Letter Page 1 of 55

February 24, 2020

Addressed to:

Governor Kristi Noem

Legislators of the State of South Dakota
South Dakota Board of Regents

The People of South Dakota

2010-2020: A Lost Decade
Over $250 Million in Cuts to South Dakota Public Higher Education

We address this open letter to the Governor, the Legislature, the South Dakota Board
of Regents and to the people of the State of South Dakota because we are concerned about
the state of public ?nancing and the Operation of South Dakota's six Public Universities.
The letter is the product of the experience of people who have worked for many years in
leadership positions with the Universities. James Abbott served 21 years as President of the
University of South Dakota, retiring from the presidency in May of 201 8. Harvey ewett
served for 20 years as a member of the Board of Regents, ten of those years as President,
retiring in 2017. He also served for 20 years as a member of the Board of Trustees of the -
College of St. Benedict, including service as Chair of the Joint Audit Committee of the
College of St. Benedict and St. Johns University, retiring in 2014. Other unnamed
contributors with signi?cant experience with the South Dakota Public University System
have helped us prepare this document. We share our impressions and perspectives, garnered
over 21. years, of the operations, governance and ?nancing of the Public Universities in
South Dakota, including our views of some false assumptions and understandings which
have burdened the public perception. Much has happened over the last two decades.
Questions have arisen about the value of Higher Education to our state, our country and the
world. ?Is it worth it?? There are perceptions and assumptions that do not re?ect the
situation in South Dakota. South Dakota Public Universities are leaders in undergraduate
education and real statistics prove that beyond a doubt. We hope to bring our experience to
the discussion of the Public Universities. We will, of necessity, also address some issues
with respect to the public ?nancing of the local K-12 School Districts, which include four
Districts that own and operate the state's four state funded Technical Institutes.

Our economy is thriving, thanks in large part to our country?s system of Higher
Education. Virtually no discussion is held about the contributions of these Universities to
the quality of life in the United States and the world. No mention is made of the advances in
medicine, building materials, ?ber optics, light wave/frequency technology, renewable
energy, and the improved use of traditional energy sources in a more economic and
environmentally friendly way. There is no mention of the amazing agricultural research
which, but for war, natural disasters, and poor delivery systems, has effectively eliminated
food shortages in the world. The accomplishments are endless. The United States simply
has the world's best system of University education and is the envy of the world. Students
around the world ?ock to attend our Universities.

Riots do not occur on South Dakota campuses. Our students and faculty do not

Letter Page 2 of 55

occupy or burn buildings, picket over trivial issues, or block speakers. They are not violent
or abusive. They do not try to deny the Rights of people with whom they disagree. Whether
their ideology leans to the left or the right, our students are overwhelmingly serious about
getting an education and becoming productive members of their communities and good
citizens of their state and country. In keeping with traditions which go back to the genesis
of the University System in Europe many centuries ago, and consistent with the very nature
of youth, more of our students probably occupy the ?left bank? of the political spectrum, but
both major political parties are well represented, and the extremes, which we see in our
national political scene, do not seem to exist on South Dakota campuses. There is a unique
combination of idealism and pragmatism in our South Dakota student bodies and faculties
which our country desperately needs.

There are many obvious differences between life in South Dakota and in life in other
areas of the country. The average cost of a family home in California is almOst $600,000.
The average cost of a family home in South Dakota is $180,000. This discussion is about
the $180,000 home in South Dakota, not about problems that exist in California. We need to
focus on how our South Dakota Universities are doing. Do people stay in the South Dakota?
Do they get jobs? Does our University System attract people and businesses to South
Dakota?

In the ?rst part of this letter we hope to demonstrate that South Dakota Public

Universities are just simply leaders in undergraduate public education in the United States.
Before embarking on this effort, and to put it in context, we call your attention to the chart
on page 3. The chart demonstrates in black and white the reason tuition and fees have risen.
In the second part of our letter, we will explain the causes of those increases. We will also
detail the individual amounts and history of the current ?nancial distress of the University
System. We also attached a summary version of this letter for your convenience.

Basic Problems

The chart that follows is referred to as an Chart? in the Board of Regents Fact
Book. The Fact Book is distributed by the Board of Regents every year to every Legislator,
the Governor, and anyone who is interested. This book is literally intended to answer any
question anyone, particularly the Legislature and the Governor, has ever asked the Board of
Regents. It is also intended to be used when individual Regents meet with individual
Legislators. While the Board of Regents maintains an extensive? ?online? presence, the Fact
Book allows the reader to review the University System as a whole and get answers to
questions or information that may not occur to the reader. The 2020 Fact Book has just
been published Much of the information herein is taken from these annual Fact Books.
This letter attempts to look at the University System from a wide perspective over the last
two decades, paying particular attention to ?scal years 2009 through 2020. We think the
undisputed numbers establish that ?scal years 2010 through 2020 were a ?lost decade? in
the State?s commitment to Public Higher Education. When the authors attended the
University of South Dakota in the late 60's, the State of South Dakota paid more than 60%
of the cost of a student's education. In 2009, as you can see from the chart below, the line
was crossed, and the Students began paying more of the cost of their education than the
State, and the proportionate actual cost paid by the student has increased most years since.

Letter Page 3 of 55

The Chart:

Qsmpiarison of Strident n3 ?enaral Fund Snppoet

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This chart is misleading in that it omits some of the direct, non-tuition costs students
must pay. If all student costs paid to the Universities in 2020, including tuition, fees. HEFF
surcharge on tuition, room board excluding books) are actually accounted for, the state's
share is only 34.3%, not the 45% shown on the chart. The cost shift from 60% plus in the
1960?s to 34.3% in 2020 is a huge reduction, causing signi?cant changes of many kinds,
including large tuition increases. Furthermore, the 34.3% ?state share? overstates the State?s
General Fund contribution because FY17, FY18, FY19 and FY20 appropriations each
include $2,900,000 of student fees "repurposed" to become part of the General Fund. These
percentages compare direct payments to the Universities by students with the Base General
Fund Appropriation in that year only. Other non-state and non-student sources of support
such as grants, gifts and federal funds that may be received by the Universities are not
included in the calculation.

Letter Page 4 of 55

 

SUMMARY BULLET POINT ITEM OF FINANCIAL DISCUSSION:
Information explained in detail on pages 35 -37 of the Letter
Lost Cash Available for Operations by Legislature Action in vears Speci?ed

General Fund Budget Cut $88,806,124
General Fund Failure to Pay Utility Increases (1999-2016) $38,954,074
General Fund Failure to Pay Health Insurance 15 792 677

Premium Increases from years 2003-2020 ($928,921 per year)
Total Legislature Cuts $143,552,875

Additional Cash Cuts 
Failure to support ?Dual Credit? at Tuition Rate (of $200/hr.)
Approx. $15,500,000
Not Passing through Interest Savings on ?re?nanced bonds? $5,112,539
Repurposing fees paid by students and then applying the repurposed .

fees to General Fund obligations in perpetuity - for 4 years $11,600,000

Total FY17-FY20 Additionai Cash Cuts $32,212,539
Total Legislature Cuts Additional Cuts $175,765,414
Lost Cash Available for Operations by Regents (after 201m
Failure to impose ?Salary Competitiveness Fee? through FY20 $14,400,000
(this will increase by approx. $1,800,000 per year
or 1% of the total tuition paid that year)
Reduction in Hours to Graduate through FY20
(this will increase by 8% of tuition paid every year $73 000 000
or approx. $12,000,000 per year currently)
Total Cash Cuts bv Regents $87,400,000
Total Cash Cuts (1991-2020) $263,165,414
Additional Loss Due to Lack of Base Budget In?ation (1998?2016) $52 000 000
Grand Total Cash Cuts $315,165,414

 

 

 

The chart above details the "loss of funding" by the South Dakota University System
over the past twenty years with the prime focus on the last 11 years. ?Loss of funding?
means three separate ways in which State General Fund Appropriations to the Public
Universities were reduced. The ?rst is simply a traditional budget cut. The second is the
State?s failure to fund obligations the General Fund historically paid in full for all other
departments of state government in a particular year, but did not pay for the Public
University System. The third is the repurposing or diversion to the State General Fund for
other non-university state purposes of fees paid by students to the Universities. As will be
clear in the discussions to follow, the total amount exceeds $250,000,000 over 22 years,
most of which, however, occurred within the last 10 years. State support for the University
System basically imploded from the mid 60% support in the mid 1960?s to less than 34.3%
today.

Letter Page 5 of 55

The Outstanding Success of the Six Institutions of Public Higher Education in South Dakota

The media often tends to focus on ?problems? and ?failures? rather than on
accomplishments and successes. To decry the excessive price of a house in California
without mentioning the reasonable price of a house in South Dakota is misleading. Our
letter focuses on the cost and value of the South Dakota ?house,? the cost and ?value? of a
South Dakota education and our plea to preserve it. In this letter we use statistics not
produced by the Board of Regents or the Universities, but by others, such as the US. Census
Bureau, the United State Department of Labor, the United States Internal Revenue Service,
and the United States Department of Education. We use statistics produced by South Dakota
Departments as well. Virtually all this information has been provided annually in the yearly
Fact Book. .

The ?rst thing we must examine is how the South Dakota Public Universities measure
up in terms of tuition and fees to the other Public Universities in the United States. What
follows is the Chronical of Higher Education list of tuition and fees charged by State Public
Universities for the 2018-2019 school year, the latest data available. According to recent
newspaper reports, South Dakota?s Public Universities rank has improved further in
2019-2020 school year.

 

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Letter Page 6 of 55

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Letter Page 7 of 55

Letter Page 8 of 55

You will note South Dakota ?nished in 39th place with only 11 states with lower
tuition and fee charges. If we eliminate last year?s 11% surcharge for HEFF, South Dakota
would have ?nished in 44th place. If we eliminate that surcharge for the last two years,
South Dakota would be 48th place with only two states with a more economic, cost?effective
education. In short, without the unique HEFF charges, South Dakota is as inexpensive as it
gets.

The Higher Education Facilities Fund (HEFF) is a cash surcharge (currently
11%) on student tuition. Bonds are issued to build and rehabilitate academic buildings
only and are repaid by HEFF. This is the mechanism by which the state transfers the .
financial burden of remodeling and new construction of academic buildings to the
students. The obvious and immediate effect is to in?ate tuition charges by 11%. South
Dakota's HEFF charges are unprecedented. We know of no other state that imposes
HEFF charges, although some states do impose speci?c building fees from time to time.
In interviewing literally well over a 100 applicants for a South Dakota University
presidency over the last 20 years, not one was aware of a state with a similar method of
financing academic buildings. They likewise were unaware of a state which constructed
athletic facilities with neither state nor student funds paying for at least a part of the
cost, as is the South Dakota practice. When ?nancing academic and athletic buildings,
South Dakota stands alone.

The chart below shows state support for Higher Education is on the low end of
our region.



 

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Letter - Page 9 of 55

The next chart indicates the FY18 Awarded Degrees and Baccalaureate Majors. The
reader will see that a total of 5,216 students graduated and can review the information by?
University and by major. Over the last 21 years, the South Dakota University System
awarded over 110,000 degrees. The success story is shown on the following two charts
which demonstrate the high proportion of graduating students and their high level of
achievement. The charts show the high proportion of Public University graduates that
remain and work in the State of South Dakota. These charts reveal much about the high
quality of a South Dakota Public University education and go a long way toward dispelling
some of the ?old wives tales? in that regard.

Letter Page 10 of 55

     

   

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The United States Government tracks students from school to school, primarily to
prevent fraud in the Student Loan Program. The next chart provides a breakdown of the
record of South Dakota Public Universities in student retention, degree completion, and job
placement. 77% of freshmen students at South Dakota Public Universities return for year

Letter Page 11 of 55

two, a high retention rate for public education. Amazingly, 68.7% of students who start
with one Regental institution either complete their education there or some other Regental
University and get their degree, or get their degree from another Institution of Higher
Education within six years. Almost 70% of students start who their education in a Regental
Institution will ?nish with a college degree, a high number when compared with other
Public Universities.

The second chart relates to where students go to work after graduation. Consistently,
70% of South Dakota students who graduate from South Dakota Public Universities stay
and work in South Dakota and 30% to 40% of out-of-state students stay? in South Dakota and
work after graduation. Taken as a whole, based on forms, 5 5% to 60% of students
graduating from South Dakota Public Universities remain in the state. It is important to note
that out-of?state students represent 38% of the State Universities? enrollment. A number
which, when calculating the South Dakota retention rate of the class as a whole, is lower
than the rate for South Dakota alone.

The third chart relates to in-state placement of Regental Teacher Education
Graduates. 67.4% of the South Dakota residents who received a teaching degree from a South
Dakota Public University between 2002 and 2016 went onto teach in a South Dakota School
District. If we count both South Dakota and out-of?state students teaching, 55% taught in a
South Dakota Public School District. Of those teaching in a South Dakota School District, 70%
were still teaching in a South Dakota school ?ve years later.

