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Good morning. We are going to call Government Operations and Audit Committee to order. I want to welcome you all here and to the millions that are probably online watching with this interesting meeting today. I want to remind everyone to please put their cell phones on silent so we don't get interrupted. And with that, I'm going to ask Secretary, would you please call the roll?

Foster?

Here.

Grove?

Here.

Karr?

Here.

Otten?

Here.

Auch?

Here.

Emery?

Here.

Moore.

Howard.

Here.

Overweg. Here.

Mr.

Chair, you have a quorum. Thank you. Okay. And I'm sure all of you have read the minutes from the last meeting. And with that, I would introduce— it has been moved by Senator Otten and seconded by Senator Howard to approve the minutes of the last meeting. All those in favor say aye. Opposed? Okay. Our minutes are approved. Let's see, we're not going to introduce pages today, are we? Okay. I want to remind everyone that all testimony will go through the chair. We don't do that for any other reason but just to keep order in here. So if you can probably remember that, if you forget, I'll remind you as we go. And with that, we're going to move right to our order of business. Our first order of business, which is— Performance Management Reviews of the Bureau of Information and Technology. Welcome, sir. Please introduce yourself for the record and give us your report. I just want to sit down and turn the mic on. There you go.

Mr. Chair and committee, my name is Neil Nightingale. I'm the Commissioner of the Bureau of Information and Technology. I've been in the position since June, and I've been with the state for a little over a year. I'm a lifelong South Dakotan, and I've spent my career in technology. And I'm here, and I'm happy to be here to serve my fellow citizens. As you can see, we have 3 primary goal areas with metrics that are mostly the same as previously reviewed, with a couple proposed changes that I will address. The first goal is to provide a secure, a reliable, secure, and modern infrastructure. We look at uptime as a measure of reliability, and you will see that we have 4 related indicators. As an overview, uptime is the time that servers and applications are available for employees and agencies to serve the public. The private cloud uptime is a measurement of our Windows-based servers. Mainframe is our older technology that still houses many of our critical technologies. While we have been very successful exceeding our targets, you'll remember our outage last August that brought down the state systems for 2 working days. Our fiscal year 26 numbers are still being finalized since we just closed the fiscal year, but due to that event, we will no longer be at 100%. Additionally, the South Dakota Public Broadcasting statistics also include uptime as the number of hours covered live by SDNET. In the same goal area for security, we measure a variety of factors. The number one The number one way threat actors infiltrate IT systems is human error. The state employee email assistance— assessments continue to be a way that we keep security principles top of mind for all of our users. Next, PCI compliance is an industry compliance measurement. The payment credit card industry created a data security standard that all merchants must comply with. These rules were created to fight fraud and ensure minimum level of card security is managed by the industry. Without PCI compliance, the state could be prevented by card— credit card companies from accepting payments. So this is a very big deal. Each quarter we must start over with our PCI compliance review, and we've never had an issue. I will point out that we can only attest to the credit card usage in our environment. If an external vendor provides credit card processing for an agency, that is not within the scope of our assessment. Finally, security and patching. Hardware and software manufacturers continue to release updates or patches to mitigate identified or potential vulnerabilities that could be exploited by an external threat actor. And they are now pushing out patches more frequently now than in years past simply because of the increase in cyber activity. So a key and critical part of our internal cyber protection is to keep all systems, devices, and servers that connect to the state network updated with the manufacturer's latest security updates and patches. We have one goal for the user devices, which is to have 90% of all devices patched within 10 days of the release, and this includes both testing and distribution. In addition to user devices, we also apply patches to our servers. We are requesting to add this as a new metric to to be tracked going forward. Are there any questions regarding the metrics for Goal 1? Oh, I'm sorry. Oh, gotcha. Here it is.

Yep.

Wonderful. Thank you.

Okay.

Does any of the committee have questions?

Okay. Continue. Our second goal is to deliver valuable services at economical costs. In this section, we would actually like to offer to remove 2 metrics. The first is planned versus unplanned work for our development team. When BIT was a build-it-first development shop, the primary focus was on creating new custom applications for our agencies. Today, the state, BIT, and most of the IT world have moved to a buy-before-build philosophy. Our developers are primarily supporting agency-requested upgrades and integrations, improving security measures, or fixing issues with our more than 1,000 custom-built applications that are still in service. Whether the plan— work is planned or unplanned is difficult to determine. We work closely with our customers to meet their needs, which may mean changing the work priorities and plans. The second deletion would be the Teams Voice conversion. Teams Voice is a Microsoft product that allows you to answer your phone from anywhere on your computer or mobile device, which replaces analog phones and lines. The deadline for statewide implementation was June 30th. We are down to the final moves, although we still have some analog lines like those used in elevators and HVAC systems. This metric is no longer necessary to track. Any questions regarding the 2 metrics we would suggest removing?

Does the committee have any questions for Mr. Nachtigall? Okay. Seeing none.

And finally, we would like to add a new metric to this section, is to show how many of our applications in the state use single sign-on. Our single sign-on, or SSO, is called MySD. It allows our citizens to utilize state services with a single username and password. It also allows us to focus our security efforts on a single access point and reduces our attack surface. We have more than 1 million registered users. This is a very important security measure. We require it for new software and work with existing vendors to add it. This will be a work in progress, though, but it emphasizes to our partner agencies and to vendors that this is not a trivial matter. Are there any questions regarding adding this metric?

Senator Howard.

Thank you, Mr. Chair. So, what is the other option if your goal is to have everyone use the MySD single sign-on? What is the other option? What are they doing otherwise?

Go ahead and answer the question.

Yep.

So, when you have a custom or a vendor-provided solution, they will want to provide their own authentication. And so you'll have to have an independent username and an independent password that's unique to that system.

Any other questions? Representative Lems.

Mr. Chair, so you had said you have 1 million users. Could you say who are those 1 million users?

Mr.

Chair, go ahead.

Yeah, so primarily they'll be the citizens of South Dakota. But we also require single sign-on for some of our other applications, such as the GFP. It's single sign-on for like registering for or applying for licenses, et cetera. So there will be other people out of state that will actually have required to use single sign-on if they're using our services.

Any other questions from the committee? Senator Otten.

Thank you, Mr.

Chair.

As you're working through this, are we looking at any AI to integrate within the system to maybe track in between all these indicators?

Commissioner Chair? Yeah, so we are investigating AI on a number of fronts. Primarily, our investigation right now is in terms of how do we make sure that it's secure and reliable. We want to make sure that any application or rollout of AI is following certain guidelines. so that we aren't exposing state data in our state systems to any malicious or potential vulnerabilities. But internally, there's a variety of aspects that are looking to say, how do we investigate AI in a reliable or reasonable fashion for productivity, et cetera? So I'm not sure if that exactly answers your question, but there is research around AI.

Senator Otten, follow-up?

Ask a question. Do you have a cost factor on an AI program compared to the other ones?

Go ahead.

Mr. Chair? Yep. So there's 2 main costs when it comes to AI. One is— will be your licenses. And so some products, they allow for free use, and in some products, such as the 2 that we are sanctioning in the state, do have a licensing fee. The reason why we go with the licensed product is because then they're within our secure environment and it doesn't expose any of our data to the outside world. But there is a cost potentially once we ever go to like using AI agents, which we are currently not doing. And that's when you start running into the cost of having to buy tokens, etc. And so that's where you potentially will see costs increase. Right now we're primarily focusing on just responsible use of Generative AI tools and not agents at this point.

Follow-up, Senator Otten.

So within this AI and these different functions, are there different, I guess you'd call algorithms or programmings? You know, you've got a AAA that is the best of them, then there's another one that's, you know, maybe a AA and an A. I mean, are there different degrees of AI?

You know, there are certain models that I guess are more utilized than others, but as far as an actual rating system, I'm not familiar off the top of my head, so I'd have to get back to you on that one.

Okay. Any other questions? I guess I have one. Are you using AI to write code?

So we are— we do—

Well, you know, you're talking to me, you know the right answer.

So we've just started some preliminary investigation within writing code. And so there is a module within our service now that we've done some exploration, and it seems to have great promise. Additionally, we have some people that are using AI as trying to get up to speed in terms of their code and development. And so there's some— is some application of using AI within our development environment. But just like any use of AI, we advocate for the human in the middle, right? You just can't expect it to write code and then, you know, release it to the world and expect that it's— everything's perfect and secure. So our expectation is that even if our developers are using AI to help with an end product, that they're still using their expertise to ensure that it is scalable and secure.

So the answer right now is yes, you are using AI to write code?

Yes. Okay, thank you.

Follow-up, any questions from the committee?

Okay, Mr.

Chair, Representative— or Senator Karr. Thank you.

Remind me who we have in front of us today.

Mr. Nachtigall from BIT.

Nightingale, thank you. Yeah, I do want to go back to Goal 1 a little bit and talk about cybersecurity. And the, you know, every organization, including the legislative branch, invests a lot of money into protecting our Our information and, and our systems that we have, our computer systems. And the one metric I see here is regarding email assessment annual failure rates. I'm assuming that's when a state employee opens something that's like a phishing type of email. Is that correct?

Go ahead and answer if you can.

Uh, Senator Karr, that is correct.

Yeah, are you happy with— Mr. Chair, can I have a little leeway?

Yeah, go ahead.

Yeah, thank you. Are you happy with that result that you have right now? What is it, 6.7% failure?

Mr.

Chair?

Is that the accurate way to read that?

Yeah, that's a 6.7% open rate, failure rate, yes. And so it is higher than what our current goal is at this point. And so our intent or our goal is to drive that down. And really the main priority or the main activity to do that is continued education. To make sure that people are aware of the more sophisticated ways that threat actors are starting to, you know, pervase in terms of their email threats. And so, the primary goal is to drive that down. But again, education is our primary vehicle for doing that.

Okay.

And so, it looks like in years past, it had been a little lower, and that's kind of came back up. How do you work to improve that?

Yep.

Again, primarily our goal is for education and then continue to do internal trials so that we can ensure that people are aware and it's top of mind. And so that as long as we can get them to avoid interaction with the ones that we send out, we'll hope they'll avoid the ones that are coming from external threat actors.

Let me be more specific. What type of training are you doing or requiring of these state employees so that they are aware of these vulnerabilities and how to avoid them?

Yeah, so certainly, and I may, Mr. Chair, if you don't mind, look for a little assistance here. There's certainly some annual security training that is required by state employees on a yearly basis that touches upon this particular topic. And if you don't mind, I may ask Lisa She can— or Heather.

Sure, just come up and introduce yourself for the record and give— see if you can shed some light on this.

Hi, I'm Heather Perry.

I'm the Deputy Commissioner for BIT.

So I would say we do annual required training.

Usually it's between an hour or 2.

It's everybody's favorite time of year, and we, we spread that fun throughout the year. We also, thanks to Lisa, do a lot of messaging throughout the year to try and make sure We're reinforcing what we're seeing that's new out there. The phishing emails are really good anymore.

We're no longer at that point where it's like, hey, there are going to be 27 misspellings in here for you to notice.

So we're seeing like people infiltrating and then, you know, using an account of another state employee. So we try to do that as well in our testing. But definitely the training is key and we have to try and keep it interesting and also keep people on their toes.

Senator Karr, do you have follow-up questions?

Yeah, one more on that one, please. I think one more. Excuse me. And so how many of these people are the repeat offenders? And, or are they— are these not the same individual kind of repeating? And what's the protocol in place if I'm a guy who keeps clicking on this thing repeatedly, then what?

Yes, we definitely have conversations with our agencies for repeat offenders, or in that— in some cases, with the leaders of those agencies, and try to specify that.

We also will take steps to change the filters on their email to make sure they're just not seeing as many.

You do risk missing important emails from someone you're not expecting an email from, so that's not positive in state government where you can certainly get information from a large number of different people. So you have to really go back and check your junk mail and make sure you're not getting it. But it does improve our odds of preventing ongoing issues with people.

Senator Karr?

Yeah, I'm going to change topics if that's okay, Mr.

Chair.

Yeah, go ahead.

Thank you.

So a few years ago, the BIT came before Appropriations and talked to us about a brittle fund. And I know you've renamed that, I believe, to something else. And the conversation was, this is going to require upgrades in these infrastructures, these informational technology infrastructures, to the tune of hundreds of millions of dollars.

Okay?

And we started putting some money in there. I know that this last year I asked the executive branch to prioritize, and your department to prioritize— bureau, I should say— to prioritize these items. Look forward to that follow-up conversation. But what I'm missing here, I think, in these metrics, and maybe this is something for the group to discuss, is a suggestion on that cybersecurity that relates to protecting that infrastructure. The only thing I see is this email assessment failure rate. However, I know that organizations large and small, including the legislative branch, Have attempts by hackers to hack the system, acquire data. You know, is that reflected in any of these metrics? Am I missing that? And is that a metric that we should be considering?

Go ahead, Mr.

Chair. Yeah, so I guess there's probably 2 parts to those. One is— and there are some actual measures in here that would be appropriate or related to that— one is that a key part of how we protect our systems is by ensuring that our systems have the most recent security patches. And so that is reflected in our security patching metrics to make sure that as our vendors and as our manufacturers identify either vulnerabilities or potential vulnerabilities, they are releasing things that help plug those holes. And it is our goal to make sure that those patches are applied in a very timely fashion. So that's one way that we protect. And the other way is, again, people coming in through the front end, and that is trying to use login means or try to hijack logins to get into our systems through the front end. And that's why, again, we're emphasizing single sign-on as the door and with the key to ensure that we're helping displace the front-end attacks as well.

Senator Karr?

Yeah, is it all right if I have a couple more?

Yep.

Follow up on that? Thanks. Can you speak to attempted hacks and any successes?

Yep.

So I don't know that I'd have all the details as far as that, so we might have to get back to you with any particular details. I'm sorry. One thing I would say is that we do track a series of cascading events in terms of, hey, there was an event and it translated into an investigation and it translated into something that propagated into an infiltration. And our success rate on that is almost 100% of decreasing those down to any infiltrations.

Okay.

Well, that's great. That sounds like a metric I'd want to be aware of and continue to see, though. I'm not sure about the rest of the committee, but I, I'm not smart enough in this area to know exactly what metrics we should be looking at when it comes to cybersecurity. But to me, having one just with emails and patches probably seems woefully inadequate. I would look for some direction on— maybe you guys could come back with some ideas on some other Patches— or I'm sorry, not patches, metrics that we should be considering so we can monitor in the future the safety of the data in the state system.

Go ahead.

Mr.

Chair, yep. Yeah, so we would certainly be glad to investigate some. I think one of the things that we're cautious of is trying to expose too much that might be interpreted or leveraged by external threat actors. And so I think our goal would be to make sure that it's metrics that's meaningful to you, but doesn't expose and try to make vulnerabilities aware of to the external public and thus something that maybe external actors could leverage. But we would certainly be glad to research and investigate what might be appropriate.

Senator Karr. That would be great because I know—

yeah, thank you, Mr.

Chair.

I know I'm going to ask a few IT experts what maybe we should be looking at. And I now feel that I failed my duty to do that before this meeting. My last question is on the topic of the Brittle Fund and the patches. So I don't want to put words in your mouth, but talk to me then about the, the need for additional dollars going into that fund versus these patches, because what I'm hearing is as long as we're timely with these patches, we should be able to mitigate any security risks or security issues. So do we need to stop worrying about putting tens of millions or hundreds of millions of dollars towards the brittle fund as long as we keep up with these patches. Can you connect some dots for me there?

Yeah, Mr.

Chair.

Yeah.

Yeah. So really, if you look at the IT modernization fund, security is one angle on it, but really continuity of business or continuity of service is another key element for the investment in modernizing some of our solutions. We currently have solutions right now that are on decades-old technologies and that can really not even be updated anymore. One of our primary systems, our timekeeping system, is one such thing. And there's lots of examples of other ones. And so security is a key factor, but then also it's just reliability and maintaining continuation of business is another key factor of upgrading and modernizing such systems.

Senator Karr?

Yeah, thanks, Mr.

Chair.

There's a lot there. I look forward to a continued conversation about the priority of the IT modernization fund. And, but I would like to have a conversation or at least comment that I do think we need to look at some other metrics regarding cybersecurity and what, as this thing continues to evolve, what we should be looking at. Again, I'm not the expert in this area. So, thank you, Mr. Chair.

Yes, Senator Otten. To go on the pro tem's thought process, I would venture to say that you're monitoring other businesses, agencies across the nation.

So, when we hear a report of, say, a bank that just got hacked, that you're kind of looking in that realm of what happened there and that we're locking that in down on our end?

Go ahead. Yep. So we really look at it in 2 angles. One is that we look at internally what's happening in the industry, and we partner with the State Fusion Center as well to understand what are the potential threats and real threats that are out in the world right now, and judge ourselves and assess ourselves to determine whether we have those same vulnerabilities. The same thing is when you understand or you hear about such a failure with another organization, and there's been several in the news here in recent times. is for us to look internally and say, do we believe we have that vulnerability as well? One of the key things that we look to do also is what's considered tabletop exercises, so we can run a variety of scenarios to say, what is the probability of this happening and what is the chance of us being able to successfully defend?

Good. Any other questions? Senator Howard.

Thank you, Mr. Chair. Just again, going back to the email assessment, Failure rate. I actually know of someone who failed one of these, but they weren't, they weren't told how, you know, it's like, oh, they were told, well, that was a phishing attempt. But nothing was, you know, like, here's, here's where you should have caught it, you know. So what is your follow-up on that when somebody When you know someone, or do you even— I mean, I'm assuming you know every time somebody clicks on a phishing attempt, what do you do? What is a normal follow-up? Because I was told there wasn't any follow-up with this one.

Go ahead.

Yeah, thank you. Yep. And Heather, I might have to see if you can assist me on this alone again. Okay, so we do reach out. I'm sorry, Mr. Chair, if that's okay.

I was just— I was gonna say, every time you come up, you have to reintroduce yourself.

It's Just— yep, I apologize.

Yep.

Um, yeah, so Heather, could you—

Yeah, sure.

I'm Heather Perry from BIT.

What I would say is it varies greatly. So if we see someone failing often, you know what I mean, more than one time, then we'll get back to them. We used to have a system where we would, you know, have that immediate feedback, and we don't have that system right now. So I think it's something we're considering again.

Go ahead, follow-up question.

Well, comment. I think that would be good, just, you know, like pull it up and go, here's what you should have caught right here. But the other on that, so you're looking for a target of less than 5%. To me, it seems like, I mean, 0% would be ideal. So, you know, I mean, real, you know, you should be shooting for None. But why 5%? Why not 2%? Why not 1%? Why not just reduce it until it gets down to zero, you know?

We could certainly change the goal and work on it, but I think we felt like 5% was attainable, but not extraordinary nor lowballing, because obviously we didn't make it.

So, but if you have recommendations, we're happy to, to do that.

Senator Howard, follow-up.

Thank you, Mr. Chair. And it's going to go to Department of Health too. I mean, just some of these metrics, it's like, you know, I would almost put it— the target should be zero. And yeah, you may not, you may never meet it, but that is what your target is. So I don't know.

Okay.

Any other questions from the committee? I will just say one comment, and I don't want to put words in Senator Karr's mouth, but I think what he was getting at is, you know, I appreciate that there are some things you don't want to release because for security, but as long as you are spending the millions of dollars of taxpayers' money, you are going to have to figure out a way to report why and how you are spending money. some kind of transparency. I'm just saying in the future, you're going to have to do it. It can't be a sealed thing. So I guess that's going to be up to you to figure that out. Any follow-up questions from the committee?

Okay.

Certainly. Thank you for your feedback.

Thank you.

All right.

You want me to close out? Yeah.

Sorry.

Yeah.

Go ahead. Let's see. Where was I? Oh, yeah. To close out in the section of Goal 2, We are continuing 2 additional metrics around our service level agreements. The first metric is the service desk service level agreements. The SLA is defined in the time that it assigns to take a technician to assign a technician to an incident and the time to fully resolve the incident. The first part of the process is to assign the technician within 4 hours of receiving an incident. The second part of the process, the resolution of the incident, our goal is to resolve all incidents within 24 hours. This is our Tier 1 SLA. For incidents with extenuating factors such as travel required or escalation to a third-party vendor, then our SLA is 3 days. Our team receives and works about 85 incidents per day. The second SLA is related to the service desk customer satisfaction ratings. Surveys are requested for all incidents and requests that are submitted, and the survey questions are associated with our response, resolution time, communication, competency, Our final goal is to build and retain a highly skilled workforce. Our first metric that we look in this area is annual staff turnover. Although not yet updated in the document submitted, BIT's turnover for fiscal year '26 was 8.9%, which was below our 10% goal. For context, we had 26 employees leave BIT, of which 7 were retirements. Our next goal is to increase the number of And finally, our employee engagement. The fiscal year '26 numbers are based on a survey done by BHRA in January. As you can see, BID was just short of our overall engagement target, though the, though the BID employee engagement was higher than the state average. Mr. Chair, I'm open to any further questions.

Any questions from the committee? I see none.

Great. Thank you very much for your time.

Thank you for your time. Senator Howard.

Thank you, Mr. Chair. I would move to acknowledge receipt of the performance management review submitted by the Bureau of Information and Technology pursuant to South Dakota Codified Law 2-6-37.

Second. Okay, it has been moved by Senator Howard, seconded by Senator Otten, to receive the report. All those in favor say aye.

Aye.

Opposed? Thank you, sir. Appreciate it. Okay, we're going to move on to our next, and that is the Department of Health. Welcome.

Good morning, everybody.

Okay, are you ladies set and ready to go?

I think so.

All right, please introduce yourself and give us a report. Your mic is off.

There you go.

All right, I got to get back into this again.

Hold on just one second. I want to announce to everybody, I forgot earlier, if you're going to testify today, please go register on the computer back there. Thank you.

Thank you, Mr.

Chair.

Melissa Magstadt, Department of Health. You've got a packet in front of you, um, and we'll be going through our slides. I wanted to— in your packet you should have our old— what we're proposing for a couple to be retired, not all of them. Put them on the left side of your desk and your new ones on the right side if you prefer that, and that will help maybe keep them straightened as we march through the slides. Just to orient you to the Department of Health, most of you I know through either Appropriations or Health and Human Services Committee, so it's good to see you. But some of you folks I've not gotten to be in the same committee as you, so it's nice to Mr. Chair, you're one of them.

This is my first meeting with you. Well, yeah, you don't come to agriculture very much, and I don't know why.

I know, but my kids are.

Okay, you're welcome, boys.

And so in the Public Health Department, what's really the job that we do? Well, we have a few different domains that we work in. First of all, we work in preventing epidemics and the spread of disease. You're going to find the tuberculosis program in here, HIV, the syphilis program, prevention of measles. That would be led by Dr. Josh Clayton in the background. Put your arm up there, Josh. There we go. So names and faces, you ever see them around the Capitol, you know who you're looking at. Protecting against environmental hazards is a piece of ours. We do all of the testing of the streams and the water supplies to make sure that they're healthy and kept in good order for not only recreation but also the consumption of humans. And so the environmental hazards, we do that in the public health lab. We also do environmental hazards with keeping track of the different seized drugs that are found in the state of South Dakota. These— the drugs in the state of South Dakota are no longer simple. They are very complex. There are multiple drugs are in the same pill. And so the public health lab has a team of chemists that specialize in this type of activities and some very top scientists that function in that lab.

Thank you.

And Dr. Leo Shuganoff, raise your hand, Doc. He is the head of the public health lab, and so if you ever see him around, that you have a face to attach. We work in the area of prevention, preventing injuries. That will be our diabetes prevention program, cardiovascular prevention, suicide, opioid prevention. All of those are in the prevention space. We also work in the promoting of health, so our Bright Start, which is our maternal Pregnancy care program. Pregnancy care is one of our key pieces that we spend a lot of time in. Why? Because we do— if you start healthy mothers with healthy babies, typically make healthy children and over the long term reduce the cost of healthcare in the state of South Dakota, specifically to the Medicaid program, because that's the population we tend to work with is the lower financial means populations. And then Beth Docken leads those areas. So there she is in the background. And then we also do response to disasters and preparedness. So when there's floods, when there's a high wind event in Highmore and the nursing home needs to be evacuated, we're in that space of helping with those facilities and helping to get those facilities connected to resources and help navigate some of those pieces. But when the Black Hills last year, when they were having hot dry summer and they planned to have some rolling blackouts, if you remember those, they contacted us to make sure that our healthcare providers, long-term care, and our home ventilator patients all had the connections that they needed to be able to weather that if that were to happen. So some of those were in the planning, but some of it were on the backside of a disaster that might happen. We might have to help help with some resources and connections. And then the accessibility of healthcare. So all of the RAP, like the Rural Assistance Program that you vote on every year to pay about $1 million for folks who have been recruited to the state of South Dakota to practice in small towns, that's administered through us. We also have all the scrubs camps. So all the pipeline of exposing healthcare students to healthcare as a potential career is in us. And then we also have 14 boards. So we have the regulatory of the Board of Nursing, Board of Medicine, Board of Pharmacy, and Dentistry is in our area. And then we're also the regulatory piece on long-term care and hospitals. So we are the inspectors that go into those areas. We're the inspectors that go into hotels, lodging, campgrounds, and food establishments. So that as you go out to eat or wherever you choose to to go in the state of South Dakota, there's someone who's made sure that on the back end and in the back office of those places, there's health and safe procedures that you can rest assured that we're there. And that would be Cassie Deffenbaugh in the back who has that piece. And in the disaster response and healthcare access is Emily Keel, who's behind the pole back there. All right. So that's kind of the lay of the land of how we do business, just in case you hadn't Um, had much time spent with us. So our performance measures were digging into 3 different areas. They made it to the top because we measure a lot in the Department of Health, but we wanted to make sure that they were meaningful and useful and are a general representation of what we do in the department without being so overwhelming that you want to just crawl in a hole, I suppose. So the 3 areas, if they're fundamental measures to public health, If they contribute to overall life expectancy. The mission of the South Dakota Department of Health is every South Dakota healthy and strong and trying to make sure that every South Dakotan lives their longest, best life wherever they choose to do it. And if we can directly impact it by the Department of Health, which will lead to the one of the ones that we want to retire because we don't have a direct impact on it. So why measure something we can't do anything about? So, um, so where we're at today, we'll be discussing— we love our graphs, we love our trend lines.

Yes.

And so that's why we have graphs and trend lines as we move forward. To Senator Howard's perspective, I think that's a really good point. Why not make it zero? Why not make it 100%? Why not make it zero? We like to measure in increments. And so if we're going in the right direction, I'm going to want to get to zero on a lot of things, or I'm going to want to get to 100% on a lot of things. But I like to show where we are year by year. I can't make it to 100% next year, but I should be moving in the right direction to that direction because I agree with you, Senator. Go ahead.

