March 9, 1990
Mr. Maurice C. Christiansen
Auditor General
435 South Chapelle
Pierre, SD 57501-3292
OFFICIAL OPINION NO. 90-15
State aid to education incentive
Dear Mr. Christiansen:
You have requested an official opinion regarding the following facts:
FACTS:
Effective July 1, 1986, the Corona School was reorganized and divided between the Milbank and Wilmot School Districts. Milbank and Wilmot received an "incentive payment" in the 1987/88 school year and again in the 1988/89 school year.
Based upon the foregoing facts, you have asked the following questions:
QUESTIONS:
1. How should the incentive payment be divided between the Milbank and Wilmot School Districts (number of students from the old Corona School District attending each school or the assessed valuation from the old Corona School District attached to Milbank and Wilmot)?
2. Were Milbank and Wilmot School Districts entitled to a third incentive payment under SDCL 13-13-38.1 which went into effect one year after their reorganization?
Is there a difference in the way the incentive money is distributed under SDCL 13-13-34 versus SDCL 13-13-38.1?
IN RE QUESTION NO. 1:
In order to examine the incentive payment requirements, it is necessary to review the history of the incentive payment program. In 1983, incentive payment provisions were enacted for (1) newly reorganized school districts and (2) small school districts contracting with adjacent school districts. 1983 S.D. Sess. Laws ch. 126, 5, 6. Your inquiry relates to the incentive payment provision for newly reorganized school districts. The 1983 incentive payment provision for newly reorganized school districts was inserted into SDCL 13-13-34 as follows:
If a reorganized school district exists on July first of the school fiscal year in which foundation program funds are to be distributed the costs of the foundation program and the income of the foundation program shall be determined from the costs and income of the old school districts from which the new school district was formed. In addition to the foundation program funds to which a newly reorganized school district is entitled, there shall be paid one-half the secondary tuition rate as provided in 13-28-26 per high school average daily membership child with school residence in any dissolved district for the first two fiscal years following reorganization. And if an old school district was divided by reorganization and a part of it is in more than one school district the costs and income shall be prorated upon a percentage basis in the same proportion that the assessed valuation of the old school district was divided by reorganization. However, the resulting school district reorganized after July 1, 1983, may not receive more than the foundation program aid to which the old school district divided by reorganization would have been entitled. (Emphasis added.)
While SDCL 13-13-34 had previously concerned only foundation aid programs, the new provision was designed to implement a separate incentive payment that would be added to foundation program funds. This statute was in effect from July 1, 1983, until July 1, 1986, when it was repealed. 1986 S.D. Sess. Law ch. 126, 13.
An incentive payment provision was again enacted in 1987. Again, the incentive payment provision was contained within the statute providing foundation aid, now SDCL 13-13-38.1:
If a reorganized school district exists on July first of the school fiscal year in which foundation aid is to be distributed, the aid shall be determined from the data of the old school districts from which the new school district was formed. In addition to the foundation program funds to which a newly reorganized school district is entitled, there shall be paid the secondary tuition rate as provided in 13-28-26 per high school average daily membership child with school residence in any dissolved district for the first fiscal year following reorganization and for the second and third year after the reorganization the dissolved district is entitled to one-half the secondary tuition rate. If an old school district was divided by reorganization and a part of it is in more than one school district, the foundation program aid shall be prorated upon a percentage basis in the same proportion that the assessed valuation of the old school district was divided by reorganization. However, the resulting school districts reorganized after July 1, 1983, may not jointly receive more than the foundation program aid to which the old school district divided by reorganization would have been entitled until new data is available to calculate entitlement. (Emphasis added.)
As was the case with the 1983 provision, this statute provided for an incentive payment fund separate from the foundation aid program.
Then, SDCL 13-13-38.1 was amended in 1989 in order to change the amount of incentive payments and the number of years for which incentive payments apply. SDCL 13-13-38.1 now states:
If a reorganized school district exists on July first of the school fiscal year in which foundation aid is to be distributed, the aid shall be determined from the data of the old school districts from which the new school district was formed. In addition to the foundation program funds to which a newly reorganized school district is entitled, there shall be paid the secondary tuition rate as provided in 13-28-26 for up to a maximum of one hundred twenty-five high school average daily membership children with school residence in either the dissolved district or the newly reorganized district for the first fiscal year following reorganization and for the second and third year after the reorganization the dissolved district is entitled to one-half the secondary tuition rate for up to a maximum of one hundred twenty-five high school average daily membership children. If an old school district was divided by reorganization and a part of it is in more than one school district, the foundation program aid shall be prorated upon a percentage basis in the same proportion that the assessed valuation of the old school district was divided by reorganization. However, the resulting school districts reorganized after July 1, 1983, may not jointly receive more than the foundation program aid to which the old school district divided by reorganization would have been entitled until new data is available to calculate entitlement. (Emphasis added.)