These retention rates are arrived at by furnishing students' social security numbers,
without names, to the South Dakota Labor Department. The Labor Department then
furnishes those numbers to the United States Internal Revenue Service. The IRS then reports
the percentage of those people who received a W-2 income report from a South Dakota
company. It is a conservative number because it only reports W-2 matches and does not
count partners who receive a K-l. People who work for themselves or work for the Federal
Government do not receive a W-2 and are also not included in the percentage.

If the same research was done for the Technical Institutes, we believe the results
would be roughly the same. The Public Universities have a much larger out-of?state
enrollment than Technical Institutes. It is well known that the proportion of young South
Dakota workers to retirement age residents is a real demographic problem. Since South
Dakota does not have a real program to attract young adults to the state, the 30%-40% of
those out-of?state students who graduate from a South Dakota Public University and remain
to work in South Dakota is very signi?cant.

Letter Page 12 of 55

 

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Letter Page 13 of 55

   

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Letter Page 14 of 55

 

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Average income, Unemployment. and Student Loan Default Rate

The chart below, a listing of the Top 10 Bachelor Degrees awarded from 1997 and
2017, demonstrates the changing environment which the Universities have successfully
addressed over the last 20 years. Both student needs and society?s needs for knowledge and
skills have changed and the Universities have changed with them. South Dakota

Letter Page 15 of 55

Universities, as is necessary in this changing world, are constantly reviewing their offerings

and addressing the market. They do not just teach the same old things, they address new
market needs. 

 

Hasa anti Now

 

Degree attainment has grown and ta grew in Saint: Dakota especialiy asterms (if high- mad majors-Sine Regents! System
continues to remain raspansive to the needs ofstata, reginnal and national ?enemies, as Well as to tile cammunitias they workwithin.

Top 10 Badlelar Dagreas, by discipline, during the 1997 an? 2817 academic years.

Figure shows degree-'5 and [sexism errata! degrees

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The following chart covering the average income and unemployment rates by level

of educational achievement, is baSed on statistics compiled by the United States Bureau of
Labor Statistics in 2016. The level of educational achievement has a direct and dramatic
effect upon employment and meome. The lesson of these statistics does not change! The

more education one has, the lower the unemployment rate and the higher the income level

and student loan default rates in South Dakota are exactly consistent with these principles.

 

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Letter Page 16 of 55

Below are student loan default rate charts for years 2013. 2014 2015 and 2014,
2015 2016. This is an issue of huge importance and an area in which South Dakota
Public Universities do extremely well. The rates are determined by the US. Department of
Education based on an actual count of individuals who defaulted that ?scal year and the
school they attended. All schools eligible to receive US. Government student loans
(virtually 100% of the post-secondary schools) are required to report information about
student participation in this federal program (including the student?s name and Social
Security number) in part to prevent multiple applications for student loans, as well as for
other research purposes. These relative proportions have been essentially the same for the last
20 years. In the ?rst chart (years 2013. 2014. 2015). South Dakota?s Public Institutions (both
Universities and Technical Institutes combined) rank 5th lowest in the country in terms of

default rate.

 

This Chart covers years 2013. 2014, and 2015

 

 

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The chart above (years 2013, 2014, 2015) indicates South Dakota Public Universities
have an average default rate of 6.1% compared with a public school national average of
11.9%. The Technical Institute default rate is 11.9%, over the national average.
The average student loan. default rate for the three years was 6% for the Universities and
11.9% for the Technical Institutes. We do not list Technical Institutes to be critical. Their
rate is not terrible or even bad. It is essentially the national average. The Universities? rate,
however, is exceptionally good. The two default rates are important in the discussion of the
value of a University education in South Dakota. The Federal Government makes the loans,
collects the loans and publishes the results by school and category of school. South Dakota
students? record in paying their student loans is a tribute both to the character of the students
and to the quality of the education they received.

The latest version of this default report by the Department of Education was recently
released. The chart below covers the years FY14, FY15 and FY16. The lessons are the same as
last years except the default rate for both the Public Universities and Technical Institutes
improved. The Public Higher Education (both Universities and Technical Institutes) default rate
for South Dakota is 7.3% for this three year period, an improvement to 4th best in the country.
The national average for Public Higher Education is now (2016) 10.4%.

Letter Page 17 of 55

This Chart Covers Years 2014, 2015. and 2016

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The South Dakota Public University default rate declined to 5.4% in 2016 for a three year
average of The South Dakota Technical Institutes? 2016 default rate is 9.3% with a three
year average of 11.4%. The national three year default rate for public education is now 10.4%. -
South Dakota?s default rates change from year to year but neither the relative positions nor the
essential message has changed. -

It must be kept in mind these are U.S. Government statistics containing information from
approximately 4,500 schools. The Federal Government is very slow to get this information
compiled and published. Further, because of the mandated delay in the start of repayment after
graduation or leaving school and other federally mandated notices, delays, and procedures, etc., it
takes about a year to ?default" on these loans after repayment starts.

Certain graduates must take a state or national test to practice or participate in the
?eld in which they have a degree. South Dakota Public University graduates do
extraordinarilywell in these licensure examinations. Below is a chart of our pass rates and
national average pass rates, where available.

Letter Page 18 0f 55

   

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South Dakota Public University graduates have the lowest unemployment rate, the
highest income, and lowest student loan default rate of any state supported Higher Education
provider in South Dakota and at least 70% of South Dakota High School graduates graduating
from a Public University remain and work in the state. These Public University successes
greatly bene?t the State of South Dakota, but have been largely ignored in the popular
narrative regarding South Dakota's Public Universities. How can anyone seriously question
the value of a South Dakota Public University education when the Public University student
loan default rate on United States Government loans is virtually one-half the Technical

Letter Page 19 of 55

Institutes rate, virtually one-half the national average, and one of the lowest in the country.
Public University graduates unemployment rates are less, and the average income is higher.
The $20,000 per year average difference between the income of college graduates and those
without college degrees, computed across a work-life expectancy, is well worth the expense.
With a $26,000 average debt over South Dakota?s average) upon graduation, the
$20,000 average income enhancement exceeds the cost of borrowing in less than two years
a great investment. The problem in student loan defaults, frankly, is largely n_ot with
University graduates, but with those who quit without receiving a Bachelor?s Degree. They
borrow the money, but don?t get the income bene?t which results from a degree. The loan
defaults of students of Technical Institutes are undoubtedly largely as a result of the same
failure to complete the technical degrees.

South Dakota Public University Budgets

 

We use FY97 as the base year because that is the year we became a part of the South
Dakota University System. In FY97, the University System's General Fund Budget was
$106,663,451 or 18.8% of the State General Fund Budget. In that same ?scal year, the K-12
and Technical Institutes General Fund Budget was $197,756,453 or 33.5% of the State's
General Fund Budget.

Obviously, the State?s total General Fund Budget increased dramatically from FY97 to
FY19. The comparative ratios are the critical consideration here. By FY19, the University
System General Fund Budget increased to $213,324,687. However, this equals only 12.9% of
the state?s FY19 General Fund Budget, at 5.9% drop from 18.8% in FY97. The K-12 and
Technical Institutes budget increased to $587,368,676, or 36.4% of the state?s General Fund
Budget, a 3% increase from the 33.5% in 1997. The treatment of the two state funded
critical programs in South Dakota is dramatically different.

Our point here is not to criticize K?l2/Technical Institute Appropriations, but rather
to demonstrate the Higher Education appropriation was cut, while more money was
allocated for the K?lZ/Technical Institutes. South Dakota notoriously underfunds K-12
operations, particularly as it relates to teachers? compensation. Every Regent and University
President whole-heartedly supported the one-half penny sales tax increase which, as we
understand it, amounts to approximately $70,000,000 plus per year dedicated to teachers'
salaries and at least $3,000,000 per year for the Technical Institutes. All these funds
automatically increase as sales tax receipts increase. No effort was made to include Higher
Education as a bene?ciary of this tax. There is a dramatic disparity of treatment between
the two systems, both of which are as old as the state itself, and both of which are central to
the State's future. South Dakota had a fair amount of money over the years but choose to
spend it in other places. While the University System enrollment increased, its percentage
of the State General Fund declined. At the same time, although K-l2 system enrollment
declined, its state appropriations increased signi?cantly and its percentage of the State?s
General Fund increased as well.

We want to stress we don't believe there is some black-hearted conspiracy. afoot to
damage the University System. We have the utmost respect for the Joint Appropriations

Letter Page 20 of 55

Committee which has a very dif?cult job consistently requiring the Wisdom of Solomon.
However, we believe the Appropriations Committee has failed to understand the Public
University System ?nancial structure and budgeting process and has failed to focus on the
Cumulative effect of cuts to University Appropriations over two decades. In South Dakota?s
?Base Budget? system, a cut in one year repeats itself year after year thereafter. A minor cut
in one year becomes a major problem over time.

The Board of Regents FY20 budget totaled $832,003,605. Student payments,
including tuition and fees, total $349,305,440. This ?gure includes tuition and fees from
graduate programs, Medical School and Law School. The total General Fund Appropriation
for FY20 to the Board of Regents is $224,222,581. Included in the total ?gure are
appropriations for the SDSU Extension Service, SDSU Agriculture Experiment Stations,
SDSD ADRDL, NSU E-Leaming Center, South Dakota School for the Deaf and the South
Dakota School for the Blind and Visually Impaired. The FY20 General Fund Appropriation
for these entities, none of which involve student instruction or operations, totaled
$32,986,149. This means the total FY20 appropriation for University System operations
was $191,236,432 plus $349,305,440 in student payments for a total of $540,541,872. The
chart compares General Funds to student funds for the ?scal year. State General Fund
support equals 34.3% compared with student support of 65.7%. The Fact Book calculation
excludes room and board ($46,944,142) from the calculation because people have to eat and
sleep regardless of whether they attend school. Room and board payments, some
mandatory, made to the University are included in our calculation. A ?full ride? scholarship
includes room and board and United States Department of Education form calculating need
for Pell Grants includes room andboard as well.

The remainder of the total budget of just over $832,003,605 includes items like the
Agriculture Extension Service, the Agriculture Experiment Stations, the Learning Center
for High School Education, the South Dakota School for the Deaf and the South Dakota
School for the Blind and Visually Impaired and all the grants received by the various
departments (most typically Graduate and Professional programs). Those grants, while not
State General Funds, must follow procedure which requires those monies be ?appropriated,?
which for grants really means "authorized," so the Universities have authority to receive and
spend the funds. "Authorized follow the same process. A grant may pay for 50 FTE
(Full Time Equivalent) employees, for example, but those FTE's, while costing the state
nothing, must still be "authorized." The University System has many employees that are
funded by grants and third parties. The hard fact is of the "total" Regent/Universities FY20
budget of $832,003,605, the State of South Dakota actually contributed $191,236,432 in
General Funds for University student education. Stated another way, South Dakota paid
34.3% compared to the 65.7% the students paid (ignoring $2,900,000 per year in
?repurposed? student fees).

During a major portion of the last two decades the number of high school seniors has
decreased, While enrollment in our South Dakota Universities has increased. (See the
comparative enrollment graph on page 27). High School student enrollment numbers for the
Public K-12 system totaled 134,052 in 1996, falling almost every year to 123,629 in 2010.
In 1997, total enrollment for the Universities was 24,269, increasing to 36,662 in 2018.

Letter Page 21 of 55

While University enrollment increased during this period by over 10,000 plus individual
students, enrollment in K-12 fell by about the same number. The Universities did not
receive an appropriation adjustment for the increase while the K-12 system appropriation
was not decreased despite the decline. K-12 enrollment numbers began to increase in 2009,
and now exceed the 1996 enrollment, with 134,993 students enrolled in 2018. In an
increasing enrollment environment, the Universities? appropriations did not quite double. In
a falling environment, the K-12 System appropriations almost tripled! Beginning in 1997,
University enrollments grew every year in a steady consistent way until 2010 when the
dramatic growth in student enrollment suddenly stopped. Something occurred in FY10
which took the wind out of the system's sails. The dramatic cuts in FY11, FY12 and FY13
are likely a part of the cause. $35,000,000 in General Fund Budget cuts, almost 20% of the
Universities Base Budget, coupled with zero in?ation increase since FY99, was a huge
shock to a successful, growing and by every statistical measurement, ?rst class University
System.

Unless South Dakota wants to limit the number of students in our Universities, a
reduction in state support increases the cost to the students. The cost of schools, whether K-
12 or Higher Education, is very largely determined by the number of students. It is
generally said that 80% to 85% of the operating budget of an educational institution is
determined by the number of students enrolled. The drop in state support versus student
support from 55% in 2007 to 41% in 2013 was dramatic. The actual cut to Public
Universities to 34.3% in 2020 was even more so. When support goes down, either
educational offerings are cut or tuition goes up. The Universities have no other source of
revenue. No state actually caps the number of in-state students although some states have
put a limit on admission to certain Universities in the state. We understand this is done to
prevent the need for additional facilities at some schools while more fully utilizing existing
facilities at other schools. To exclude or cap out-of?state students would effectively
mandate a large in-State tuition increase.

