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CHAPTER XVII

STATE AID

Sources of state support.-South Dakota derives its state revenues for support of public schools from the following three sources: (1) the permanent school fund; (2) state legislative appropriations; (3) fines for violation of state laws. The state levies no tax for public schools, and it is only since 1917 that any considerable amount has been appropriated by the legislature for public schools. The United States commissioner of education reports for 1917-18 no state money for schools other than the income from the permanent school fund and leases of land. This, however, is not accurate, as there were state appropriations for that year as will be shown later.

Table VIII, Part I, shows the amount and the per cent of total school revenue furnished by the state, while Part II shows the amount and per cent of the several state sources.

Figure 2 shows the facts of Table VIII graphically. Table VIII and Figure 2 show that less than one sixth of the total school revenue receipts come from state sources, and that the permanent school fund furnishes all but about three and one-half per cent of the money coming from state sources.

ANALYSIS OF STATE DECEIPTS FOR PUBLIC SCHOOLS
AND RELATIVE IMPORTANCE OF SAME

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1 United States Bureau of Education Bulletin, 1920, No. 11, Statistics of State School Systems, 1917-18, p. 126, Table 46; p. 128, Table 47.

TABLE VIII

ANALYSIS OF STATE RECEIPTS FOR PUBLIC SCHOOLS IN SOUTH DAKOTA, 1919-20

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■ State Superintendent of Public Instruction Report, 1920, p. 270. Computed by taking total and subtracting "balance on hand" and "amount received from sale of bonds."

b Computed by adding "amount apportioned to schools" as given in Commissioner of School and Public Lands Report, 1920, p. 72, statement 91; $20,000 appropriation made "aid to Common Schools" and the amounts reported in State Superintendent of Public Instruction Report, 1920, as being received by the district as "special aid," pp. 174, 223, 225, 252, 253; and subtracting amount expended as federal aid as shown in Fourth Report of the Federal Board for Vocational Education, 1920, pp. 248-50.

© Computed from the figures given.

◄ Computed by taking "amount apportioned as aid" given in Commissioner of School and Public Lands Report, 1920, p. 71, and subtracting from this the amount contributed to the interest and income fund from fines, State Treasurer of South Dakota Annual Report, 1920, p. 22. This whole amount probably should not have been subtracted as the entire interest and income fund was not apportioned. The state treasurer gives a slightly different amount as apportioned to schools (p. 22) than does the commissioner of school and public lands, p. 71. The difference is so small as to be almost negligible, being only $150.48.

e State Treasurer of South Dakota Annual Report, 1920, p. 22.

Computed by adding the appropriation of $20,000 as "aid to common schools," "special aid," Superintendent of Public Instruction Report, 1920, pp. 147, 223, 225, 252, and 253, and subtracting "federal aid," Fourth Report of the Federal Board of Vocational Education, 1920, pp. 248-50. A much larger amount than this was available but was not used.

Interest and income fund.-It may be well to define here the term "interest and income fund," which is used repeatedly in speaking of state school revenues. This fund is made up of the following: interest on the permanent school fund; interest on deferred payments to the permanent school fund; amounts received from leases of lands belonging to the permanent school fund; proceeds from the sale of sand, wood, timber, gas, coal, and oil, from lands belonging to the permanent school funds; and the net proceeds of all fines for violation of state laws. In other words, the interest and

income fund is made up of the income from the permanent school fund (including lands) and the net proceeds of fines for violation of state laws.2 Table IX shows the receipts of this fund for one year with the percentage from each source.

TABLE IX

SUMMARY OF RECEIPTS AND DISBURSEMENTS OF THE INTEREST AND INCOME
FUND FOR THE YEAR 1919-20a

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• State Treasurer of South Dakota Annual Report, 1920, p. 22. The amounts given here do not correspond exactly with those given in the report of the state auditor, or of the state commissioner of school and public lands.

b Computed.

Table IX shows that less than I per cent of the interest and income fund is contributed by fines and that the remainder comes in some form from the permanent school fund. Of this, leases on lands, including sale of timber, coal, wood, etc., contribute the largest amount, followed by interest on the permanent fund and interest on deferred payments. Analyzing this a little more closely, we see that the money capital contributes over half of the income and the land capital about 43 per cent of the income. It may be well to note at this point that the leases of agricultural land contributed $43,862.41; sale of wood, timber, sand, oil, gas, and coal, $23,876.16; and rent of land for grazing purposes, $731,851.90.3

2 No statement of the composition of the interest and income seems available. Article VIII, sec. 3, of the constitution comes nearest to making a definition. From reports of the commissioner of school and public lands, and from the reports of the state treasurer, it may be seen that the fund is made up as stated. Examples: Report of State Treasurer, 1920, p. 22; Commissioner of School and Public Lands Report, 1920, pp. 61, 62, statement 76. Other reports might be cited to show the same thing.