If I— but to that point, how I would do these metrics, I would like, for instance, childhood pediatric obesity. We don't want any kids to be obese. So to me, I would do the metric. The goal is zero. And as long as you're decreasing, you're meeting that, you know, you're green. I know everybody wants green on here. They want their status to be green, not yellow or red. But to me, it's like, if your goal should be zero, then as long as you're decreasing, you're green. You know, your, your goal should be reduced to zero. Am I down from 14 to 13%? Great, I'm green. That's how I would do it.

Perspective. Absolutely.

Okay.

Thank you.

Continue, please.

Thank you, Senator. Um, and then what's driving the performance measures— hope to give you a little bit of a glimpse into what we're Why it is what it is, and what we're doing about it. And then some new areas of impact that we think are probably better measurements of what we're doing here. So this is an overview. We collect this data out of the Department of Vital Statistics. So every baby that's born and every person that has their last breath in the state of South Dakota is recorded by the Department of Health in our vital statistics. And then we pull out of that data how we lost or why we lost this person. If you get up into those 50s and 60s, you're going to find cancer and heart disease flip-flop back and forth for the most of the, the number 1 and the number 2 position in that age group. The next highest loss of life is going to be in your year 1. South— and that's going to talk about a little bit of our data that we have. But year 1 is a place where we lose a lot of South Dakotans who don't make it past their first year. And then you're going to see scattered throughout this chart is if you're in the younger age, the 10-year-olds, 20-year-olds and 30-year-olds, you're going to see suicide as a piece of each one of those losses as well. But otherwise, you're looking at the top 10 causes of death and the year rankings for the people of South Dakota. This is one of our metrics that we keep in mind for the state of South Dakota is that we have 2 large populations in the state of South Dakota. One are white South Dakotans, one are our Native American South Dakotas, and those are really just 2 basic populations that make up the majority of us. So we use this graph to really have this sense of the disparities that exist in the state of South Dakota between one population and another. So the blue line is white South Dakotans, and the arrow with 50% points down to number 80. And we lose about 50% of South Dakota white South Dakotans by age 80. So if you are a white South Dakotan, you will likely live a very long time and be able to talk to your grandkids and be able to speak into their lives. But if you were going over to the red group, that's our Native Americans, and that 50% now is pointing down to the number of 58. We lose 50% of our Native Americans by age 58, which is a 22-year disparity between one population and the other, sometimes by one county versus the other. And so at this point, the Public Health Department has— keeps this in mind as we do our work, that there are certain people that are suffering at greater greater outcomes than others are. This speaks to, you know, 2 different types of pictures. In our American Indian deaths, liver disease and heart disease are your top 1 and 2. Cancer, diabetes, and suicide is how we lose our Native Americans. But in our white South Dakotans, it's cancer and heart disease. Alzheimer's gets up in the number 3 area, the white South Dakotans, because— but why is it not in American Indian deaths? Because they don't typically live long enough to develop Alzheimer's. So, how we like to start off is, you start out well, you've really set a foundation to long life if you start out well. And that starts in pregnancy, that starts at conception with healthy mothers. And all the way through those, especially those first 2 to 5 years of life, is where you're setting down a lot of habits. Nutrition, education, relationships, growth and development, including pediatric obesity. To Senator's point, you know, pediatric obesity, it— like, should we even have that at all? Probably not. However, we have moved to a place that that is a part of the conversations that we're having now. And if you are obese in your pediatric years, you tend to have more obesity in your adolescent years. And you tend to have obesity in higher rates in your adult years as well. So Goal 1 has these 3 bucket areas in the Healthy Beginnings. And Goal 1 Activity A, this is exactly what's in your Excel spreadsheet. So if you prefer Excel spreadsheets, absolutely have a look at this. We pulled that data of what we actually have versus the target in the pediatric obesity rates. When we started measuring this in 20, um, at our last time we were at GOAC, we suggested this. We were at 17%. We're now at 16.1%, and our target is to continue to keep going down year after year. Hopefully I'll be able to tell you, Senator, that we hit zero.

Senator Howard has a question.

Thank you, Mr. Chair. On, on most of these, this question would apply. Do you also keep track of this by the different populations?

So yes, Yeah, Mr. Chair, yes, that's— we do parcel those types of things out. And you're right, there are different disparate groups across the state. Absolutely.

You good, Senator Harding?

Well, follow-up.

Go ahead.

Um, do you, do you do different things to target different populations? You know, how do you— just for instance, pediatric obesity, can you talk a little bit more about that, the disparity between those, and how How do you, how do you deal with that?

Mr. Chair, that's a great question. So yes, everything that we do when we're talking with populations, if I'm talking to as a healthcare provider to a patient, I'm going to meet that patient where they're at and understand who they are, what resources, what challenges they might have as a patient unit, and try to come alongside with that provider to patient. We try to do that in the Department of Health as well. We're going to look at a population, how we're going to treat the county of Brookings and help support the county of Brookings is going to be way different than how we're going to treat and support the county of Oglala. You know, you have different resources, different education levels, economic outcomes, different challenges in the community in Brookings than you do in Oglala. And so it's not a one-size-fits-all. And that's a great point that we We try to go to the population, meet the population where they're at, figure out what is culturally appropriate. There's different community cultures. If you were to go to our Hutterite colony, how we treat our Hutterite colony partners is going to be different than we're going to treat our West River friends that have a different type of culture as well. So everyone's different, and we don't have a one-size-fits-all, but we really try to link arms with the healthcare providers that are in that area. And then try to link arms with the community organizations and health systems to reach those populations. Okay, good.

Senator?

Okay, please continue. Others, I should ask, are there questions? Representative Lems.

Mr. Chair, so how do you gather this information? Are you getting it from the healthcare providers, the school, well checks? How are you getting this, these statistics?

Yes, Mr. Chair.

Madam Secretary.

Thank you. Great question. These are WIC participants, so they're all our clients. So that's where we get that. And that's why we dialed this into WIC participants. Melissa can't make a difference if you are not a part of our client base. But, you know, that being said, these are the folks that South Dakota is spending money on. And so the outcomes really do matter to us.

Representative, you got follow-up questions? Okay, please continue.

Thank you. All right, so, um, in the pediatric obesity rate, um, see, here we go. Here's what I was going to share. So the last time we were at GOAC, we put this as one of our goals because we saw this rise like year after year, especially during the COVID years when we took kids out of school, when we didn't let them play with one another, when they did, you know, sort of were isolated and didn't have exposure and kept them isolated in that piece, it was not a good thing. And so we started seeing this rise in obesity rates. So in 2020, the last time we were here with GOAC, we were seeing a rise. We put this on our markers because we didn't want to continue the same trend. So we really have put a lot of resources towards these WIC participant clients to start driving this down the right direction. You know, I look back at 2018, 2018 to 2025, look at this. We went 15.7 until all of a sudden we were at 17%. Not a good trend for our state, not a good trend for the healthcare of people. So we want to keep this on our radar and keep driving it downward. Hopefully quickly the next time I come back to you, maybe I'll be at 2018 standards and I'd be great with that too. Keep driving it to zero, Senator, as you would say. Goal 1, Activity B is the childhood immunization rates. We've been monitoring this one. This is one considered one of our core public reasons for being, and that's to look at the measles, mumps, and rubella shot. It's an MMR. And for kindergarten entry in the state of South Dakota, you have to have 2 MMRs. We had a higher rate up into the last few years, and year after year— and I'll kind of move to this— we had been losing quite a few folks of going and having their measles shots done by kindergarten, and an increase in the number of religious exemptions, which is fine. We just wanted to make sure that we continue to watch that and not see that drop 3% and 4% and 5% year after year. We've stabilized that over this last year, and hopefully we'll see an improvement in those measles vaccinations at school age in the next bit of time.

So I want to ask then, so the decrease— have you seen an increase in measles? I mean, have you seen An increase in diseases because you've seen a decrease in vaccinations?

Mr. Chair, yes. Last year the nation had over 2,200 measles cases, and we already have that many already this year.

So did you have a question?

Thank you, Mr. Chair. So why MMR? What, you know, there's a lot of vaccines There's a lot of vaccines out there. Why are you tracking— do you track all vaccines, or why is this the only one on your map?

Yeah, go ahead, Mr.

Chair. Thank you, that's a great question. So there are a small amount of vaccines that South Dakota requires for school. MMR is one of them, chickenpox is the second, Tdap, which is diphtheria, tetanus, pertussis, it's all in one, and polio. South Dakota does not require any more of those. The reason we do MMR, we do keep track of all of them, absolutely. The reason that we do MMR is that measles tends to be one that's globally looked at but also nationwide looked at. So if you went to the state of Minnesota, your childhood vaccination schedule will look much more robust than ours does. We have the minimum amount of childhood vaccines to starting to school. So we start with school-age ones. I could put all of them in here, but then we'd have 4 or 5 slides on immunization rates, whereas a measles rate is a pretty good indicator that if you had your measles shots, likely you had your Tdap and likely you had your polio ones. So that's why. But I can give you more, but that's like 4 or 5 slides of the same thing.

Yeah. Senator Howard, you okay? Okay. Representative Auch has a question.

Thank you, Mr. Chair. Just quickly, you said 2,200 cases of measles across the nation or here in South Dakota?

Nation. Thank you, Mr. Chair.

How many here in South Dakota?

Yeah. So last year we had 16 cases of measles. This year we have 11 so far and we should hit that. We had 16 in the entire year last year, 11 so far this year. And they tend to kind of happen in the summers, which is sort of interesting. So we're monitoring that very closely for sure.

Are you okay?

Follow-up?

Sure, follow-up.

Representative Althoff.

I don't want this to be interpreted in the wrong way.

Is there an ethnicity that are not taking the measles? I mean, what—

Go ahead.

Sure, Mr. Chair. Go ahead. I can tell you that because it's public information. We have that all on our dashboards is that there are certain communities that are less likely to have their immunizations for childhood school. Some of ours are in our colony and our Hutterite populations and our Mennonite populations. And so what we do with those populations, again, it's a different population, work with them differently. We educate, make aware, and then make it easy to get it done if you so choose. So right now we are making sure that we connect with are typically underutilized measles populations by making them sure that you know that this is going on in the state. Here's the symptoms.

If this—

you would happen to have developed these symptoms, be aware, get into your healthcare provider quickly so that if you are not immunized for measles, that at least you have an awareness and you know how to identify it quickly.

Follow-up, just real fast.

Go ahead.

And so of these cases that we've—

16 cases in the state of South Dakota, South Dakota that we've had, how many actually turned into like a severe case where they actually ended up in the hospital?

Mr.— yeah, Mr. Chair, thank you. That's a great question. So, um, all of them were— did not have vaccination. None of them ended up with a death, which I would consider serious, right? So none of them. We have not really had pregnant women who've developed measles at this time, so that's a key population. Then if a woman who's pregnant developed measles, That unborn baby is typically the one impacted by it. So we've been very, very blessed, and we'll keep, we'll keep doing the good work, and we'll keep sharing the information, making people aware, and also educating healthcare providers so they know how to spot it when they see it, so they don't leave persons sitting in the waiting room for long periods of time that have measles, and that exposes everyone else in that area. So we have multiple levels of things that we do to make sure that it's dialed in.

You good, Representative Auch?

Good.

All right, Senator Howard has a question.

Thank you, Mr. Chair. So the communities that you tend to see the lack of immunization, are those also the communities where you tend to see the outbreaks?

Mr. Chair, so yes, all of the persons who had measles last year in the state of South Dakota happened to be people that were unvaccinated. We did not have vaccinated persons develop measles last year, and that's ringing true for this year.

Okay, Representative Lems.

Mr. Chair, question. So the Health Secretary, RFK Jr., at the national level, he has— they've kind of ratcheted down the recommendations for childhood immunizations. So are we mirroring what the recommendations are from the national level?

Mr. Chair, Mr. Chair, yeah, in the state of South Dakota, we have, we have traditionally been very conservative on what we have required for childhood or for entrance into schools. And so South Dakota is already in that place of using the minimum possible. Do other— do physicians and families decide to have hepatitis B immunizations at their childhood appointments? Yeah. Does the state of South Dakota require it? No, not at all. But that's always how we've kind of approached it. This legislative body has always thought, okay, what's the critical need, not what is the maximum that we have to do.

Are you good, Representative? All right, Senator Howard.

Thank you, Mr. Chair. Are there any— for instance, polio comes to mind— are there any that you would say we're close to being able to drop off because it's like no longer— it's just no longer there?

Mr. Chair, go ahead. You know, I would have said— I would have said that with like 3 different things, and I never thought I'd see an uptick in my life. Syphilis being one of them. That one I didn't think I'd see again in my life. I didn't think I'd see measles again, and here we are in uptick. I didn't think we'd see tuberculosis, and we're seeing an uptick in that in the state of South Dakota as well. And so we have our eyes on that as well. Things that as a healthcare provider, when I went in my training, we kind of went, oh, there's this thing called— don't worry about it, you're likely not going to see it. And then lo and behold, we started seeing all these things. So You know, every time I speak in confidence, I probably will end up taking it back.

Senator, who asked that question? You did, Senator. How are you?

Good.

Okay, one more and then we got to get moving. Senator Otten.

There's a lack of better verbiage.

I think it's a norovirus.

It's a stomach virus that's been very serious and whatnot. Do we have any clue What is causing that, and is there anything that people can take to prevent it? Mr. Chair, you're right. Norovirus is a very nasty GI bug, and it's a viral. It's a viral illness. It's got to work its way through. But I tell you, if you get it, you have some real sick kids with norovirus, and it has its peaks and flows. We'll see it more in the state of South Dakota for a while, and then it kind of tends to go down again. But Yeah, it's always circulating.

Sure.

Is that spawned off any other virus that it's got a little more bite to it? You know, noroviruses tend to be a little collection of ones that look and act the same way, but that's very typical with viral families. They all tend to have a little group of them that all act and behave the same way. So viruses typically are always morphing.

So, okay, interesting conversation. We got a lot to cover, so let's get moving.

Sorry, thanks, Representative. I do like to talk healthcare, so you can always keep talking.

I understand. I know you well, so let's, let's continue.

That was great. All right, one we're proposing is safe sleep. We have never measured this because we've not had the data to measure it, but out of the Pregnancy Risk and Monitoring System, PRAMS, it's data that Pregnant mothers are surveyed in our state. The federal government does the survey. They package it up and send us back as our state data. So in 2023 was the first time that they sent us this data on the percentage of South Dakota mothers who report placing their infant to sleep in an approved sleep surface so safely every time was only 31%. Less than a third of the time South Dakota mothers put their kids down in a healthy, safe way each and every time. So when we saw this data, we decided that this was one that we wanted to spend time with. And we're going to share a little bit more about our infant mortality data, how this one plays into it, very, very much connected to it. And so that's why we're going to propose that. But we'll talk a little bit more in infant mortality, the why about this. But less than a third of South Dakota moms are putting their babies down healthy. So with this data, we only have one point of data because we have not heard back from the federal government as of yet, the most recent data, but we should be getting back our PRAMS data soon from them. So, and Goal 2 is maternal and child health. Those 3 areas, infant mortality, maternal mortality, and breastfeeding, we're proposing to retire. We'll share with it why. The infant mortality rate in the state of South Dakota is not good. It's defined as the death of an infant before 1 year of time. As compared to 1,000 live births. So our rate is 6.7 right now, and we'd like to get that down to 6.0. We'd like to, in the next 3 years, be able to say that we're moving that down the right direction. South Dakota does not have a good history of infant mortality. In fact, we have not been able to crack the code in the last 10 years of a higher infant mortality rate than a lot of other states. places in the nation, and we have one of the higher rates of the states that are around us as well. It's been a real struggle for us, and losing a child before 1 year old is tragic. It's tragic for the mother. It's tragic for society. So we have the 7th highest infant mortality rate in the nation in this state. Now, what contributes to this? The highest loss is congenital deformities, congenital malformations, chromosomal problems. The next piece is sudden infant death syndrome, sudden unexpected infant death syndrome. That means that a healthy child left the hospital and for some reason was gone before their first birthday. The third reason is gestational age and length of gestation. Born too small, born too early, and the last one is infectious disease. Congenital malformations, born too early, born too small, infectious disease are all prenatal care driven. If we can get mothers into prenatal care, we're going to see a decrease in the amount of those very much those particular contributors. Now the sudden unexpected. Infant death syndrome. The vast majority is unsafe sleep practices. The vast majority is not putting baby down to sleep safely in your home each time or when you're traveling, when you're in a hotel room, when you're at grandma's, every time. And so, the sudden unexpected infant death is a place that we want to dial into our safe sleep because we told you that our—

Right.

So, less than a third of moms lay their babies down in a safe manner each and every time. That's why we're suggesting the sudden— or the safe sleep be a part of the metrics as we try to decrease the infant mortality by getting moms healthier during pregnancy, identifying them early, supporting them during their pregnancy, and then hopefully having safe sleep behaviors for that year afterwards. We have— a maternal mortality and infant innovation grant that we applied for last year because our rates were so high compared to others that we applied for a $5 million grant and were able to get it in the state of South Dakota to spend time and effort and expertise bringing together health providers, health systems, tribal organizations, community organizations, faith-based organizations to come together to really dial in. how to reduce maternal infant mortality. These are the healthiest populations in the state of South Dakota. They should make it past 1 year old, and they should make it past their, um, 20s when we typically see mothers.

Mr.

Chair, Senator Grove, sorry, I didn't see you. Thank you.

Um, so I'm just looking at— I took a picture of the South Dakota mortality Distribution page. And it's kind of hard for me to read, but I'm seeing that there's quite a disparity here between Native American relatives and the white population at the very beginning of your chart.

Like, it's really drastic.

Mm-hmm.

And so I'm wondering, obviously that's heavily impacting our total outcome here. So I'm wondering of that, I think you just said $5 million, that in the grant funds and all that kind of stuff, like how much attention are we putting towards that? And is that death rate in the Native American population, is that the same With the sleeping, how you're laying the baby down. Is that the same thing or what are we talking here?

Mr.

Chair, yeah, that's actually a fabulous question, right? In the Maternal Infant and Infant Mortality Innovation Grant, yes, our tribal entities are a key piece of it, but they're also key partners always. You know, we're doing some projects with Pine Ridge. We're doing some projects in Rosebud and Cheyenne River and Standing Rock because You know, I think there's a Bible verse that says, I wasn't here to see the healthy, I go to the sick. That's our job too, is that, you know, when people are doing really, really well, resources towards that is maybe more generalized support. When people are doing very, very poorly, we have to approach that with a much more aggressive, assertive partnership with those on the ground, because who knows our Native American populations better than our Native American populations?

Yeah.

their leaders, their connections, what the culture is. And so, yes, we do some very much specialized focus in those areas. Now, loss of life regarding those infants, yes, very similar. Congenital malformations, sudden unexpected infant death related to sleep and safe sleep, born too early, born too small, and infectious disease.

Are you good, Senator?

Okay.

Please continue.

Maternal mortality, Goal 2, Activity B. I could talk forever, Representative, but you know, you're cutting me off. That's good. So we want to reduce the 5-year maternal mortality rate from 21.4 down to 19.2. This has been a very tough metric for the state of South Dakota for quite some time as well. These are very healthy people. They should be able to live past having— doing a very natural thing called birth. And living past this, but the maternal mortality rate for South Dakota as we measure it is not only just losing a mother during pregnancy, losing a mother in childbirth, but up to an entire year afterwards. Why do we do that in the state of South Dakota? Because our data has is very telling. We lose 60% of our mothers after they have given birth within that first year. You're kind of like, well, how can how is that related to pregnancy or? How is that pregnancy care? Well, we lose the vast majority of our mothers by substance use disorder, motor vehicle accidents related to substance use disorder, and suicide. The loss of our mothers is a mental health and a substance use problem, not necessarily during childbirth itself. And so for our data, Minnesota probably looks different, Nebraska looks different, but South Dakota's data is very specifically to mental health and substance use disorder challenges in the maternal health space. And so our measurement and our time spent for helping support maternal mortality is really connected in that postpartum space, not just delivering, then do your 6-week check and then see you later. We really need to be targeted in that whole year afterwards for depression screenings, suicide screenings, substance use disorder screenings, and not just thinking that someone's given birth that you're good to go. Postpartum depression can happen a month, 2 months, 3 months, 4 months afterwards. And what a sad situation to lose the mother of a newborn before they even really can say mama.

So, Senator Howard, you have a question?

Thank you, Mr. Chair. Are you— I'm assuming that the age of mothers are increasing. Are you tracking that as well? And does this correspond with as the age of Go ahead.

Mr.

Chair, thank you. You'd make a good epidemiologist. So yes, we do track that, the number, the age of the mothers, but it doesn't seem to be a contributory factor that's very specific. So that's not sticking out in our data of going older mothers or younger mothers have a tendency towards one or the other.

But Follow-up?

Just, yeah, somewhat of a follow-up. But okay, so it's 21.4 per 100,000 in a given year. What is the actual number?

So the raw data rate, I'll have to get that to you. But yes, it follows that. And the reason we do rates is that if you have a city or a state of 10 million and you lose 1,000 mothers, it's a way different percentage than if you have a A state of a million and you lose 1,000 mothers. It's weighted differently. That's why rates are reported, but we can get you the raw data too.

All right. Any other questions from the committee? All right. Please continue.

Thank you. So there's the maternal mortality rates. It looks like it's decreasing, but we're still in that sort of higher than it was about a decade ago. So we want to at least get back down to where we were a decade ago, hopefully to zero eventually. Breastfeeding. So we had this as one of our goals. We know that breastfeeding nursing moms, number one, it's the healthiest way to have babies and nurse and give nutrition to your babies. But it's also very the most fiscally responsible way to do it. I mean, easy way to get it done. It's very, very cost effective to nurse. Our goal was to hit 76.2. We are at 76.9. The reason we want to retire that is not because we don't want to do this work. work anymore because it's very, very important. But we're getting to the point that we either have 2 populations left. Number one, moms that don't want to, which is totally fine, and moms that are unable to. And at that point, we're in the supporting role, but not necessarily demanding that you have to nurse your children if you don't want to. Doesn't mean they're not healthy babies. But we really are at that place that we have saturated that, that population. Continue to improve it, continue to put resources and support mothers, but don't necessarily think there's a lot of meat on the bone anymore, even though we're big supporters of it.

Senator Howard.

Thank you, Mr. Chair. Did you consider changing the metric to, okay, 8 weeks, let's go to 16 weeks? I mean, that to me, 8 weeks is like, seriously? I mean, I'm thinking a year and a half.

Do you know, longer the better, Senator, longer the better, you know. And that's one we could even consider if we wanted to expand it up to 12 weeks or 4 months or whatever it is, because, you know, I feel we're, we're, we're with you that the longer the better, no doubt about it.

Okay, you good? All right, please continue.

Okay, the next one is in the bucket of injury and harm prevention. The 2 areas that probably stick out and mean something to this Committee is at suicide deaths and unintentional overdoses. The suicide death rate in South Dakota has been a long-term problem here as well. We're the— it's the 10th leading cause of death in South Dakota, but it's the number one loss for anyone that's 20 to 39 years old. So it's the number one loss for young people in the state of South Dakota. We have the 5th highest suicide rate in the nation as well, and our American Indian Senator about 3 times higher as our white South Dakotans. Our data— now it looks like we've been up and down. That's a very narrow, that's a very narrow space. So we have not been able to make any significant differences on this. Now you're kind of going, well, social services has mental health, behavioral health, and substance use disorder. That's true. Social services, Department of Social Services treats the individual person. Person by person, appointment by appointment. Where the Department of Health is, we work in community resiliency. We work in population health. We work to make increased factors that improve the community's resiliency and to reduce factors that put more communities at risk. So that's where we live. They treat person by person. We treat the population and look to make communities more resilient. So unfortunately, you know, there's not one thing that contributes to suicide deaths. If there was, we'd take care of that one thing. But, you know, for some, for our farmers and ranchers, it might be financial stresses, it might be isolation. For others in your 60s, it's sometimes right after you've had a diagnosis of a something, a diabetes, a heart disease, and maybe your family history has not done well with diabetes. If grandmother was on dialysis for 20 years with her diabetes, how you see diabetes is going to be different than someone else who, hey, you know, I just used a diet all my life and did fine with it. So after diagnosis is a big piece for our 60-year-olds. But we're also seeing in our working environments, what does it mean when people are isolated and disconnected from one another? So all of those things are not just one thing, but multiple things that contribute to it. On the flip The other side of it is the more that communities are connected, the more that we're getting access to mental health treatment without stigma, the more that we have access to substance use disorder, the more that we talk about these things, the more likely people are to say yes and say, I'm struggling and would like to have some access to care. So those are the things that we work in, in spaces, not only suicide but overdose. We look at what communities have 3 suicides in the last 6 months. That's quite a bit for a community of our sizes. We look at the factors of what's going on in that community. We go to the community leaders, we go to the healthcare providers, let them know this is happening, help them to get connected to resources and how to screen for struggles both in suicide and substance use to hopefully strengthen up that community. And then we continue to monitor that data month after month. And that kind of moves me into unintentional overdoses. Whereas we've really struggled in the suicide space, in the overdose space, South Dakota does really well in general. Now, one life is too many, absolutely. But in general, our overdose rates, we're one of the lowest in the nation for overdose rates. Now, we've seen a decrease in the amount of opioid deaths. That's good. We're— fentanyl's about the same as it was, but that's lumped in opioids. So every time we lose opioid deaths, that's a good trend for us. South Dakota, one of our biggest struggles is methamphetamine overdose. So meth is really king in South Dakota when it comes to overdose. We do the same sort of things in community resilience. So the same risks that produce suicide for an outcome are the same risks that can have substance use disorder as one of the struggles in the community. So when we start seeing overdoses or near misses in a community, we start sending resources, information, screenings, educating healthcare providers, educating community members how to recognize this in your fellow persons and how to get linked to resources. So question? Yeah, question.

Sorry, Representative Auch.

Thank you, Mr.

Chair. Is there any way we can get that raw data so that we as legislators or representatives Representative, can see where, where these issues are occurring?

Mr. Chair, yes, there are a few rules to our data. If there's less than 5, I believe, Josh, if there's less than 5 in a county, then that, that data cannot be published because then you can theoretically know who that person might be. But regions and things like that, when we can publicize data that gives more local information, we do. But if it's less than a certain number, then we have to hide that. Yep.

Are you good, Representative?

I'm good.

Okay, please continue.