It is often suggested that academic offerings be limited or cut and in fact, the Universities
have done so over the years. Obsolete majors, low count majors and low count courses have
been eliminated. A look at the major ?elds of study in 1997 and 2017 (page 15) indicates a
radical reordering of priorities, resources and offerings during the two decades. Unfortunately,
many courses or majors suggested for elimination are inexpensive offerings and may actually
pay for themselves. No one suggests eliminating high cost programs such as agricultural
sciences, engineering sciences, information technology sciences, medical doctors, nursing,
pharmacy, biology, physics, botany, chemistry, and the like but that is where the real costs are.
People dismiss things like journalism, history, political science, english, education
courses, and various other social sciences and suggest the elimination of these courses of study.
The problem is that most lecture based programs pay for themselves. To save money, the very
majors and courses even the critics suggest the Universities retain would have to be cut. A
University?s ?cost centers? are the very areas everyone agrees the Universities must retain. Cost
is not the only factor when deciding which courses are offered. The profound benefit to society
provided by social sciences and the arts must be considered. teachers do not take only
?teaching? courses, they enroll in a wide variety of other academic courses as well.

Letter .. Page 22 of 55

There are approximately 4,500 colleges and Universities in the country competing for
students. Our red hot state and national economies tend to depress enrollment. Every time a
school eliminates a major, activity or opportunity, a certain number of students are lost. When
Dakota State University in Madison changed its mission to concentrate on Information
Technology, some administrators saw little purpose or value in extracurricular activities or many
majors other than Information Technology and directly related courses. As a result, Dakota State
University student enrollments declined to fewer than 1,000 full time equivalents before
people experienced in Higher Education were returned to control. Colleges and Universities
recruit l7 and 18 year olds, many of whom do not know what they want to study or will do for
their lives. Potential students all visit dorms and student unions, rarely labs or classrooms. The
students are eager for activities and courses outside their major ?eld of study.

A range of majors and activities are necessary to attract students, but, more importantly,
students need to be exposed to a broad range of ideas and studies. How many times have you
heard, ?kids don?t study American History or Western Civilization anymore?? These courses
and the like are critical to producing a well?rounded work force and a better society, but are often
the type of course people suggest cutting. The idea that society should only support schools that
offer a narrowly focused curriculum is false. Students don?t want that and businesses do not
support that. For pro?t commercial schools offer virtually no social science courses, most focus
on hard skills only. In South Dakota those schools? student loan default rate is 22%, not the less
than 6% default rate of the Public Universities. (See federal report on page 16 and 17). Today?s
students must be prepared to compete in an ever changing and increasingly complex world.
They need a broad range of studies and experiences. The Public Universities live in a world of
intense competition for students. This competition affects all operational aspects, including in
part, the physical assets, curriculum, and quality of staff and marketing that exists. It is all,
including marketing efforts, extremely expensive. We need to keep in mind that even in highly
technical companies, 40% to 50% of the jobs are non-technical.

Issues Pertaining to Technical Institutes

The Legislature must address issues pertaining to wasteful duplication of services
between the South Dakota University System and the South Dakota Technical Institutes.

K-12 School Districts (including Technical Institutes) have been, per the State?s
Constitution, controlled by publicly elected local School Boards. Funding is provided by
property taxes, the State of South Dakota General Fund appropriations and various federal
and additional state program funds. K-12 School Districts do not charge tuition for
attendance by District residents. Technical Institutes students pay tuition and fees. For
FY18, the General Fund Appropriation for School Districts, including Technical Institutes,
amounted to $549,274,862 or 35% of the General Fund Budget. For FY20, the General 
Fund Base Budget for School Districts, including Technical Institutes, totals $608,314,514.
University Base Budgets for FY20 amounted to $224,222,580.

Recently, the voters created a new Constitutional Board to control many aspects of
the School Districts? Technical Institute's operations, including curriculum offerings. The
measure has the effect of removing the authority of the Board of Regents to prevent

Letter Page 23 of 55

unneeded and uneconomic duplication of the respective systems curriculum offerings. The
State's Constitution, however, provides for "control" by the Board of Regents of all Post-
Secondary Educational Institutions funded by the state ?in whole or in part." The Technical
Institutes award an Associate of Applied Science Degree which, while not a traditional
college level degree, is clearly post-secondary and, after the state-wide vote, is now the
dividing line of ?authority? between the now two Constitutionally created boards.

The Board of Regents is a Constitutionally created Body of the State that "controls"
the Public Universities, the South Dakota School for the Deaf, the South Dakota School for the Blind
and Visually Impaired and all post- secondary education entities except Technical Institutes,
supported "in whole Orin part" by state funds. Regents are appointed for six year terms and
must be approved by the South Dakota Senate. After approval, Regents can only be
removed by Impeachment by the Legislature. By virtue of the State Constitution, Regents
are a semi-autonomous part of the South Dakota State Government. This system was adopted
in part to insulate Higher Education from the political process. Laws of General application
and the appropriation process clearly supersede that ?control.?

Board of Regents? employees (over 5,000 individuals) are state employees but-are
not controlled by the South Dakota Governor's of?ce or the Department of Education.
The Board of Regents Executive Director and University Presidents are selected by the
Board of Regents and report to the Board of Regents. Of course, the Board of Regents
and Universities operate subject to State Laws and Appropriations. Funding for the
Public Universities is limited to State General Funds appropriated annually by the
Legislature and student tuition and fees set annually by the Board of. Regents subject, as
a practical matter, to the "signi?cant in?uence" of the Legislature and Governor. Grants
and gifts are received only as "authorized." In 2018, the General Fund Appropriation
for the Public Universities was $213,390,272 or 13.1% of the General Fund Budget. In
2019, the appropriation was 12.9% of the General Fund Budget. The Governor?s of?ce
has certain funds such as the Future Fund that it can distribute periodically to assist the
Universities for speci?c projects. The Federal Government has various programs that
likewise support the Universities, primarily at the research and graduate education level.
A private foundation associated with each University raises money from third parties
primarily for buildings and scholarships. In FY19, foundations associated with the
individual Universities provided $24,126,450 in scholarships to University students.
Both the Universities and Technical Institute students are eligible to participate in the
Federal Pell Grant and student loan programs. In FY18, Pell Grants (scholarships)
provided $33,552,959 and State Opportunity Scholarships provided $4,511,500 to Post-
Secondary schools in the state, both public and private. Federal and alternative loans to
University students amounted to $197,075,306 in FY18. The average loan balance for
fall 2017/spring 2018 graduates was $26,904. The average balance in the 
school year was $25,427. The average loan balance was $12,528 in FY97.

With the passage of a recent Constitutional Amendment, it is clear the Board of
Regents have no further role to play in coordinating the education offerings between the
Universities and Technical Institutes, which was a purpose for the proposed Amendment.
This change has already resulted in material duplication by the Technical Institutes of

Letter Page 24 of 55

University programs. Since 1935 registered nurses have been educated at two Regental
Schools. Since the recent Constitutional Amendment, there are now six state funded
registered nursing programs, four taught at the Technical Institutes. We understand
some Technical Institutes have now started three year programs rather than two year
programs. According to the Rapid City Journal published January 12, 2020, the
Technical Institutes will now change their names to ?Colleges.? History suggest these
schools will begin four year programs within a few years and will petition for authority
to grant Bachelor?s Degrees. That motion will arrive within ?ve years. The Board of
Regents did not receive any notice from any state department or entity of the adoption
of these competing nursing programs, learning this only after the fact from non-state
sources. Another area of possible duplication is in the area of the sciences. Although
the state clearly needs the four Technical Institutes, the state does not need, nor can it
support, ten Universities. It is vital that the Executive and Legislative branches address
coordination of post-secondary offerings. We have problems funding education in our
state. A costly duplication of education offerings between the University System and
the Technical Institutes further complicates our funding problems. As an old story
about cattle ranching says, if a rancher puts too many cattle in a pasture, all will starve.

Recruiting Students

 

If a person visited a campus in1997, he or she would have found six University
campuses which looked almost identical to the way they looked in 1966. A few
buildings had been added, but the Universities uniformly looked old, worn-out and ill-
maintained. New and rehabilitated buildings were needed to meet the speci?ed missions
of the schools.

Sometime prior to 1997, the Board of Regents surrendered to pressure from the
Legislature and Governor and raised out-of-state tuition to an amount equal to 325% of
in-state tuition. Historic practice set out-of-state tuition at 150% of in?state tuition. The
increase to the 325% tuition level, which had nothing to do with the cost of delivering
education, was perceived by out-of?state students as an invitation to leave or avoid
applying in the first place, and they did so in huge numbers. South Dakota had, in
essence, 50 year old, worn-out campuses, which became prohibitively expensive. Iowa
and Nebraska students, once a large part of the enrollment, stayed way in droves.
Minnesota students were exempt due to a unique agreement with the Board of Regents.

With a decline in enrollment, the system faced a reduction in force (RIF),
subsequently negotiated with the Legislature and Governor. This resulted in the
termination of the employment of 140 professors in 1998. At about the same time out-
of?state student tuition increased, the Legislature passed a bill that, as a practical
matter, prevents out-of?state students from ever becoming South Dakota residents, and
thus, from ever bene?tting from in-state tuition. That law, still in force today, continues
to cause dif?culty in recruiting out-of?state students. The states around South Dakota allow
out?of-state students become residents. For some reason, students at Technical Institutes are
not covered by this statute.

Letter Page 25 of 55

In 1999, in a two-step process, the Board of Regents implemented a return to out-of-
state tuition rate equaling 150% of the in-state tuition. There had been various rate
reductions for certain states and for certain Universities over the years, and in 2018 the Board
of Regents decided to provide in?state tuition rates at all Public Universities for students from
surrounding states, plus Colorado. This was part of a current movement in the United States
to move to a one level tuition rate. Those rates did not appear to violate Legislation
preventing out-of-state student residency. Changes in the tuition rates were necessary to
remain competitive in the "out-of-'state? student market. In the fall 2019 semester, 37.9%
students enrolled were out-of-state students. Without the out- of?state students, the South
Dakota Universities would be forced to limit enrollment of students, raise tuition
and fees, or drastically cut academic offerings to remain in business. Time will tell the
economic impact of the expansion of the ?in-state rate? eligibility.

In 1999, the Universities first addressed the loss of students by beginning to retreat
from the 325% of in?state for out-of-state tuition. In 1996 enrollment was 23,673 individual
students. It grew from 1996 until FY10 when it reached 36,440 individuals. On?campus
enrollment in 2010 reached 26 409 and off-campus reached 15,444. There is no duplication
in these numbers, meaning that a person is only counted once even if the student takes classes
both on and off campus. In fact the Board of Regents found that over one half of the
?online? courses being taken were on-campus students. 

 

In 1997 University System total enrollment was 21,374, of which 2,895 were off-
campus students. Thereafter, and in response to major changes on South Dakota Public
University System campuses, enrollment increased each year until 2010 when total
enrollment was 36,440, of which 10,031 were off-campus students. After 2010, the steady
increase in enrollment abruptly stopped and slowly declined until 2018. In 2018 the total
enrollment was 35,737. In 2019 the total enrollment was 34,520. Of that amount, 10,959
were off-Campus. In 2010 on?campus enrollment was 26,409. In 2019 on-campus
enrollment was 23,561. The on?campus decline from 2010 to 2019 was 2,848. The off-
campus difference between 2010 and 2019 was an increase of only 928 students. The recent
decrease in total enrollment can not be dismissed as a result of on-line or off?campus
education programs. When the off-campus use has been analyzed, 50% of the online
enrollment was by on-campus students. There has been, essentially, a 2,000 on?campus
student decline since 2010. The ?off-campus? numbers are computed by subtracting the
?on~campus? enrollment from the ?total enrollment? number. The ?off-campus? number in
the Fact Book contains both on?campus and off-campus students who take online or similar
courses. Approximately 50% of online enrollments are actually on-campus students. While
these numbers are not completely exact, they accurately re?ect what has generally occurred.

"Off-campus" means all forms of education not actually conducted on?campus,
including both internet and advance placement programs, etc. It does not, however, include
NSU's E?Learning Center for Higher Education. The E-Leaming Center is an intemet based
high school distance education program, taught by Masters? Degreed teachers, exclusively
employed by the Center, teaching to confer high school, not college credits. The program is
paid for completely by State Appropriations. It is administered and housed at NSU and
hence included in Northern State University?s appropriation. It would be more appropriate

Letter Page 26 of 55

if the E-Leaming program was separately appr0priated in the same way the Medical SchOol,
Ag Experiment Station and Ag Extension is treated. Northern State University was severely
penalized for having E-Leaming and University operations in one bill. This program was
initiated in conjunction with the Opportunity Scholarship program to insure every high
school in the state can could offer its students the required scholarship curriculum.

