Sen. Sue Peterson, R-Sioux Falls, speaks to the Senate State Affairs Committee on Feb. 9, 2026, at the South Dakota Capitol in Pierre. (Photo by Makenzie Huber/South Dakota Searchlight)
PIERRE — An attempt to make it easier to refer excess school property taxes to voters passed the South Dakota Senate State Affairs Committee with a 6-3 vote on Monday at the Capitol.
Senate Bill 223, introduced by Sen. Sue Peterson, R-Sioux Falls, targets decisions by school districts to “opt out” of property tax limitations imposed by the state, in order to raise more revenue.
Peterson originally introduced a bill to require elections for schools to exceed property tax limits. That bill failed in the House on a 29-39 vote last week.
Peterson’s second attempt targets the number of petition signatures needed to refer an opt-out to a vote and the length of time petitioners can gather signatures.
Effort to require elections for excess school taxation falters in state House
Local residents can already petition a board’s opt-out decision to a public vote. They have 20 days to collect signatures from at least 5% of registered voters in the district.
That is “unattainable” for some school districts, Peterson said.
The new bill would lower the signature threshold to 5% of the last school district election’s voter turnout or 50 signatures, whichever is greater, and extend the circulation period to 40 days. That would align with referral requirements for statewide issues.
“The referral process is meant to ensure that citizens are part of the process, not excluded from it,” Peterson said.
An attempt last year to refer the Sioux Falls School Board’s $2.1 million opt-out decision required 5,490 signatures. Petitioners collected 2,302 signatures.
Peterson’s bill could drop the number of required signatures to refer an opt-out in Sioux Falls down to 148, given the 2.33% voter turnout in the 2025 school board election. The district’s future elections will have to be held during the June primary or November general elections, due to a law the Legislature passed last year mandating local election dates, which could result in higher turnout than past elections held on standalone dates.
Opponents of the bill included education lobbyists and members of the Sioux Falls and Rapid City school boards, saying that the change would erode the purpose of electing school board members to make decisions for district residents.
The bill now heads to the Senate floor.
Mandatory funding increase bill advances
Another education funding discussion will continue after the House Education Committee on Monday advanced without recommendation a bill that would require state education funding increases to match or outpace inflation, with a floor of 3%. The committee voted 8-6 to move the bill to the House Appropriations Committee, which is one of the Legislature’s budget panels.
South Dakota’s current law requires an annual increase of 3% or inflation, whichever is less — an amount described as the “index factor.” Public education in South Dakota is funded not only by the state but also by local property taxes.
How South Dakota lawmakers get around a law that ‘dictates’ increased funding for schools
Rep. Nicole Uhre-Balk, D-Rapid City, introduced the bill to set 3% “as the floor, rather than the ceiling” by changing the language to “whatever is greater.” The change would help school districts keep pace with inflation and would prevent cost shifts onto local taxpayers from higher property taxes, she told lawmakers.
“Keeping the law the way it is now will guarantee cuts to education that will never keep up with inflation and will always underfund our ability to keep up with target teacher pay,” Uhre-Balk said.
Gov. Larry Rhoden recommended flat state funding for school districts in the next state budget, despite the law. Lawmakers regularly adjust the law each year to increase funding above or below the index factor.
Grant Judson, with the state Bureau of Finance and Management, told lawmakers the change would “create an expectation we can’t guarantee” because funding changes each year based on revenues.
