South Dakota and Teacher Pay

by Bill Powers

There has been increased interest in the media regarding teacher salaries. The 1/24 edition of the Brookings Register had an editorial calling for increases in teacher pay, and perhaps a shift from local school control. On 1/29, Todd Vik, SF School Distrist Business Manager, offered a seminar on school funding, calling for an increase in state support for education. Now that the discussion is finally heating up, I thought I would provide a little bit of background.

You can find a thorough report of the nation’s schools at http://www.nea.org/home/rankings-and-estimates-2013-2014.html comparing state educational systems, and a more complete pdf file at http://www.nea.org/assets/docs/NEA-Rankings-and-Estimates-2013-2014.pdf.

I have spent the good part of day combing through this data. It is not easy to compare states because no two states are the same. One thing is clear, however; SD doesn’t spend more money on education in part because it doesn’t have the funds. It doesn’t have the funds most importantly because it is amongst the lowest tax states in the country. North Dakota is one of highest, with Minnesota not far behind. It might seem sensible to simply call for higher taxes in SD, but the situation is a little more complex than that. Of neighboring states MN, ND, and NE, SD has a much lower median income than all three. As a result, SD has a larger fraction low income earners and a lower fraction high income earners than the other three states, especially MN. How important is this difference is unclear, but since much of our taxes comes from the wealthier, having fewer of them influences tax receipts. However, even with lower income than the other three states, its income per capita is still higher than the national average. It would seem then that the state could afford to pay higher taxes. The situation might be more flexible if SD had a state income tax. It is the only state of the four that does not. Without an income tax the state collects much of its revenue from local property taxes and sales tax. While sales tax tends to be regressive, it is worth noting that North Dakotans pay higher sales taxes than SD.

An increase in teacher salaries can come from two sources. Money can be taken from other expenditures or revenues increased. We need to bear in mind the distinctive features of SD when comparing its expenditures to other states. Being a rural state, it spends almost twice as much on roads per capita as MN. Nonetheless, ND spends more per capita than SD. Still South Dakotans spend considerably less per capita on schools than any of the other three states, NE being the highest. The differences can in part be explained by the differing schools systems. ND has a large number of schools, likely resulting in higher costs for education. NB has one of the lowest student-teacher ratios in the country, also likely accounting for the higher expense of their school system. MN realizes considerable savings by having much higher student-teacher ratios and average school size twice as large as those in SD. SD might save educational dollars by closing some smaller rural schools, thereby releasing more funds for teacher salaries, a suggestion that many for good reasons oppose. It might also increase the use of distance education technologies, thereby not only providing educational opportunities that might otherwise not have been available but also reducing the number of teachers employed. These savings might then be passed along in increased teacher salaries.

Despite these many possible ways to find savings that could be allocated to increased teacher salaries, it seems that the most obvious difference between the three neighboring states is the tax revenue. This is particularly striking when one compares corporate income tax rates. MN has one of the highest in the nation, ND one of the lowest, but only SD, NV, and WY have none. There are tax-based reasons for businesses and individuals to want to live in SD. However, it does seem that SD could still retain many of these advantages while still increasing some of its state taxes, some of which could be used to provide higher salaries for teachers in SD, where the average salary is the lowest in the country. Having said this, it also ought to be clear that someone must be the lowest, and bearing this in mind entails that non-comparative means ought to be sought to evaluate, not only teacher salaries, but also South Dakota’s educational system in general.

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Comments

  1. Carol Hayse says:

    Thanks for your thoughtfulness, Bill. Responses: I always wonder why we cannot tax the very rich at a higher rate than the rest of us? (and spend the subsequent revenue on public goods, such as education. Also, when states say they “don’t have the money”–it might be true, but I always want to look at what the money is being spent on. SD is invested in a set of learning standards called the Common Core. The US Dept. of Education has forced it down many states’ throats, but it is MASSIVELY expensive. Many states have dumped the Common Core, despite the fact that Arne Duncan, Sec’ty. of Education, threatens them with considerable monetary sanctions for doing so. Teachers, parents, and politicians around the country are agitating against the CC for a host of reasons. How much did and will SD spend on this rapidly failing initiative? Also, it would be interesting to look at teacher salary data not only from our surrounding states, but from the next two states up from us on the list. Mississippi? Alabama?

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