The intemet does not seem to be the only possible explanation for the on?campus
enrollment decline. "Dual Credit" in its various forms may have played a part. The Dual
Credit program includes a high school student taking a college course on a college campus,
or a student taking a course taught by a University professor at a high school. A student in a
Dual Credit program receives both University and high school credit. For this program (high
schdol students taking college courses from a University professor on campus or at a high
school), the student pays $50 per credit hour and the state contributes an additional $100 per
credit hour. The student does not pay fees, only the $50 per credit hour charge. The average
standard per hour tuition rate is approximately $250 per credit hour, plus fees. The
University receives $150 per credit hour rather than the standard $250 per credit hour rate
and zero fees. This constitutes a huge discount.

A third option in the dual credit program, a high school course taught at a high .
school by a high school teacher with a curriculum approved by a University, grants both a
high school credit and a college credit. The student pays $50 per credit hour but state does
not contribute the $100 per credit hour. Since Public Universities grant college credit for all
three ?Dual Credit? options, there appears to be no good reason why the State does not
contribute $100 per credit in each instance. If the State contributed $200 per credit hour in
all instances, the Universities would still be granting signi?cant discounts because fees are not
charged. Fees in many cases are close to tuition charges. Also these students do not pay
HEFF charges. In FY16, 1,793 high school students took 2,590 individual courses equaling
7,770 college credit hours for which no payment was made by the State. $200 per credit
hour would amount to approximately $15,500,000. Thus Universities would still be
effectively discounting normal tuition and fees by almost 50%. It does not appear that this
dual credit program had any impact on the enrollment numbers whatsoever. The University
System did not seem to attract more students as a result of the dual credit program. But,
since more students arrived with college credits at a deeply discounted rates, overall
University income was reduced.

2010 seems to be a watershed year for many aspects of the University System. The
charts below show the decline in high school graduates between 1997 and 2016. The
adjoining graph shows the steady and consistent increase in University enrollment from
1997 to 2010 and the dramatic leveling off between 2010 and 2016. Something dramatic
happened in 2010.

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Letter Page 27 of 55

Letter Page 28 of 55

Campus Facilities Update

In 1997, at the same time out-of?state tuition was addressed, the universities began a
twenty year project of replacing or rehabilitating campuses. The replacement of 50 year-old
dormitories, whose rooms resembled jail cells, was the ?rst priority. The University System,
like any business, has to have an attractive, modern and eye-catching physical plant. While
virtually 100% of potential students visit the dorms and student unions, few ask to visit a 
classroom. In the past 21 years, 53 new buildings were built and 57 rehabilitated. In FY20
the University System owned and operated 361 buildings, 276 of which are Academic
faCilities. The infrastructure improvements over the 21 years exceeded $1.3 billion dollars --
Of that amount, State General Funds contributed only about $40 million
dollars, or The University System had to raise the balance.

Dorms (like apartments) and Student Centers are generally ?nanced with revenue
bonds. There are 85 revenue producing buildings on University campuses. Student dorm
rent and University Support Fees make the bond payments and maintain the buildings.
Because building new or substantially rehabilitating dorms is expensive, an increase in fees
to students are required. New dorms with higher rent sell out ?rst. No HEFF (again student
tuition surcharges) money is used to support dorms, student centers, etc. HEFF is only used
to pay for new or rehabilitate academic buildings and helps maintain the same. Most often,
private third party donations pay for a signi?cant percentage, and occasionally all, of the
cost of academic buildings. No General Funds, student fees, or HEFF monies are allowed in
the construction of athletic facilities and buildings. All that money must be raised from 
affiliated foundations, alumni, business donors and others. Student activity fees, gate
receipts, and third party donations maintain athletic facilities.

From 1997 to 2010, University System enrollments grew every year, increasing in
round numbers from 25,000 to 36,500 individual students. The Universities began to thrive
and income increased correspondingly. However, no corresponding increase in General
Fund appropriations was made to keep up with the enrollment increase. I

Below are three Student Unduplicated Fall Headcount and FTE charts covering years
1974?1996, 2000-2009 and 2009-2018.

Letter Page 29 of 55

Enrollment . Fiscal Year 1997

Historical Fall 'H-eadcount Eur-011m e111

P11188111 - Spring

m1: 111-1513 13311 1151.} 8138181 81.35.11 115!) USI358 81111 '1'1'11111 Cha?ge 1111111 111111
15198 2.366 1.231 3,634 2.223 3.3811 53.9711 724.289 4.01%

I935 2.7315 1.354 2.633 2.336 3.81113 3.32? 25.193 ?5.15% 23,673 1996
199-1. 3.961 11-1-3111 8.92.1 2.16:! 9.1111 7.739 28.117: 11.79% 2111.65; 188's
19193 2.3311 1.563 2.86? 2.491} 3.9615 7311? '26.463 2.69% 24,762 .1894-
1992 2.11111 1.51111 2.3611 2.11111 11.5511 11.591 25.171 3.9711 23.961 1.993
1981 2.334 1.1165 2,318 2,451} 3.690 7.231 211.?38 4.61% 23.606 1993
1980 3.545 1.31 1 3,1 13 2.233 1.612 8.817 83.631 8.11118 .2133: 1991
1989 2.112 1.224 3.103 2.1 15 7.9110 8.39? 22.2139 5-3588 28.317111 19813
1983 1.2131 1.111 3.0515 1.9511 6.31.1 5.1138 21.124 3.511% 351.1556 1.989

28139 $3.53 3.02? 1.931 6323 5.621 213.392! ?9,961 13.83
1936 2.139 9159 2.889 2.1323 6365 5.5 I 1 20.26? 19.3 1% 
1983 2.117 515'? 2.1113 11.2% 6,837 5.520 150,419 ?3.94% @322 
1984 2,230 97? 2.718 2.5% $5,341} 5.353 81.255 67 .4191: W354 2935
1983 2.223 1.2451 2.77% 2,933 3.828 i??l 22.956, 21.50? 1984
1932 2.030 2.895 7.339 6.175 33.093? 0.63% 21.88?! WM

1981 2,173 1.1111I 2,7015 3.113 7.1151 6.221}
19111 2,1199 1.111111 1.6113 2.393 1.1143 3.111511

22.855. 5.112% 11.855 I932
25.1.?63 6.01% 1111,3133 1931

1:144.


1979 2.8521 195 2.159 2.158 11.884 8.5153 218.521 1.57%: 193135 111811
1971 1.96? 311:. 1.3713 1.9351 8.83? 5:131 21.2111 11.19% 19.21111 1919
1.312 9512 2.1128 1.112 6.539 5.1112 1111 211.1116 2.21111. 19.0117 19711
1976 1.1.1121 922 2.353 1.612 6.1611 5.5133 838 19.682 0.46% 18.11118 1811
191.1 1.815 1711 2.3119 1.889 6.112 5.1132. 1113 1.9.5111 4.97%. 13.150? 1336
15:74 1.?71 2.198 1.488 6,131 5.560 711) 113.1545 11.13% 11,111 1981

Historical .FTE Enrollment

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19911 2.5111 92-? 2,2117 1.1158 7.81111 6.19? 11 21.311 8.29%

19195 2.394 1.1124 2.293 1.912 3.351 5.596 8 ?22.1511 {1.1611 29.523 '1996
1991 2.885 1.1.115 2.418 2.81:4" 5,111 1 8.11115 11 22.1815 1.111111 21.148 1985
1993 2.525 1.1155 2,483 2.889 1.1151 11.1111 11 22.111 2.91514 21.1511 1985
1992 2.11111 1.1312 1.355 2.13:1? 1.459 6.713 11 22.861 3.815% 211,523 1993
18191 31379 959 2.3116 1.99? 3.143 8.511 11 21.22.: 1.113111 19.111 19112
19110 1.242 11311 2.3281- 1,3513 8.333 6.1133 51 20,244 4.35% 111.111 19111
19119 2.11115 1189 2.3138 1:562 15.3115: 5.833 11 29131111 4.51% 1333.5 
19113 1.949 82? 2.315 1.11311 6.2.18 5.348 11 18.41213 2.1311 18.296 1589
1.1131 1,311 1111 1.425 1.1172. 8.1219 5,223 11 11.1184 1131111. 111.8111 211311
19115 1.241 7111 2,321 1.742 8.2111 3.0153 11 11.981 12.7111 111.913 1981
1.815 1.354 2152 2,384 1.917 6.1111 5,211 11 13.457 8.113% 17.11313 1936
192:4 2.1133 912. 2.3211 1.11:1 15.1153 5.1289 11 19.5111; 8.19% 13.11112 1135
195:1 2,1102 1.133 2.315 1.52:1 8.123 5.123 11413 21.3411 4.118% 18,703 1934
1.11112 1.811 1.1 15 2.311 1.5211 1,1113 5.1131 1111 21.582 8.2811 213,369 1983
1911 2.8217 1,1151 2.381 2.41:1 1.1134 5.11321 7.55 21.839 1.8214 wa?s 1982
19811 1.1144 9511 2.3115 2.119 5.8214 1.551 153 41.329 5.3111. 19.341 1931
1819 2.919 11133 2.2119 1.11113 8.2111 5.405 1133 19.111111 1.111% 18,175 19311
1.933 1.353 314 2.121;. 1.3111 8.468 5,311.1. 1131 19.159 51.1 18.11211 1979
1971 1:191 19': 2.223 1.151 81.174 5.332 1128 19.11.31 1.11181 11.9751 191111
2978 1.7114 1198 2.218 1.8119 8.49:1 5.306 19:1 111.1185 111.1411 121.5117 197?
1831 1.7113 111-: 2.165 mm 6.341? 5.313 806 19.11519 1.71115. 11,1145 1916
1914 1.598 7115 2.539 1.152 6.533 5.11.11 ?15-1 111.111 11.11111. 17.1111 197:;

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The years 1997 through 2010 were relatively good years. Enrollment increased for
13 consecutive years. SDSU and USD moved to NCAA Division 1, resulting in a great deal
of added success and exposure. They played in high pro?le national tournaments against
nationally known teams and played well. Their academic programs became more well-
known and recognized. The Medical school was nationally recognized for rural medicine.
Graduate Degrees and the number of graduate students increased. NSU thrived in NCAA

Letter Page 32 of 55

Division II, achieving national ranking in both men and women athletics. 
International Business Center thrived. BHSU successfully expanded into Rapid City.
technology program thrived and expanded. The School of Mines expanded
enrollment and substantially rehabilitated the campuses. Enrollment increased at SDSU and
USD. Their academic programs expanded. For the ?rst time in years the ?Core
Curriculum? for the Universities was revised. Academic curriculum was modernized and
updated. Majors and courses were reviewed, many discontinued and many added. Courses
with fewer than 10 undergraduates and classes with fewer than 7 graduate students were
prohibited. Classes with low enrollment were canceled. South Dakota provided computer
wiring for all educational institutiOns in the state, but, as far as we know, orir system was the
only state funded University System in the country which did not receive funds to
computerize campuses. Nor did the University System receive a state appropriation for the .-
purchase of computers on campuses. Student University Support Fees, and later technology
fees, purchased and operated computers on campuses. One year, student fees increased 8%
to cover computerization and Wi-Fi installation costs.

The Board of Regents raised millions to build the State?s ?ber optic cable system.
Computers, including personal computers, then notebooks, then iPads and smart phones
arrived in force. Wi-Fi was installed. The cost, unsupported by the state, was enormous
with the students carrying virtually the entire burden. HoweVer, during this time, the state
did adopt its ?rst and only generally available four year undergraduate scholarship program,
the Opportunity Scholarship. If students quali?ed (by grade point, a 24' cumulative ACT
score, and required curriculum) and remained quali?ed, the scholarship provided $5,000 per
student over four years. This was later increased to $6,500. All South Dakota not for pro?t
post-secondary education institutions, public and private, including Technical Institutes, can
participate in this program. In FY18, 4,062 graduates of South Dakota High Schools
received Opportunity Scholarship payments amounting to $4,511,500 at 15 post?secondary
schools in South Dakota. All South Dakota Public Universities added additional scholarship
funds to the Opportunity Scholarship recipients at their schools.

Economics and ef?ciencies were initiated. A uniform system of accounting and
system wide computer system was adopted at last. South Dakota alone has one uni?ed
transcript combining all Public Universities and listing all the courses taken at each. Over
the 21 years, more than 110,000 degrees were awarded by the University System. Cost
saving changes, too numerous to list, amount to over approximately $15,000,000 per year.
Some decisions, such as outsourcing janitorial services, were abandoned as the cost was
actually higher and the quality of services declined. This process fully 20 years old,
continues to this day. .

