South Dakota Lawsuit Ends

Last Updated: September 28, 2011

This article appeared in the September 2011 Rural Policy Matters.

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A group of South Dakota school districts have lost their challenge to the state’s school funding formula, but attorneys for the districts say future legal challenges could still succeed.

Earlier this month, the state Supreme Court upheld the constitutionality of the education finance system. Noting that the plaintiffs had to meet a very “high burden” to overcome the presumption of constitutionality, the ruling reads: “They [the plaintiffs] have to show that the state funding system is ‘clearly and unmistakably’ unconstitutional” and that “there is no reasonable doubt that it violates fundamental constitutional principles.”

The justices did not find causation — a link between underfunding and low student performance — as the plaintiffs had hoped. The decision notes that some districts with very low revenues have reasonably good results on test scores and other measures, while some higher spending districts are not as successful.

The funding formula limits increases to the education budget of the larger of inflation growth of 3%, which plaintiff attorneys argued prevents schools from ever making up lost ground. But, the court responded that the state had added one-time money for schools in the budget each of the four years prior to trial.

The court seemed to leave the door open for other types of challenges to South Dakota’s school finance system. The decision specifically reads: “The constitutional mandate does not contemplate a system that fails to educate all children or leaves pockets of inadequate conditions and achievement as a result of insufficient funding.”

In addition, the court points out, “The plaintiffs’ evidence raises serious questions about whether the state aid formula is based on actual costs and whether local taxing procedures and caps might have constitutional implications. The plaintiffs have also shown some groups of students are not achieving at desired levels and that some districts struggle to provide adequate facilities and qualified teachers.”

However, the ruling prohibits the individual plaintiffs and the South Dakota Coalition of Schools, a group of mostly rural school districts that originally brought the suit, from participating in another such lawsuit for 10 years. Although state law would allow it, the state attorney general has said he will not seek to collect attorney’s fees from the plaintiffs.

Lawsuit background

Originally, the South Dakota Coalition of Schools sued the state, offering as evidence the severe discrepancies in opportunities in underfunded schools, including course offerings, student services, teacher salaries, and building maintenance. (See some of the previous coverage of the case in RSFN here, here, and here.)

Over the course of the case, the plaintiffs suffered several major procedural setbacks. First, then-Governor Mike Rounds ordered an audit of the state's schools and then other state officials asserted that school districts had illegally used taxpayer money for the lawsuit. The state legislature also tried to ban school funding lawsuits such as this one. The suit ultimately went forward with parents and students rather than school districts as plaintiffs, and the state Supreme Court eventually ruled that school districts did have standing to participate in the lawsuit.

Funding for schools in South Dakota have been reduced by as much as 6.6% in recent years. In response, schools have made extensive cuts to programs and staff, and a quarter of all school districts are using some form of abbreviated schedule, usually a four-day school week, to reduce expenses.

Education groups are now turning their attention to legislative efforts and hope to successfully lobby for a sales tax increase on the 2012 ballot. The initiative currently underway is called ‘Moving South Dakota Forward’ and would enact a one-cent sales tax increase to be used for education and Medicaid in the state.

Read more:

Local coverage:

Read the decision here:

Local coverage of other funding issues:

Coverage of sales tax increase initiative:

Read more from the September 2011 Rural Policy Matters.