To that, Mr. Chair, there are— if you go to our website too, if you like data, which I love people who love data, you have enormous amount of dashboards that are being built. And I think in the year of COVID we had 1, now we have 16, and we're building those more and more because we want you to have that current data and have it flow into a way that you can click on it and know it for your community. And so if you want to peruse, we would love to have you peruse. And the last goal is access to care. We want to retire the average scene time for EMS agencies. I'm going to tell you why. And then we're adding emergency technician pass rates. I'll tell you why. Breast cervical cancer screening rates and healthcare professional licenses. And I'll share with you that we I'll give you reasons why. So average scene time on ground for EMS. The Department of Health has nothing to do with how much time is spent at the ambulance services on the ground. What does influence that? The terrain, the weather, the patient, how long it took to get there. I was watching— I read an article last week of someone, a hiker up in the Black Hills, and the first responders had to hike this person Out of the Black Hills to get to care. I can guarantee it was longer than 16 minutes at that site because it took that long to get out of the Black Hills in general. So the Department of Health does not sit there and berate people of going, how come you spent 5 more minutes at the scene than you should be? What if there's the jaws of life that are used? None of that is really controlled by us, nor should it be. We do keep this data. We do give this to the ambulance services so they can do their own quality improvement types of measurements. But this is nothing that we would ever call up an ambulance service and say, how come you didn't hustle it when you were out on the ambulance scene? Because they had a whole bunch of things going on that we have no idea. So we'd like to retire that one, but we'd like to shift this to the emergency technician pass rate. This is something we do have impact on. We want to increase the National Registry of Emergency— so EMTs technician first-time pass rate from 68% to 75% by 2028. Here's the thing. Here's a little bit of our data, why we wanted to put this in here. In 2024, just 56% of the people were passing the test. So they had a heart for EMS, they wanted to be a part of their community EMS team, they went through some training and then did not pass the test and couldn't practice. What a loss to the community of someone who wants to do this and can't. So we started looking at where Where do we have the levers to pull? We can help with the educating and training, so these people have the education, training, and skills to be able to go take the exam and pass it the first time, because how many of you know when you don't pass it the first time, the likelihood of you taking it again goes down, and if you didn't pass it the second time, basically you're just done even trying at that point. So those first-time passes are really critical. So we started working in that period of time when we saw this data, That we do not want anyone that doesn't— that has a heart for EMS service to be left out just because you're not ready to take the test. So, so far we're at 68%. I would love to have 75%. I would love to get 80%. I will tell you that there is not one profession that has 100% passing the first time. Doesn't mean that they won't pass the second time, but I'd really like to get us up to at least 75% in a couple years and 80% and hopefully 90% At some point as well. So breast and cervical cancer screening. So South Dakota has the All Women Count program. It is a program that is for women who do not have financial means to get breast cancer and cervical cancer screening. We all know that the earlier you're screened, the earlier cancer is identified, the easier the treatment. It just is. And that's for every type of cancer. Now, the All Women Count is a federally funded program specifically for breast cancer and cervical cancer. When South Dakota expanded into Medicaid expansion, a lot of the women that were not eligible and we saw as All Women Count participants for Medicaid, they switched into Medicaid expansion, which is great, wonderful, that's what it's for. But we do know based on the finances of and the number of people that we have that we should have more in the all-women comp than we do based on numbers, finances, economies, insurance coverage. We should have more women than we do in some of those areas. We're finding lack, especially in the 20-somethings, for cervical cancer, because you don't do breast cancer screening for 20-somethings. But 20-somethings should have cervical cancer screenings. Absolutely. So we're missing some people that probably do not know that this is available to help them pay for testing if they do not have financial means.

Senator Howard.

Thank you, Mr. Chair. So that's great that you're helping the women in Medicaid or with financial need, but there are women out there and— well, I'm not going to say who. Yeah, I don't want to disclose too much information, but there are women out there who actually have insurance But insurance is failing them. And I want to talk briefly about breast cancer screening because, as you know, if your Tyrer-Cuzick score is above 20%, at that point healthcare providers are going to recommend that you have— you alternate MRIs with mammograms every 6 months. Insurance will not yet cover that mammogram. So do you guys ever use your clout?

Yes.

to maybe have some sway with insurance companies because they really need to be covering those alternating MRIs. And they don't— they aren't right now. At least some aren't. Mine does. I'm very thankful. But I, I personally know someone who is like, yeah, I'm at the same risk, I'm at the same level, but insurance will not cover that. So they have their mammogram, but that's it. Mr.

Chair, that's great. Great question. Yes. So you're right, the Medicaid population is taken care of now. Medicaid expansion took a higher group of women that had— were kind of falling in the cracks. But then the women are left that have insurance with high deductibles, or it doesn't cover these pieces. Our All Women Count program is eligible to those women. So, and we do feel like they're missing apiece. All Women Count also, for the ones that are recommended, that MRI screenings. So there are certain women that have to have these more advanced screening based on their risk and their history. And that's part of the All Women Count program too. So yes, we see that as a gap too. And especially as higher deductibles get. So yes.

Okay.

You good, Senator? All right. Please continue.

All right. So these last couple of slides, one comes from the Board of Medicine. This first one is. We decided last time that we really need to start monitoring how many healthcare providers are in our state. We talk a lot about workforce in the state of South Dakota. We spend a lot of dollars trying to develop the residency program, doing the rural assistance program, all of these things. Does it translate into increasing the number of providers that are in our state? So last time we started setting a baseline as to what we have and started monitoring this. You'll see that we have increasing numbers of physicians, physician assistants. Advanced life support is the dark or a little bit lighter blue color. And then their EMS providers personnel was added just this last time. Why? Board of Medicine just received EMS providers. So EMTs into their board during this last 2025 fiscal year. Otherwise, they were not in the Board of Medicine. They all are. They are now. That's why they're counted in that area.

Okay.

But what we're doing is we're really going to start refining our goals. We didn't know what to put as a goal last time. We didn't even have a baseline. But now we're going to really put some stretch goals in place with number of physicians through our scrubs camps, so the pipeline early, recruitment programs, residency programs, our boards of nursing. We want to have scholarship programs for nurses.

Right.

So we want to try and measure all of these things that impact workforce to see if they're making a long-term difference and see what the trends are. And we want to see a higher increase in the number. I mean, we're increasing, but we'd like to see that even higher than what we're getting.

Senator Howard.

Thank you, Mr. Chair. So are these numbers based on a certain, like a percentage of the population you want so many doctors How are you pulling these numbers?

Mr. Chair, yeah, so we are looking at what would be a beneficial number for the number of people that we have in the state, but also the projected number. But then the flip side of this too, certain percentage of these, and I can't tell you some of this data, are retiring in the next 5 years. And so we also need to not only replenish, but to grow as the state grows.

Follow-up? Go ahead, ask a question.

But I know, I know there are statistics that say, you know, if you— the, the fewer number of physicians you have per population, usually the, the worse the community health is. So I'm just wondering if these metrics should be, you know, right now we have this many internal medicine doctors per 100,000 people, our goal is this many per 100,000 versus just straight numbers.

Yeah, Mr. Chair, thank you. You know what, that would be really good information to have. South Dakota does not have workforce data like that. They don't have how many EM emergency physicians are in the state. They don't necessarily have OB-GYN specialties. But it is one of those things that I'm interested— it does take funding to build that kind of technology, but That would be really nice to know how many internal med docs, how many people who are neurologists are in the state of South Dakota for stroke and Alzheimer's care. Any of those kind of things would be good data, but South Dakota does not have that data.

Okay, follow up.

Just comment. I have a son that'll be adding to that population here soon.

And he's going to be in South Dakota.

Yes.

Okay, I'm going to add 760— 7,652.

Are you good, Senator? Then we're going to Representative Lems has a question.

Mr. Chair, question. So looking at this data, does our medical school here in South Dakota use this data to determine how many students that they are going to be accepting?

Mr.

Chair, go ahead.

I'm not sure how they utilize this data. I'm sure they do. I'm sure they keep track of it because it's kind of our pieces of what's, what's needed and how do we continue to expand. expand programs to meet those needs. I'm sure they do because it is— it's known knowledge. We can share this information. It's public.

Okay, please continue.

This is from the Board of Nursing. The orange is the RNs and LPNs in the state of South Dakota. The blue is the advanced practice nurses. Advanced practice nurses are nurse practitioners, nurse anesthetists, nurse midwives are all in that space as well. And so we're seeing an uptrend, but we really do want to start putting towards some goals of what it— what's a meaningful increase rather than, hey, we're all just getting better. But what's a meaningful increase to increase and hit the goals? These might be stretch goals that we fall, but we at least want to be aiming towards something as far as our goals go.

Okay, please continue.

All right, I'm at the end, sir.

Okay, any questions for the secretary at the end? Then if not, Senator Howard, do you have a—

Thank you, Mr. Chair. Yes, I move to acknowledge the receipt of the performance management review submitted by the Department of Health pursuant to South Dakota Codified Law 2-6-27.

Okay, it's been moved by Senator Howard, seconded by Representative Lems to accept the report from the Department of Health. All those in favor say aye.

Aye.

Opposed? Okay, we accepted it. Madam Secretary, would you, before you get into rural healthcare, would you allow us a 5-minute bathroom break?

You bet.

Okay.

If you allow me one too.

All right, we'll be back in about 5 minutes. Okay, we are going to come back in. And we are now going to hear from the Department of Health, and you're going to talk to us about the Rural Health Care Transformation Fund, right? And I would just like to say to the committee, I have talked to the Secretary before, and we will plan as she gives kind of her— the information that she has now, and we can kind of collect ourselves and our questions. Go ahead and ask them if you have them.

Thank you.

But we're going to have her back. We're going to plan to have the department back in our October meeting.

Perfect.

And then she will know a lot more information, and we can kind of get our heads around some more questions that we want to target with. So I guess we'll just kind of turn this over to the Secretary, and, and you kind of do what you do. We'll try to stay out of the weeds as much as we can if we don't know, and just— we'll just figure it out as we go. Okay, so go ahead.

Mr. Chair, thank you. Melissa Magstadt, Secretary of Health. What we'll plan on doing is laying the foundation, reminding you where we've been with this, and then telling you what we're doing right now and what we anticipate coming in the next few months. So yep, that sounds great. You'll probably remember from all of the debates and the great discussions back during session with rural health transformation funding. This funding comes out of the one big beautiful bill one year ago Congress and President Trump gave to the states $50 billion for the purpose of investing into healthcare, especially rural and frontier healthcare. It's a once-in-a-generation investment with the keyword being transformation, not propping up a system that's not doing well already, but transformative dollars to hopefully at the back end of 5 years be Have a healthcare system ready to last for another 15, 20, 30, 50 years beyond that. So that's what these dollars are for and designed to do. It's designed to be initiatives that are not just one initiative, but a portfolio of initiatives. Because when we went and did some of the assessments and meeting with community leaders and experts in the field and county leaders and city leaders and behavioral health specialists to put this application together, it wasn't one size. There was no silver bullet to fixing the infrastructure of rural and frontier medicine in the state of South Dakota. There's not. But there are key elements that these experts said would be impactful for the state of South Dakota in rural and frontier areas. That's where the 10 initiatives came from. But to go back in time, came through the federal legislation supporting rural health System redesign for the whole goal of strengthening rural health access, workforce, and the keyword sustainability, which right now what we have going on, there's some sustainability really challenges going on. And you were hustled very quickly to get this through the committee hearings and the Senate and the House and House Bill 1044. And then that was signed on January 29th. And ended up being the first bill that Governor Rhoden passed through there. So thank you for all the hard work that you guys did to get that over the finish line very quickly. The funding is $50 billion over 5 fiscal years, South Dakota's first award this first year. And the federal— let's kind of take a step back here. There's the federal fiscal year and there's the state federal fiscal year. The state fiscal year just started again July 1st. The federal fiscal year is different than ours, unfortunately, and it happens in the fall every year. So October 1st. So we always have this weird sort of disconnect between the federal fiscal year and the state fiscal year. So federal fiscal year 2026 was approximately $189.4 million, which means we are almost close to the end of fiscal year 1 of this already. We're just a few months away. And so we are actually in the midst of putting together all the reports reports, the metrics and the outcomes of what's happened this last year. And this feels like we literally just started. Because, you know, by the time we got through session and things like that, the federal fiscal year starts in the fall, we're just about done with this first year. And it's a multiyear investment as well. So the Rural Health Transformation Fund has domains that we had the option To picking 3, at least 3 of these 7 domains. The 7 that they decided was preventative and chronic disease interventions, innovative provider payment models, technology and telehealth, workforce recruitment, health IT and cybersecurity. I heard the conversation regarding the BIT Bureau earlier, so it's on the mind of many. Behavioral health expansion and innovative community center health.

Health.

Care models. Now, based on some of the data that you just saw with us, we have an interest in every one of these areas. And so South Dakota did not pick just 3 program domains. We have initiatives in every one of these domains because each one of these are very much something that we are impacted by and need to have improvement in, and it's a critical piece to our infrastructure for long-term success of our healthcare systems. So just a little bit of a landscape. The state of South Dakota has 64 out of 66 counties are considered rural, and about 30-some of our counties, especially on the west side, are considered frontier. So we've got vast space with small amounts of people on it, which I kind of love, but it does make for different challenges in delivering healthcare, whether that's hospitals, primary care, or EMS services. We are privileged to have 9 tribal nations in the state of South Dakota that bring such variety and wonderful culture and experiences, but different types of outcomes, as we were talking about the previous session, in healthcare disparities. We have 2 of the poorest counties in the nation. You know, if I were to— if I did, I Googled this, top 10 wealthiest counties in the United States, and South Dakota did not have one of them. But if you Google top 10 poorest counties in the nation, 2 out of 4 of them were known by the state of South Dakota. They're familiar counties to us. We have barriers and long distance to care, especially the more west that you get, and then limited to specialty access. And so, you know, we might have lack of neurologists, for instance. Senator, thank you for contributing your son to that. But gaps in maternity care deserts, especially the west side of South Dakota. Just because we have a lower amount of birthing hospitals on the western side of the state does not mean women don't get pregnant and have babies. We have healthcare workforces shortages. This is nothing new. We have had workforce shortages for a long time living in a rural state. That's been on our mind for a long time. And this legislative body about a decade and a half ago put the Rural Assistance Program to meet that need and be a part of solution-making. when it comes to healthcare workforces. And then we have some disparate outcomes in chronic disease as we talked about in our previous discussion. Suicide rates, substance use disorder, but also diabetes rates versus liver disease rates are gonna be different in different populations. If you want to know about South Dakota, our website, by coincidence, we did 3 assessments in the last couple of years.

Wow.

Rural healthcare landscaping, the landscape. So that report gave us all of this information that we were able to use in this application. The second assessment we did was all about EMS services. So we evaluated the EMS landscape. We were able to use that assessment in this application and the maternal health assessment. All happened within a year or 2 of each one of those that we were able to use that data in our application. So we knew we had very robust data to submit with our application on those 3 different areas. So based on our data and our assessment, based on our healthcare outcomes, based on all the conversations that we had with civic leaders and healthcare providers and system providers all the way across the state, we developed 10 initiatives. And in those 10 initiatives, they fall into 4 buckets. these 4 areas right now. In your packet, you will have this— it, well, it kind of looks like a Grecian, uh, Roman structure with 4 pillars on it. I don't know who came up with that sort of whatever, but I thought, yeah, you're right, pillars. It looks like a Grecian Roman pillar thing. So that's the— these 4 buckets and where they're housed. On the back side of that, you're going to find additional information about what RFPs went out, Which ones are closed, which ones are yet to come, and that funding forecast will be built on as a dashboard year after year for the next five years. So you will know, and you're kind of like, okay, what's going on with the state with these? Pull up the dashboards and all of these: what's out, what's closed, what's coming next will all be there. Because you know, I I want to make sure that you have what you need, but I also want to make community communities aware of the. to because it does no good for Melissa to keep $1 of this away from accomplishing its purpose. So there we go. So what does our funding support? There's a lot of different areas, but you can consider they're modernizing and stabilizing rural healthcare delivery, developing new care models that really reflect the realities of rural life. And there are certain realities of rural life, but they include distance, Workforce shortages and limited specialty services access, supporting technology and data infrastructures to help small facilities operate more efficiently. But also, we, you know, technology is one of those things that healthcare uses technology exclusively. But as we even move further and further, what is telehealth? How can that be utilized in rural areas? How can we maximize some of this technology to really reach healthcare into rural and frontier areas? And then strengthening partnerships. I think one of the biggest things that we have to do better is make connections better. And some of our initiatives very much are connected to how do we make better connections in maternal care? How do we make better connections in EMS care? How do we make better connections in chronic disease care across our state? Technology and data, some of the key pieces that we're working on right now. And some of this is— went out in RFP. In other words, not only do we have a set of federal guidelines and rules, because these are federal dollars. Well, they're actually taxpayer dollars. They're taxpayer dollars that went to the federal government are coming back to the state with a set of rules on them. So we have a set of rules that we have to maintain with the federal government. But in South Dakota, we also have procurement laws that this body, which I think are a really great thing, that are a set of rules that I cannot just say, Melissa, I'm going to give this to my buddy because they're my, they're my buds and I'm going to give them these dollars.

Oh, no.

The procurement laws of South Dakota are transparent and they're fair. And so we have to march by those laws as well. And I think that's a good thing. I think we want to have fair, transparent, and accountable laws when dollars are being involved in it. So we are doing those same types of rules that we always have to do when it comes to procurement in the state of South Dakota. So technology and data is a piece of it. Upgrading electronic health records. I have been in healthcare almost 40 years now. That's hard to even say. Back in the day, when a person came with their healthcare records, you could have a stack of records this big, and you had to get through them as a healthcare provider. But unfortunately, they were only in the hospital that you happened to go to. If you were from our Rapid City friends and you came visited us in Watertown, and you didn't bring your health records from you, and you end up having to use the hospital system in Watertown, Nobody knew what your history were. Nobody knows what your allergies are. Nobody knows what medications you're on. And if you can't remember to tell us what those things are, when you're sick you can't remember, then there's an abyss that we were functioning in. Then came electronic medical records, which helped put into your computer system all of your records. But unless the Rapid City healthcare provider can transfer that information to a Watertown provider, It's still in the abyss. Now, we have gotten much better at this. We actually have the technology that allows your records to follow you from Rapid City to Watertown, and your healthcare provider can see what happened in the Rapid City hospital so that they know how to treat you in the Watertown hospital. But that's not consistent across the board. And so making sure that we continue to strengthen up those systems so that your records follow you wherever you go is a piece of it. Expanding telehealth and remote monitoring tools. In healthcare, the 15 minutes that I spend with the patient once every 3 months is not even close to how to manage their healthcare, but what they're doing at home. What they're doing at home, what they're eating, how they're drinking, how they're managing their stress, how they're taking their medications is much more relevant than the 15 minutes that I'm spending with them in the 3 months, every 3 months in the healthcare system. So remote monitoring tools are starting to become very much a key piece of how we Monitor blood sugars. They're called continuous glucose monitors, where that information is being fed from the patient to the provider constantly. And I can see from that patient when things are going off the rails. So all of those remote monitoring tools are very impactful, but we've got to strengthen that up into our rural communities so that information— if you're 2 hours from your healthcare provider, it's even more important that remote monitoring tools are in place. Improving cybersecurity, just like we were talking about earlier with state data. One of the other big pieces that are targets for cybersecurity attacks are healthcare data.

Why?

Because it's so rich. It's so rich in information. And so cybersecurity efforts in the state of South Dakota is important. It's also important in the healthcare systems for South Dakotans as well.

Madam Secretary, just a minute. Can you just— and probably this isn't the time for this question, but just for clarity, How will this fit with what we're on now, the Avel eCare? Can you kind of— is this going to work together, fall across it, or can you just shed a little light on that?

Yeah, Mr. Chair, that's a great question. So yeah, Avel eCare, they have their space sometimes in behavioral health, eSchool Health, and then also in the back of the ambulance services. So every one of those telemedicine platforms, They're all really important. They're really doing good work, but changing information from one to another is a part of the interoperability that we'd like to see happen. So that if you were seen by telehealth in this area, that those records are also transferred to your primary care provider. You can see how complex this is, but we are closer than we were, and this investment is a great place to spend time in that transferring of data. So Abell is a partner in this? Absolutely. And then the statewide rural health data platform, that is really— you're going to see a lot of our dashboards in our Department of Health. We want data to even be more easily findable by the citizens of the state of South Dakota. We gather a lot of data, but I don't consider it the department's data. I consider it the citizens' data, and it should be easy to be found by the citizens however they want to use it. All right, rural workforce. This is a recurring theme in the state of South Dakota. It has been for quite some time. You have created in the legislature policies that have helped to expand this. Nurse practitioners and PAs have independent practice. We have a lot of compacts that we use in the state of South Dakota. So this legislative body has been very proactive in creating ease for which you can join the healthcare workforce in the state of South Dakota and practice here. We also have a lot of scrub camps. In other words, expand exposing young students to healthcare. That's how I decided I was going to be in healthcare. I was exposed to healthcare as a kid and I thought, oh, I love this. I want to do this. And you can ask a lot of healthcare providers and they're going to tell you some similar story that they discovered that they really liked healthcare at a younger age and then set on that pathway. So those programs are really important, but we want to be able to expand recruitment programs. Right now, our Rural Assistance Program, the RAP program, are for communities less than 10,000. The rural workforce initiative that we're doing now expands the number of providers to specialists. The Rural Assistance Program that we do already is primary care, it's dentists, it's nurse practitioners and PAs. This workforce initiative will be pharmacists, behavioral health counselors, paramedics, all of these types of things, and will be open to all rural workforce if it's outside of the county of Minnehaha and Pennington. Why? Because they're not considered rural by the federal definition. So this really, these dollars are really for rural and frontier areas, although I would like to acknowledge that Sioux Falls and Rapid City and the healthcare providers that are there are critical to the healthcare system in the state of South Dakota. And if we didn't have them, we would be missing out a lot of specialty care that we need in our state too. Keeping healthcare access local and strong. I think in this piece right here is the word partnership and connectivity. So in the western side of the state, we're not going to be able to build 5 hospitals that deliver babies. We're not. That's not financially able to be able to be done. However, We can make connections to clinics that are in small towns, hospitals that are critical access hospitals, local healthcare clinics such as pharmacies. Sometimes that's the only place in town that is a healthcare provider. How can we strengthen our connections to what is on the ground in those communities, including ambulance services? We have to be better at partnership and connections. And that's what the maternal and infant health initiatives And that's what the EMS initiative is about. It's about connecting the furthest part of the county that maybe is not close to the hub of the county, but connecting the resources and the people and the maybe first responder that's in that area, connect them to the Redfield ambulance service. So there's an interesting model out of Spink County that has Redfield as the main ambulance service, but they have created a whole bunch of hubs.

Okay.

Into the smaller areas in every part of that county that is first responders that can be at the scene within 15 minutes anywhere in that county. And with that, that means that the ambulance service might be coming from Redfield, but someone in this corner of the county is already there and doing first aid care and already doing first responder care to that person. And so that model is a very effective model that can be— we can have first responders throughout the county who the ambulance service might take a little bit to get there, but the first responder is already there doing care. So that's these kind of things, connections and partnerships.

Representative Lems has a question.

Mr. Chair, a quick question. So just backing up a bit, so Minnehaha and Pennington are excluded from this plan, is that correct?

So yeah, Mr. Chair, thank you. So Minnehaha and Pennington, inasmuch as they have institutions in smaller towns. So like Chamberlain is a Sanford, you know, Sanford and Avera Monument have hubs throughout the state. So Sturgis is a Monument Hospital. So if it only impacts Sioux Falls only, then that would not necessarily be a rural health impact. But if it has an impact to these greater areas, such as a Sanford might be in a Chamberlain or a Ver is in a Pierre, that our healthcare systems are not necessarily isolated that way. Okay, follow-up?

Go ahead.

So just because I'm in Lincoln County, so very urban on the north end and rural on the south end. And by the way, I have a son-in-law that's second-year residency coming to one of our small towns, Lincoln County. So I got 2. Yes, we've got to. But yeah, so I was just wondering questions, you know, because we're northern Lincoln County, Sioux Falls, and southern is not, obviously. But Minnehaha has like Del Rapids and Hartford. And so I just didn't know if we were excluding that whole county or if there were portions still of that county that were going to be impacted with this.

Mr.

Chair, the federal guidelines are going to want to see 2 things: rural health impact, and so that does not necessarily exclude a Sanford because they have so much rural health impact, but also sustainability. So the 2 things that we're measuring all of the applications by is how much rural impact did you make and how sustainable is your plan. I'm going to use facetious numbers right now. If I have a $5 million plan affecting 5 people with no sustainability plan, that's going to score very low in our rubrics that we use to score these. But if you have a $5 million plan impacting 5 million rural and frontier South Dakotans, which we don't have that many, and it's got a really great longevity and sustainability plan, then you're going to rate higher in our scoring. So it's not a yes or no, but it's those 2 areas.

Are you good, Representative? Any other questions? Senator Grove?

Thank you, Mr. Chair. And if this is inappropriate, you can cut me off. I'm just wondering, last legislative session I brought a bill that was on birthing centers, and you mentioned that we are obviously having babies outside of Pennington and Minnehaha County. I'm just wondering if something like this, the grants, that strengthen the hospitals, clinics, et cetera. If we were to pass a bill at some point, which I'm not going to be able to bring one, but if we were to pass a bill, something like that, is that type of an organization something that could apply for these types of grants, or—

Mr.

Chair?

Go ahead.

You know, there's no exclusion as long as you show rural health impact and sustainability. Those are the rules.

Any other questions? Otherwise, continue, please.

Okay. Transferring systems for sustainability. This has to do with the EMS system. So that's not— the EMS system is just not one ambulance service, right? It's the connection of all of them working together. The behavioral health models. One of our struggles, and you saw it on maternal mortality data, is that we lose Our mother is from suicide substance use disorder. So behavioral health is a critical piece for this. And primary care transformation through alternative payment models. Now the behavioral health and the alternative payment models, that is being led, those initiatives, by Department of Social Services. So as I'm thinking about it, Representative, you might want to invite Department of Social Services in October as well. As I'm thinking about it going, oh, we probably should do that because they can really give you a deep dive into this. So the behavioral health models, what we're trying to do is get connections back to connections. We can't build 15 behavioral health treatment centers, but we can connect people at the local level to resources. And how to do that best, that is what these behavioral health model initiatives regarding.

Okay, Senator Howard has a question.