Bullet Point Summag:

What follows is a summary chart of losses in University cash ?ows since FY97.
Some are traditional cuts from the budget year before. Some result from failure to fund
increased costs in areas previously covered by the General Fund and still funded for the
other Departments of South Dakota Government. A third ?loss? was caused by diverting
Student Fees to the General Fund.

Letter Page 33 of 55

 

SUMMARY BULLET POINT ITEM OF FINANCIAL DISCUSSION:
Information explained in detail on pages 35-37 of the Letter
Lost Cash Available for Operations by Legislature Action in years Speci?ed

General Fund Budget Cut FY10-FY16 $88,806,124
General Fund Failure to Pay Utility Increases (1999-2016) $38,954,074
. General Fund Failure to Pay Health Insurance $15 792 677

Premium Increases from years 2003?2020 ($928,921 per year)
Total. Legislature Cuts $143,552,875
Additional Cash Cuts -
Failure to support ?Dual Credit? at Tuition Rate (of $200/hr.)

Approx. $15,500,000
Not Passing through Interest Savings on ?re?nanced bonds? $5,112,539
Repurposing fees paid by students and then applying the repurposed .

fees to General Fund obligations in perpetuity - for 4 years $11,600,000

Total FY17-FY20 Additional Cash Cuts $32,212,539
Totai Legislature Cuts Additional Cuts $175,765,414
Lost Cash Available for Operations by Regents after 2010)
Failure to impose ?Salary Competitiveness Fee? through FY20 $14,400,000
(this will increase by approx. $1,800,000 per year
or 1% of the total tuition paid that year)
Reduction in Hours to Graduate through FY20
(this will increase by 8% of tuition paid every year $73 000 000
or approx. $12,000,000 per year currently)
Total Cash Cuts by Regents $87,400,000
Total Cash Cuts (1997-2020) $263,165,414
Additional Loss Due to Lack of Base Budget In?ation (1998?2016) 352 000 000
Grand Total Cash Cuts $315,165,414

 

 

 

The summary above is intended to provide a 20 year picture of the funding, or lack of
thereof, to the Public Universities. Not all our information is complete through FY20. This
letter? and the summary above is IE intended to compute an IOU from the State to students. It is
intended only as a ?big picture? View of what has happened, particularly over the last eleven
years. In any given year it might not seem like a ?big deal? to fail to hand a million dollar health
insurance increase but in base budget funding a one year short fall continues every year and must
be paid again yearly by the students until the Legislature again appropriates the money to cover
it. We urge the readers of this summary to look at What really happened to Universities in the
last decade. An argument can be made that rather than being considered absoltrtely critical to the
continued well-being of the State, public higher education has become State government?s last
priority. During this time, the State accumulated over $30,000,000 of excess reserves which
were then used to prepay bond debt. While virtually all that debt was attributable to the
Universities, and ?nanced by student fees, students received no bene?t from the prepayment. In
fact, an argument can be made that the source of those excess reserves, at least in major part, was
the $88 million dollar reduction in state funding of the Public Universities between FY11 and
FY16.

Letter Page 34 of 55

Actual Budget Cuts

From 1998 until FY 2011, the University System did not suffer a Signi?cant budget
out (other than the loss of purchasing power resulting from the absence of an in?ation
adjustment and the practice of not paying 100% of utility costs). The 2009 Legislative
Session appropriated $185,218,896 in General Funding for FY10. A ?budget cut? is de?ned
here as a cut from the previous year?s General Fund Base Budget appropriation. ?Cut? also
means when costs historically paid for all departments of state government were paid for all
departments except Public Universities. Here, we refer speci?cally to failure to appropriate
funds .to pay Board of Regents employee health insurance premium and utility bill increases.
All other state government utility and health insurance premium increases were paid in full
those years. In as much as every other department of government had its utilities paid,
refusal to pay increased expenses always paid in the past is, in fact, a ?cut? and is treated as
a ?cut? here. As a result those expenses (health insurance and utilities) were required to be
transferred to the students that year and each year thereafter. The cumulative total of these
?cuts? is $54,746,751.

A ?cut? also means, obviously, a traditional cut in the General Fund Base Budget
from the previous year. In this instance, we address reductions in FY11, FY12 and FY13
when the appropriated General Fund Budget for Public Universities was reduced to
$150,748,788 from $185,218,896 in FY10. While the Universities? General Fund
appropriations did ultimately begin to increase, it did not exceed the FY10 General Fund
Appropriation until FY16. This chart shows the money "lost? between the high point (FY10)
and FY 1 6 when the General Fund appropriation returned to the FY10 level. It is critical to
note here the cuts were deducted from the total operations of the Universities. Increases
after FY13 were directed at very speci?c University majors, degrees, programs, etc. and
were not made to every University, program, etc. This manner of ?refunding? particularly
disadvantaged the smaller Universities.

Cuts from FY10 $185,218,896 

 

FY11 - $170,902,101 $04,316,795)
FY12 $167,302,956 $07,915,940)
FY13 - $150,748,788 $(34,470,108)
FY14 - $167,851,167 $(17,367,729)
FY15 - $180,483,344 $(4,735,552)
FY16 - $194,029,591 

Total $88,806,124

The cumulative cut in General Funds available for operations from FY10 to FY16 vs
simply freezing the FY10 Appropriation and, without adjustment for in?ation, was
$88,806,124. The total does not count the refusal to pay health insurance premiums and
utility costs of $54,746,751, which have been discussed separately. Health insurance and
utility costs remaining unpaid were transferred to the students. To be clear, the $54,746,751

Letter Page 35 of55

in utility and health insurance costs were not included in the $88,806,124 in cuts but had to
be paid in addition. When we say costs were transferred to the students,.we mean student
tuition and fees were increased in part to pay them. In reality. tuition and fees could not be 
increased suf?ciently to accommddate all these cuts. The Universities were compelled to .
out operations, which means, in large part, educational opportunity. The total of these State
cuts is $143,552,875 over the course of a decade.

In?ation/Base Budget/Costs

We urge the 2020 Legislature to consider appropriating an amount equal to 2% of last
year's Base Budget Appropriation. It would be the ?rst true in?ation adjustment in 22 years.
We are aware that the chances an appropriation such as this will-happen this year are low. But
there needs to be some appropriation that will end the slow defunding! There needs to be action
that shows the State appreciates the crisis looming on the horizon. An in?ation adjustment,
when it occurs, needs to apply across the board not to a particular school, major, degree, building
or project. In?ation draws money from every nook and cranny of the University System and
must be returned in the same manner.

Assuming a 2% annual in?ation rate, equaling the purchasing power of the FY10
appropriation of $185,218,896 would require a FY20 appropriation of $224,114,864. The
General Fund Appropriation for FY20 was $224,222,580. Hence, the General Fund Base 
Budget for FY20 at last re?ects the FY10 appropriation increased by a level annual increase
of 2% in?ation, essentially accomplishing in FY20 only the same purchasing power the
public system had in FY10. A LOST DECADE. All is not equal just because the FY20 -
appropriation at last equals the purchasing power of the FY10 appropriation.

Returning to FY20, the fact that the Board of Regent?s appropriation returned to
where it should he does not repay the $88,806,124 in cuts made during that time. It does not
repay $38,954,074 in utility ?costs? and $15,792,677 in health insurance, a total of
$54,746,751. These costs totaling $143,552,875 were transferred to the students in the form
of increased tuition and fees. Further, and equally signi?cant, the FY20 General Fund Base
Budget appropriation does not re?ect $87,400,000 in revenue loss to Public University
funding caused by actions of the Board of Regents, the largest continuing negative impact to
the ?nancial health of the South Dakota Public University System. Also, and most
signi?cantly, the FY20 appropriation amount is only 34% of the cost. To reach a 50/50 cost
sharing (not the of the past) the State would have had to appropriate an
additional amount of $80,000,000 on the Base General Fund Budget in FY20. This is
obviously unachievable this year but demonstrates the magnitude of the problem!

Diversion of Student Fees

Student tuition and fees are not State General Funds and are not appropriated. The
Board of Regents adopt, assess and collect tuition and fees and determine how the tuition
and fees are spent. Sometime ago, the State adopted a practice wherein if outstanding bonds
were re?nanced at a lower rate, the State General Fund would be the bene?ciary of the
savings. That policy, applied to Public Universities? debt, means student fees continue to

Letter 4 Page 36 of 55

pay bond payments at the old rate, not the new cheaper rate, and the difference is paid into
the General Fund. This is a policy of long duration but, as applied to student fees, just does
not seem fair or smart. It just increases student costs.

In all "re?nanced? bond issues, whether revenue or Higher Education Facilities Fund
bonds, payments by student funds should immediately be reduced to the new interest rate.
Money saved in the re?nancing should bene?t students, not the State General Fund. The
recent ?nancing resulted in re?directing $5.1 million dollars of student fee payments to
General Funds. Student funds should pay a share of the actual costs required to issue or
re?nance bonds, but not some "administration fee" above actual cost. We have looked back
further and really think this matter should be prospective only.

While no money should be refunded for the ?repurposing? of student fee money used
to cover $2,900,000 of General Fund Appropriation to the Board of Regents, the State
should, however, begin to use General Fund money for the entire appropriation to the Public
Universities. In FY17 ?a deal? was made by the State and the Board of Regents. In return
for an Appropriation of $3,228,782 in General Funds for salaries, the Regents agreed not to
raise student tuition and fees that year. However, the Legislature appropriated only
$324,029 in General Funds and ?repurposed? $2,904,690 of student fee payments to cover
the remainder of the $3,228,782 deal. The effect was to transfer $2,904,690 of student fees
to the Board of Regents? operating account, replacing General Funds inthat amount
(Thereby saving $2,904,690 of General Funds for the state forever and shorting the students
forever). The state did prepay outstanding bonds with its excess reserves. The prepayment
should have bene?ted the students by $2,900,000 per year but rather than allowing the
bene?t to ?ow to the students, the Legislature used student fees to in part fund its
$3,228,782 Salary Policy obligation. This leaves the Board of Regent?s Base Budget $2.9
million dollars short forever, not just for the term of the prepaid bonds. We urge the
Legislature to appropriate $2,900,000 in General Funds to the Regents to correct the process.
The statute authorizing the "repurposing" of student fees should be repealed. While we are
not advocating a refund, future student fees should not be used to pay General Fund
obligations. This whole process is absolutely unprecedented. Student fees are used for
speci?c purposes at the Universities and should never be converted to general operations.
The dollars at issue here are used for maintenance and repairs of buildings. The Board of
Regents will have to replace that $2.9 million dollars at some point to continue the never
ending cost of repairs and maintenance. Unfortunately, this will mean $2.9 million in
additional costs to students while continuing forever to pay $2.9 million dollars for non-
existent bond payments.

Miscellaneous Cuts

There are other cuts which were cuts to the Base Budget, and hence repeat
themselves every year thereafter. It had been the state's practice every year to fund the
increases in University (and all other state employees) employees health insurance cost. In
FY03 the Legislature did not fund University employees? health insurance increase in the
amount of $928,981. This was a Base Budget item which, through FY20, has never been
refunded so that cuts from FY03 to FY20 total $15,792,677. This is a Base Budget item that

Letter Page 37 of 55

repeats itself every year in the amount of an additional $928,981 and this cost is again transferred
to the students. This is not a ?cut? in the traditional sense, but a failure to fund an increase cost
that was paid for other departments of Government but not University employees.

It was also the State's longtime practice to fund increases in the Universities? utility
expenses the following year. However, in FY99 there was a utility shortfall in the previous
fiscal year in the amount of $377,123. The State refused to appropriate that amount. In fact,
either in FY99 or in one of the next year or two, the Board of Regents were speci?cally
instructed by members of the Appropriation Committee to ?just raise tuition" for utility I
shortages, and, because the utility bills had to be paid, that is exactly what the Board of
Regents did. In the years between FY99 and FY16, every year, except three, were years in
which the General Fund Appropriated Budget for utilities on the University campuses was
short. The total shortfall over that period was $38,954,074, and this is after credit for the
three years when the State appropriated more than the utility increase that year. This cost
was transferred to the students. This again is not a traditional ?cut,? but a failure to pay an
increase in costs traditionally paid, and paid for all other departments of State government.

There were many other small refusals to fund items that were traditionally paid but,
in the main, the State in a later year agreed to fund them again. We simply have not tracked
and do not now have the ability to track those other lesser items.

State Support Formula Funding

A state statute requires a 3% to 4% in?ation adjustment in the annual appropriation
for K-12 and Technical Institutes. While subsequent Legislatures have not adhered to that
provision, the national in?ation rate has at least been recognized as a real cost for K-
12/TeChnical Institutes. In our experience, this 3% to 4% in?ation factor is exactly the
correct number. The increase per year in University System operating costs is never less
than 3% and normally just below (There have been years with mandated salary freezes
for state employees which reduce but do not eliminate in?ation). In?ation here means the
Cost increase of doing the same things in the same place with the same number of staff for
the same number of students. Adding additional buildings, students, professors or degrees,
etc. increases costs but are not increases due to "in?ation." We have only 2% in our
calculations. 2% for 10 years equals 20%. We have not used the 1.2% multiplied by the
previous year which would be correct and would be much larger.

