State aid in South Dakota is determined by a foundation formula, calculated by subtracting local effort from district need. District need is determined by multiplying each district’s average daily membership from the previous year by the per-student allocation. The allocation for the 2004-05 school year is $4,087. Although South Dakota does not require local districts to raise a property-tax levy to receive state aid, it assumes that districts will raise a certain amount of revenue and adjusts state aid accordingly. If a district is able to raise the entire per-pupil allocation through local revenue, it does not receive general state aid. The only adjustment in the formula provides additional support for small schools. Districts are categorized into three different sizes: 200 or fewer students, 201 to 599 students, and 600 or more students. All districts with fewer than 600 students receive additional funds. South Dakota provides categorical aid for only one other district characteristic, the number of students in special education. Money for special education varies based on different disability categories and a district’s local tax effort.
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