Thousands of dollars are at stake for two school districts while a conflict unfolds over accountability measures in state law. The state’s School Finance Accountability Board is holding its ground after lawmakers rejected its recommended sanctions a couple weeks ago.
South Dakota statute sets spending and saving parameters for school districts. When they don’t hit minimum or maximum financial numbers, they can face sanctions from the state including financial penalties, a financial review conducted by the Department of Education, or full or partial waivers.
That’s what could happen to the Frederick Area and Miller School Districts. The accountability board initially recommended a partial waiver and a fiscal penalty of 10% the excess amount for both the Frederick Area and Miller School Districts. Both stand to lose thousands of dollars in state general aid for the 2026 fiscal year.
But legislative appropriators disagreed, instead voting for full waivers for both and sending the matter back to the School Finance Accountability Board.
Jim Terwilliger is the commissioner of South Dakota’s Bureau of Finance and Management, as well as a member of the School Finance Accountability Board. He motioned to send the original recommendations for Frederick Area and Miller School Districts back to appropriators.
“I think we had a good process when we met originally,” Terwilliger said.
Terwilliger added while he understands where appropriators are coming from…
“I think we took into some consideration there was some circumstances. I think we could’ve done the full penalty,” Terwilliger said. “It would’ve been pretty significant, so I think we backed off it and took that into consideration quite a bit with some additional context.”
According to South Dakota Searchlight, Terwilliger has been adamant in past meetings about taking these sanctions for excess cash seriously while citizens grow frustrated with rising property taxes. School districts are the largest benefactor of property tax funding, next to local governments.
While the recommendation now heads back to the Appropriations Committee to review – the board said it’s unsure where the issue goes from here. One member of the board said “it could be a back-and-forth deal” regarding these recommendations.
Appropriators rejected the board's full waiver recommendation for Agar-Blunt-Onida School District, which receives zero state dollars due to sufficient local funding. They instead opted for a financial review of the district. The School Finance Accountability Board approved that recommendation from the Appropriations Committee.
"It's a good move and it provides some transparency for the district to their taxpayers and to the state I think," Eric Stroeder, chair of the board, said. "It isn't like we're telling them how they have to spend their money, but it kind of sheds some light on how they're going to work through the process."
