Rapid City Area Schools warn enrollment decline and state formula could cut state aid by roughly $2.2 million

Superintendent Dr. Thompson and the district chief financial officer warned the Rapid City Area School District 51-4 board that long-running enrollment declines, combined with how South Dakota's state aid formula works, are likely to reduce state aid and tighten the district's budget.

Dr. Thompson told the board enrollment has fallen about 1,900 students since 2014 and noted a substantial rise in families identifying as homeschooling: "It has grown from 541 students in 2016-17 to 1,839 students in 2026," he said, adding that kindergarten enrollment has dropped from a high of 1,117 in 2017 to 814 in 2025. He cautioned that those state-reported homeschool counts can be imperfect because families need only file once.

At the same meeting the district's chief financial officer, identified in the transcript as "Mister Sassy," explained the mechanics of state aid and presented the district's revenue projections. He said the FY26 general fund budget was about $96,400,000 and that state aid revenue comprised roughly $35,600,000 (about 37% of general fund revenue). In the district's FY27 projection the formula-generated need figure was approximately $88,500,000, with the district's projected state-aid payment near $33,400,000 — a year-over-year decrease of roughly $2,190,000 in state aid and about a $1.8 million reduction in total general fund revenue.

"You're getting a double whammy impact when you have enrollment decreasing and do not have an inflationary increase," the CFO said, describing how the formula combines enrollment, a target teacher salary (the inflationary lever), an overhead rate and removal of local effort. He warned that the formula's interaction with property taxes can make it difficult to replace lost state aid by simply raising local revenue.

Board members asked for context and data sources. The CFO said state Department of Education figures are the source used for comparisons and offered to compile historical returns to illustrate what, for example, a 3% legislative increase has actually delivered to districts.

Dr. Thompson and board members discussed policy responses. Dr. Thompson outlined the district's five-pillar entry plan, including recruiting and retention work, a facilities strategic plan that may require a future bond referendum, and proposals to expand junior kindergarten and career and technical education in partnership with local institutions. He also said he would recommend reorganizing central office to add a director of Indian education and school improvement to focus on long-standing achievement gaps.

The board did not take any budget votes at the meeting; members were told further budget parameters and a follow-up study session will be scheduled in advance of negotiations.

What happens next: the district will continue to refine enrollment counts and state-aid projections, produce the requested historical comparisons for board review, and discuss budget parameters at upcoming January meetings.