In stark contrast to the treatment of K-lZ/Technical Institutions, the University
System has not received an increase in State Appropriations for in?ation since 1998. The
income from the 1/2 penny sales tax for the benefit of K?12/Technica1 Schools is by its nature
"semi?indexed? to in?ation. Before 1998, there was a "formula" which measured increases
in cost to the Universities in certain agreed areas. Certain costs, including 100% of the costs
of utilities, health insurance and a certain amount in salary, were paid by the State and
excluded from the ?formula.? The formula dealt with other items and was never really
controversial. Governor Ianklow, elected to his third term, struggled to fund the Property
Tax Relief Fund promised in the campaign. The Board of Regents in?ation formula, a
Victim of this effort, has never been restored. A meeting lasting far into the night was held

Letter Page 38 of 55

with the Governor and leadership of both the Senate and the House. In probably the single
worst decision in twenty years, the Board of Regents agreed not to oppose removing funds
for ?in?ation formula? increases for the University System for one year with the express
promise the State would not permanently remove in?ation funding from the Base Budget.
Everyone in the room that night acknowledged the University System could not withstand a
permanent lack of adjustments for in?ation. It was agreed that the Base Budget would be
adjusted for in?ation (formula increases) every "few years." The in?ation formula fund
adjustment has never returned to the Base Budget and, as a result, there has not been an
adjustment for in?ation in over two decades. There have been appropriations for increases
in employees? salaries consistent with an announced State Salary Policy. that year, but salary
increases are not in?ation adjustments and in any case only partially fund salary increases.

. A State Appropriation to the Board of Regents for a 2% State Employees Salary increase,
for example, does not cover the entire 2% increase for Regent?s employees. The State
Appropriation must be supplemented by student tuition and fees. For 2019, for example,
62% of the in?ationary salary adjustment came from student tuition and only 38% came
from the State Appropriation. The absence of a true in?ation increase has had a huge
impact. An in?ation increase of 2% per year on the then 1996 base appropriation would
have resulted in at least $52,000,000 in additional funds to the system from 1999 to 2016,
and this calculation assumes the FY09 appropriation was frozen at $185,000,000 and not
out. Any in?ation percentage will result in a huge impact on the budget. The nationally
published in?ation rates for All Urban Consumers and separately the Higher Education Price
Index are set forth in parallel columns as follows:

Letter Page 39 of 55

 

 

Consumer Price index - Urban Consumers Higher Education Price Index
Fiscal Year Annuai Average Percentage Annuai Average Percentage

1997 1.7 - 2.9

1998 1.6 3.2

.1999 . 2.7 3.5

2000 3.4 2.4

2001 2.8 4.1

2002 1.6 . 6

2003 2.4 1.9

20041r 1.9 5.1

2005 3.3 - 3.7

2006 3.4 3.9
.2007 2.5 5.1

2008 4.1 2.8

2009 0.1 5

2010 2.7 2.3

2011 1.5 0.9

2012 3 2.3

2013 1.7 - 1.7

2014 1.5 1.6

2015 0.8 3

2016 0.7 2.1

2017 2.1 1.8

2018 2.1 3.7

2019 2.8 Projected
2020



 

Aside from partial funding of salary increases, increases in University
Appropriations have been restricted to very speci?c new courses, new degrees and new
programs and have not been directed to maintain the purchasing power of existing Base
Budget appropriations. In other words, new program expenses might be covered, but no
in?ationary adjustment for the cost of existing and continuing programs was adopted. As
I anyone on a ?xed budget knows, failure to adjust for in?ation effectively results in a budget
cut which, if it continues, must be addressed. The way refunding did occur worked a
hardship on small schools.

The delay is now over two decades old. The cost of in?ation is passed on to students.
As a practical matter the choice must be made to limit enrollment and permit our assets to
deteriorate, raise tuition and fees, or both. There really is no free lunch. After all this, the
unacknowledged fact is that when viewed nationally, South Dakota tuition and fee charges
are extremely low. The students, the Regents and the State of South Dakota must all be a
part of the solution.

Time and again over the years in the Legislature, and sometimes in open Budget

Letter Page 40 of 55

Committee hearings, from the Budget office and from the Governor?s of?ce (with the
exception of the current Governor) one heard, ?The Board of Regents have a lot of money-4
so let's out there." No department of the State has experienced anything close to the
underfunding faced by the Universities or the K-12 System, with possible exception of the
Human Services Center in Yankton. The result is that it has become dif?cult to keep our
children in South Dakota for college. South Dakota's graduating high School seniors can
attend college in Minnesota, North Dakota and Montana at the same or less cost than they
can in South Dakota. Nebraska has a program which allows quali?ed students to attend
Nebraska Universities at South Dakota in?state tuition rates. Some Nebraska state
Universities have an open-door state rate policy for South Dakotans. Our Public
Universities and our Public K-12 Education System have been consistently underfunded, but
only the Regents/Universities have been slowly defunded for the last 22 years and at a greatly.
accelerating rate over the last 11 years.

We are now paying the price for these funding deficiencies?in student recruitment
and in the college preparation of our students??and the price will get steeper if something
doesn?t change. To be clear, no one expects a large appropriation to correct all past
de?ciencies at once. Our history is behind us. But the Universities will be in dire straits if
we do not face reality. We must get on the right path?~?the path chosen by the founders of
our state who made education the very top governmental priority! We must recognize the
problems with our educational budget process, start over and "stop the bleeding! We know
SouthDakota is not awash in money. South Dakota essentially funds state operations with
the 4% sales tax, ?rst adopted decades ago. Let's look forward to a more even handed
future. Some of the actions will take years to complete, but we must start the process as
soonas possible.

Salaries

The most pressing issue for our Public Universities, as well as the K-12 system, is
salaries and bene?ts. Salaries and employee?related bene?ts are far and away the largest
expense category in the Public University System, as they are in any educational institution
or unit of government. The greatest challenge to the Public Universities is to attract and
retain high quality professors. The Universities compete for professors on a nationwide
basis. South Dakota itself does not produce anything close to the number of college
professors needed and, even if we did, it is a bad idea to have all professors come from one
State or University.

It is an extremely rare course wherein the professor's up-to-date, in? depth
knowledge, experience, ability to communicate and people skills are not the de?nitive factor
in providing an effective, meaningful and productive education for our students. For
example, the Chemistry classes we took in college are now taught in high school. The
knowledge of chemistry is said to have expanded by at least 100% in just the last ten years!
Professors need to not only keep up with the continual growth in knowledge, they also need
to be able to effectively communicate it to the students. It?s a challenging job and, if we are
going to give our students the tools they need to compete in this competitive world, our
professors need to be excellent and paid accordingly.

Letter Page 41 of 55

A long-term study undertaken by the University of Missouri quanti?es average
professor salariesin the United States by discipline and specialty. The study is largely
regarded as accurate, but exceedingly detailed and cumbersome. According to the Missouri
study, South Dakota University salaries are 33% behind the national average on a discipline-
by?discipline basis. Because the Universities recruit on a nationwide basis, this long term
Missouri study adversely impacts professors contemplating applying for positions in South
Dakota.

The South Dakota Board of Regents have for years done a comparative study of our
own salaries with the Public State Colleges and State Universities in states that surround us. 
In the late 1990's and early 21st century, South Dakota Universities found themselves well 
behind the salaries paid by surrounding states. We were in a position where, for many of the
positions advertised, there were simply no applicants, or a very low number. In the late
1990?s, Dakota State University in Madison, whose principle mission is Information
Technology, was unable to get any quali?ed applicants for several open Information
Technology positions. The system solution was three-fold. The ?rst was to adopt a policy
that for professional employees, there would be no salary schedule or automatic salary
increases by seniority. Second, salaries would be set on an individual basis based on the
market-value of the position and the individual's merit and quali?cations. Each University
was required, in performing this analysis, to consider its institutional mission and priorities.
The Universities were directed to consider salaries of professors whose discipline is directly
involved with the stated mission of the University to take priority over other salaries.

Having addressed those structural issues, the base problem was still ?money.? The
system addressed this problem by proposing a ?Salary COmpetitiveness Fee? assessed to the
students. The Board of Regents and campus Presidents went to the students at each
University and explained the problem and the proposed solution. The Regents and
Presidents asked the students to consent to an annually assessed, permanent additional fee of
1% of their annual tuition, and guaranteed that 100% of that amount, and all accumulated
amounts derived from that fee, would be used by each University solely to increase salaries
of professors using a ?merit and market value? procedure. Although not without dissent,
some vocal, the student acceptance was overwhelming, convincing us of thematurity level
of our student body compared to that in other states. To the best of our knowledge we are
the only state that has adopted such a straight-forward salary enhancement fee.

What follows is a chart of the impact since its adoption in 1998, of the Salary
Competitiveness Fee compared to what would have happened if the Competitiveness Fee had
not been adopted. We think it?s obvious the South Dakota Universities would virtually have
gone out of business without this fee. Please remember that while our salaries are 5% to 6%
below the surrounding states, they remain approximately 33% below national averages.
Without this fee, our salaries would have been 34% behind the neighboring states by FY16.
Nationally the shortfall would be well over 50%.

Letter Page 42 of 55

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The Board of Regents did not publish this chart in the FY17, FY18, FY19 or FY20
Fact Book because, unfortunately, the fee is no longer assessed. The Regents have
unilaterally abandoned assessing the annual 1% increase in recent years. The Regents did 
not abandon the fees collected, they simply stopped assessing increases in the fee. The
effect of abandoning the assessment is that the Universities have lost $1,800,000 in
additional funding each year which could be used to supplement faculty salaries. The 1%
fee was accessed every year from 1999 to 2010, which as indicated above, was the year in
which other very damaging changes were made. After 2010, the 1% fee was assessed in
FY16. In FY13 and FY17, 1/2 of a percent fee was accessed. The annual accumulative salary
competitiveness fee still charged is $24,065,369. The Salary Competiveness Fee quite
simply saved the South Dakota Public Universities and is most likely the Universities only
hope in the future. It is short sighted to wait for a crisis to reoccur, especially since South
Dakota, even with the HEFF surcharge, is at the bottom of tuition and fee rates. The repeal
of the salary competitiveness fee makes it virtually impossible to operate a merit and market
based salary system. It forces across the board pay raises with variations based solely upon
market demands. The market element simply cannot be avoided. When the ?market? is
materially higher than the offered salary, people simply do not apply. When Presidents
allocate funds to departments Without money for merit raises, faculty stars and highly
quali?ed professors are penalized. When highly quali?ed and in-demand professors can not
be rewarded at their true market value, they will eventually leave. The Regents and
Presidents fought hard for the merit element and it is frustrating to see it has been forced to
virtually abandon it. It remains controversial on campus. We should mourn the loss of this
best business practice. Had the 1% fee not been abandoned, an additional $14,400,000
would now be available for faculty salary increases.

A response of "we don't need it this year" completely misses the point. The failure to
assess this fee annually means, quite simply, less money in the salary pool and the shortage
multiplies from year to year in the future. The result is less money to retain existing staff,
less money to pay new hires and no money to pay bonuses for ?star? professors. Obviously a
dropping enrollment aggravated these problems. This fee, and the ?merit and market

Letter Page 43 of 55

system,? have been _th_e only tools the system had to address the Regional and Missouri
study salary problems?problems which continued especially in salary freeze years. The
salary competitiveness fee is absolutely critical to the ?nancial health of the South Dakota
Public University System. When the Legislature passes a state employee salary increase, it
does not cover the entire amount needed for Regental employees and thus'must come from
somewhere. It must come from student tuition and fees. The DSU experiment would have
failed without this fee and every University will be harmed by its absence. We urge this fee
be reinstated by the Board of Regents immediately.

Tuition Decrease

A decision made by the Board of Regents in 2011 made a material, adverse impact
on the ?nancial health of the Universities. The Board reduced the number of hours required
for undergraduate?students to graduate from 128 to 120. In essence, Universities ?sell?
credit hours to students. Tuition and some fees are charged on a credit hour basis. A
reduction in the number of credit hours to graduate results in less tuition and fee income. The
decision was made by the Board of Regents with little or no discussion with faculty as to the
need for classes for each major; without pro forma calculations of the ?nancial impact;
ignoring the fact that South Dakota Public University tuition and fee charges were in the
lowest 20%; and in the face of the huge state support reductions beginning in 2010. That
decision has thus far resulted in a cumulative loss of income of $37,509,537 through FY17
and that loss will continue to increase every year in the future at the rate of approximately
$12,000,000 per year. This will result in a cumulative loss of approximately $73,000,000 by
the end of FY20. This loss, together with the loss of the salary competiveness fee, amounts
to approximately $14,000,000 per year in cuts to the Universities? budget, an enormous
unnecessary hit to public education in South Dakota. We are not aware of any actual study
after the 2017 study included here. There has been no enrollment change resulting from this
large out except downward. This decision alone has a negative impact that by next year will
exceed the impact of the $88 million dollar cut imposed by the Legislature between FY10
and FY20 and will continue to cripple the Universities year after year. Tuition and fees are
not General Funds governed and appropriated by the Legislature. The Board of Regents has
the authority to lessen this burden.

