School board approves opt-out resolution

After three public meetings about a possible opt-out, the school board passed a resolution approving an opt-out at the May 11 board meeting.

In the resolution, “…the above said board is unable to operate under the tax limitation measure currently in statute for the General fund. We therefore OPT OUT of such tax limitation in the amount of $500,000 starting with calendar year 2026 taxes payable in the calendar year 2027.  This opt out will be for 10 years, which will be through taxes payable in the calendar year 2036.”

According to the resolution, this decision may be referred to a vote of the people upon a petition signed by at least 5 percent of the registered voters in the district and filed with the board within 20 days of the first publication of the decision. Unless this action is referred to a vote of the people and reversed by such vote, this resolution authorizes the county auditor to spread an excess levy to raise tax dollars in the above stated amount. 

Superintendent Adam Shaw said they had about a dozen community members in attendance at each of the public meetings. 

Shaw and business manager Angela Arlt presented on the finances for the district and what an opt-out would mean to taxpayers and operation of the district.

In Arlt’s presentation, she provided examples of what the opt-out would mean to taxpayers. For agricultural property with a taxable value of $10 million, the cost would be $146.83 per month. For owner-occupied with a $400,000 taxable value, it would be $13.15 per month. For commercial property valued at $1 million, the cost would be $68.01 per month.

Property owners can use the opt-out calculation worksheet found under “Opt-Out Information” on the school district’s homepage at https://lennox.k12.sd.us to calculate what their cost would be for their property.

State law prevents school districts from building up large reserves in the general fund. The law says a district cannot have more than 25 percent in cash reserves. In 2020-21, the district was at 25.2 percent so the board put in a plan to spend down the fund balance over the next few years. 

Part of the planning and budgeting process was to conservatively assume an increase of five students each year and a 2 percent increase in state aid each year. Five students per year was conservative because the 10-year average was an increase of 20 students per year.

Then in 2024-25, the district decreased by 25 students which meant $180,000 in revenue that was budgeted based on history of increases in student numbers.

Arlt said the district receives their big tax payments in November and May so in order to cash flow they have been needing to borrow money from the capital outlay fund to cover bills in the general fund. The general fund pays for operations like salaries, supplies and fuel; and the capital outlay fund covers physical assets and protection like software, building improvements and buses.

In addition to a decrease in students, the tornado that hit the high school in 2021 has impacted the insurance rates for the district. Only three companies insure schools in South Dakota. Two of them explicitly declined to cover the district due to that tornado incident. Now, the district has seen a 190 percent increase in insurance premiums over four years and the deductible has increased to $75,000 per building.

The board has made a number of budget cuts in the last two years. They have reduced general education aides, reduced support staff, reduced specific teaching FTEs, eliminated sections, consolidated administrative roles, ended participation in COGNIA, ended agreement with Carroll Institute, reduced coaching positions, cut junior high oral interp, cut academic bowl, put in a zero percent salary increase for administration in 2025-26, board pay reduced to $0 per meeting and admin insurance reduced to least expensive premium.

“Our problem is we’re not overspending. We’re operating near the bottom in South Dakota,” Arlt said.

Lennox ranks 141st out of 148 school districts for how much they are spending on educating children.

Arlt said not passing an opt-out would mean larger class sizes, fewer programs, staffing challenges and reduced opportunities. She said a $500,000 opt-out does not mean the district has to take that full amount every year.

“We would only take what we need for that year. It’ll only be taxed on the amount that we take,” she said.

Shaw said the overall feeling from the meetings was positive. He feels the biggest priority with an opt-out is to get classes back down, particularly in the junior high.

Board president Scott Sandal said this opt-out is not an open checkbook.

Read more about the May 11 school board meeting in next week’s edition of The Lennox Independent.