor of SB 85 Feb. 4 largely argued that taxpaying voters need to have a say in opt-outs that school boards want to pass, and that part of “local control” is for local school board voters to be part of decisions in their local school districts.
Hughes had argued that a number of school districts across the state “glibly ignore spending limits.”
In his rebuttal, he said his sons shouldn’t have to go to school board meetings and “plow through budgets” that make “all of us gloss over.”
He also said that in December, Nold gave a “wonderful defense for everything he’s doing to continue, according to the status quo,” and said that if legislators don’t pass SB 85, “we ought to just give everybody a trophy and go home.”
Rep. Terri Jorgenson, R-Rapid City, argued SB 85 is not about schools or education funding, but about taxpayers’ consent. She said there are 79 active opt-outs across the state levying $43 million in excess property taxes.
SB 85 takes tools out of education’s toolbox, opponents argued
In prior committee hearings, SB 85 was opposed by lobbyists for the Sioux Falls School District, Rapid City Area Schools, Associated School Boards of South Dakota, School Administrators of South Dakota, South Dakota Education Association, South Dakota United School Association, the Large School Group and the Greater Sioux Falls Chamber of Commerce.
Since the petition group in Sioux Falls didn’t gather enough signatures, ASBSD lobbyist Heath Larson said it’s possible local constituents were supportive of the district and trusted what school board members were doing.
Large School Group lobbyist Dianna Miller argued that putting a mandate like SB 85 on schools isn’t “limited government,” and said that the property tax problem shouldn’t be “solved on the backs of school districts” alone, something Rep. Mike Stevens repeated on the House floor.
Reps. Erik Muckey, Jim Halverson, Tim Walburg, William Shorma, Roger DeGroot, Keri Weems, Stevens and Mulder all spoke against the bill on the House floor.
DeGroot said school districts pass opt-outs because “we’re not doing our job here,” referring to legislators’ power to increase education funding in Pierre. He added the lack of a proposed increase in state aid to education this year “makes absolutely no sense to me at all.”
Stevens said all legislators do recently is “take tools out” of education’s toolbox, and that if SB 85 passed, “there’d be no more tools in that toolbox.” He noted districts must publish public notices and hold public hearings when school boards plan to vote on or pass opt-outs.
Walburg said he trusts his superintendent and school board members, and that the state shouldn’t dictate what they can do. He noted that 57% of his property tax bill went to schools, which he said was about $265 twice a year.
Halverson said one of the superintendents in his legislative district had asked him to vote no and respect local control. Weems also said constituents in her district value what their property tax does for education, and that she voted against the bill and in favor of local control.