Letter Page 44 of 55

2013 {November} to 123 Tuition Savings for Students,

 

 

 

 

 

Piste! 3%!ng ?eggmai Tara! Ragw?? Total (3??de at Credit Highest Mama.?
Yum? .iswciate Credit Credit F13 Average ?warsmia! Rm . - Torai?awmre Loss
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485 3?.635 39-33% 1.64? 3274 3452.321
F134 4150 3?32 3.3 AWE 3 1305 3,634 5274 $996,306
. FY15 232 33.? 30,?33 23.370 2,08? 3392 3609,3531
FY36 230 T33: 16.8%? 13.653 1.?94 $292 $524.02?
-243 7?9-6 111.3%? 1970?. .. 3.55.3 . . $303 
5 Year Average 
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Year ?nanciers Credit . Credit F12- Avemge D??emi?ai Rafe Tara! Revenue Loss
3952 126.5. 499.92%
FY15 4211 124.3 $33.92} 540.232 7.251 5274 $1,991,610
FYH 4231 1.13 519.183 533.95? 14,??4 521'? 
FY15 121.4 524,443 546,481} 23,033 329.2 $6,433.54?
4d?6 1123.?? $55,041 .5 .14 36.4133 $292 310.155.3303;
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5 hardiemga $6,830,663.39
FY13 
FY14 
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FY16 
FY17Fair 811,793,596
5 Average 317,3 01,901?

3111115. 

The stated reason given for the passage of this reduction was that South Dakota was
?out of step? nationally with the ?number of hours" required to graduate. However,
charging by the credit hour is just one of the many ways to charge tuition and fees. What is
important is the total amount charged, not how it was computed. On November 2, 2018, the
Chronicle of Higher Education published a National Survey (set forth on page 6 and 7 of
this letter) of the total cost, state by state, to attend Public Universities. The survey included
both inustate and out?of?state student tuition and fee charges. South Dakota ranked 39th,
meaning that only 11 states had lower total costs. It should be noted the South Dakota cost
includes the 11% HEFF tuition surcharge. Without the HEFF surcharge, only Wyoming
offers a less expensive education. According to recent newspaper reports, South Dakota?s
position on the cost chart has improved for the 2019-2020 school year.

In FY20, on a Regional basis (surrounding states) South Dakota Public Universities
ranked 6th highest in cost for in-state tuition and fees. Only Minnesota ranked higher. On the
basis of total costs, including room and board, the South Dakota Public Universities ranked
4th lowest, meaning only North Dakota, Wyoming and Montana cost less. The total costs
?gures are heavily in?uenced by the amount of state contributions to the University System.
South Dakota is arti?cially high because of the HEFF surcharge and the relatively recent,
replacement of dorms and academic buildings. In our opinion, the decision to reduce the
number of hours required to graduate must be reversed gradually. The loss of revenue and
relatively low cost of a South Dakota Public University education, should be considered
when tuition and fees are accessed. Results of the local survey follows.

Letter Page 45 of 55

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Letter Page 46 of 55

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A Uni?ed Public Education Budget

Currently, and Technical Institute budgets are agreed to and adopted by the
Appropriations Committee as virtually the Committee?s ?rst item of business, usually
without any formal hearings. The budgets of the Agriculture Extension program, 

Letter - Page 47 of .55 I

Experiment Stations, the Medical School, the six Public Universities and the Schools for the
Deaf and Visually Impaired undergo extensive and sometimes hostile annual hearings lasting
several days. The Board of Regents Appropriation is just over $200,000,000 while the K-12
appropriation is over $600,000,000. As a practical matter, the consolidated Board of
Regent?s budget for the Public Universities is the last item to be agreed upon. Time and
'time again, the budget is balanced by reductions to the Board of Regent?s budget on the last
day. There is no reason one Public Education Funding Bill cannot be adopted as part of the
budget process. If the in?ation rate is 3% for the High Schools and Technical Institutes,
there is no reason to believe it is not at least the same for the Universities. Both systems
represent a commitment to the citizens of South Dakota. The Legislature should hold
hearings on the Universities? educational and related programs. The state spends about
300% more on the combined K-l2/Technical Institutes than on the Universities, and is the
largest funding source for that system. There is no reason not to treat the three as one
system. All represent the central promise the state has made to its citizens from time
immemorial

Board Structural Problems

 

The Public Universities have a signi?cant vested interest in the operation and success
of the high schools in our state. The largest source of University System students is the
South Dakota System. It appears that of the roughly 9,500 high school graduates every
year, approximately 40% go on to Higher Education in South Dakota and 36% go to an
institution outside South Dakota. Unfortunately, approximately 3,000 per year, 24% of those
graduating, do not appear to pursue any formal post high school education. These numbers
vary and are far from exact except as to the general order of magnitude.

The consistent ?nding of the Public University System over decades, is that
approximately 30-40% of South Dakota high school graduates who enroll in South Dakota
Universities are not academically ready for College in at least one areal! In South Dakota
Public Universities, students must take and pay for remedial courses that do not count as
credits toward University graduation. In addition, requiring remedial education courses can
make it dif?cult to graduate in four years. A report by the South Dakota Department of
Education, appearing in the November 28, 2018 Argus Leader, stated that on average every
year 46% of the State?s high school graduates are not ready for "career or college
coursework." This is essentially consistent with the Universities? ?ndings of 40%. Sioux
Falls, the largest K-12 district in the state and widely regarded as an excellent education
leader in South Dakota, reported in the same report that 33% of its graduates are not ready
for ?college or a career coursework." South Dakota must focus on the failure to prepare our
students for college or career coursework. South Dakota's pre?high school students do
comparatively well in national tests, but do not do as well in high school tests. South
Dakota needs to examine and focus on high school academic education. The Public
Universities have recently redone the math requirements for various majors. The elimination of
the math requirement for some majors reduced the 40% requiring remediation to 30%. Without
getting into a discussion about whether lowering the requirements results in an arti?cial as
opposed to real gain in preparedness, 30% of University freshmen are still unprepared for college
level work to some degree! How is it possible that 30% to 40% of high school graduates are

Letter Page 48 of 55

not be ready for ?college or career courses?" This is South Dakota's biggest and most
- important long term challenge.

The United States Department of Education tracks students post high school. Their
report discloses that for the last several years, the South Dakota Public University System
attracted more out-of-state students to South Dakota Public Universities than leave the state.
for post? secondary education. That fact is not widely known or acknowledged. Too often
we hear, "everyone leaves the state." The old narrative is just not correct! Consistently 70%
of the graduates of South Dakota Public Universities will remain, pursue careers and raise
their families in South Dakota. This is a tremendous bene?t to South Dakota any way you
lookat it#econornic, political, social and every other way. South Dakota would be well 
served to retain a still higher percent of students in-state. Reducing state support from over
60% to 34.3% does not indicate a South Dakota University education is a high priority.
Retaining more high school graduates in the state for college should be a priority.

The Board of Regents campaigned over several years for the adoption of a minimum
base curriculum for graduation from an accredited South Dakota high school. The
curriculum was rigorous, designed to achieve an average ACT score of 24. This curriculum
was adopted for the Opportunities Scholarship Program. Experience has shown that a
student with an ACT score of 24 or above attending a South Dakota Public University, will
graduate 85?90% of the time. This curriculum was adopted by the Legislature, not only for
the Scholarship Program, but as the preferred or college track curriculum for graduation.
School superintendents had unlimited discretion to waive requirements but there is no
reporting requirement of waivers to the South Dakota Department of Education.

In 2018 the South Dakota Board of Education divided high school graduation
requirements into three categories. An Advanced Honors curriculum meets the requirements of
the Opportunity Scholarship and meets South Dakota Public University admission requirements.
It is essentially the Board of Regents recommendation absent a foreign language requirement.
The intermediate category, the Advanced curriculum, is not as academically rigorous as the
Advanced Honors category but still quali?es a student for admission to a Public University.
Both Advanced Honors and the Advanced curriculum are close to the curriculum recommended
to the Legislature as the college preparation curriculum. Neither require two years of a foreign
language. A foreign language is no longer required by the Public Universities either, but is very
common nationwide, particularly in more selective schools. Without question, large
corporations search out applicants with real language quali?cations. At a recent meeting, one of
the authors asked two senior of?cers of large national corporations, ?How can a student virtually
guarantee themselves a personal interview in the job application process?? The answer from
both was, ?Be ?uent in a language in addition to English." Schools short change their students
by dismissing the importance of a second language. It will eventually be as important to a
college graduate as computer literacy. The state is short sighted in deleting the foreign language
requirement from the ?Opportunities Scholarship? requirement. The state?s E?Learning center
can and does provide a foreign language for high schools that do not offer it. Time will tell the
effect these separate categories will have on the readiness of students. A large part will depend
on how the individual schools administer the program and how easily waivers are obtained.
Superintendents have the right to waive requirements but there are no standards for the waivers

Letter Page 49 of 55

and no reporting requirements. It appears this three category system was designed to increase
high school graduation rates rather than preparing students for college or career studies.

The State should require and subsidize a practice whereby every South Dakota
student takes the ACT test at the end of his or her junior year of high school. Doing so
would provide high schools and students the entire fourth year to remedy academic
weaknesses revealed by the test. The student may then take the ACT test again their senior
year. The testing agency then reports the highest score to colleges to which the student
applies. How about a short review course for those that took Algebra I as a freshmen?
Should schools be electing four day school schedules if 30% to 40% of their students arenot
ready for college or career courses? Do schools require make up classes for classes missed
because of extensive extracurricular activities? That 5th day could be well used to work on
weaknesses disclosed by the ACT.

The University System, as it exists, is an under?recognized ?gem,? offering huge
bene?ts to its students and to the State of South Dakota. South Dakota has ?ber optic, high
speed internet, for example, because the Board of Regents raised the money to install it and,
recently, raised money to bring it up-to-date. By every objective measure, the University
System is operating superbly. To have virtually the lowest student loan default rate means
our Universities have a curriculum relevant to the market place and its graduates obtain jobs
at salary rates that allow them to pay their student loans. As indicated, last year the South
Dakota University System ranked from the bottom in cost to in-state students. A reform
of the HEFF surcharge would make things even better. The Universities face huge
challenges due to the huge reduction in General Funds. Unfortunately, much of education is
about money and the Regents have compounded ?nancial problems through a series of
decisions which resulted in major revenue reductions.

Conclusion

We have learned over the years what an enormously dif?cult task service in the
Legislature has become, particularly for members of the Appropriation Committee.
Committee members face an enormous task and work extraordinarily long hours during
Session. A plethora of grand, even greatly needed, ideas are proposed by and to the
Legislature each year and there is simply not enough money to ?nance them all. We know
that Legislators act in good faith and in accordance with their perception of priorities. We
hope Legislators agree the Universities are not the ?problem? in South Dakota, but rather the
answer to many of the state?s problems. The Universities make a huge contribution to South
Dakota's economy. Our University Presidents have been, and are dedicated to their
University, faculty, staff and students. They are, to a person, men and women of honor and
integrity.

The Board of Regents did not come up with, nor implement, all the ideas to
reinvigorate and renew these great institutions. The ideas, the passion, and the zeal came
from the presidents, the faculty, the staff and the students of the Universities. No one gave
the Regents money. Universities? foundations raised the bulk of the $1.3 billion private
dollars for buildings and additional funds for scholarships. The Universities revised and

Letter Page 50 of 55

updated the curriculum. The Universities modernized and implemented economics of
modern business practices to deal with the rapidly changing economy and capital needs.
The Universities mastered new technologies and helped attract capital and businesses to
South Dakota. All this was accomplished with a faculty who stayed with the State and our
Universities when wages and bene?ts were frozen and when it was hard to ?nd a state
of?cial or Legislator who had a kind word to say about the Universities in general and the
faculty in particular. The University System and af?liates spent $832,003,605 in FY20 with
a combined economic impact on this state of well in excess of $2,600,000,000. This
University System produces great graduates who get jobs and stay in South Dakota. Our
graduates have the knowledge, skills and work ethic businesses require. Great students
attract businesses to our State.

As we have noted, what has been done in the past, remains in the past. No one is -
looking for some kind of ?make whole" payment. The state is simply not awash in cash
flow, and the University System should not expect any "repayment" from past years. We do,
however, respectfully urge the State to consider the following changes to begin the process
of renewing our commitment to public education.