Thank you, Mr. Chair. Hitting on the sustainability, and you keep saying it has to impact rural healthcare and be sustainable. Can the average public find the applications of the people applying for this so they can look and see what is the plan for sustainability? And what are you seeing for the average way to sustain these? I mean, I want to know, is their plan for sustainability, well, it's going to come Come from taxpayer dollars. You know, what, what are you seeing for their plans?

Yes, Mr. Chair, thank you. Um, and I'll, I'll skip to where I would have done a couple slides for now, so it's a great segue. Um, right now there are 20 RFPs that have been released and closed. Now, in the technology one alone, we had 113 applications and $333 million in requests. We have $89 million.

We have, we have a lot of people watching. RFP, explain.

Yeah, RFP, great. Request for proposal. It's government speak for a request for your ideas and what you'd like to do with these dollars. Thank you. And there's a set of rules that the procurement laws are a piece of that. So we have to publish the RFP. It has to be competitive. And then you have to play by the rules that the federal government put together and the state of South Dakota has. So the federal government has pieces of rural healthcare impact and sustainability. Now, out of those 113 applications for technology, we got to whittle it down from $333 million to $89 million. That's what we have in this first year. The Rural Strong, which is the maternal infant hub initiatives, we had to whittle those down from somewhere like $120 million down to $30 million.

Wow.

One of the first things is that how we are scoring your application by your sustainability plan and your impact to rural healthcare. In fact, and so some of these things are not going to be funded because they did not have a sustainability plan. That being said, if that first round your sustainability plan was, hmm, or the impact on rural care, hmm, not so much, you can come back next year. And strengthen up your sustainability plan because you're right. When this is said and done, there are no taxpayer dollars to support this. The state of South Dakota does not have the ability to prop up any of these programs for the long term. We don't. You guys look at the budget. I got my appropriators here that, you know, if I said, hey, now we're going to need some support that every year I'm going to need $1 billion to support these projects, that's going to go over like a lead balloon. And I wouldn't blame it either, because I don't want my taxpayers just going into a system that's falling apart. So, we have eliminated, in the first round of our applications, many, because they did not have sustainability plans to go with it. Now, when it's all said and done, because you asked about who finds out about this, who applied, if we do not award them that grant, and, and The minute we award that and sign the contract that between you and me that we are in agreement that you're going to do this and this is what your outcomes are going to be and this is when you're going to execute your plan, the minute we're in contract, now that's public information and it will come on OpenSD. So everything, all RFPs there, but all of the people who got the awards and signed on the dotted line that we are in agreement that you're going to do this project.

Okay.

will go on OpenSD. If they didn't make it past and they didn't get awarded, they remain in the confidential space and maybe coming back next year if they—

Representative Lems has a question.

Mr. Chair, um, so are you outsourcing any of this to an outside agency to help you with this as far as who qualifies? How is it implemented? Can you expand on that a little bit?

Yeah, unless you're going to do that later. I mean, will that answer your—

Yeah, we can digress. That'll be totally fine. So in some states, we've heard that they've hired 15 to 20 FTEs, full-time equivalents, to do their work in their state. We, we have not added any FTEs because what do you do with them after 5 years? You know, that would be a pretty rough set of pink slips coming in 5 years from now. So we have contracted with some additional help with contractors, South Dakota Foundation for Medical Care, but other types of— Great Plains Tribal has a piece. And so we've contracted with some folks to help us expand our staffing to meet the needs for the next 5 years, but not add 5 or 15 to 20 FTEs for the state to now have to deal with. And so there's a piece that is also helping to do that. Now, If I awarded you, Representative Lems, this project and you said we're going to do this, we will be checking with you and you'll be submitting to us your metrics, your outcomes, your expenditures, all of that kind of stuff. So you will be giving to me all of the things that I need to package together to send to the federal government that says this is what we did with these dollars. Because the only reason that we get our second year of funding and third year of funding Is if we have done well and we've done stewarded and we've gotten dollars out, we have outcomes for the year that came before it. So what we're doing right now is actually pulling in all the information of what we've done over this last about 6 months since we had this funding. But we've been working on this for a year since the, since the opportunity came forward. By August 31st, we have to have to the federal government what this year has been like. What do we have done? How many RFPs are out? Today we have 4 contracts signed. By 6 weeks from now, by the time that we're together, we might have 20, 30, 50 contracts signed by the next time that we're together in October. 50 contracts meaning that that many applicants are getting dollars from the state of South Dakota to do a specific project that we agreed that you were going to do. to improve rural healthcare and show that you're sustainable. So there's a lot of action in the next few months. And when we come back, we'll have so many of those projects. And we can even, if you'd like, you know, highlight some of them that we think are kind of some interesting projects that I think would be pretty impactful too. So we'll have that information.

Good, Representative. Okay. And I would just like to add that when you come back, like these, like North Star Solutions and Black Hills Specialty Co-op, who you're paying money to, I would like to see somewhat of an explanation of what they actually are doing for the taxpayers' money, if that's possible. I know you can't do it probably now, and I don't want you to, but when you come back, I mean, whoever you hire to do this, I think, you know, we should know what they're actually doing. Okay, thank you. Senator Howard had a question.

Thank you, Mr. Chair. Just to follow up to what I was asking before, and I appreciate you saying the state You know, the state won't have the taxpayer dollars to continue these programs, but that's the state on average. I mean, what are you seeing as ways that these people are saying they're going to be able to sustain these programs? Because there's also local taxpayer dollars, county, city.

Yeah, Mr. Chair, thank you. A lot of these are like one-time investments in technology. Those are pieces of it. Sometimes it's a one-time build and shifting the system and how the system works from provider to patient all the way up to the larger system, the connections of that, not even just technology connections, but our processes are pieces of it. So a lot of those projects are those one-time investments that change a trajectory, and then you go back to the same billing and services that you did, submitting to insurance and those kind of things. So it's a lot of times a one-time— build of an infrastructure that from that point on it's billing through insurance and your typical mechanisms that you do healthcare.

Okay, you good?

We'll follow up.

Go ahead.

Thank you, Mr. Chair. Um, just a question, maybe you're going to cover this later, the pillars. Are you gonna—

We're gonna ask it now if you'd like to.

Absolutely. Well, I'm curious on the connecting technology and data, the grant management consultant for $270,000, is Is that the one that you mentioned that you guys contracted with to help manage?

Yes, that's to add a little more staffing for us to be able to manage it. With 113, just even those grants alone, but also you need staff to make sure that people are held accountable to using these dollars. You know, you don't want to put dollars out without having eyes on those dollars and accountabilities month after month as to what you did and how much progress you made. progress that you made. So yes, those are like staffing expansions instead of hiring contractors so that you can at the end of 5 years not, not have to fire people.

Yeah, and that's what I was saying, just when you come back, even if you write it up, what, who got what.

I like it.

Yep. Okay, any other questions? Then we're going to move on. Continue, please, Madam Secretary.

The implementation timeline, we showed this to you in the legislative session. We are exactly where we're supposed to be in mid to late fall. with funding rounds, technical assistance in getting those RFPs. We answer a lot of questions for folks on how to do these RFPs. All of that is on our website too, but we have had a lot of technical assistance webinars to help people write a good grant. We want them to do well too. We are moving along because we had to. The timelines for the federal government are not, not iffy. They're not soft. They have very hard boundaries on them. So we are moving along and have kept right along on this This road because we have to. We have to keep the pace that we're doing. I said rural health transformation funds. I said it's almost like dog years. There's one human life, 7 dog years. In rural health transformation, one week of rural health transformation work is about a month. And so it's moving at that path or that pace, and it has to because we have to have these dollars out. We have to have partners identified, and we have to report back to the federal government what we did. In a very short amount of time.

All right.

This is getting into the weeds of those procurement laws. So I wanted to give this to you so that in case you had people who asked you, that you could send them to this. Here's the set of steps. Here's how you go through it. Here's the little practical things that you need to know, that you have to have this thing at SAM.gov. That's a federal government. You have to have a portal with them. for you to be able to receive dollars from the federal government. So these are some little basic things for people who are applying, the little need-to-knows. Our governance structure. So one of the things that we had to accomplish for the federal government this year is to have a governance structure. But that's also just good work, is having a structure of people that are meeting on a regular basis to make sure we're all on the same page. We have 10 initiatives. 10 initiatives with all the people involved. If we do not stay in close communication, these things can get off the rails very easily, especially when you're moving at the pace that we do. So our implementation team meets every Thursday morning to connect all the dots between all the initiatives so that we don't get off the rails. The governance team meets once a month. That's the governor's office, Secretary Althoff, and myself. I will tell you though, that meeting once a month does not We are in contact with our teams every day. If I don't speak about rural health transformation every day, I would be surprised, and usually multiple times a day. So that governance team meeting once a month, it's like, oh, well, that's when we formally get together. Otherwise, we are working it morning and afternoon. And then we meet with our federal partners every other week, but almost daily and weekly regarding emails as well, because we want to make sure we are implementing And we stay close to the federal government because they are holding us accountable. We don't want to get off too far off the rails without being brought back into where we need to be. It would be a shame for us to mismanage this thing and lose out on the next set of funding for the state of South Dakota. So we are staying very close to our CMS team. So here's where we've been. We talked a little bit about this real strong grants. That's the maternal one. We had 85 applications, tech and data 113. I mean, it is It— what it tells me, there is no shortage of good ideas in the state of South Dakota. And so I would love to be able to share some of this cool stuff that people are proposing, things that I never even thought of. And I've been working in this for many years, but someone has got some really creative, innovative ideas of how to make an impact. And I get to tell you about them in October. So coming attractions. Here's a little bit of the dollars.

Just one second. I just want a real quick answer from you. Do you foresee trying to run more legislation next session? Will you be needing more legislation?

Yes, we will be bringing back the federal authority for the next year. So when we came to the legislature this year, we had to ask for federal authority for years 1 and 2 because of the fiscal year ends in August before we come back. We will be asking for federal authority for fiscal year 3 because 3 will be starting next summer. So we'll be having these conversations again come legislative session. So, but that's the only one I foresee that we're going to need to have some legislation on. Expenditures. Now, this is very short right now because this is really early. What we want to do in our plans and have been from the beginning is to have a dashboard of expenditures on the public website that all people can see how much was spent for this, how much was spent for that, what dollars are out, what are obligated. And that will come in a dashboard form in the Department of Health's website and be filled with data as we update it every week. Now, that being said, we are so new in this right now that we haven't a lot to report. Our contracts that will, that will have been put into the state system by June 30th is now in the new system but have not been shown updated. Yet, so we're a little behind when it comes to having these things for what we're currently doing. Plus, in about two to three couple months, we're going to have a lot of contracts with people who are going to be receivers of these dollars. So this is a little meh, not that exciting right now. It will become very full as time marches on, and so we plan on putting that in a dashboard list so you can look and find as you please for what dollars are being used, how they're being used, what's obligated, what's left and have that dashboard that lives and informs you as you would like. Okay. The funding forecast, that is that little pillar packet, and we're going to keep updating for the next 5 years. These things will continue to be so people know what's out there, what's coming, what's closed. One of our biggest challenges, and we're trying very hard to make sure that we're as transparent with the public as possible. And the reason is we don't want people missing out on opportunity. I mean, we don't want key persons to have not heard about rural health transformation and completely miss something that could be very useful for their community. So the funding forecast is kind of a quick way to look at what's out there, what's coming, what's closed. But we also have an enormous amount of communications. In your packet is the list of all of the things that we have pushed this information out on. So if you want to know, okay, how do we get this information out to people? Different communications, social media, listservs. We have an enormous amount of listservs in the state of South Dakota to push information out on to make sure that people know. Because, you know, it's hard to get on people's radar sometimes, but we're trying to make sure that this is pushed very heavily. So that's what that packet is. All of the people have heard about it. What doesn't include is that I was just at Urban Indian Health yesterday speaking to them about this. So it's even outdated as of yesterday because I already gave a presentation to our fellows in Urban Indian Health yesterday. So these are some of our posts. What's next? I've kind of talked about this a little bit. We've got reports that are due. So we are building the structure, the governance structure. We are getting the RFPs out, and then we are also prepping to let the federal government know what we've done this year. So that's what's on the next radar. Our deadline's August 31st. We should know by October 15th. I don't know when the next GOAC, the October one is. September? September 8th. Okay. Will we be coming to that? No, we're coming to October. So maybe we'll know by October 15th or by the time we come here what we were awarded for next year. If not, then of course we'll share that with our legislative body when that happens too.

Thank you.

In the annual report, we have to have initiative checkpoint updates. We have to give— some states committed to making policy changes in their legislature in their application. Now what's really interesting about our policy actions, the state of South Dakota had already made those adjustments. They were— because we had already given nurse practitioner independent practice and we already had PA independent practice and we already had Some of these compacts in place. That was all accounted for us in our application when we applied. Now, if you were a state that wanted credit for that, you had to commit that you were going to bring that legislation. We don't have any of that because we'd already made those kind of decisions before in this legislative body for our healthcare system. Obligated and spent funds, we have to do our— for them, sustainability plan updates. So we've got to share that with our federal government. That was a big deal when they were here and did our site visit from the feds in June. They drilled to us how important that sustainability is and rural health impact, but more so sustainability. So they are watching us very closely as well with that same sort of sentiment of going, we're not going to build this and now have to prop it up as a federal government as well. So that's kind of what's coming on our radar. Again, rural health transformation is like dog years. In healthcare, healthcare work and Department of Health work. It is going that fast and at that high of a pace. So we got a bottom line that at the end of this next 5 years, South Dakota's healthcare system has got to be different than it is right now. And the federal government is putting the money where their mouth is to make sure that that is true on behalf of our state.

So.

Thank you. Any questions from the committee? It's very informative. I can see you— it's hard to know everything right now. You're just— it's baby years.

Yeah, we are so early, and we're, we're right at the point of finishing up implementation and building and almost to the point of operating. So we're right at that spot. But, um, you know, eventually we'll be in all operations, and then the information comes out— what's happening, where is happening, how is it being spent.

But We'll try to do our best to get our staff the, you know, if we have questions between now and October, so you have some time to research them. But, uh, one last time for any questions from anybody.

I have one.

Oh, raise your hand so I can— you say the mic, I can't know you're here. Senator Grove.

Um, I just, uh, would love to hear on, um, the peer support and CHW kind of stuff. And where that falls in October.

Yes.

Thank you, Mr. Chair. So the CHW, community health workers, is what they're— or community health representatives. If they're from tribal nations, they tend to be more title of CHR versus CHW. So the CHW is a newer healthcare provider, not like a nurse or a doctor that's kind of been long-term in healthcare, but they've been around just for a short period of time. And Community health workers are people who go into the community, into the homes of the patient, help connect them to services that they might need. If they need transportation, they connect them to transportation. If they need their bandages changed, they change their bandages. If they need to be taken to an appointment, they take them to an appointment. If they need education in diabetes, they help support diabetes education. These— I call them the utility knives of healthcare because they help do what I can't do in the exam room.

Okay.

But are contributing to the healthcare outcomes of especially disparate populations. We have about 270, maybe cruising towards 300 in the state. These dollars, we have a specific amount tagged for tripling the amount of community health workers in our state by the time it's done, because they are so critical to the outcomes for healthcare. If people don't have food in the fridge, they are not going to be able to manage their diabetes Well, and so not to say that we're going to start providing food in the fridge as a state, no, but there are resources in communities that already exist, whether that's food pantries, whether that's faith-based organizations connecting those to those things. Sometimes people just need help with the connections, not necessarily someone to fund things for them. So, okay, community health workers, yes, more to come on those too.

All right, well, thank you for your information, and we'll see You in October.

Thank you, Mr. Chair.

Appreciate it. Okay, so that we don't need any motions on or anything. So we are going to take up the review of the juvenile correction reports. Senator Howard.

Mr. Chair, I would move that we go into executive session.

It has been moved by Senator Howard and seconded by Senator Otten that we move into executive. Executive session. Do you have a comment?

Just due to the private nature and the personal nature of the report that we're going to be receiving, we are going to ask that everyone outside of the people presenting this report please leave the room until we're done, and then when we come out of executive session, everyone is welcome to come back in.

Okay, all those in favor of going executive session say aye. Opposed? We are moving into executive session. Okay, welcome back. Senator Howard.

Thank you, Mr.

Chair.

I would move that we come out of executive session. Second.

It's been moved by— been moved by Senator Howard and seconded by Senator Otten to come out of executive session. All those in favor say aye. Okay, no, we are out of executive session. Welcome back, everybody. Senator Howard.

Thank you, Mr. Chair. I would move to acknowledge receipt of the Juvenile Corrections Report reports submitted by the Department of Corrections pursuant to South Dakota Codified Law 26-11A-33.1.

It has been moved by Senator Howard, seconded by Senator Otten, to receive the report. Comments on your motion?

No.

Okay, all those in favor say aye.

Aye.

Opposed? Report has been accepted. Um, Okay, we're going to move on and we are going to hear the annual report from the South Dakota High School Activities Association. Welcome, sir. Please introduce yourself and give us your report.

Thank you, Mr.

Chair.

Mr.

Chair, members of the committee, my name is Dan Swartos. I'm the executive director of the South Dakota High School Activities Association, just starting my 10th year in that position. Prior to that, I was a school superintendent for 9 years, and prior to that, I was a teacher and coach for 3 years, all of that here in South Dakota. So we come up here annually for public— in order for public schools to belong to us, it's a requirement in statute that we are audited financially by the Department of Legislative Audit annually, and then that we report to—

The legislature.

GOAC following those audits. So that's what I'm doing here today, and, and I appreciate your time. What I'm planning to do today is just give you a brief overview of us. I think I've, I've met a lot of you before, and some of you may know a lot about us, some of you may not know as much about us. So just a very brief overview of us and then get into our audit, which was from fiscal year '25.

Okay.

So, uh, we are the South Dakota High School Activities Association. Uh, we were— we've been around since 1905, so just over 120 years. Uh, we serve as a regulatory body for sanctioned high school sports and fine arts activities, uh, in South Dakota. That ranges from football and basketball to debate and oral interp to esports to, uh, chorus, orchestra, jazz band, show choir. So we have 179-member high schools. There are around 48,000 students in those high schools. And those high schools are— most of them are public, but we also have private schools and we have federal schools that are either run directly by the feds or through a grant that runs from the feds through the tribe to the schools. We have an annual budget of— that's right around $3 million. We don't have any revenue that comes directly from the state. We don't have any dues and fees that we charge to our schools. Our revenue comes from gate receipts at postseason events, corporate partnerships that we have for advertising at our state events, and officials registration. So we have a 9-member board of directors. 7 of those members are superintendents, principals, athletic directors that are representative of all schools by size and geography across the state. We have 2 local school board members, one for the larger— our larger schools, one for our smaller schools, and those are elected by a vote of all member schools. So Harrisburg gets one vote, Elk Mountain with 2 students gets one vote. We meet around 6 times a year. We follow open meetings laws, everything else just like a school board would. As I stated, we serve as a regulatory body for high school sports and activities. So within that We, uh, we have 16 different sports and 13 different activities that we sponsor, and we run 36 different state events per year. Our first events start— our state events start in early October, and we finish the first week or so in June each year. So the second page there is just sort of a fact sheet that we've been putting around, uh, this last year just to sort of, uh, Try to help people understand what we do. And the biggest thing we have there is that we are a membership-driven organization. We're here to serve our member schools and the member kids. We're not here to rule over anybody. So we exist to make high school sports and activities equitable, consistent, safe, organized, things like that. So we— some of the things we do We support academic achievement, we recognize academic achievement. We conduct— it's over 780 different state tournament or postseason events per year. We promote student safety, minimize risk with coaches' education, and anywhere from concussions to heat illness to sudden cardiac arrest, things like that. We lead sportsmanship initiatives, which is a big push for us right now in an attempt to Keep the officials we have and try to get more officials in. We offer student leadership opportunities for the kids around our state. We provide that structure for regular season competition. We have our playing rules that offers consistent rules for people. We also oversee all transfer rules. Anytime a student transfers their athletic eligibility from one school to another, or hardship cases for kids that need to transfer or they need some extra time in high school. We do all of that. So, and, you know, studies have shown that participation in those high school sports and activities lead to higher GPAs, higher graduation rates, greater career aspiration, fewer absences, fewer discipline problems, and a lower risk of drug use. You know, there are a lot of kids in the state that still Stay in school and end up graduating school because they're driven by sports and other activities and by those opportunities that they get to participate. So, and we like to remind folks that our, our purpose is, is as a supplement to the high school experience of kids. It's not, it's not a training ground for collegiate sports. It's not, you know, we're here to As a supplement, as an extension of the high school program. So that is a very brief overview of us and what we do. Our office is here in Pierre, and we have a big job, and it can be difficult sometimes, and it's— but it's a humbling job, and it's one that we never take for granted, and we're thankful to have. So our audit, this was an audit for fiscal year '25. We have a July to June fiscal year, just like the schools do. So this would have been from July 1st, 2024 through June 30th, 2025. This was just completed by—

excuse me—

the Department of Legislative Audit. We received it last month from them. It's an unmodified opinion. There was one finding in here, and you'll see that on page— it's page 8 of the PDF, it's page 3 of the financial audit. But that finding was in regards to segregation of duties. We had some issues there. The biggest one was that our bank auto-enrolled everybody into paperless bank statements.

Okay.

So normally, that bank statements would come to me, I would check them over, I'd initial it, then it would go to our finance director who would reconcile it, and then our board approves those financial reports every time we meet. Well, I get a lot of mail in, and I didn't realize it for a while that we had gone to paperless. Our finance director thought I was getting them online as well as he was, so we missed that. So we fixed that. We've enrolled back into paper— paper Bank statements, which will help us. And then part of our process— one of the other things was part of our process for expenditures is that every expenditure has a voucher that's signed by myself and our board of directors president. And there were, I think, 6 vouchers throughout the year that papers got stuck together or they just got lost in the shuffle that our, that our board president missed and ended up signing at the end of the year when we found the So, uh, we do have a new finance director who started with us July 1st. Uh, he was actually with us until 2020, and then his family had moved out to the Black Hills area. He's back with us now, and he worked with LRC, uh, or DLA— excuse me, DLA— prior to coming to us the first time. Isaac John is his name, and we're excited to get him back in there. Um, but when you bring someone new in, it's a good time to look at all of your policies and So we're doing that and reviewing everything that we do financially to make sure that it's— our policies are matching what we do in practice and making updates as we need to make updates. So other than that, that finding, you know, just in general, for '24-'25, our attendance at state events was flat or it was down a little bit.

Yeah.

And that's— that can be pretty volatile depending on weather, particularly in the winter, depending on the teams that are in there. If we have a AA— it usually is AA where this happens— but if we have a AA basketball tournament in Rapid City and say 7 of the teams are from the Sioux Falls area, that can impact the attendance quite a bit. Or if we have state basketball in Watertown and we got Clark and Hamlin and Aberdeen-Roncalli, you're gonna have a ton of people show up there. So it, it's really volatile based on where, where it's at, what teams make it, the weather during it. A blizzard during one of the state basketball weekends could be a $50,000 deal for us and less, less and less gate. And our expenses stay the same. We're hiring 72 officials whether 10 people show up or 10,000 people show up. So So that attendance was flat to down. That fluctuates, as I said. This last year, uh, we had some higher attendance, what we're showing preliminarily, uh, with some increases in, in some, decreases in some others. So, um, overall, I think we had about a 2.5% loss on the year, year over year, as to what we had budgeted. Uh, we're going to be about that number on the plus side for this year that just finished, and we're usually kind of in that In that range, and in that $80,000 each way range, and it generally evens out. You know, some of the concerns that we have for our future, you know, a non-financial one, as I talked about earlier, would be the recruitment and retention of officials. Some of you may notice you may have a local team that plays a game on a Thursday or a Saturday or maybe on a Friday afternoon, and that's because we don't have enough football crews to play every game on Friday night. So we have some on those days, and that's so that crews can do a game on Thursday and Friday, or Friday afternoon and Friday night, or Friday and Saturday. So, and that's across all of our sports. We've increased our officials over the last 4 or 5 years quite a bit. We've really been hitting on sportsmanship in trying to bring some perspective back into high school sports and what it's all about. And And I think that's helped, but we still— now we're seeing it more geographic where we need to hit. We've got all the officials that we need in the Rapid City and Sioux Falls areas and up and down I-29. And but there's, there's areas, central South Dakota for sure, there's a big lack of officials. So you end up bringing people from a long way. So we're trying to hit more geographically. We're working with high school Offering some high school classes on officiating or offering some university classes on officiating and trying to pair them up with some crews and get them some experience. And hopefully, as our officials, our cadre of officials, for lack of a better word, retire and age, we've got a younger group that's coming in to take over for them. So that's, that's sort of the bigger non-financial issue we have other than The ones that all states have, which is arguments over public and private and classifications and things like that. But financially, our biggest concerns moving forward, just like everybody else, costs for everything have increased— for rent, for ticketing, for labor, particularly at the large venues. And, you know, for us, when I was a superintendent, Yes. A school budget, your revenues are pretty much set based on your property tax valuations and levies and everything else, and you control your budget by controlling expenses. We're kind of the opposite in that a lot of our expenses are set and we control our budget by controlling revenues. Not all of our expenses are set, but a lot of them are. As I said, we, we hire 72 basketball officials. That's going to be about $72,000.

Okay.

And whether 10 people come to state basketball or 10,000 people come to state basketball. So we control that by controlling revenue. And for us, the only way to increase revenue is to increase ticket prices or to somehow get more people to come to state tournaments or charge dues to the schools or to get more corporate partners. So we've been trying to navigate that. We haven't raised ticket prices in It's probably been 6, 7 years, maybe 8 years since we've raised them, and we're really trying everything we can to avoid that.

Excuse me, sir.

Yeah.

Last year, I believe, when you were here, you mentioned something about you're going to try to put more of, say, like the basketball tournaments at the same place, at the same weekend, at the same facility. Did you have any luck with that?

We've tried that. We've reached— So every year around state basketball, we have mostly the media and some other people saying, why don't you do all your state basketball, all the boys basketball tournaments in Sioux Falls or in Rapid City? And logistically, to do that, we'd have to play down to 4 probably before we got to state, and that's not something our membership has been willing to do. So we have done some of it. Last year we had, because the Premier Center wasn't available, we had The Boys AA and Boys A both in Rapid City at the, at the Monument Center, in the Summit Arena and in the Ice Arena. That worked out really well, and tickets were good for both tournaments. So you had people going back and forth, and I think that was— it was a great experience for people. And there's been some push to say, hey, you know, why don't we try to do this with A and B, or, you know, try to do it in other areas? We've combined volleyball to do that. Um, we do volleyball together now, we do wrestling together now. Basketball has stayed Separate, and it's— and, uh, we're gonna have to— we would have to pry Class B basketball out of Aberdeen's cold, dead hands. I think they'd be very reluctant to give that up.