8 Commissioner of School and Public Lands Report, 1920, p. 62. This does not correspond exactly with the figures given in the table taken from the treasurer's report, but the difference is very small.

THE PERMANENT SCHOOL FUND

Official title.-Neither the constitution nor the laws of South Dakota specifically provide an official name for this fund. It is spoken of incidentally in the constitution as "the permanent school fund," and it is commonly so designated in official reports. It is also often called the "common school fund."

Importance. The permanent school fund is the most important state source of school revenue in South Dakota. This is in striking contrast with the United States as a whole, in which the receipts from permanent funds and rent of school lands furnish less than 3 per cent of the total school revenue receipts. Only three states, Nevada, New Mexico, and Wyoming, surpass South Dakota in the percentage of revenue receipts coming from permanent school funds."

Origin. The permanent school fund has been derived largely from the school land granted to the state by the Federal government at the time of its admission to the Union. Sections 16 and 36 of each township were reserved for the use of the schools. This land is commonly called "common school land" in reports. "Whenever the state lost any of these sections or parts of them either through homesteads, Indian allotments, or in any other manner authorized by Congress, it was permitted to indemnify itself by taking lieu lands of equal acreage to those lost, from any unappropriated government lands in the state." Such lieu lands are known as indemnity lands. Some indemnity lands have been granted in lieu of certain unsurveyed school land sections 16 and 36 in national forests within the state." The total amount of common school land granted by the national government was 2,225,653.30 acres, and the total amount of indemnity school land granted was 633,233.09 acres. On June 30, 1920, the permanent school fund consisted of deferred payments on land and of loans amounting to $27,434,983.83, while there were still 2,162,717.59 acres of unsold school

land.

Value of unsold school land.-The constitution provides that no school land shall be sold for less than $10 per acre. It also provides that the land must be appraised and may not be sold for less than the appraisal price. From the admission of the state to the Union, until June 30, 1920, 646,960.53 acres of land had been sold for $23,809,161.51, an average price of $36.80

Constitution of South Dakota, Art. VIII, sec. 11.

United States Bureau of Education Bulletin, 1920, No. 11, Statistics of State School Systems, 1917-18, p. 122, Table 44.

• Commissioner of School and Public Lands Report, 1914, p. 6.

Ibid., 1918, p. 7.

8 Ibid., 1920, p. 8, statement 2.

Ibid., 1920, p. 3.

per acre.10 Recent years have shown a large increase in the average price Table X shows the common school land sales

per acre above this figure.

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a Apparently includes any sales of indemnity school land.

b Commissioner of School and Public Land Report, 1916, p. 34, statement 33.

e Ibid., 1916, p. 35, statement 38.

a Ibid., 1918, p. 36, statement 32.

e Ibid., 1918, p. 38, statement 44. Ibid., 1920, p. 37, statement 32. Ibid., 1920, p. 38, statement 33. h Computed.

On the basis of the average price of all land sold since statehood, the value of the unsold land would be approximately $76,000,000. This includes the surface value of the land only, the mineral value being entirely unknown. The total prospective value of the permanent school fund is therefore approximately $103,400,000. Any valuation placed on the unsold land belonging to the permanent school fund must be regarded as largely hypothetical though estimates made agree fairly well. A letter from State Superintendent Shaw dated April 17, 1922, says the fund "now amounts to over $40,000,000.00, and when all of our state land is sold we will have better than $100,000,000.00 in our Permanent School Fund." The United States Bureau of Education in 1918 estimated the value of the unsold land at that time as about $85,000,000, an estimate of about $37 per acre for the 2,304,215.45 acres of land then remaining unsold." The survey of the school system of South Dakota made in 1918 estimates the final value of the permanent school fund, after all land is sold, at $90,000,000.12

10 Commissioner of School and Public Lands Report, 1920, p. 25, statement 19.

11 United States Bureau of Education Bulletin, 1920, No. 11, Statistics of State School Systems, 1917-18, p. 119, Table 42.

12 Ibid., 1918, No. 31, The Educational System of South Dakota, p. 51.

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