Financial woes discussed at meeting

By Jeff Smith


Organizational changes are being made and all types of cost efficiencies are being looked at in the Hill City school district. This includes but is not limited to salaries, benefit structures and contracts.

Decisions have been made. Some in the community have strong opinions on how they could have been handled better. The board of education approved the resignation of Chip Franke, elementary school principal, and approved to cut four district employees. This includes an ESL aide, a food service worker, a custodian and a special education aide. Both of these actions became effective at the end of the school board meeting.

“If anybody in this room thinks we have taken this decision lightly you are mistaken because we haven’t,” school board member Dennis Krull said.

During his report, Franke said that he is proud of his staff and the innovative things they have been able to do. He said that more is going to happen through trainings.

The meeting room was filled to the brim  on Jan. 8. People with all different concerns were at the school board meeting.

School board member Greg Schroeder said they saw what was coming right when the state changed the funding formula to improve teacher salaries.

Mike Hanson, superintendent of Hill City school district, said the new funding formula in 2016 was based on lowering taxes and increasing teacher salaries. They are looking at every code in the budget to ensure efficiencies, create exemplary opportunities for students and to be within budget, a budget in which taxpayers  will be confident in.

Changes have to be made in order to keep the school district funded  in a sustainable way. Although what is in the budget right now will look different going forward.

“We’re taking some smaller steps right now to make adjustments in the future,” Hanson said.

The first source of revenue for these school districts is property taxes.

Levies have dropped significantly and the school district is receiving less tax revenue than what they had been receiving.

The majority of what is received comes from businesses. The school district  saw a loss of $330,000 recently due to a focus on property tax relief that came in 2016.

Krull said it was the taxes for businesses that decreased.

A half cent sales tax also goes for teacher salaries but it’s not for any of the teachers in Hill City. It goes to those around the state.

There are high valuations of property in Hill City where there is enough from property taxes, according to the state funding formula, that state aid shouldn’t be supplied.

Student enrollment plays a factor in what is given and it is unusual for school districts to not receive the funds.

Only a handful of other school districts don’t receive state aid.

Krull said if they are going to improve their situation they need to cut their budget and more students coming into the district would help. But 150 students would be needed to make a real difference in the budget. A suggestion was to look at getting affordable housing in Hill City to get the number of students up in the area. There is also the problem of year-round jobs, which are in short supply in Hill City.

The State of South Dakota has a formula that is given to the school district to operate. The set funds that the state thinks the school district needs is around $2.7 million. Last year’s general fund budget for the school district was around $4.8 million.

Eighty-five percent of the school district’s budget is salaries and benefits.

A decrease in student enrollment reduces the need decided by the state to educate each child in the district.

On top of new funding formula reducing the local taxes the federal money has fallen flat. The funds from the Secure Rural Schools and Community Self-Determination Act (SRS), which compensates more than 700 forest counties and school districts for timber harvesting revenue lost due to changes in federal forest management policy has fallen significantly too.

In the past the school district has received $500,000 a year and this past year they received $100,000.

It’s not included in the budget and is not a given as the program is not currently guaranteed to be reauthorized.

School board member Mike Welu said they have met with state representatives a couple of times and they don’t fight for the school district because they know it’s a lost cause.

“There are 130 school districts that are getting state aid and if they include us, that’s less for them,” Welu said. “All those legislators from Sioux Falls to Rapid City, if they include us in the formula they are going to get less dollars.”

He said that is one reason why the funding formula is difficult to change. Welu said the school district is caught in the middle when it comes to state aid. Lead-Deadwood is another school district that doesn’t receive state aid but because of the casinos and the revenue they generate the school district doesn’t care about not receiving state aid. So many tax dollars are generated from their property tax that the school district doesn’t have any issues.

“We have a great school. We have a great education system. But we’ve been paying a lot for it,” Welu said.

As a school board, Welu said they have to look at how far over the state’s suggested funding they are and see that there are areas to look at and reduce costs.

Some at the meeting had the idea to hold a town hall meeting before voting on certain things and having people resign.

“I think we need to have an open forum night where no decisions are made and only data is taken,” said Howie Euneau, business owner in the community.

A concerned parent, Britt Daiss, said after the meeting that she was appreciative that the board listened to what the audience members had to say. She would have liked to have had one more session of discussion before the decisions were made.

“I recognize that they’re in a tight spot,” Daiss said.

Daiss said Hill City has tremendous schools and teachers. Her husband grew up in Hill City, which is a smaller district, and she  came from a smaller area in Illinois. She likes that Hill City is a small school district. Some of the administration has alluded that personalization in education is going to be better going forward.

The problem Daiss has might be the one many had. The school board didn’t come to the community earlier for help.

Alisha Coy, parent, said that if this was coming for three years there should have been smaller changes in those three years.

“It just rubs me the wrong way that nobody knew this was coming until people started talking and I got a Facebook message about something you guys are going to talk about later,” Coy said.

She feels like they should have gotten together as a community to figure out what to do.

Karen McKee, teacher at Hill City Elementary,  said that the school board never once came to anybody and asked the stakeholders what to do.

She said there’s a whole community here and even though they don’t know the numbers there could be things they are willing to go without.

Daiss also thought that the city council should be aware of how those in the area need to stop focusing on tourism and get back to supporting the school. The problem is how to get more students in the school district.


  1. Re: the last paragraph…

    For the record, I didn’t say City Council should STOP focusing on tourism. Tourism is obviously what keeps our town going and we need to have some focus on it. I said the school board and the city need to address what’s contributing to our loss of enrollment and why families aren’t staying/coming to Hill City. That tourism can’t be our ONLY focus.

  2. Ms. Daiss is correct. Tourism can’t be are only focus. Technology has created the potential to start a new industry in Hill City area. The biomass fuel industry. Wood chips, wood shavings and saw dust are all biomass fuels available to this area. Modern products that burn biomass fuel to create energy are available locally. These environmental friendly products create options for customers who want to heat facilities and homes using a 100% renewable energy resource. Government programs quite possibly could help the school district with initial project cost. Utilizing high efficiency biomass fuel boilers would reduce long term operating cost for district. Furthermore creating new opportunities for local biomass fuel suppliers. The city could explore a local tax for biomass fuels and products. New opportunities and jobs would be created.

  3. As an out of state property owner who owns 23 acres in the city limits I support the effort to find a solution to the school funding situation. Does a larger combined school district with other municipalities make sense? The state not funding the needs of our students is just untenable. Hill City is a little piece of paradise & we need to suppport the education of local youth.

    • I, year-rounder, believe the root issue in our school funding is a decline in enrollment based in large part due to the lack of affordable housing coupled with the absence of good year round jobs. As much as we appreciate our “snow birds” and out of state property owners and their property tax revenue, it is my opinion that a large portion of these do not support our non tourist related service industries. We have a great local dentist now, who brought 2 new students into the district, and I am guessing most of our “transient” guests are not supporting the practice. This is just one example. A young family owns the local grocery store, my local in town insurance agent has 6 grandkids in Hill City, my local bank is employed by moms and dads, as a contractor I support the local lumber yard which employs families, local auto repair shop (which is awesome by the way, just had a motor replaced.) With 23 acres, you could be part of the solution? Build some affordable housing, work with the local EDC to start a new business that would support year round jobs? Unless of course this is the 23 acre chunk of land that the forest service liquidated and was purchased for $75000 a couple of years ago and is now on Craigslist for $229000 without any noticeable improvements. If not I apologize, if so, that is part of our problem.