But I would mention that volleyball made money and the rest of them lost money. Well, so I mean, I remember you asking me about that last year. So is that something that you want to look at as far as not hemorrhaging money so bad?

Potentially. So when you look at that, like on page 29 there where you're looking at the event revenue, some of those are like where Boys A basketball where it says, you know, we had budgeted $175,000 and the actual was $91,000. At the Premier Center, that's a net. So the actual ticket sales were around $190,000 for that, but they take the expenses out. So on this, in those venues, it's showing as less revenue and less expenses.

Okay.

Generally, basketball makes us money. Basketball makes us money. Sometimes, like a AA girls basketball tournament in Mount Rapid, we've lost money there depending on the teams that are involved. But the rest of them, we make money on state football, state volleyball, state basketball, cross-country, wrestling, and track.

Okay.

And that helps fund the rest of it. Where, like, in Outdoor Campus, we don't charge admission to Outdoor Campus, but there's about $50,000 in costs for Outdoor Campus. So it helps fund those things. Or golf, we put on 6 golf tournaments. Or tennis, where we don't charge. But we— yes, I think you're right. That has helped a lot in volleyball. It's helped a lot in wrestling as well. And if we could ever get our membership to—

1,000?

want to do that. I think a 2-class system could work like we just did. Getting 3 of— all 3 of them in there would— we'd have to play down to 4, and the schools haven't wanted to do that. So, Mr. Chair? Yeah.

Representative Auch.

I, I have a question, and I'm not sure how, uh, how the executive director is going to answer this, but I did receive this question from a constituent constituent in my district. Question for High School Activities Association, and I'm just going to read this for you. There have been parents, teachers, school board members who have been concerned about students missing a tremendous amount of school time, class time, for extracurricular activities. Do member schools, or do you, have any concerns about this? Are kids going to learn and then do extracurricular Are they going to school to do extracurricular activities and then possibly learn? There is a school in my area, and I personally know this, that is about to opt out to pay for extracurricular activities. I think my question for you is this. I mean, are we putting extracurricular activities ahead of actually teaching our kids in school. This is a big concern of mine. I think you're aware of this. And I— we have a problem. And so, you know, in this state, we— and I'm aware of a school district in my district that I have teachers that say the kids are gone more than they're in their schools, they're in their seats, because they're participating in all these extracurricular activities.

Yep.

So I we as a state are obligated to educate our children to read and write and learn math and and teach them history. We are not obligated to teach them how to play football, basketball, volleyball, all these other things. So this is this is something that is a concern of mine, has been a concern of mine, and will continue to be a concern of mine. And I don't know what your organization can add to it, but I mean when we have a school. school opting out to pay for extracurricular activities in the tune of $600,000, there's a problem. So, you know, we need to address this in this state.

Sure.

Okay, not sure that that's the question exactly for you, but if you want to try to answer that, you can.

Representative Auch, thank you for that question. I don't disagree with you. I had a son that played basketball here in Pierre, and their longest— their shortest road trip was 2 hours each way.

Right.

So some of that, because of where our cities are and grouping those schools of the same size together, some of that's unavoidable. So someone like Yankton or Aberdeen, who are sort of outliers in the north and south on the east side, they're having to go out and play Sturgis or Spearfish or Rapid City, and Sturgis and Spearfish and Rapid City coming the other way. Some of that's a little bit unavoidable. For the regular season games that we schedule, which is football, particularly for 11A, 11B, and 9-man, we really did everything we could. We sort of went geographic with everybody to the extent that we could and tried to match them up so that kids are missing less school. Where I see it the most, where I think A majority of— because we hear it from teachers and we hear it from schools as well— is in the spring, in that a lot of those events— you have golf, tennis, track and field, softball— that start in late March, early April, and that weather can be really iffy. So things get postponed and postponed, and then towards the end of the year, they're just slammed trying to make it all up. And you've got kids that are gone maybe 3 days a week. And some of those are day contests too, when you're talking about golf, tennis, softball. So they're missing the whole day of school. I know Secretary Graves talked to me last year about trying to figure out a way to track, to track the amount of time that kids are missing due to sports, and we're happy to help with that. That's going to vary wildly geographically based on where schools are at. You know, for the postseason contests that we schedule ourselves, we're still regional. In some of the postseason contests, and then that SoDak 16 leading up to it, we have a neutral site. But I don't disagree with you at all. I mean, I— and, and the, the, uh, there are some kids that are just coming to school to do sports, and, and that's keeping them in school and getting them graduated, which I think can be a positive thing. But we also want to make sure that kids that the academics are the first thing, they're the main thing. And as I said, we're here to be a supplement to the high school experience of kids. So I agree with you completely. And, you know, we're willing to look at whatever we can look at to try to help that.

Mr. Chair? Okay. I just want to say we're getting a little off topic here. This is about the audit of the report. I know We don't want to get into the weeds with social issues. That's not our point here today. So let's stay on topic a little bit more, okay? Thank you. Go ahead, Senator Grove.

Okay.

So when we were talking about recruitment and retaining officials and revenues and all that kind of stuff, one of the questions that I had a constituent ask me who is also a football coach, Why do we have so many classes? So we have 7 football classes, but we only have 3 in basketball.

And I'm just—

as you were talking, I was thinking, is this one of the ways where we could maybe tighten up on some of those expenses? We'll just not offer so many of these different classes. Do we actually have to have them?

I, I agree with you.

I think we have too many classes of football. It was there, and we did a 2-year study on that a couple years ago, and it came out and nothing really changed. We had a, uh, right when COVID started, we had a vote to shrink that down to 5. It was gonna be 3 11-man and 2 9-man, and our board ended up split 4-4, so it failed. And then everything just sort of cascaded.

Yeah.

And we're back to where we are. And then we've added the, the All-Nations Conference football as well. So there's really 9 classes of football when you think about it. Now, I don't know, for in terms of that could lessen the travel, because sometimes— and we try to stick within classifications for, for scheduling contests— and you could reduce, maybe reduce some travel. 9-man football, we cross over, that's all geographic. We cross over across all 3 classes. 11B and 11A end up playing each other, and we're doing some more crossover stuff to try to fix that. Unless there's going to be less teams, you're going to still have the same number of contests, so there's still going to be the same number of officials that you need. But if there were fewer classes, you could mix and match a little bit better and maybe find some more closer geographic games. And Rapid City Central and Stevens is a big one on that in football, in that our highest class, you've got those 2 out there, and then the rest are in the Sioux Falls area. To where— so that's sort of a closed one, to where if we were able to offer— and we give them a game against Spearfish and Sturgis, one or the other. But if we could also— we could have them playing the other, either Spearfish or Sturgis and Douglas. It would eliminate another one of those cross-state travels. And we have looked into that. I think it's something we're going to continue to look at because the numbers of— we have 54 teams playing 11-man football right now and there's 4 classes of it. So we're going to have to address it at some point.

Okay.

Senator— are you okay, Senator? Senator Foster, did you have your hand raised for a question? Okay.

Okay.

Representative Lems.

Mr. Chair, just like 2 quick questions.

Mayor, very quick, we're getting very behind here.

So, so we have 179 member schools. Do all of our public high schools belong?

Mr. Chair, uh, to my knowledge, yes. Um, there, uh, there are like the, the cyber school portions of some of those high schools aren't members, like Chester Cyber School or Western and Cyber School. They don't belong to us, but I believe all of the physical high schools— I think Big Stone City didn't have a high school, so they weren't a part of us, but I believe every public high school belongs to us.

Okay, and quick follow-up. Follow-up is, does every state have an activities association like that, or do some states do it differently?

Mr. Chair?

Go ahead.

Yes, everyone does. Iowa has 4. They have one for boys' sports, one for girls' sports, one for music, one for speech and debate. There are some that have private school associations in addition to— like, I think North Carolina has 2 or 3. They've got their, their one with the public schools, and then their private schools have one or 2 other ones. Or like New York— New York City has their own association. Or California, there's sections that each have their own association and they meet and play one. But every state has one main activities association as we do. There aren't any states that don't have any.

Okay, good. Please continue with your report.

Yes, sir.

So—

sorry, I need to find my sheet again here. Increased costs is— it's just what everyone's dealing with. And, you know, even for officials, mileage has gone from 47 cents a mile to 70 cents a mile. And that, when you're hiring 200 to 300 officials per year for state events, that adds up. Competition for the larger venues, you know, the Monument Center, the Premier Center, with music concerts, with collegiate Activities potentially— I mean, basically anywhere where they can sell alcohol, they're going to make more money than they do off of us. So we have competition with that. They've been very good generally keeping our dates open, and we're very thankful for that. But there is more competition for those things. Keeping up with wages and travel costs for officials, and then rapidly increasing attendance at some events with few options for Larger venues. We've got some great venues across our state, but we've got like competitive cheer and dance. The attendance for that is just exploding, and we're to the point where we, we almost can't hold it in a, in a high school facility anymore. And then there's limited facilities to where we can do that. Or softball— we'd love to put everyone in the stadium-type setting, but there's only so many of those around the state, collegiate stadium settings for softball.

Okay.

So those are just things we're looking at for the future. In general, I think we're sitting okay financially. I think we're doing all right. We're dealing with the same things everyone else is dealing with.

Okay. Last chance for questions from the committee. Seeing none, Senator Howard.

Thank you, Mr. Chair. I would move to acknowledge receipt of the report submitted by the South Dakota High School Activities Association pursuant to South Dakota Codified Law 13-36-4.

It has been moved by Senator Howard, seconded by Senator Otten, to accept the report. Any comments on your motion?

I would just like to thank Mr. Swartos for coming in, and, you know, we appreciate all that you do, while still acknowledging though that the academic part is the most important part. But thank you so Thank you so much for the report.

Okay, yes, thank you so much for coming to report. We have a motion to accept the report. All those in favor say aye.

Aye.

Opposed? Report has been accepted. The committee is now going to break for a very short work lunch. We wish— hopefully we're back here in a half hour or less. Okay, we are going to call the committee back to order. Thank you for indulging us to have us Put some groceries down our throat so we don't pass out here. So we're going to move on to more business. The annual reports about the Building South Dakota programs and the Workforce Education Fund is first. Welcome. Please introduce yourself and give us your report.

Thank you, Mr. Chair. My name is Amy Miller. I currently serve as the Career and Technical Education Director for the South Dakota Department of Ed. This would be the first time you're seeing me in this role, but prior to this, I've served six years as the assistant director. I appreciate the opportunity to bring you up to date on the Workforce Education Fund and the grants being made from that fund. You have our submitted report, which provides greater detail, but I appreciate the chance to put those details into context for you. As you're aware, the Workforce Education Fund was created by state statute in 2013, and there have been various changes. Changes to it over the years. And currently, the fund's purpose is to support new and existing secondary career and technical education programs, more commonly referred to as CTE programs. The Workforce Education Grant incentivizes schools and local businesses to co-design bold, sustainable, forward-thinking educational programs. These are supported by a 1-to-1 matching requirement, and the grants must demonstrate that schools have fostered relationships between their CTE programs and local industries. Ultimately, these collaborations show students that their community is actively investing in their potential and opening doors to exciting career opportunities right in their backyard. South Dakota has had remarkably successful CTE programs within every public school, and half of all secondary students are enrolled in these courses. While federal funding is the baseline to support necessary maintenance of CTE programs, it's not designed to fund major systematic transformations. That's where the state's workforce education grants become indispensable. These grants bridge the gap between maintenance and innovation and give forward-thinking schools specialized capital to— required to partner with local industry to build cutting-edge facilities. to prepare our future workforce. Each spring we put up $1 million with a maximum grant award of $225,000. Our career development specialists work hand in hand with schools to evaluate their CTE offerings. We don't just advise, we partner. We're there to support the schools from the initial spark of an idea through the full project implementation. We have 2 grants from FY25 that are nearly wrapping up. Totaling just over $443,000. These allowed the Burke School District to create a permanent agriculture space to replace mobile units that were no longer meeting their needs, and the Harrisburg School District to create an industrial-quality childcare center that allows students to use that as a lab for their human services and education career clusters, creating a skilled pipeline of future educators and childcare professionals. Strengthening both workforce and community needs. In the spring of 2026, 4 additional districts were awarded workforce education grants totaling $340,376. Those districts are actively working on these projects to benefit students over the next school year. The districts are Frederick, Hill City, Rapid City, and Spearfish. These grants will modernize and advance technology in the welding programs of Hill City and Spearfish. fish, transform Rapid City Stevens' culinary classroom to reflect the hospitality and tourism needs of the Black Hills region, and equip Fredericks with a new ag facility full of advanced agriculture equipment. By transforming classrooms into innovative learning environments, these grants do far more than just provide equipment. They create opportunities, they inspire students, and they build a skilled workforce pipeline, ensuring that educators have the resources to keep pace with the rapid-changing technology in these high-demand fields and prepare students for the careers that await them. With that, I'll stand by for questions.

Any questions from the committee? Okay, seeing none, um, do we have to— Senator Howard.

I move to acknowledge receipt of the report on the Workforce Education Fund I move that the Senate receive the report submitted by the Department of Education pursuant to South Dakota Codified Law 1-16G-49.

Okay, thank you. It has been moved by Senator Howard and seconded by Senator Otten to receive the report. Any comments on your report or on your motion?

I just want to thank you for coming in. It's a very nice report and we appreciate that.

All right, with that, all those in favor of the motion say aye.

Opposed?

Okay, that report is received. We are going to move into the Housing Opportunity Fund.

Welcome.

Please introduce yourself and give us your report.

Thank you, Chairman, and thank you, committee members. My name is Chas Olson. I'm the executive director of South Dakota Housing. My presentation today is broken up kind of into 3 different areas. I've got kind of the overview of what South Dakota Housing does by department. our relationship to the state, and then broken up between the Housing Opportunity Fund and the Housing Infrastructure Financing Program that was requested that I come back with last year. So if that's acceptable to you, I'll go through all of those. I also know you said we're a little behind, so I don't know, do you want me to get into the history and the overall departments, or—

I don't think you have to get into the history. I think just give us your report. We will catch up. If we have a question, we'll stop and ask you.

So to be clear, you would like me to skip over the overview of kind of every department, what we do, and get right into the HOF and the HIP?

Yeah, I think so. I think we know what you do, so let's just get into the report. If we have to backtrack, I apologize.

All right, I'll get right into it then. And I'm going to start out with just a little bit of a kind of a graph here of what the difference between what the Housing Opportunity Fund and what the Housing Infrastructure Financing Program are. The Housing Opportunity Fund, or HOF, which I'll refer to it from here on out, was created in 2013 via Senate Bill 235 within the Building South Dakota Fund. The Housing Infrastructure Financing Program, or HIF as I'll refer to it, was created in 2023 via Senate Bill 41. As far as the leveraging requirements go, both programs now with the passage of Senate Bill 42, I believe, now the infrastructure can pay for up to one-half of a project cost, and the Housing Opportunity Fund by statute has always been a match program, so it can pay for up to 50% of a project or program cost. Eligible activities under the Housing Opportunity Fund include housing production, so that'd be new construction, rehab of, you know, multifamily units, apartments, single-family homes. And then there's also some funding within the program for programs such as homebuyer assistance, Essentially down payment assistance programs, homeowner rehab programs for owner-occupied individuals and households, and then homeless prevention activities. Eligible activities under the HIF is limited to public infrastructure for housing, with the exception of a couple of bills that have come over the last few years for airports and a school. Income requirements for the Housing Opportunity Fund. All beneficiaries of the program must income qualify at or below 115% of the area median income. And with the Housing Infrastructure Financing Program, there were no income restrictions. As far as the funding, the Housing Opportunity Fund approximately receives around $3 million annually. About half of that comes from state appropriation. And then the South Dakota Housing Board of Directors has a continuing resolution that as long as the state continues to put that money in, it will be matched with $1.5 million from the authority. The HIFP was funded with one-time funding of $200 million, which was comprised of $150 million of state general funds And $50 million of COVID relief ARPA funding. A little bit about the fiscal year '26 HOF allocation. As you can see there, the typical number from the state that we get for actual appropriation is the $1,040,000. And then the other sources that come in is some bond volume cap and interest income for the $633,000 and the $88,000. And then the annual allocation from South Dakota Housing that put this fiscal year funding just over $3.2 million. And then statutorily, we're able to get 10% of those for administrative funds. If you look down below, it is by statute broken up with 30% eligible for Sioux Falls and Rapid City, and then 70% for the rest of the state. So we kind of have to do a calculation to figure out among the programs and among the projects, what is, you know, how much is available in each one of those set-asides, and then further, how much are we going to allow somebody to come in as a maximum request. So we do 75% for housing projects.

Okay.

That's going to be your actual building of homes, building of apartments, and then 25% for those programs I mentioned that are the down payment assistance, the homeowner rehab, and the homelessness prevention. In the next few slides— in a few slides, you'll see all the programs and projects that resulted from the fiscal year '26 allocation. Currently sitting in our HOF account, our overall account balance is just over $7.5 million. Just under $3.2 million of that is for projects and programs that were previously awarded funds that have not yet disbursed. They're either, you know, in the middle of the programming, working with, you know, the subrecipients or working with applicants, or they're, you know, somewhere in the course of construction on their project. We currently have a little over $1.4 million in our administrative fund. That's just from being used up over, you know, built up over the years and us not utilizing all of it. So we're actually going to revert $1 million of that.

Okay.

to our general pool for the fiscal year '27 application round, so we can increase our limits and try to get a little more funding out for the actual housing projects. Our program income balance, that can be from repayments of loans on housing projects, repayments on loans from the homeowner rehab and down payment assistance programs. That's gotten to about $2.25 million, and that is also going to be included in this year's general pool funds for fiscal year '27. And then we have just under $700,000 that $682,796 that's remaining from fiscal year '26 funds. Do you want me to get into these? There's a lot of projects here.

Okay.

If you have any specific questions, I'd be happy to answer.

I don't want you to go through every one of them. I mean, you do your examples if you want, but not every one of them.

Okay.

Yeah. Let me just pick out a few. I mean, a few of these, and one of the things we like about the Housing Opportunity Fund is that it really gets projects done that, you know, otherwise may not happen. And, you know, so we're dealing with a lot of rural communities, a lot of small projects, you know, 2, 3, 4 units where it's just really difficult to cash flow when you're doing that all with a bank loan. And so we can come in with 50% of the project cost. We can do some forgivable loans. We can do partially forgivable loans. We can, you know, be flexible with it in terms of repayment to really make those projects work. So like one, for example, would be the De Smet Calumet Townhomes. That was just a duplex, 2 units, total project cost of $668,000, and then one of those units will be at or below 115% AMI. So a community like De Smet just has a hard time making these types of cash flow deals cash flow when you're getting commercial loans at 7% or thereabouts. And so the Housing Opportunity Fund just does a good job with 0% financing, and then in some cases, if the cash flow doesn't show enough repayment, to, to make it feasible, we can do some partially forgivable loans, as we do sometimes. I'm going to move into the administrative fees that we used in fiscal year '26. If you recall from a previous slide, we were eligible for up to $326,156. Um, the total staff salary that we spent in fiscal year '26 was $184,194. Um, 3 of those were staff for program administration, so that's things Like collecting the application, reviewing the application, processing draws. That's also inspections during construction. So if we're going and doing a fourplex or whatever it is that we have our funding involved in, our construction inspector will be out 3, 4, 5 times throughout that project to make sure that things are being built as they should. Also our compliance staff. So once, once a project comes from development and it's built out, leased up, Then it goes over to our compliance department, because anytime we put funding into anything, there's going to be a set of years where those projects need to remain affordable, both from an income standpoint for the tenants and also rent. So you have those 3 compliance staff who will be doing things like file reviews, financial reviews, and then also the ongoing physical assessments of the properties to make sure they're being kept up as they should. And then just the 1 staff for accounting, and that's essentially processing draws, so pretty minimal. A little bit of overhead, about $24,500. That's for things like payroll tax. We had some software maintenance changes that we had to use for the program and some kind of minimal expenses there. And then when we do the programs for down payment assistance rehab and homeless prevention, they're eligible for up to 10% admin. So if I get a $50,000 down payment program, I'm going to get a $55,000 award because, you know, these programs cost money to work with the applicants, do the homebuyer education, you know, just the administrative fees.

Right.

Awarded $67,500 in admin fees to 8 subrecipients that are administering 9 different programs.

Senator Howard has a question.

Thank you, Mr. Chair. Has homelessness always been part of your mission since 2013?

Mr. Chairman, homeless prevention activities is in the statute. As an eligible activity.

Okay, you good? Okay, please continue.

Um, if there's no other questions on Housing Opportunity Fund, that concludes that portion of it, and I'll move on to the HIFP.

Senator Howard.

Thank you, Mr. Chair. I do have some questions on the Housing Opportunity Fund. Um, do you, do you see— do you believe we have a housing shortage? Do you— or maybe I should ask, do you believe What is your primary goal that you are trying to achieve in the Housing Opportunity Fund?

Mr. Chairman, go ahead if you want. Inventory and affordability. We don't have enough homes at affordable price points, and we don't have enough rentals at affordable rental levels. So a Housing Opportunity Fund is a great tool to try to get some homes at those lower price points, you know, under $300,000, and some rental levels that are more feasible for especially our rural communities. So I mean, I think HOF, you know, we always think of this mainly as a rural development type of program. You know, we, we don't allow any projects over 16 units. So we're really trying to make projects happen with this fund that would otherwise likely not be possible.

Follow-up?

Go ahead.

What do you think is the primary cause of affordability? Just lack of inventory, or what do you believe are the driving forces for affordability?

Part of it is inventory. A large part of it is lack of incentive to go into a small community and build these apartments or homes. You know, a lot of times when you have, you know, I'll just focus on single-family homes. If you have, you know, A community of whatever population, say under 5,000, and you haven't had any new homes built in the last 10, 15 years, there's no comps to go with. It's a hard— you have a hard time with what the costs are to develop in a rural community, actually getting an appraisal and a lender that'll actually lend that much out for what the cost that you have into it. And if you can, the profit margins are much, much smaller. So if I'm a developer and, you know, we are Pretty limited with large-scale developers in South Dakota. I'm focusing on the areas like Spearfish and Sioux Falls and Rapid City where I know there's comps. I know there's a large market that can afford those types of homes. So to me, it's a combination of lack of inventory, which is probably perpetuated in a little way, to some degree, by the lack of incentive for developers to go into some of these smaller communities, and not just smaller communities, but develop Lower, you know, homes at lower price points. There's just less meat on the bone when you're selling a $275,000 house versus a $475,000 house.

Follow-up?

Thank you, Mr.

Chair.

But do you not believe that the market, the free market, would work if you're saying there's a lack of incentive for developers to go in? They're only going to go in if they're subsidized with taxpayer dollars. I mean, wouldn't they be incentivized to go in if somebody truly wanted a home built there? Are you not propping up a false market for this, that if the free market was allowed to work, it wouldn't be there? There wouldn't be the incentive. So why not allow that to work? Or are you ever going to see your job as being done? Are you ever going to see a completion of the Housing Opportunity Fund? Will we ever have In your mind, will we ever have enough developers subsidized and enough houses subsidized with taxpayer funds? Meanwhile, we have renters and other people struggling to pay their mortgages that are subsidizing these. It's their dollars that are paying for these subsidies. They're struggling just as much, but they're not getting any subsidies. Are you ever going to say we're good, we don't have to take any more tax dollars to subsidize these?

You can answer any Pick any one of the 5 questions you just asked.

Okay, I think the one I'll focus on is do I think it's needed? And absolutely. I mean, the proof is in the housing studies we get. You have rural communities that come in and it will say we haven't had a new home built in 15, 20 years. If there was enough incentive for the private market to step in, they would be doing so, and they're not.

Okay, you good? Senator Grove.

Thank you, Mr.

Chair.

My question is, especially when you're talking about in the rural communities or even just moving inventory, why do we not consider more of, like, tiny homes, homes like that that are actually truly affordable, that are perfect for elders because they're usually just one floor? And then you're moving whatever they're in, say it's a ranch-style home, they're moving out, moving into the tiny home, and now you have a family home. So you have like 2 homes in one. Do we— do we— we don't really talk a lot about that in the state of South Dakota. And I'm just wondering, is that ever on the table?

Mr. Chairman, go ahead and answer.

That's a great question. And it is a trend that's been picking up a little bit more in South Dakota than it has in previous years. I know in Sioux Falls, they have, you know, a veteran project with tiny homes. I think they're starting to Um, work on one in the Oglala area, I think also in the Yankton Sioux area. So I mean, I think that it's starting to pick up a little bit. Um, you know, you do have to some degree some developers, and I wouldn't say tiny homes, we're not talking 400 to 600 square foot homes, but you do have some, um, like out West River, they're starting to, instead of focusing on these 3, 4 bedroom, 2, 3 bath homes that are 20, you know, 1,500 to 2,000 square feet, they are starting to see more 2-bedroom, 2-bath, you know, 850 square feet or 900 square feet. So, you know, are they under $200,000? No. But, you know, they're still there for the most part. They're probably between $225,000, $275,000. So is that affordable to everyone? No. But I mean, I think it's a step in the right direction. As far as to really answer the question about the tiny homes, when you're talking, you know, 500, 600 square feet, I think it takes a special demographic. Whether that's, you know, seniors or veterans or whatever that is. And I just don't think that it's a trend that's taken off for developers in our state yet. But I think that there's room for it. And I think that it could be trending in that direction. And certainly something that as a housing authority, we would be interested in, you know, funding a project or 2 to see how marketable they are in this, you know, in our area.

You good?

Okay.

Representative Lems.

Mr. Chair, question. So I was in Watertown not long ago, and I had a citizen of Watertown kind of driving me around town. You have your older homes that are not being— you know, they're for sale. They're either not being bought by younger people, or you're having these big investment firms coming in and buying them up. Berkshire Hathaway, or BlackRock or whoever. Do we have any funds that will— that, that's like for remodeling? Like for, you know, sometimes maybe they, they can't afford it because the basement foundation is, you know, whatever it might be. Do we use anything like that to repurpose and then maybe get some of the older people into something else and then the younger people maybe make it more attractive for them to get into an existing home?

Mr.

Chair, go ahead.

We do, and there's 2 different kind of, I guess, approaches you can take to that. Some of that is the, you know, I'd mentioned under the Housing Opportunity Fund, we have the homeowner rehab program. That's for an owner-occupied home. So I say I'm NeighborWorks Dakota Home Resources out of Deadwood, and I apply for a pot of funds. And then as an owner-occupied household, I can come in and apply for funds to fix my roof, fix my structure, do things like that.