In interpreting SDCL 13-13-38.1, it is clear that the fund for incentive payments is calculated based upon ADM. Thus, if the dissolved school district was absorbed by one other school district, the new school district would receive the total incentive payment (which has been calculated based on ADM). Your inquiry, however, concerns the method for dividing this sum in the event that students from the dissolved school district are assigned to two school districts.
SDCL 13-13-38.1 does not contain a specific provision setting forth the methodology for dividing incentive payments. The 1990 Legislature appears to have remedied this ambiguity by enacting Senate Bill 12. Senate Bill 12 provides that the incentive payment should be divided based upon ADM. This legislation, effective July 1, 1990, is, of course, only prospective in effect. Because foundation aid is calculated based on assessed valuation and then divided between school districts on the same basis, it could be argued that the incentive payment should also be divided based upon the means by which the fund itself is calculated. In other words, under SDCL 13-13-38.1, (1) foundation aid would be totaled and then divided among districts based upon assessed valuation, and (2) the incentive payment should be calculated and then divided among districts based upon ADM.
On the other hand, it might be argued that the incentive payment should be calculated by ADM, but then divided between school districts according to assessed valuation. This analysis would be inaccurate, however, because the portion of SDCL 13-13-38.1 that pertains to the division of funding based on assessed valuation applies only to foundation aid. The third sentence of SDCL 13-13-38.1 states:
If an old school district was divided by reorganization and a part of it is in more than one school district, the foundation program aid shall be prorated upon a percentage basis in the same proportion that the assessed valuation of the old school district was divided by reorganization. (Emphasis added.)
This language shows that the payments based on assessed valuation pertain only to foundation aid, and not to incentive payments. Similar language was contained within SDCL 13-13-34:
And if an old school district was divided by reorganization and a part of it is in more than one school district the costs and income shall be prorated upon a percentage basis in the same proportion that the assessed valuation of the old school district was divided by reorganization. (Emphasis added.)
Considering that the third sentences of SDCL 13-13-38.1 and 13-13-34 are otherwise identical, it is apparent that the substitution of the words "the foundation program aid" for the more general "costs and income" was designed to clarify that only foundation aid payments should be distributed based on assessed valuation. Otherwise, the words "foundation program aid" would be rendered meaningless.
Statutes should be construed, whenever possible, in a manner that will give effect to all provisions within a statute. State v. Heisinger, 252 N.W.2d 899 (S.D. 1977); State v. Hirsch, 309 N.W.2d 832 (S.D. 1981). In order to give effect to the words "foundation program aid," those words must be construed to mean that only foundation aid would be distributed based on assessed valuation.
As demonstrated, the second analysis is inapplicable. Therefore, the first analysis addressed above must be utilized in order to provide a methodology for dividing the payments. In other words, foundation aid should be totaled and then divided based upon the assessed valuation formula, and, in a correlative fashion, the incentive payment should be totaled and then divided between school districts pursuant to the ADM formula. Each fund would be calculated and then divided based upon its own independent formula.
Thus, the division of incentive payments between schools, as well as the calculation of incentive payments themselves, would be based on ADM.
IN RE QUESTION NO. 2:
The Milbank and Wilmot School Districts would be entitled to two incentive payments under SDCL 13-13-38.1. Because the Corona School District was reorganized effective July 1, 1986, on the same date that SDCL 13-13-34 was repealed, the Milbank and Corona School Districts would not have been eligible for any incentive payment under that statute. As described above, the new incentive payment provision contained within SDCL 13-13-38.1 was not enacted until 1987. Thus, no incentive payments were authorized for the first year after dissolution of the Corona School District.
When SDCL 13-13-38.1 was enacted on July 1, 1987, the Corona School District had been reorganized for one year. Based upon the words "If a reorganized school district exists" at the beginning of SDCL 13-13-38.1, it is apparent that the statute was designed to include already existing reorganized school districts.
The newly reorganized school districts would, under SDCL 13-13-38.1, be eligible for incentive payments for the second (1987/88) and third (1988/89) years after the reorganization.
IN RE QUESTION NO. 3:
Based upon the foregoing analysis, it is my opinion that no reorganization took place that would entitle school districts to payments pursuant to SDCL 13-13-34. Thus, it does not appear that a comparison of SDCL 13-13-34 and 13-13-38.1 is necessary in order to resolve this or other school funding issues.
Respectfully submitted,
ROGER A. TELLINGHUISEN
ATTORNEY GENERAL
RAT/db