1. As approximately 30% to 40% of South Dakota high school graduates are not
prepared for College or Technical Institutes, the state should require and pay for
every student to take the ACT test in their third year of high school. The test results
would assist high schools and students to focus on individual weaknesses during the
students fourth year. 

2. The annual Education Appropriation Bill should cover the entire Public Education
System. The K~l2 System, the Technical Institutes and the University System
should be reviewed as a whole, with one set of Legislative hearings.? The South
Dakota School for the Deaf and the South Dakota School for the Blind and Visually
Impaired should receive special attention. They are specialized institutions that are at
times largely ignored.

3. A system to coordinate Technical Institute and University System curriculum
offerings should be put in place. Without such a process, extremely expensive
duplication is inevitable. The Technical Institutes now want to change their names to
colleges even though they do not award a traditional academic college degree.

4. The current HEFF fund should be revised so that students pay a percentage
surcharge, matched by the state dollar for dollar, to establish an "annual maintenance
and repair fund for academic buildings to be distributed in an equitable manner. The
annual maintenance and repair process needs to be preserved. The State of South
Dakota should assume the liability for the construction and rehabilitation of
academic buildings. The system has HEFF Bonds outstanding and cash and reserves
for those pledged Bonds. The state can not just abolish the HEFF process overnight,
but the system should be carefully reviewed and revised.

5. The Board of Regents have made two ?cuts? that materially affect the solvency of the

Letter Page 51 of 55

Public University System. One was to end the ?Salary Competiyeness Fee.? The ?salary
fee? was an annual increase of 1% of student tuition used exclusively to support faculty
salaries. By failing to assess the 1% increase annually, the fund was frozen at
approximately $24,065,369 per year and no longer increases $1,800,000 per year.
Additionally, the Regents cut the number of credit hours necessary to graduate from 128
hours to 120 hours without computing the impact on each University and without
substantial discussion. It was proposed and adopted at one meeting: The exact reduction
in income is dif?cult to compute looking forward, but is estimated at $12,000,000 per
year or a cumulative amount of $73,000,000 since the reduction.

. The Public Universities operated 276 academic buildings in FY19. The system also
operated 85 non-academic (revenue producing) buildings such as dorms, student unions, 
etc. South Dakota needs to develop a process to preserve existing HEFF, but the State
should assume the responsibility for new construction and rehabilitation of academic
buildings. In FY20, the amount of the HEFF set aside for annual maintenance and
repairs totaled $16,000,000 in round ?gures. In the last few years, the state has
participated in the annual Maintenance and Repair Fund. In FY20 the State contributed
$12,300,000. Also, a new student fee in the amount of $1,900,000 to support annual
maintenance and repair was recently imposed on students. This amounts to just over
$30,000,000 annually to maintain and repair academic buildings. Per the South Dakota
Office of Risk Management Formula, the ?replacement value? of these 276 academic
buildings is $1,820,414,860 in 2018. In round ?gures, approximately 50% of the annual
receipts of HEFF money is now allocated to payment of long term debt used to build new
buildings, for major rehabilitation of buildings, or retained as reserves for outstanding
HEF Bonded Debt. The other approximate 50% is spent annually on Maintenance and
Repair. The annual Maintenance and Repair money is absolutely critical to the
functioning of the Universities. A careful study is needed with one critical goal being the
transfer of liability for academic buildings substantially to the state.

. The non?academic facilities fee system should remain as it is. We recognize that with
some needed adjustments, the present HEFF system has worked fairly well. We
recognize HEFF monies have been spent on buildings outside the mission of that
particular University, an obvious abuse of HEFF which should cease. However, it
must be recognized that the system is intentionally designed to transfer the cost of
building and/ or rehabilitating academic buildings from the State to students. There is
no other possible explanation for existence. The State should appreciate that
without the extra HEFF surcharge, South Dakota is clearly the most economically
managed and the lowest cost Public University System in the country with the
possible exception of Wyoming and, even with the HEFF included, is in the bottom
2% The non-academic buildings have been well managed with fee income.

. The Board of Regents receives intense pressure and even threats, on occasion, to not
raise tuition and fees but General Fund support has been consistently cut. Student
fees are diverted to the General Fund! Our system is now running on fumes. Monies
for salaries, professional development and marketing are critical. To appropriately fund
our Universities, both additional student tuition and fees and additional State funding is
required.

9.

10._

11.

12.

13.

Letter Page 52 of 55

To be truly effective, the Opportunity Scholarship should consistently keep pace with
in?ation. A scholarship equaling the average tuition and fees charged by the Public

Universities (such as the privately funded and Governor administered Dakota Corp

Scholarship) would allow South Dakota to compete more effectively with scholarships
offered by surrounding states.

Because without HEFF charges South Dakota would have virtually the lowest tuition
and fee rates in the country, the Board of Regents should consider raising the number
of hours required to graduate back to 128 or, more likely, making an annual tuition
adjustment to ease the revenue loss over time. The number of hours required were

lowered based on a false premise and without consulting the faculty on the number of

course hours required for various majors. Since tuition was not adjusted upward
when the credit hour requirement was reduced, the reduction in hours to graduate
resulted in a huge negative impact on revenue. The decision ?cost? the Universities
$73,000,000 in lost revenue to date but the number of students enrolled did not
increase. The yearly cash impact of $12 million is approximate but will in?ate.
Although it may now be difficult to reverse, strong consideration should be given to
doing so. It poses great and critical problems from both a ?nancial and an academic
perspective.

The citizens of South Dakota wisely passed a one-half percent increase in the sales
tax to support K-12 and Technical Institutes. An additional one-half percent for the
Public Universities would greatly bene?t South Dakota Universities, the students and
the state. It would completely fund all or a huge percentage of a "needs based
scholarship" and the Opportunity Scholarships and would bolster the annual
Maintenance Repair fund. It would eliminate the need for the 1% Salary
Competitiveness Fee and would cover the loss in revenue caused by the reduction in
the number of hours to graduate. This should be submitted to a public vote in the
same manner as sales tax increase. This would virtually overnight remedy the
last decade of harm and may now be the only real solution.

Our students recognized the need, and voted for, an annual 1% Salary
Competitiveness Fee solely for the purpose of supplementing academic salaries.
Professors are quite simply the heart of our Public Universities. This fee was the
Only source of money allowing the Universities to keep pace with faculty salaries in
surrounding states. It should be reinstated immediately by the Board of Regents.
Considering the problem of long-term salary disparity, to decide "we don't need it
this year" is terribly short?sighted. Furthermore, the absence of this fee makes the
merit pay system virtually impossible. Reinstating this student fee will allow South
Dakota Universities to better compete with other states for the most qualified
professors. It is a much needed and effective tool to attract new faculty and retain
highly quali?ed existing faculty. -

We urge an annual state appropriation sufficient to pay Public University utilities
in full every year. In the past, if there was a short fall, the students covered the

14.

15.

16.

Letter Page 53 of 55

shortages and the Board of Regents could request a supplemental appropriation the
next ?scal year. The Legislature refused Board of Regent?s requests for a 
supplemental appropriation for unpaid utilities several times in the total amount of
$38. 9 million dollars That does not occur in other departments of state government.
We do not expect a check for the $38. 9 million dollars to cover past shortages, of
course, but the State of South Dakota should pay ?lture utility bills in full as has been

done historically.

We urge a state appropriation suf?cient to pay 100% of the State's health insurance
obligation to Board of Regents employees as is done for other state employees. In
the past, the shortages were covered by student fees and the Regents could ask for a.
supplemented appropriation the ?scal year. In 2003 the Legislative refused to cover
a shortage of $928,981. Because of the refusal of the Legislature to make the
supplemental appropriation, student tuition and fees have accumulated a total of .
$15.7 million dollars in health insurance obligations. It would take an extra
appropriation of $928,981 to bring the health insurance fund up to 100%.

We urge the Legislature to appropriate an amount equal to 2% of last year's FY20 Base
Budget Appropriation as the ?rst in?ation adjustment in 22 years. An in?ation
adjustment should be across the board, not designated for a particular school, major,
degree, building or project. In?ation impacts every line item of University budgets and
the in?ation adjustment must be applied in the same manner We understand this will
not happen this year, but it needs to be done soon. If health insurance and utilities are
paid in full and a salary policy 13 granted in the usual manner, an in?ation formula should
be straight forward and need not be controversial. To put this in perspective, in FY20 the
State would have had to appropriate an additional $80 million to the Universities to have
split the costs 50/50 with the students.

A mechanism similar to the old in?ation ?formula" should be adopted. ?Formula
funding? ceased 1n 1998. What follows 15 a chart of salary and bene?t
appropriations. For example, the appropriated Increases were 0.08% ($163, 492) in
FY18, 0.92% ($1,911 ,373)1n FY19, and, at last, a makeup of3. 38% 207 ,112)1n
FY20. To put this into context, the total salary and bene?ts expense to the
University System was $430,303,419 in FY17, $433,597,557 in FY18 and
$437,799,510 in FY19. The information that follows demonstrates the significant
inconsistency over the last ten years.

FY en eral Fun 11
Salary Package

 

 

FY 11 FY 12 FY13 FY14 FY15 FY16 $705,397 SO 34,527 .364 55,115,866 $7,128.78? 53,695,035 3615185330 3163.492 $1,911 .373 $7,207,112
0 .4 1% 0.00 92% 3.00 9:11 3 $4815 3.95% 1.9 0% 3.08 9?11 0.08 34': 0.92 0x: 3.38%

Total Samar anzi Boner it Package Fermi: manage af 13:13::
Appropriated for theIFiscai Year

Once health insurance premiums and utilities are paid in full, and the salary policy is set,
the formula should be easy.

Letter Page 54 of 55

17. We urge the Legislature to appropriate an amount suf?cient to pay the Universities
$100 per credit hour for each dual credit course taken by a high school student. We
also urge that this payment be increased to $200 per credit hour over three to four years.
Currently, the State pays for some of these credit hours.

18. In all "re?nanced" bond issues, whether revenue bonds or Higher Education
Facilities Fund bonds, payments made from student?s funds should immediately be
reduced to the interest rate necessary to repay the bonds. The students should not pay
at the old rate and the ?savings? diverted to the General Fund.

19. While no money should be refunded to cover $2,904,690 of student fees
?repurposed? to the State General Fund in FY17, the action left the Board of
Regent?s Base Budget $2.9 million dollars short forever, not just for the term of the
prepaid bonds. We urge the Legislature to appropriate $2,900,000 to correct the
process in the future and not rely on student fees for General Fund commitments.

20. We urge the Legislature to appoint a group to study and recommend a solution to deal
with the problem of the overlap and duplication of services between institutions govemed by
the Board of Regents and those governed by the South Dakota Board of Technical
Education. The cost to the public of this duplication of competing state funded post-
secondary schools will be in the millions of dollars.

21. We urge the Board of Regents to immediately readopt the 1% annual salary
competitiveness student fee increase with the same coverage and limitations as before,
particularly the limitation that those funds would be used exclusively to compensate
professors at the campus Where the fee is collected. The students supported this fee
because they understood the faculty of a University is the heart of the University and
a University education can never be better than the education, wisdom, knowledge
and experience of its professors. The absence of the salary competitiveness fund
requires the Board of Regents to play extremely high risk poker in their attempt to
attract and keep the highest quality professors. As a practical matter, the lack of
these funds renders the merit pay portion of the merit and market program untenable.
We should mourn its loss.

We hope the State government and the people of South Dakota recognize the superb
potential of our University System. Working with the K-12 and the Technical Institutes, our
Public Universities impact the lives of our young people and the future of the State of South
Dakota. The two systems have made improvements to realize that potential. The
suggestions made in this letter are the product of many years of work with our great Public
Universities. We hope our perspectives will be of bene?t to our South Dakota leaders as
they strive to provide the funding needed to continue the legacy of the founders of our State
who put education at the absolute center of governmental priorities.

We should and do acknowledge we speak only for ourselves. No one on the Board
of Regents or other Regental employee has seen this document and we have no idea if they

Letter Page 55 of 55

support any of our ideas. We consider this a 10,000 foot View of the reduction in economic
and other support (by the State of South Dakota) over 21 years. State support is designed to
make Higher Education available to all. Public Universities help retain students in-state and
recruit out-of?state students who become South Dakotans. Real adjustments, some needed
right now and others over time, are critically needed. With declining enrollments
nationwide and with South Dakota?s decline in high school age students, the competition is
intense. South Dakota is well served by our ?rst class Universities and needs the state?s
support both vocally and ?nancially. They need and deserve both verbal and ?nancial
support from our State?s leaders. The State of South Dakota, the Board of Regents, South
Dakota Public Universities, faculty, staff and students must work together to strongly

. support our public higher education.

Respectfully,

Harvey C. Jewett
James W. Abbott

A digital version of this document is available upon request by emailing angela?iiewetthcorg