Okay.

So that is definitely an option, and we have We have pretty good geographic distribution with— for those homeowner rehab programs, not only through Housing Opportunity Fund, but a federal program called the HOME program. So that's certainly an activity that we support and have specifically set aside funding for every year. The other way that you can do that is to do like a rehab resale of a single-family home. And so you could come in for Housing Opportunity Fund and say, You know, this home, we're going to have $75,000 into the acquisition. We're going to have $150,000 into the rehab. We're going to turn around and we're going to sell it to an income-qualified buyer. Those are all eligible activities. So you can, you know, not just build new construction with these programs, but you can work on the existing housing inventory and stock that we have that does need, you know, minor to major repairs with a lot of—

with several of our programs.

You good? Senator Howard.

Thank you, Mr. Chair. Okay, so if I'm a homeowner and I'm assuming low income, you— there's a local organization that I would go to to ask for assistance. That local organization is going to come to you and get assistance. What if they're— what if their local church just took care of it? How much overhead are we wasting with these multiple layers of bureaucracy when, when it could just be this homeowner needs some assistance from a local church, from his neighbors. Do you ever, do you ever step back and go, this is better taken care of in the local community without state government involvement?

Chairman, I guess—

go ahead. Um, I guess my, my only comment to that would be, you know, I don't think churches have money sitting around to do things like that, so there needs to be a funding organization and there needs to be a funding source. You could?

Okay. Please continue with your report.

Getting into the Housing Infrastructure Financing Program, you know, I think a big topic of conversation was just kind of the lack of applications that have come in over the last couple of years with the infrastructure program. So I thought it would be good to put this out there. You can see over the years it did dwindle quite a bit. You know, fiscal year '26, I want to point out that 9 out of 14 applications that were approved, 4 of those are still pending. They came in in late June. They'll be considered in August. But the, you know, for the most part, all of these applications that were not approved, it wasn't a denial based on merit. It was more a technical denial, whether it wasn't public infrastructure or they maybe didn't get the resolution from the city that was required that they would take over the ownership and maintenance long-term of the infrastructure. So with the exception literally of one project, our board and we did not deny one single project other than, again, one project that was just— it was a little aggressive for the community that it was in, and it really went against what the housing needs study said was needed.

Excuse me, was that the Canistota project?

No, sir. This was Big Stone City.

So you denied the Canistota project, though?

That's correct.

So then you denied 2 projects? You said one.

May I clarify?

Sure.

The Canistota project applied for HOME funds, which is through HUD, and that's direct housing funding. That's not infrastructure funding in any way. So these— so far, projects, we've done 89 projects. They have been awarded in 44 communities. I have a pretty nice graphic on the next one to kind of show what that geographic distribution Looks like. Of those 88— 89 projects, 7,489 single-family lots are planned and 5,882 multifamily units planned. This is just a nice graphic that shows a little bit about the geographic— shows the geographic distribution of all of our projects. So the way to read this would be like, if you look at the top left, you see Belle Fourche and then the number 3 by it. So they've been approved for 3 projects. Those 3 projects Total 120 single-family lots and 90 multifamily units. So you can see we have a good geographic distribution. The other thing I like to point out on here is the line under the kind of the bold heading there, and that's that we've awarded $135 million in HIF funds to support projects with costs of almost $439 million. So, you know, over a 3x leverage factor. And the thing to remember too is that that's just the infrastructure. So this will end up leveraging into billions and billions of dollars of the actual the actual vertical construction, the actual homes. So $135 million investment is going to turn into millions— billions of dollars worth of homes by the time all these lots come to— lots and multifamily units come to fruition.

So, Mr.

Chair, I just would like—

Representative Auch, go ahead and ask your question.

I'd just like to ask another question in reference to, are we doing the right thing? Because in my district, 3 separate areas were developed, I don't believe they've sold hardly any lots, and they've been in competition with private individuals who have built the infrastructure themselves and not using taxpayer funds, and they are selling lots because they're less expensive than the ones that they are marketing through the money that was funded by the state government. So I'm— I just, I just beg to differ with your question of what is— government has its place, and I don't think it is in developing lots that the market, that the free market could do it on its own.

Chairman?

I'm going to help you out here a little bit. And I understand your question, Representative, but his view of what this program is and what he's reporting to us It doesn't really affect what he personally thinks about the program that's already been— I mean, I'm just trying to keep us a little bit on track here.

I'm on track.

Mr.

Chair, I've got one more question.

I'd like to respond if I could.

Okay, go ahead.

My question is basically, are you seeing this across the state where we're using state funds to develop land that could be done through the free market?

Go ahead.

Thank you, Chairman. I mean, there's no way to answer that definitively. I can tell you that if you look at this list here, I don't think a lot of private developers were developing subdivisions in some of these rural communities. Now, could it have happened? Potentially. But sometimes it needs an incentive like this. Like, you know, some of it was grant funds, some of it's low-interest loan funds. As you know or may not know, there was a legislative legislative summer study, and everywhere they went they said what we need is funding for infrastructure. Then the legislature approved $200 million for infrastructure, and we're managing it as we were told to do, and that's where we are.

Okay, you good? Are you got more questions? Okay, anybody else? Okay, please continue.

Um, this slide here is just about HIF funds dispersed throughout the different pots. We have the ARPA funds, which are about Over 80% disbursed. That was a $50 million pot. We have the general fund grant funds, which was $50 million. That's also over 80% disbursed, about 84%. And then the general fund loan funds, as we know, has gone out rather slowly. That is about $18 million disbursed so far. But as you know, is natural, all the grant funds went out first. So the loan projects that we approved, for the most part, are a little bit newer and still working on drawn down some of those funds. As far as HIF projects completed and some of the progress we have so far, we've had 37 projects completed to date, which results in about, about $32 million of HIF investments that's been fully disbursed to these projects that will result in 1,932 multifamily units and 1,259 single-family lots. And we have 10 projects that are completed and working on closeout documentation. That's about an $8.5 million investment. I don't have the units and lots on there because before closeout, we catch some— we get— we collect something from the engineer that says, this is how many single-family lots will be there, this is how many multifamily lots that can produce this many multifamily units. So until we get that information, I don't want to speculate on what exactly those units and lots will be. And then another 20 projects that are 90% plus complete and projected to be done by the end of this summer here.

Okay.

So that'll be another— should be another approximately $60 million that we get out the door for completed projects. And then a little bit on the admin. By statute, we're eligible for up to 1% of the funding for administrative fees. In fiscal year '26, we had 2 staff code-timed to the program for $46,431 and then overhead of $73,390. Since the inception, we've had still the same 2 staff We've had $155,477 paid out in salary from the admin and just over $400,000 for overhead for the program. And I'd pause there for additional questions on the HIF.

These are 2 each, so we're talking 4 staff members, not the same 2 staff members?

The same 2 staff members. I just thought it would be a nice graphic to know from the inception of the program how much of that administrative have we actually spent and drawn down. So you're looking at about $455,000 total out of the 1%— out of 2 million eligible on the $200 million that's been drawn so far.

Thank you.

Senator Howard.

Thank you, Mr. Chair. Just a question. Do we have a— did we get emailed or can we get a copy of this handout? Is it okay? All right. Thank you.

Okay, go ahead, please.

All right. Well, that wraps up the HIF portion of it. Mr. Honan asked that we include some Governor's House information last year. So I have that again here this year. In fiscal year '26, we did 91 homes completed and delivered. We had about 147,000 inmate hours, which equates roughly to about 1,500 hours per home, which is about, about regular what we normally see. And with that, I'd be happy to answer any questions on the Governor's House, HIF, or HOF, or housing in general.

I got a question. Why did we see the hours drop in half July 25th to June 26th of inmate hours?

Typically that's because of, um, we don't have as many inmates from time to time. Whether that's because, you know, during COVID it was like, you know, somebody gets COVID, you lock down. Um, now it's more related to staff, you know, like if they have medical transports, you know, typically we have 130 to 140 inmates a day. Um, if you have, you know, some, some offenders who have to go do medical transports and that's taking a few guards away, then we get what's called limited staffing and we get like 40 or 50. If, you know, it gets to a point where there is, you know, maybe, you know, something going on at the prison where they, where they're on lockdown for any other reason, we get zero. And so that's just, you know, that can ebb and flow. Some months it's great, some months it's really, really a struggle. So that would be the big difference for the change in, in inmate hours from month to month.

All right, thank you. Questions?

Mr. Chair.

Senator Grove.

So on the Governor's House program, I had a community that built— or they bought 2 of the Governor's House homes and loved them, except that when they got them, what the homes were to sell for Was way outside of what the people in the community normally sell or buy homes for. And so they ran into some real issues in getting people into the homes because of— they didn't qualify income-wise for— because of the price point on the home once it got there. And they really struggled trying to work with however we do it to make it work. And I think the last time I checked, there was still one home sitting because they couldn't make it work. So I'm just wondering, if we're going to build these and we're focusing on rural areas, which my areas are really rural, how can we make this program work when you build a home that's By the time you get it there, it's over $200,000 or whatever, and that's just way out of line for that community. How do we get people in them?

Chairman, so we— our board did take some action here 2 board meetings ago to help address that. And at the time, you know, and this has changed over the years, it's kind of— it's increased a few times. The maximum area median income for a family of 2 or less was 70% AMI and 3 or more was 80%. Our board approved to just make that 100% across the board to help with that, because we did have several homes that nonprofit organizations and communities were buying throughout the state that were sitting for 1, 2, sometimes over 2 years because they'd find somebody that was $5,000 over income, you know, the young family, the teacher, but they're $5,000 over, they're $10,000 over between, you know, the couple. So knowing that our board We wanted to just make it a more viable program, knowing what kind of affordability gaps we have today between not just the cost to build, but your homeowner's insurance, your taxes. Everything adds up to a point where 80% AMI is really a difficult income level to be a feasible homeowner. I mean, you think about that's like 2 homes. That's like a couple each making $40,000 and trying to buy a $280,000 home. That's difficult. And so our board saw fit to increase that to 100% AMI across the board. Whether you're 2 or less, 3 or more. So now that income limit is $103,400, which we're hoping helps with those situations.

Good.

Just a quick follow-up. So that's in place right now, that new program that they're offering, that's in place?

Chairman?

Go ahead.

Yep, that— it's in place and it's retroactive to any home that was sold or purchased and built prior to. So any of the homes that you're referring to would be eligible to go up to that limit.

Okay, Senator Foster.

Thank you. Um, speaking to affordability, can you give me what the price increases of the homes have been, say 2018 prior to COVID to now?

Mr. Chairman, go ahead. Are you referring to governor's homes or kind of homes in general? I don't have it in front of me. I, I don't know it off the top of my head, but that's really easy to get and I can email the committee with that if that's okay.

Are you good? You have follow-up? You're good?

Okay.

Senator Howard, did you have a question?

Thank you, Mr. Chair. Okay, I just want to— I want to confirm that I have the numbers right. If I'm looking at this, you've awarded $135 million in HIP funds, so there's $65 million remaining of the original $200 million?

Mr.

Chair, um, we need to take $15 million out of that for the Douglas School. And then there's another $30 million, not necessarily earmarked because that wasn't in the bill for the airports, but technically there would be. And this is in your packets as well. Let me find it here. With what's pending, because we do have those, those 4 pending applications for about $12 million. And if you take out the $30 million for the airports, we would have about $4.3 million in our rural pot.

Okay.

Once you take out those ones that are pending, and about $16 million in the Sioux Falls Rapid City pot.

Go ahead.

Okay, so you're saying $20 million roughly, $4 million plus $16 million. Will HIF cease to exist when that is expended?

Chairman?

Go ahead.

The idea of it is that it will revolve, you know, back into the Housing Infrastructure Fund. Like even the, you know, the Douglas School loans and the airport loans are being repaid back to the HIF. So the idea is that it would revolve and be continued to be used for the same purpose.

You good? Okay, please continue.

Chairman, that concludes my report.

If—

unless there are any other questions from the committee.

Mr.

Chair?

Senator Grove?

May I make a statement?

Um, well, regarding this, you could make the motion now or after the motion's made to accept whatever.

Okay, well, if you look at this map, you see Kimball and Chamberlain, and then you see a whole lot of white. This is my area, and it's very rural, and it— and we have a lot of poor situations going on there. And I just want to reiterate that people in my area cannot afford these homes that are affordable. Even the governor's houses have now They're really expensive. And so I just want to reiterate that it is important that the state of South Dakota, if this is something that we're going to put ourselves into, that we seriously consider things like tiny homes that are actually affordable. And they, and they impact 2 specific people, very young people and the very old. And so those are 2 groups of people that, that we could actually put in homes And not in stinking apartments. We're South Dakotans. We like to own our land.

That's it.

All right. Any other questions from the committee? Okay, Mr. Olson, I'm going to need you to register. We took your testimony without registering. When you're— we're done with it, if you would please go to the—

I thought I did. It must have been for IRC.

Well, they're telling me that you didn't, so we'll blame it on the computer and just say you did. Senator Howard.

Thank you, Mr. Chair. I would move to acknowledge receipt of the report on the Housing Opportunity Fund and the Housing Infrastructure Financing Program submitted by the South Dakota Housing Development Authority pursuant to South Dakota Codified Law 1-16G-49.

It's been moved by Senator Howard and seconded by Senator Otten to receive the report. Is there any comments on your motion? Seeing none, all those in favor will say aye.

Aye.

Opposed? Report is received.

Thank you, Chairman and committee members.

Thank you, Mr. Olson. We are now going to move to the Local Infrastructure Improvement Program.

Welcome.

Okay, good afternoon, Mr. Chair and members of the committee. It's great to be here with you this afternoon in a cool room on a warm day. My name is Joe Fiala. I'm with the Governor's Office of Economic Development as the Deputy Commissioner. I will be reporting on 4 separate programs today, which we report on every year, part of the Building South Dakota programs. You'll see the map that got handed out here just by Ann. This relates to the Local Infrastructure Improvement Program. That's the first program I'll touch on today. Okay, the Local Infrastructure Improvement Program, or in short, the LIP program, provides assistance and funding for the construction or reconstruction of infrastructure for the purpose of serving economic development projects. So as an example, if a business wants to locate in a small industrial park in a rural part of state and the road needs to be improved into the industrial park, this LIP program can help develop that infrastructure. So roads, water, sewer, electric, natural gas. Who is eligible? Any political subdivision of this state, tribal governments, or local development corporations may apply for the Local Infrastructure Improvement Program to the Board of Economic Development.

Okay.

Applicants would work with their planning district to submit a completed application to the board for consideration, and this is done on a quarterly basis. So as an example, I just thought I would put forward an example of a really good use of of the of this program. The city of Volga developed their small industrial park, and this was back in 2020. The the lip award was approved. It was $500,000. The Volga Development Corporation put in $900,000 to develop that street, some water, sewer, and electric. After that was done, they had several local South Dakota businesses locate in that industrial park, including Infinite Welding and Machine, ATR Precision, and Johnson Pro Clean. So it really helped those businesses kind of upgrade their facilities. I'll turn now to the condition statement for the LIHP program. The cash balance as of June 30th was $6,587,345.75. There are some LIHP grants that have been approved, but they have not been advanced yet as those projects, you know, are working through the process process to get all the permits and everything in place of $1.7 million. That leaves the remaining funds available in the fund at $4,868,537.79. I should note in here, with this particular program, there is an annual appropriation of about $1.47 million per year. And then turning to the last page for this particular program, it's the table. It's this table. I'll just touch on that very briefly. I'm going to just walk through these columns. You can see the applicant column, that's who applied, the amount that they requested, the dollars that have been awarded. Then we did some kind of a little bit of Economic impact analysis. So the state gross tax receipts on those projects, you can see that listed there. So as those projects are built, that's what the state takes in. Then because of the projects, there will be ongoing tax revenue. So you can see that column. That's on an annual basis, primarily focused on sales tax and any contractor's excise tax that might result there.

Okay.

You can see projected jobs. The jobs both created or retained, and then the dollars awarded per FTE. We broke that down.

Mr. Kirschenmann, could you scroll your computer down, please?

Oh, sorry.

We were a little lost there.

I'm sorry.

No, you're good.

I got to drive and speak. Uh-oh.

I get it.

Okay.

Thank you. Thank you for that. You can see the communities served, the project description. So in this case, there are 2 projects. One was a lift station in Watertown, the other one was a road reconstruction in Lake County, and then the total project costs. And so the— this program is to help with infrastructure costs so that projects can move forward that otherwise they may not move forward. And in this case, $1 million awarded has resulted in $6.5 million Senator Howard.

Thank you, Mr. Chair. I'm struggling to understand how a road reconstruction can create 58 jobs. Are those temporary jobs, construction workers that are gone as soon as the road is done? What are those jobs? And do you go back and— yeah, just more explanation.

Go ahead, Mr. Karr.

Mr.

Chair, thank you. Thank you for the question, Senator Howard. So in all of the cases with the Local Infrastructure Improvement Program, there has to be an economic development project. So it's essentially a business project that is trying to move forward somehow. In that particular case in Lake County, the ethanol plant there, it's near Wentworth, wanted to expand. And it would increase their ability to process corn into ethanol. So it would be a few more trucks. That road needed to be improved. So unless the road was improved, they wouldn't be able to do their expansion, and their expansion resulted in those jobs then, those new jobs. So those are permanent full-time positions.

Go ahead.

Thank you, Mr. Chair. So how can you confirm to me and to all the taxpayers How did you verify to taxpayers out there that there was absolutely no possibility that between the ethanol plant, the county, the city, there was absolutely no way this road was going to get constructed? Or that this— how did you verify that the expansion literally could not happen without this road reconstruction?

Go ahead.

Yeah, Mr. Chair, with every project we have numerous in-depth conversations with the business and any other partner that's So in this case, the county on this particular project, but it might be a city, it might be a county, it might be a township in some instances, it might be a local economic development corporation. And, you know, our job is to not provide all of the funding. Everybody's got to have skin in the game. That's just kind of a base philosophical point that we have at GOED. So the business has to be contributing somehow, the county has to be contributing, and in this case, they were not going to be able to put enough overlay on that particular road to handle the trucks. And so this particular grant with Lake County allows them to have enough overlay so that the road does not get damaged with a little bit of increased truck traffic.

Follow-up?

Okay, so I understand it's the but-for dilemma, but do you ever go back and, and maybe look at all the projects that you actually do say no to, to see which ones went ahead anyways, to kind of give you an idea of are you really doing a good job on the but-for, you know, or if 90% of the projects go ahead without you, then maybe we need to rethink whether this is necessary.

Yeah, Mr.

Chair, go ahead.

Yeah, thank you again for the question. Uh, I'm kind of thinking back through some past projects, and I don't know that I can point to any that when we did not help that they moved forward anyway. And we, we remain in contact with the local economic development office or the city finance officer or the county officials, we remain in contact with them on a regular basis. And I don't know that I can point to one, you know, where we said no and they moved forward. I, I'm not recalling any.

Are you good? I'd like to ask a really quick question. So on these projects, where— who do you cut the check to, and do you make sure that it's getting spent for the project?

Uh, yes, great question. Good question. So in this case, in these couple of cases, the checks are going to the City of Watertown and Lake County because they are actually doing the work, you know, and maybe they've hired some contractors or— and, and, but we verify throughout with reporting requirements that things are getting spent appropriately on the right things.

Okay, thank you.

Yep.

I'm going to move on to the Economic Development Partnership Program then. That's Section—

Let's have one more time for questions. Oh, nope. Okay, go ahead and move on.

All right, thank you. All right, Economic Development Partnership Program. So this program provides matching funds to assist funding equipment and training needs, new staff, or to elevate existing part-time staff for the purpose of developing or expanding local and community economic It also may be used to commence or replenish local revolving loan funds for the purposes of housing, community development, and economic development programs. Who is eligible? Nonprofit development corporations, tribal government, municipalities, counties, and other political subdivisions of the state. The funds are provided on a matching basis, so again, there has to be skin in the game by by everybody involved. I will say the primary use, while there's a number of uses called out here on this page, the primary use over the last several years and going forward I think is going to be the primary use, is to train folks in economic and community development. And it really gets to helping people that are—

Yes.

Becoming involved in their community somehow. It could be a local economic developer. It could be a local elected official like a city councilor, a county commissioner. It could be somebody on that local economic development board. They could utilize, apply for and utilize these funds to get trained up on how do you do economic development? How do you do community development? How do you How do you properly plan for your community for those things that you want your community to move forward with? And it could be, you know, housing, it could be business, it could be planning infrastructure, it could be a number of things to lay the groundwork so that businesses can thrive and grow and prosper. And so these funds are primarily now used for that training piece. How it works, the applicants would again Utilize the planning districts to get a completed application submitted. Those applications are reviewed on a quarterly basis. Flipping the page then to the condition statement, you can see here as of June 30, 2026, the cash balance was $244,261.69. There are two applications. pending for a total of $13,500, which leaves a total in the fund of $230,761.69. I will note that the Allied Dakota development, that did get approved, and you'll see that on the next page actually. We've got a little—

We have a question here from Senator Howard before you move on.

Thank you, Mr. Chair. So I know Elevate, I'm assuming Allied Dakota Development is also an economic development corporation or entity, which are supposed to be supported by local businesses. So why aren't the local businesses— you know, if Elevate Rapid City needs $6,000 from state taxpayers, if it's for such a vital need, why aren't local businesses stepping up and providing that for them?

Mr.

Chair?

In both of these cases on this particular page, they applied for funds from the program, but they are matched either from businesses or matching money from their organizations, or I think in both of these cases there is a mix of numerous essential sponsors and others contributing to put this training on.

Follow-up, go ahead.

Do you get to see their entire tax returns? Because they're receiving taxpayer dollars, and when I tried to get a copy of Elevate Rapid City's tax return, they will not release it. So we have no idea, at least the average taxpayer has no idea, what they're receiving as far as revenue goes. Do you get to see that in order to justify giving them taxpayer money?

Go ahead.

Mr. Chair, uh, I might have to double-check on this, There is a whole sheet of information that we request when they do apply. I don't recall if it— in this one, if it includes their tax returns, but it does include a number of things about what they're applying for. I'd have to get back to you on that one.

Okay, follow-up, go ahead.

I just want to know, are you justifying that they actually need these dollars? Because if they're bringing in a couple million in revenue and they're paying out this, They don't need $6,000 of taxpayer money. So I just, I want to know what you're seeing that you are using to justify their need for taxpayer money.

Okay, Mr.

Chair.

And when you answer that, you could probably also tell us what the $6,000 is for.

Yes. Yeah, that might, that might be helpful. So I might just go to the next page a little bit, and that might help just a little bit with at least one of these. So let's take the Allied Dakota Development. They are putting on a training called Fuel the Growth, which you can see in the project description there. Fuel the Growth is a regional training for economic developers, people that want to learn about community development. It's a group of people coming together. They have nationally trained people coming in, national speakers coming in. There are some local speakers as well to cover the basics of economic development. And this does get a credential actually through the International Economic Development Council. So those that are taking it can use that credential to work towards a certification in economic development. The training that Elevate Rapid City is applying for, that is a similar training, where International Economic Development Council is bringing in speakers to do specific training on various topics on economic development. So when we receive these applications, we do try to find if there is an actual need. I would have to get back to you on those specifics, Senator Howard, about the exact documentation, but we can certainly follow up.

Okay. Did you get your question answered? Okay, with follow-up. Um, Senator— or Representative Lems.

Mr. Chair, quick question. So could you tell me a little bit more? Is any nonprofit development corporation— so obviously Elevate was mentioned, they would fall into that category. In my area, Sioux Empire Growth Alliance, would they fall into that category as well? Would the local Does a chamber fall into that category or not?

Mr. Chair, so certainly Sioux Metro Growth Alliance would fall into that, Representative Lems. I don't know that we have done one with a chamber. They would not technically, I don't think, be called a nonprofit development corporation.

But we will—

I mean, we would entertain applications in As long as they meet the requirements of the program, we would take a look at them. I should also mention this is not necessarily just group training either. We have had individuals from Sioux Metro Growth Alliance and other organizations that sometimes you need to travel for a course, maybe to Denver or Minneapolis and have a hotel room and a little bit of travel. Even some of our smaller towns have sent people to get training.

Okay.

So that they could help their small rural communities. And they've been able to use these funds on an individual basis to make applications.

Okay.

You good?

Okay.

Please continue.

Okay.

I think if there's no other questions, then I will roll into the next section.

I'm sorry. Representative Auch has a question.

Thank you, Mr.

Chair.

And this is funded by an appropriation every year? Tell me where the funds come from, please.

Yeah, thank you for that, Mr.

Chair.

Go ahead.

Okay, uh, this one is, uh, it had been receiving in years past kind of a, uh, an injection of funds each year. I think it was through the contractor's excise tax over several years. That has been changed. There is no longer any funding flowing into this, so what the balance is is what there is. And we will do our best to spend it wisely and train economic developers.

All right.

You good there, Representative?

Good.

Okay.

That's the end of your report?

On that section. I've got 2 more sections. All right. We've got another map. If Ann could help me with that. The next section is on the reinvestment payment program. I will touch on the map here just briefly. Before I forget, you'll see a number of blue pins. These are communities where there have been projects in those specific communities. You'll see some counties that are shaded a light blue. These are— there are projects in those counties, they just weren't in a specific community. So it might have been outside of city limits, but projects did locate in those counties. Okay. The reinvestment payment program. The purpose of this program is to— is available to assist companies in offsetting the upfront costs associated with relocating or expanding their existing operations and/or upgrading equipment in South Dakota. The program allows for project owners to receive a reinvestment payment not to exceed the South Dakota sales and use tax paid on project costs for new or expanded facilities with project costs in excess of $20 million, or for equipment upgrades with project costs in excess of $2 million. Just to touch on history here, this program was created in part because South Dakota is one of the few states that at that time had a sales tax specifically on manufacturing equipment, but on other new equipment Yes. And most states do not tax that. And so what we were finding as a state was that existing South Dakota companies were choosing to do their expansions in other states, or companies that were looking at South Dakota chose not to come to South Dakota. They chose to go to some other state where that— they could— didn't have that same sales tax. I think there are 34 states currently that completely exempt sales tax on manufacturing and other types of equipment. The other states, I think generally all of them have some type of ability to provide for something similar to a reinvestment payment so that those projects can move forward. Okay. A little bit of history there. Who is eligible? Companies pursuing new or expanded facilities with a total project cost, as I said, of in excess of $20 million, or equipment upgrades with a total project cost in excess of $2 million, are eligible to apply to the Board of Economic Development. One of the key criteria considered by the board when approving or denying an application is the likelihood the project would have occurred without the reinvestment payment. In other words, we heard it, I think, a little earlier today, the but-for clause. But for the program, the project would not have moved forward. You can see the projects that are eligible. There's a list there. There's a list of projects that are not eligible. There's some details about how this program works. I'm just going to very lightly touch on this. Essentially, we take in an application. The Board of Economic Development considers that application And if it's appropriate and they decide to do so, they approve it. Then the project builds their project and they pay their sales and use tax. So they pay it. As that sales and use tax comes in, it is put in a holding account by our friends at the Department of Revenue. And once the project is completed and we have verified that that project is actually done and they did what they said they were going to do, then we can direct the Department of Revenue to send them a reinvestment payment in the amount that's in that holding account. So they actually pay the money into a holding account and then it can get released back to them at the end once it's completed. I'm going to page forward to the next page. You can see that these are the reinvestment payment program uses over the last year, so as of June 30th, 2026. I'm going to go ahead and go to the next page with the table. This is a little bit more detailed, and we'll walk through this just a bit. So you can see the list of applicants. Again, I'm going to go through the columns. Here and just touch on the columns to try to describe this. There's the applicants. There's the amount that was requested through the reinvestment payment program. Then the next column is ongoing taxes from the project. So this is annual sales and use tax and other taxes that are projected to be collected every year because of the project. Then there's the Department of Revenue contractor's excise tax column. So that's the contractor's excise tax that is collected as the project is constructed. There's the sales and use tax that's collected as the project is constructed. You can see there's a column that says the project is reassigned to the county. This has— this is the ability for the applicant to reassign their reinvestment payment to the county, or they can reassign it actually to any, any, any other party they want. But we do ask if they are going to reassign it to the county, it's good for us to know. Some of them do choose to reassign it to the county because their project is having an impact, say, on, on roads, and that payment then goes to the county and the county can use it to maybe make those road improvements. We stay out of the middle of that, but we do ask if they are going to reassign it. You can see the dollars awarded column, the projected full-time equivalent employees, both created and retained, the dollars awarded per FTE column, the communities and the populations that each project is located in, a little bit of a description. And then the total project costs added up. And again, I think it's important to note because of that but-for clause, but for the program, the projects would not move forward.

If you—

if I had to boil this down, there's $40 million that are awarded in reinvestment payments that has induced, in this case on this page, $1.8 billion dollars in investment. And then if you look at the second column, there's about $21 million projected to come in every year after that as state revenue.

Senator Howard.

Thank you, Mr. Chair. Going back to the projected FTEs created/retained, are those numbers all coming from them prior or when they make the application? Do you have anything afterwards? How do you verify that?

Yeah, Mr. Chair.

Go ahead.

Thank you for the question, Senator Howard. So in their application, we do ask about employment numbers that they currently have. We ask about employment numbers that they project for, you know, as they build and then after their project is built. And then we do have some reporting. I don't recall how long they they actually report to us, but it's, you know, a couple of years after the project, if I'm remembering correctly, where they have to report employment figures. So we are trying to verify what they're actually employing there because of the project.

Follow-up?

Um, just thank you, Mr. Chair. Looking at Smithfield, you have 3,100— I can't quite make that out, I don't have my readers— 3,153, I think, for FTs for Are any of those new? Because if they're all ones that they already had, how do you say that those are— was Smithfield going to leave the state if this didn't happen? Because otherwise you would have to say zero.

Yeah, Mr.

Chair?

Go ahead.

Yeah, thank you again for the question. Each project is a little different, you know, depending on What they're doing and what their dynamic is. With Smithfield in particular, they were looking out of state. They had a choice of, okay, do we, do we try to fix our facilities in downtown Sioux Falls? Do we build it what's called a greenfield site, a brand new facility? And if we're going to do that, the company was contemplating, is it in South Dakota or is it somewhere else?

Okay.

And so that caused our office, the city of Sioux Falls, Sioux Falls Development Foundation in that case, you know, to all come together and try to understand with the company what are all the dynamics here. How do we, you know, how do we pull together to keep that particular business in the state? I would note of these applicants in the table this year, 6 of the 9 are existing South Dakota businesses that chose to expand. And in all of those cases, they had the opportunity to look at other states.

Senator.

Thank you, Mr. Chair. Do you ever look at— take into consideration the salary of these FTEs? Because I do wonder about Smithfield. I mean, I would imagine those are pretty low salaries.

Mr. Chair, yeah, we, we do look at salaries for, for every program at GOAD, not just the reinvestment payment program, but every program. Our— I'm not going to have the exact number, but I'll be pretty close.

Our—

it's adjusted every year. Our base expectation is $21.50 an hour. If it's below that, we do try to help the business, but they're probably not going to be able to qualify for our programs. But we do try to connect them to resources so that that business can, you know, move forward and realize that owner's dreams. In this case, with all of these, they are, in some of these cases, well above that $2,150. It just depends on each project.

Okay.

Senator, follow-up?

Thank you, Mr. Chair. So you are saying Smithfield, those are above $21.50 an hour?

Mr. Chair, yeah, to the best of my knowledge they are, um, and, uh, I can verify that on their, you know, application and information they've sent us.

My concern off that is more that we're not These new jobs that are coming in, are they being paid, their healthcare being paid so they're not coming off of our Medicaid? That's my concern. You know, and I think we've talked about that before, that you guys to be really conscious of that, you know.

Yeah, Mr. Chair, I can maybe just make a very short comment on that. We do ask for that information. We ask for their full benefits package so that we can understand that because it does play a role in We have another question.

Senator Otten.

Going back to Smithfield, I'd heard a report, and I'm not for sure if the numbers are right, but anyway, Smithfield's total economic imprint in South Dakota, you know, across the entire state.

What is that number? Do you remember?

Go ahead and try that one.

Yeah, Mr. Chair, um, I'll do this with a caveat, Senator Otten, that this is my best, my best estimate, but I think, I think I heard the same number you did. I want to say, uh, the economic impact of that facility in South Dakota right now is $3 billion per year.

Representative Lems, I keep wanting to call you a senator. Don't be mad at me that I'm knocking you down a little bit.

It's a promotion.

That's all right. Quick question, Mr. Chair. So, you know, I'm hearing that for these businesses that want to move to South Dakota, that they're saying other states are offering us a sales tax exemption up front. You know, we heard that with the data centers, all of those things. I wondered, and maybe it's not apples to apples, but we always hear South Dakota is a great place to do business. And so because we have no corporate income tax, we have no state income tax, and so sometimes I think, and I get it, you're looking at a business, you know, spreadsheet, balance sheet, profit and loss, but there's also benefits to those people that are working in those businesses for doing business here in South Dakota or living in South Dakota. And along with that, just to kind of piggyback on what you said, Chair, Mr. Chair, the, you know, with the healthcare costs. I mean, I know you guys, we've talked about this before, but also the added costs, you know, depending on the business, is it bringing more crime? Depending on who's working, what's our added cost to our schools? And, you know, what's the— all these factors that we're bringing in, you know, we want businesses to be here, obviously, but we also don't want to give— put the burden on our taxpayers if it doesn't even out. So anyway, I appreciate your response.

Yeah, Mr. Chair.

Go ahead.

Yeah, I'll just make a couple of maybe just quick comments, uh, and, and thank you for that. Uh, so I, I think I'll start with the second one first. Um, it's It's really important that as we do our work that we have good strong partnerships with the local folks, whether it's economic developers, the city council, the county commission, just local stakeholders, other business owners, because they do provide that feedback about, you know, is this appropriate for our area? And we are not in the business of pushing something on somebody. That's a local decision. We're here, we're here to help if that community or area decides this is what they want. But you're right, those considerations have to be taken into account so that you're doing growth wisely, right? And then remind me of your first part.

The apples, Mr. Chairman.

Oh, yep.

Apples to apples.

Got it. Okay, uh, so South Dakota continues to have a great business environment, and we've got a business analytics team. Anne is our, our director of business analytics. She and her team are really sharp at understanding the business environments in all 50 states. We, we still have a really good business environment, but some of the other states are Figuring this out, and they have been making changes over time to their taxes so that it it's not as much of a benefit or a clear line between South Dakota and some of these other states. They're sneaking up on us.

Yeah.

Okay, let's continue.

All right, thank you. Okay, we're going to go into Section D then, the last one today from from me, South. Coda Jobs Program. I will preface this one. This, you'll recall from last year, this one is— maybe we term it the little sister of the Reinvestment Payment Program. It's very similar, it's just for smaller projects. And so just like the RPP, except that it's for new or expanded facilities with project costs less than $20 million.

Okay.

Or equipment upgrades with project costs less than $2 million. Otherwise, it functions in a very similar fashion. The eligibility is essentially the same. You have to make application, which goes before the Board of Economic Development. The eligible and ineligible projects, those lists are the same. How it works is a very similar process.

Okay.

The caveat to all of that is that when this program was created, it ended up with a pool of money in the program. And so instead of setting aside sales and use tax as the project is constructed, there's this pool of funding for the South Dakota Jobs Program. when the project gets their payment back, it's from that pool. And so there's no appropriation or incoming funding for it for this program at this time. So I'll turn to the condition statement then. Cash balance as of June 30th—

Senator Howard has a question.

Okay.

Thank you, Mr. Chair. I see that the following projects are Are not eligible, and it's buildings or structures used predominantly for the sale of products at retail. So, I mean, that eliminates a huge swath of our economy, it would seem to me. And is that statutory? Is that a statutory limitation? I mean, I'm in favor of not picking winners and losers at all.

So—

But if we're gonna pick I mean, could— why are we excluding some right from the get-go from even being considered?

Mr.

Chair, it's my understanding that when these programs were created, these essentially lists were developed of eligible and ineligible as the legislature crafted this. I, I think that this is an administrative rule.

You good? All right, continue please.

Okay, on to the condition statement. Cash balance as of June 30th is $1,791,567.07. You can see that there are some South Dakota jobs programs approved but not advanced of $489,000 and change. There is one application pending for $214,465. That's going to leave remaining funds available in the program of $1,088,025.07. Then we've got our table at the back of this section here. Again, it's very similar to the other tables. I won't go through all of these columns. Again, it's very similar in nature, but you can see the applicants and the communities. These are smaller projects by nature of the program, and you can see it's reflected in maybe some more rural areas in the state, which we love to see. And with that, that concludes my remarks, but I would certainly stand by for questions.

Okay. Is there any committee questions for Mr. Fiala? Okay, not seeing any. Senator Howard, do you have a motion?

I do, Mr. Chair. I would move to acknowledge receipt of the report on the Local Infrastructure Improvement Program, the Reinvestment Payment Program, the South Dakota Jobs Grant Program, and the Economic Development Partnership Program submitted by the Governor's Office of Economic Development pursuant to South Dakota Codified Law 1- Is there a second?

Okay, it has been moved by Senator Howard and seconded by Senator Otten to receive this report, all 4 of these reports. Is there any comments on your motion? Okay, it's not seen any comments. Then all those in favor of the motion say aye. Opposed? We will receive it.

Thank you.

Okay, thank you, Mr. Fiala. We will now move to item number 6, Future Fund Report. Welcome. Okay, please introduce yourself and give us your report.

Thanks, Mitch. Good afternoon, Mr. Chairman, members of the committee. Bill Even, your Commissioner for the Governor's Office of Economic Development, here to review the Future Fund report. And probably to start off, I think it's important to note some of the work and changes that had occurred here in calendar year 2026. First, with Governor Rhoden's Executive Order 2026-03 regarding his directive to Governor's Office of Economic Development for use of the Future Fund, and then also work with Senator— excuse me, now I promoted you— Representative Overweg and the Future Fund legislation. And Ann, if you have copies of that, we can distribute that to make sure that you have those changes in front of you for the members of the committee. I think it's important to recognize the work both at the governor did to show his indication and direction, and then also the work that the legislature did. And I would say the collaborative approach with Representative Overweg and a number of others as we look to bring House Bill 1286 into law. I'll pause while those pass those out. I think one of the— certainly the topic of conversation during legislative session was regarding the Future Fund. How does it operate? Clarifying a lot of that. Where's the money gone over time? And then how do we ensure to the legislature from an oversight standpoint as well as the taxpayers, they understand how this system operates and works. And I think between the governor's executive order and the work of House Bill 1286, we've gotten the Future Fund into a spot where we're ready to move forward and see how this thing works. This report that you have in front of you now is based on the previous statutory requirements to give a report to the Joint Committee on Appropriations. That report has to be delivered in May and November. And so this report was delivered in May of this calendar year. And so what you're seeing is the report that also went to JCA. I should also note that going forward with House Bill 1286 becoming law as of January— excuse me, July 1st, there's now a number of other entities that are going to receive the report. And I believe there's 6 different committees. It's the Joint Committee on Appropriations continues to receive the report, House Committee on State Affairs, House Commerce and Energy, Senate State Affairs, Senate Commerce and Energy, as well as this committee, the Government Operations and Audit Committee, on an annual basis. So what I would envision, Mr. Chairman, is that sometime later, later in this calendar year, you'll be receiving the next round of Future Fund report per the new law that's on the books. I'd stop there and see if you have any questions regarding some of those changes and how the Future Fund is reported on and where the reports need to go to.

Not seeing any questions for you.

Okay. So we'll go on to the The report itself, and again, this would be on your screen, and I'll walk through the list here and stand by for questions. So at the top of the list is a grant to the Sioux Falls Development Foundation for gas line infrastructure in Foundation Park. There's 4 different new businesses that were served with this expansion, and when you include the businesses that were being built in North Foundation Park. This was going to include the 600+ from the Schwann's development, as well as other development in that area. I think like Lineage, Avera's up there with a medical distribution business and so forth. So that was the grant awarded on July 2nd of last year. The second is Southeast—

We got a question here, Senator Howard.

Thank you, Mr. Chair. Just curious, did they apply for a Local Infrastructure Improvement Program grant and get denied that?

Or—

because it's a gas line, seems like it would be infrastructure.

Mr. Chairman?

Yeah, go ahead.

Senator Howard, my understanding is the size and scale of this effort completely outstrips the Local Infrastructure Improvement Program approach. And so the Future Fund was the method that was used in this In this instance. I should also mention on local infrastructure improvement plan, there's a $1.47 million annual legislative appropriation into that, but there's also a $1.7 million annual limit on what can be awarded. And so those 2 numbers match up. So there's a cap on how much can go out of the local infrastructure improvement program. I believe the balance is somewhere around right now about $4 million, I believe, roughly, Joe? $4.8 million. The cap on getting that money out is then we only have expenditure authority of $1.47 million a year on the LIHP program as well. Does that help, Senator Howard?

Now I'm really— thank you, Mr. Chair. Now I'm really confused. Say those numbers again. You're limited to what you can expend to $1.47 million? Mr. Chairman?

Go ahead.

Senator Howard, yes, in the local infrastructure improvement program, there's $1.47 million of general funds appropriated into that per the Building South Dakota effort. But there's also an appropriations cap that matches that, so you can't spend more than what goes into the account. So if there's a year that you don't have a lot of applications, the account balance builds up. restricted on what we're able to put out.

Follow-up?

Go ahead.

Okay, then how— when I go back and look at the Local Infrastructure Improvement Program dollars, the Lake County— I mean, there were— okay, wait a minute. Project costs for those is over like $6.8 million.

So go ahead, Mr. Chair.

What am I missing?

Senator Howard, those grants, I believe, were $500,000 in matching grants.

Thank you.

Thank you.

Yep, I was looking at the project cost. So sorry.

Okay, continue please.

Next on the list is Southeast Technical Institute. So this was a partnership with South Dakota Department of Corrections. As you're well aware, last year with all the work around the new prison and dealing with issues of recidivism, There was a discussion at the governor's office level of what should the state be doing to ensure that we're providing training for those inmates before they go back into society. So this was a partnership with Southeast Technical Institute, our technical college in Sioux Falls, of $1.5 million in a Future Fund grant to get the necessary equipment to be able to put in a heavy equipment mechanic program working in conjunction with with the state penitentiary and the Department of Corrections. That project is operating out of Southeast Technical College there in Sioux Falls. Next on the list is Sioux Falls Development Foundation for the CJ Swans Project. This was a $15 million Future Fund grant that was designed to really work on a couple of things. It was the wastewater treatment facility that was required by the city of Sioux Sioux Falls, instead of doing partial treatment, the city was going to require full treatment. And to do that, there was a substantial cost difference between us and the state of Kansas that was in the final running for the location of these 2 facilities. CJ Swann's currently has a large production facility in the state of Kansas, and the ability for them to co-locate that by moving to Sioux Falls, South Dakota, there was an additional cost related to the wastewater treatment facility. And so that was designed to meet those Sioux Falls specs and to ensure that that water was appropriately cleaned to the DNR standards to be able to be discharged into the Big Sioux River at an appropriate discharge point.

Senator Aylward.

I'm sorry. Thank you, Mr. Chair. I asked this question last year, but I want to ask it again because this is a prime example, I believe. Before making the decision to give $30 million I think it was a total of $30 million for Schwann's, of taxpayer money to them. Did you take a survey of the average person in Sioux Falls, or did you just talk to the economic development people and the politicians? You know, did you find out, is this what the average person, Joe, walking down the street, is this what they wanted?

Go ahead, Mr. Chairman.

Senator Howard, these conversations evolve over a period of months, And in this case, probably a period of years. I was not here for all those conversations, but I would say this: those conversations are often confidential, and they're managed vis-à-vis what's going to happen with the state of Kansas, and how are we stacking up competitively on that, and how does one get into a negotiated stance where the decision at the corporate level is going to be locate in South Dakota. So that investment, $550 million, was the investment Going into the initial build-out of the facility, which is phase 1. There are phases 2 and 3 also planned in that space. The initial jobs are going to be 650 jobs, including facility and headquarters facility in Sioux Falls. And the total annual property tax sales that are flowing out of this is about $6 million a year in state and local taxes. So those are some of the conversations from a business and spreadsheet standpoint of what goes into those type of negotiations.

Yep, go ahead.

Mr. Chair, no disrespect though, but that did not answer my question. And my question goes to this, it goes to when we recruited Amazon to come into Sioux Falls. Do you ever go into a community and before you put taxpayer dollars towards one of these projects, not necessarily Schwann's, any of them, Do you find out if this is what the average citizen wants?

Mr. Chairman?

Go ahead.

Senator Howard, I think I'd answer the question by the fact that Sioux Falls has got comprehensive planning. It has zoning. It developed a 1,000-acre industrial park, and this was going to be located in a 1,000-acre industrial park. And so through that process, which would have been public notice, public hearing, as well as the different conversations around long-range planning, There is public input to determine, does the community wish to have a business park or an industrial park or a residential neighborhood, and where would they build it, and what sort of infrastructure has to get built? Our job at this end is we don't park these facilities in any given place. We just want to make sure that the investments are made somewhere in South Dakota. In this case, Sioux Falls was the location that they were looking at.

Okay.

And we were competing against the state of Kansas.

Good. How many projects do you have on this paper? I'm going to ask as chair now because I don't think we have the time nor the mentality to go through every one of them one by one. I mean, this is for reporting. How many is on here? How many are you looking at projects right here? Is this it on this first sheet?

Yeah, this was up to date. Yes.

Well, I mean, what you're showing is starting from the Sioux Falls Development Foundation going down, how many are there? Because I can only see— I can't see past the Aberdeen development.

Oh, there's one more.

Oh, okay.

My apologies, Mr. Chairman.

Well, I just don't want to have to go through each one of these one by one.

It's—

we don't have the time.

Okay. Well, continuing forward, uh, the next one on the list was Design Sensory. This was a $500,000 grant to essentially pay for South Dakota to get engaged in a lot of, I would say, trade shows primarily. So you have SelectUSA, which is run by the US Commerce Department. That's in Washington, DC. It has countries from all over the world. So this is in line with President Trump's Foreign Direct Investment Initiative. We have the SHOT Show, which has been a long-running effort in the state of South Dakota for the firearms industry in particular. and getting the type of expansion we've seen, particularly in western South Dakota. Cybersecurity artificial intelligence technology conference that we attended with Dakota State University as a partnership there. And then also going forward, national security and defense-related trade shows so that South Dakota is actually present and having conversations and sidebar conversations. And that's what this effort was for. The next one on the list This is what I'm talking about.

Senator Howard.

Thank you, Mr. Chair. I'm sorry, but why— I mean, from everything that you just went through, it sounds like that's— this is money to go to trade shows, which is part of GOED's job. So why isn't this being funded through GOED's normal appropriation?

Mr. Goetz.

Senator Howard, this was outside of our budget. The GOED budget was reduced by $1 million. And consequently, the governor chose to put $500,000 in to ensure that GOED and the associated state businesses that accompany us on these trade missions and, I should say, trade shows, they were able to continue that work going forward.

Okay.

Okay.

I'm going to ask you to pick one or two more to go through and then we're going to move ahead.

Well, I think one that's just looking at the size, Mr. Chairman, is the next one on the list, and this is Foundation Park expansion in North Foundation Park, the $6 million recently. This was for the rough grading of about 140-some acres in North Foundation Park, as well as to finalize the land acquisition to square everything up with the Crooks Renner exit.

Okay.

A major effort, and this was tied in with the Smithfield project and other things that are going to co-locate in that area. And then probably one worth mentioning that's on the opposite end of the spectrum, Mr. Chairman, is the South Dakota Chamber of Commerce and Industry. This has been a long-running program. It's $50,000. It's the Giant Vision Innovation Awards that are given out at the annual GOED conference.

Okay.

Individual innovators from across the state of South Dakota. It's a competitive process. It's judged by an independent board, and they bring those individuals forward. And it's essentially a way of how do you get someone that has an idea and get them in, get them some cash to get through that initial startup phase before they have the ability to go out and get bank loans. So those are some examples. I would say, Mr. Mr. Chairman, that this list is compiled and stacks upon what was reported on last year as well. So this is up to date through the end of the month of May.

Senator Howard.

Thank you, Mr. Chair. So is Dakota Bioworks, is that, are we giving taxpayer money to them to do work on fake meat, for lack of Representative Overweg, go ahead.

Senator Howard, the answer to that is no. This is biotech. Think of it in terms of using biology to move into the space of new products and new— I'll refer to it from a farming perspective. So if the 20th century was a century of chemistry, the 21st century is really focusing on the century of biology and our ability now to manipulate things at the molecular level for, I would say, crop improvement projects, things related to inoculants or things that you may put on seeds, things that are related to deal with insect pressure. Instead of coming from a chemistry standpoint, it would come from a biological standpoint. And then the ability also to work on fermentation issues downstream. So there's a lot of fermenters in here that are essentially making different types of solutions that can be used by different companies in the agricultural space and in the food space. So the meat component is not part of this, not at all.

You good? Okay. Any other questions? Okay, seeing none, do you still have more?

This concludes my report, Mr. Chairman, for the Future Fund.

All right, is any other questions? Okay, seeing none, Senator Howard, do you have a motion?

Thank you, Mr. Chair. I move to acknowledge receipt of the report on the employer's investment in South Dakota's Future Fund. submitted by the Governor's Office of Economic Development pursuant to South Dakota Codified Law 61-5-29.3.

It has been moved by Senator Howard to accept the report from GOED, and it has been supported, seconded by Senator Otten. Is there any comment on your motion?

Just a brief comment, just to remind everyone that because this is— well, we have one more to go, but We are just accepting these reports. It does not mean we like everything in the report. That this is in no way approval or disapproval. It is simply we're acknowledging that as a body, we've received the report that we're required to receive.

There you go. Okay, we have a motion. All those in favor of that motion say aye.

Aye.

Opposed? That report is accepted. Next on our business is the review of the annual habitat stamp, Game, Fish, and Parks. Welcome, sir. Please introduce yourself and give us your—I might add—short report.

I will do my best. Good afternoon, Mr. Chairman, Vice Chairman, and members of the committee. Tom Kirschenmann, Director of the Wildlife Division, Department of Game, Fish, and Parks. Good to see you this afternoon, and thanks for the opportunity for our agency to come before you and give a quick review of the habitat stamp. First, if I may, Mr. Mr. Chairman, I have a short presentation. I'm just going to go a little bit over background, but more importantly, just give you some visuals of the types of projects that we're working on with the funds generated through the habitat stamp. And then I'll quickly go over some of the few details of the report, the lengthy report that we provided you as well.

Yeah, that sounds good. Just don't get too deep.

I will not. I'll keep it on the surface, sir. So first slide here again is just about the habitat stamp. Started back 5 years ago. Key item to the habitat stamp is in statute, it's set for $10 for residents, $25 for non-residents, and every person is required to obtain one habitat stamp per year. So whether you buy one fishing license or you buy fishing hunting combination license, big game license, whatever that might be, you purchase one per year. You can see the few exceptions that exist out there: youth, those under 18, one-day license. Landowners and private shooting preserves, you're not required to obtain a habitat stamp. The key part of the habitat stamp revenue: what do we use the funds for? On the terrestrial side, it's for doing habitat and access projects on public lands, and then it's also used for access opportunities agreements on private lands. On the aquatic side of things that come from fishing licenses, we use it for aquatic. Habitat and public access to public waters. None of these funds are used for the acquisition or purchase of fee title land. So there's no land acquisition involved with the habitat stamp. Quickly, I would share with you committee members, this habitat stamp falls directly in line with our agency's strategic plan and top priorities. We have 4 priorities in our agency. You've probably heard Secretary Robling mention these. And other committee hearings as well. They are operational excellence. We're dealing and working with our staff. Customer service is a high priority of our agency. Asset management. And then habitat and access. And habitat access, I would offer to you, is my number one priority in the Wildlife Division, working on both public and private lands. And on an annual basis, we expend about $20 million annually on those efforts. Thank you. And the habitat stamp is a huge contributor to those overall efforts. Quickly, some of the terrestrial habitat and access projects, particularly on game production areas that are covered across the state. We do grassland plantings, pollinator plantings, new woody habitat projects, woody cover providing winter shelter, hardwood release projects, especially in those wooded areas like in the Black Hills area and region, grassland enhancements, Grazing infrastructure. We work with landowners all across the state with grazing infrastructure, fencing, water lines. High-quality grazing management results in high-quality wildlife habitat. Food plots and then access roads, trails, and parking areas are all important when we look at our game production areas across the state. Aquatic habitat. You can see some of the pictures there of some places that provide new access, like the one the Farm Island new pond. What those are are figures that jet out into the water that have riprap around them so that anglers can get closer to the water for better fishing opportunities. Obviously boat ramps, trails, and different things like that. We work on a lot of the boat ramps, docks, and piers for fishing opportunities, habitat improvements, and fish structure within lakes to provide better habitat, better spawning, and actually enhance fishing opportunities. As well. To give you an idea, in 2026, our fiscal '26, where on public lands and public waters did we do projects with the habitat stamp? You can see there the aquatic is in the greenish-blue colors. The red color will be the terrestrial ones scattered across the state. That was just for this year. If we go back all the way to 2021, you can see how they're scattered across the state of South Dakota, almost in every county. You will see a higher number in eastern South Dakota. The primary reason for that, when we look at our 280 game production areas across the state of South Dakota, approximately 75% are located in the eastern part of the state, hence why you will see more in that part. Also, some of the projects that we use a high level of habitat stamp funds for are our 2 Conservation Reserve Enhancement Programs, or CREPs as we call them for short term, both in the James River and in the Big Sioux River watersheds. The James River was our first one, started back in 2009, and then the Big Sioux River just starting here a few years ago. You can see this last year, or since we started these programs, 24,000 in the James River and 4,500, almost 4,600, are specifically due to habitat stamp projects. A key to the habitat stamp efforts and the, and the 2 CREP programs that we have, those are long-term agreements with annual payments that go to private landowners who voluntarily enrolled into this program. So they are long-term commitments, anywhere between 10 and 15 years agreements that we have with them. As I mentioned, access is a huge priority in the Wildlife Division in particular, but our whole agency. And this is just a graph depicting and showing the efforts that we've put into access. And the primary point again, this one, is these access opportunities are located on private land. And so that occurred by putting together agreements with private landowners and again on a voluntary basis with direct payments going on an annual basis to the landowners. And this last year we were just over 1.6 million acres of private land open for hunting across the state of South Dakota. One of the pieces—

We got a question from Senator Howard.

Thank you, Mr. Chair. I'm just curious, how much do we pay the landowners per acre?

Through the chair, go ahead.

Senator Howard, it will vary depending on the agreement, depending on the location. Walk-in area payments have different rates in the eastern part of the state than central and western. The CREPs are based on a county level because there's also a CRP agreement there as well. And so the CRP rental rates in Hutchinson County are going to be different than Brown County, and we pay a percent on top of their CRP cash rental rate. So it will vary from county to county in there. But if we look at the walk-in area, which is the primary access program across the state of South Dakota, on average, if I'd consider All of the agreements we have, I would say it's roughly about $6 to $7 per acre is what that agreement would come out to.

You good? Okay, go ahead, please.

Continuing on, walk-in area signing bonuses. We just talked about the walk-in area program. We also offer up to landowners an upfront sign-on bonus. Basically, a lot of these are like their CRP that they would enroll in. Let's say they have a 10-year agreement. We will give a one-time upfront sign-on bonus for the length of their CRP contract. That gives us 10 years of commitment for that program then. And then if I take collectively all of our access programs, public lands, public waters, all the projects we did, here is a map depicting where all those projects take place. Each year we provide this same map. It gets more and more crowded every single year, and that's exactly what we want to see. But again, you can see see that they're scattered all across the state and getting high-quality projects done. So looking forward, a couple more slides for you. Continued efforts on some of these same projects. The CREPs, both James River and Big Sioux River, high-quality habitat. A great perk that comes from the CREP program as well is water quality aspects because a lot of them include wetlands or along streams and riparian areas in each— in those 2 watersheds. So we're getting a lot of water quality benefits from them as well. Woody habitat projects are a big part of the projects that we do on public lands as well. And then on the aquatic side, we continue to do riparian aquatic habitat projects both in the hills and across eastern South Dakota. We work on some dam projects, continue to do boat ramps and different types of opportunities to get anglers in or close to the water. For those fishing opportunities. And then what also comes with new projects comes ongoing maintenance and operation, right? So there's constantly some things that we have to do, whether it's the upkeep of new grassland plantings, clippings of grass, keeping parking lots up, boat ramps functioning, all those types of things. And you can see the list there, but those are just an example of some of the ongoing maintenance and operation things that we also utilize habitat stamp funds for. So that's, that's the PowerPoint slide. I just wanted to again show you a couple of examples of some of the projects we do. I'll take any questions if there's anything on that, and then I'll go into the report itself.

Okay, anybody got questions on that, on this report? Okay, move ahead please. Thank you.

Thank you, Mr. Chair. And let me bring this up. I believe you should all have this It was in the email yesterday. Okay. So what we shared with you is basically a 20-page report, and I'm certainly not going to go line by line.

Thank you.

And, and, uh, but I will just break it down in a few segments for you. So pages 1 through 4 would be the projects that we did on both terrestrial projects and aquatic projects on public lands and public water. So some of those grassland plantings, tree plantings, boat ramps, those types of things. This past year we did approximately 120 projects with habitat stamp funds on those types of properties, on our game production areas, public waters across the state. I would also share with you this list will get longer because we have projects that are in progress right now, but they're not complete by the end of the fiscal year. So There's carryover between fiscal years and calendar years because these projects go on throughout the year. But we did approximately 120 projects this past year. Then if you go on to the rest of the document, pages 5 through 20 gives the laundry list of individual agreements we have both for the James River CREPs, the Big Sioux River CREPs, and walk-in area bonuses that we provide and fishing leases that we have with private landowners as well. The reason when you look at it why we include all the fiscal years for the, the 2 CREPs, the James River CREP and Big Sioux River CREP, is because, as I mentioned a few moments ago, those are ongoing commitments. So when we sign somebody up in arbitrarily 2015, it's a 10-year contract, they're getting an annual payment from us through 2024. And so that's why we include all All of them by fiscal year. And you'll see then at the end of the James River, you'll see the new ones for 2027-26. You'll see the new ones for the Big Sioux River, and so on and so forth, just so that you can see the laundry list of locations, counties, and the ongoing commitment that we have for them. The walk-in sign-in bonus is just for this last year. That would be on page 15. 15. And there's several pages of those. And then the last couple of pages there are aquatic access leases where we work with a private landowner that has a lake that they are willing to open it up to public fishing. Many cases we will actually assist by stocking those ponds so there's a higher quality of fisheries for those individuals that do go and take advantage of those opportunities. So again, there's a ton of information there if you do have If you have a specific question, I'm always more than happy to visit with you on the side as well, but I will turn it over to you, Mr. Chairman.

I apologize if you went through this and I missed it, but did you say, like, what is the average intake from the stamp every year? How many dollars?

Yeah, Mr. Chairman, so again, it's a combination of residents, non-residents through the $10, $25. Of our annual makeup, approximately 5 to $5.2 million is what it comes out to. It varies, excuse me, year by year depending on how many people purchase one. And of that, approximately 70% is generated through the nonresident fees that are included in that habitat stamp charges. So, right, approximately 70% nonresident, 30% resident.

So what, what did you start the year with? What did— in the fund, how many dollars were there before you received the $5.2 million?

And again, We don't receive it all at once. It comes in throughout the year, but it would approximately have been, I'm going to, if I remember correctly, about $2.5 to $3, somewhere where we would have been at the beginning of a fiscal year. And then it comes in throughout the entire year.

Right.

But I mean, somewhere around $8 million you would have at the end then if you started with $2 point some and you received $5 point some, you're basically—

And then we continually work on the projects and work it down.

120 projects. So how much— how many dollars did you spend then on the 120 projects total?

Oh, on that portion of it, approximately—

sorry, I don't have it right because that's really what the committee's after is how the dollars spent, you know, on the reporting.

Yeah, so on the terrestrial side, we would have spent approximately $2.7 to $2.8 million total. That would have been between crepe, walk-in area, and those on the game production areas. And then on the aquatic side would have been some of the projects on these first 4 pages. That would have been probably right in that $2.5-ish to $2-ish million, right in there as well, on an annual basis is what we spend.

So basically, if I'm doing math in my head, if you started the year with $2-point-some million and then you end up and you receive $5.2, basically you're spending about $5 million a year on projects.

Yeah, about close to What comes in right now?

Okay, right. That's what I was after.

Yeah, and it varies from year to year depending on the projects that we're able to complete.

Sure, please go ahead. Continue.

That that's really what I wanted to cover on the long report unless you had some further questions on that again. If there is something, happy to visit.

I don't see any. No other questions. Does that complete your report? Yes, sir. Okay, Senator Howard, do you have a Yes, I do, Mr.

Chair. I move to acknowledge receipt of the annual habitat stamp itemized expenditure report submitted by the Department of Game, Fish, and Parks pursuant to South Dakota Codified Law 41-6-86.

It has been moved by Senator Howard, seconded by Representative Lems, to receive Game, Fish, and Parks report on the habitat stamp. Any discussion on your motion?

I will just thank you for coming in. We appreciate everything that GFP does. to ensure we have habitat to hunt and fish and enjoy.

Yes, thank you very much. So with no further comment, we have a motion to accept the report. All those in favor will say aye.

Aye.

Opposed? That report is accepted. Okay, that moves us to our last item, public comments. And what this is, is, uh, uh, citizens or anybody that wants to comment to the committee can have 5 minutes. Is there any public comment? Okay, sir, step up, please. Okay, introduce yourself and you have 5 minutes, please. Hit your button and introduce yourself.

There you go. Good morning, Mr. Chair and board. My name is William Wagner. I come from Rapid City in the Black Hills area on the western side of State, a veteran advocate, and also a constitutional advocate. Today, I'm bringing the oversight review of Rapid City Municipal TIF realignment and non-compliance with state cost internationalization mandates.

Mr.

Chair, my name is William Wagner, and I stand before you today as a resident of Rapid City and Blackhawk to present undeniable evidence of. Systemic project scope creep, municipal financial manipulation, and an institutional rush by the Rapid City government to evade the statutory intent of Senate Bill 228. On April 15th, 2026, the Rapid City Legal and Finance Committee was formally placed on notice. During the public comment period, a mass infrastructure deficit regarding our city's TIF practices Was explicitly read into the record. Despite the direct warning, local officials chose to immediately push forward, voting to expand and amend the East Anamosa Street TIF, TIF number 84. The depth of this warning is further validated by a separate formal document authorized or authored by Paul E. Evans, which was submitted directly into the city the day of June 16th, 2026. This consecutive filing provides independent verification of the exact infrastructure deficits and boundary overreaches we called out, permanently cementing a multi-source paper trail into the city records. This was not a good faith administrative decision by local leadership. It was a calculated preemptive strike to beat the clock on this legislature's landmark reform, Senate Bill 228. By rushing these multimillion dollar adjustments through committee, Before the July 1st enactment deadline, Rapid City officials sought to shield private corporate entities from stricter geographic boundaries and lower-cost inflation caps this body fought to establish. They used the East Animal City TIF as a financial conduit, expanding project scope midstream to absorb and grade land for private corporate industrial developments, including data center footprints. That could never financially support their own infrastructure front-end costs. To mask the resulting deficits in the East Anamosa corridor, the city has actively used taxpayer sales tax dollars via our capital improvement plan to backfill these holes. This textbook financial shell game shifting the burden of corporate development directly onto the backs of working-class citizens. When I brought this infrastructure data to light, the immediate reaction from the city administration was not transparency; it was immediate. String of unsolicited private meeting invitations from the city finance director attempting to manage and mitigate a citizen witness outside the view of the public record. In fact, minutes after my comment, before the session even ended, the director emailed my personal account to me to pull me off the floor. I have attached a physical copy of this timestamp digital invitation to my testimony today as irrefutable proof of immediate administrative. But the laws of South Dakota are clear, and they do not bow to backdoor municipal damage control. Under South Dakota Codified Law subsection 3-24-6, my good faith disclosure is completely immune from civil liability. Under the Uniform Public Expression Protection Act, the anti-SLAPP law enacted on July 1st, any retaliatory litigation from these corporate actors or the city face. Is immediate dismissal and mandatory penalty recovery. Under South Dakota Codified Law 3-16-9, state public policy strictly prohibits municipal bodies from executing any form of professional suppression or coercion against individuals exposing any abuse of public funds. Because the mass infrastructure deficit was placed on the official record prior To the pre-July 1st rush, the city's claim to a grandfather clause defense is completely voided. They acted with full knowledge of the statutory infraction. Therefore, I'm formally asking the committee to take 2 immediate oversight actions. First, direct the Auditor General to initiate an immediate independent forensic review of Rapid City's TIF District 84 project plan modifications and the corresponding balancing mechanisms with a capital improvement plan to ensure public funds match state parameters. Second, recommend a programmatic evaluation of local public-private partnerships such as those with Elevate Rapid City to establish clearer guidelines for municipal contract compliance and ensure public investments drive broader community growth. The local ordinance updates passed by Rapid City Council may allow their members to hide their votes in silence, but they cannot hide from the oversight of the state. Thank you, and I'm open to any questions from the committee.

Thank you. Any questions?

Everything— oh, go ahead.

Oh, that's me. Sorry, Mr. Chair.

Thank you, Mr. Chair. Mr. Wagner, you mentioned, you mentioned a mass infrastructure deficit. And I haven't had time to look through everything here, but is there actual concrete, you know, is that in what you handed out?

Yes, ma'am. Go ahead and answer the question.

Thank you, Mr. Chair. So my answer is the proof lies in the Rapid City Capital Improvement Plan minutes following the April 15th meeting when the East Santa Rosa Corridor required basic municipal utility keep-up and road maintenance The general fund lacked the revenue because those dollars were trapped inside the amended TIF developer agreement. The City Council was forced to vote to allocate CIP sales tax dollars to cover those basic public work gaps. I'm asking the Department of Legislative Audit to trace the exact pipeline to show how taxpayer sales tax is bailing out developer-driven infrastructure shortfalls.

Okay, follow-up questions, anybody?

Okay, Senator Howard. And then you mentioned a document authored by Mr. Evans. Is that in here as well?

That is Exhibit C. Exhibit B is from the Citadel, which describes the the land that was supposedly donated by Pete Lean, which y'all need to look into that. Then Exhibit B is the emails that was timestamped right after I said the mass deficit— infrastructure deficit, right at— it was just still in public comment that Daniel Ansley emailed me right at that time. And then Exhibit C is Mr. Evans' documentation.

Okay. Any other questions? Okay. Seeing none, thank you very much.

Thank you all for your time.

Is there any further public comment? Please get up and give your name.

My name is Gwen Meyerink.

Ms. Meyerink, wait until you get to the mic. Sit down and then give your name for the record. Thank you.

Okay. Committee Chairman and members of the committee, my name is Gwen Meyerink, and I thank you for the opportunity to testify today. My presence here and my advocacy for the devastating realities facing healthcare accountability in our state arose out of a personal tragedy. While ongoing legal reviews prevent me from sharing the specific details of our family's experience today, the lessons I learned from that loss are painfully clear. What I discovered when our family needed help is a system that seems to be one engineered to protect the medical institutions, insulate them from transparency, and strip everyday citizens, especially our vulnerable seniors, of any meaningful path to accountability or justice. I am here today to expose a system that failed my family and ensure that it doesn't happen to others. Members of the committee, the current system is perfectly set up to protect the medical facilities at the expense of the Here's how. Number 1, our low non-economic malpractice caps, which have remained the same since 1985, have closed the courtroom doors. 2, the peer-governed medical boards bury disciplinary findings for a year to a year and a half on an obscure website. No report is given to the families. Number three, the CMS et cetera issues suggested education if any wrongdoing is discovered. Number four, the South Dakota Department of Health is the last line of defense for South Dakota families. But right now, it seems to operate as an invisible shield for the industry. Not only is there a lack of visibility for who they are and what their purpose is, but also if discovered. They have a hidden, unposted 12-month deadline for complaints. A right you do not know you have, or an office you cannot find, is a right that does not exist. Also hidden in this system are alternative options for care, stripping vulnerable citizens of true informed consent. Right now, major healthcare work— networks are using electronic record algorithms screen incoming patients. If a senior or an individual with an advanced illness triggers a repeat admission flag, an automated algorithm deploys a palliative team to their bedside. These teams do not arrive out of clinical coincidence. They are triggered by software to aggressively push families towards hospice. Under South Dakota law, healthcare providers are legally bound to inform consent, but true consent is not possible when options are clearly hidden. When these teams arrive, they present a false binary choice to either continue curative care or choose to enroll in hospice. Omitted in the discharge papers is the third path that informs patients with a terminal disease diagnosis that the law permits patients to remain on their standard Medicare, maintaining their absolute right to accept or deny individual curative treatments while keeping all their Medicare advantages, including pain control when needed. Hospitals are actively omitting this third option. I am asking this committee to exercise its oversight authority, investigative power, subpoena power, and budgetary leverage to issue 5 strict mandates on page 1 of admission and discharge discharge papers for the purpose of informed consent, to protect patient autonomy, enforce transparency in hospital administration and discharge procedures, and to include a South Dakota Department of Health disclosure. Why? Because the South Dakota Department of Health's official mission is to promote, protect, and improve the health of every South Dakotan. I have provided a physical mockup of this proposed solution in your handout.

Thank you.

You have the power to change this dynamic, to take the shield away from the corporation and place the power directly back into the hands of your constituents. I urge you to consider these questions today. Is it your role to protect medical metrics, or is it your role to protect the South Dakota citizens? Would you take the lead with these changes, making South Dakota the pioneer in protecting its citizens? Thank you, and I am open to any questions you might have.

Thank you, Ms. Meyerink. Is there any questions from the committee? Okay. Oh, you have Senator Howard.

Thank you, Mr. Chair. I just want to make sure I understand the— if I can— the gist of it. Are, are you essentially saying that we are— that the state is trying to force people into hospice prematurely, maybe, or Maybe they don't have the whole picture when they could just stay with Medicare, but they're kind of being pushed into hospice.

Chair?

Go ahead and answer the question.

Yeah, yes. Yeah, it's totally omitted in any explanation or any paperwork. And so it is kind of an insurance by default, you know, and it's probably on page 14 of patient's rights. Somewhere. But people don't know it. And they don't know South Dakota Department of Health. Personally, when I was looking for help, couldn't find any because of these things I just mentioned, roadblock after roadblock after roadblock. And then I contacted them and I got an email. I could read it for you. That said, sorry, 12 months is up, you're too late. I'm thinking, you know, You know, I guess when expectations meets reality, it's a tough pill. And so I just think there's— I think there's close to 180,000 seniors in South Dakota, and I think we're all— and until it happens, you don't know. You know, I was shocked when I found out, and then I thought, well, now how do I get some justice? How do I get some accountability? And then everything was closed—this door, this door, this door, this door. So that's why I'm appealing to you. If you look it over, you know, obviously I'm not a lawyer, a medical person. So any revisions or you don't have to be whatever.

But it you know seems we thank you for your testimony. Thank you. Okay. Is there any further public comment?

Yes, sir.

Please introduce yourself and give us your 5 minutes.

Is the mic active? Mic good? Okay. Chairman Overweg, Vice Chair Howard, and members of the committee, my name is Chad Bishop from Sioux Falls. I am the author of the Pandemic Response Accountability Resolution the Republican Party recently adopted unanimously at its June convention. And I come to you in my personal capacity. I recognize this committee is not made up of only Republican members, and I ask the Democratic members to indulge me as I note that resolution. The operations questions that follow are for the whole committee, not one party. Let me be clear at the outset about what I am asking. It is a question about operations, and that is why I am before this committee. I am asking you to examine how our state government operated in one specific regard: how the Department of Health, the state epidemiologist, and the executive branch identified, received, evaluated, and communicated important epidemiological information during the pandemic. That is the whole of it. This is a review of state operations, and under South Dakota Codified Law 262, that is exactly what this committee exists to do. I'm here to put 2 patterns in front of you. I have given each a name so we can talk about them plainly. You can pick new names if you like. The first I call Voluntary steward accountability gap. When a trusted institution announces in a crisis that is going to do research the public urgently needs, that announcement can crowd out everyone else. That institution becomes the principal holder of the data, and if the state has no clear process to identify that data, request it, evaluate it, and get the non-identifying findings to the public, the information can be delayed, narrowed, or never arrive while it still matters. It sits in a gap. oversight may not automatically reach. And in this case, one steward— the steward was not merely voluntarily— excuse me, voluntary. Sanford Health is a tax-exempt nonprofit. On its own federal tax filing, it lists the research division that ran the SURVIVE study among the public benefits it provides to the community. I say this as a free market person, and I'm glad when private institutions can carry the load. But a public benefit claimed in exchange for tax exemption comes with the other half of the bargain, a duty to deliver that benefit while it can still help. Timely reporting was not a courtesy here. It was the substance of the benefit they claimed. The second I call stealth publication sans promotion. An institution that has publicly tied itself to a study then publishes the findings in a form and on a timeline that satisfies The letter of disclosure while making the work almost impossible to find. U.S. Senator Ron Johnson recently described a similar pattern in vaccine injury research. Sanford's Survive study fits that description: quietly ended in January 2021, as reported, published in February of 2022, 13 months later, without the Survive name, without announcement, press release, or social media post. And without the durability and efficacy analysis it was announced to deliver. Why does this matter to state operations? Because we know what the alternative looked like. In April 2020, New York announced a statewide seroprevalence survey, released the results within days, and its governor stood at his daily briefing and used the infection rate to put his people's fears at ease, telling them the true death rate was far lower than they had feared. That is the reassurance real data delivers in real time. It deescalates fear and lets people think clearly when they need— most need to. South Dakota's largest health system then measured the same class of information in its own workforce and held it for 13 months. It publicly announced nothing. So the real question for this community committee is about the flow of information through state government. Sanford's own CEO said in November 2020 that Sanford was giving state government daily information. So the reasonable assumption is that class of data was reaching the Department of Health, if not the governor's office directly. And yet, from what I can discern, our own governor never mentioned this study in public at all. So which is it? Did the data never flow from Sanford to our state government? Did it flow and get lost along the way? Or did it flow and simply not get seen as important? Each of those is a question about how state government was operating, and each is one that escapes community committee is positioned to answer. I'm not here to assign blame. I'm here to ask that the state be willing to examine its own operations so that if information of real public value was ever held back or lost during a crisis, we understand how and prevent it next time. As a systems engineer, I would describe this as root cause analysis. That is the review I'm asking for, and I'd be grateful for the chance to present the full record to you in a future meeting.

Thank you.

Thank you. Is there any questions? Senator Howard.

Thank you, Mr. Chair. Um, I'm— I don't want to make any assumptions, but have you read the Survive study?

Go ahead and answer.

Yes, ma'am.

Follow-up?

Oh, go ahead.

What can you— could you say that there was information that was critical that it be released that was not released? Why, I guess, you know, why does this matter so much? If you can just expand on that.

Go ahead.

Yes, ma'am. Thank you for the question. The summary is that this study was conducted amongst healthcare workers, and when it was finally published in February of 2022, it had begun enrollment in June of 2020, and it was described as 7 blood draws over the course of a year to determine 3 things: seroprevalence, durability, and efficacy. The press release that we received on July 23rd, 2020 described it in more layman's terms, but that is essentially what it was. And so when it was finally published, they disclosed in the publication, which happened in February of 2022, and that data is very important, that they had seen seroprevalence rise amongst this cohort from 25% when it began to 55% over the course of 3 blood draws. So 55%, when we talk about the concept of community immunity or what was called herd immunity, that you're approaching it at that point. Before— and it was— and this work was done before the vaccine was available to the population or to the healthcare workers themselves. And so you're approaching herd immunity community, and you're approaching with South Dakota running right in the middle of a death toll at that point. And what this means is you have to start to ask the question of what benefit was it to our population.

Okay, one more follow-up.

Thank you, Mr. Chair. Can you put the pieces together? I am remembering, and this frustrated me at the time, that, you know, we claimed to We were—we stayed open thanks to the legislature, and we weren't forcing anyone to get any vaccines to go anywhere. However, I was very frustrated at the time that the healthcare organizations—and I know Sanford at least did—required their healthcare workers to be vaccinated, and students who—we didn't require the students to be vaccinated at our universities. However, if they were doing clinical rotations with the healthcare organization that required it, we gave in and we said, oh well, you know, yeah, I guess you have to get it in order. I was frustrated because we should have fought back. But can you tell me, would they have known what they knew at the same time? Because the governor— I mean, we would have— I believe you're saying the governor would have had this data Would they have known this information at the same time that we were forcing some of these people who may not have wanted to get the vaccine to get it in order to participate in the clinical rotations that they had to for their education? Did I just— I know.

I think I got it. If you want to answer.

Yes, ma'am. Thank you for the question. I'll recall as best I can. So the study was reported— it was announced to have ended, and I included it in internal email in February, and it was when it was finally published ended in January of 2021, although the data that actually represents the third draw could have been drawn, and we don't know from the data that's available to us, as early as end of October of 2020, meaning 55% before the large surge in November of 2020. So at the rate of spread, by the point which a company like Sanford enforced their vaccine mandate, which was November November 1st, 2021. And they did that without any mandate from the federal government at that point in time because Centers for Medicare and Medicaid Services interim final rule was not even announced until, I believe, November 5th, 2021, and was not enforced with basically requiring the second vaccination until middle of January. And so this particular study wasn't published until February of 2022. Those dates are important, and I would add one more. October 12th, I believe, of 2020 is when we found via Freedom of Information Act request that the decision that the federal government made about not allowing natural immunity or infection-induced immunity to count as vaccination was made in the absence of this information being published. So they'd had it since January. And then in my submission that I provided to the committee in advance of this, There is another internal email that's not known to the public that they shared the results in June of 2021 internally amongst an unknown number of, of Sanford employees. The reason that's important is that that data did not change from that point until the point where it was actually published in the paper that ultimately surfaced it in February of 2022. So it was present and they had it and they decided not to publish it. And if you don't know and you never saw the We held two by eight foot banners out front of the headquarters in Sioux Falls from July, August, and September of 2021, asking for them to specifically release the Sanford Survive study data and asked how many were already antibody positive. We also asked the question: What is the benefit to a COVID-19 recovered person if they're which is negligible? So there's only risk and therefore medically unethical. So To answer your question, by the time those mandates were put into place, knowing the rate of spread and knowing what was sampled by at least January 2021, it's yes, they knew.

Okay, thank you. Um, we're gonna— okay, we're gonna, we're gonna move along here because Representative Lems—

I haven't been able to ask a question.

Ask a question, go ahead.

So I have 3 quick questions. Did you ask Sanford Health why they did not release the results the study when it was completed? Number 2, have you spoken to our IG, and where is he on this? Because this is before him as well, right? And then have you spoken to our congressional delegation for assistance? And then I have like 2-sentence comments after you're done.

Let's keep our answers to her—

to answer short. Yes, sir. Um, so the, the first one is, had I answered them? The— I was unable to broker discussion. U.S. Senator Rounds is office and his director of state office tried to broker a discussion to get these questions answered, and they refused to meet with me. The second question, I apologize, have I—

Did you ask Sanford Health? Yeah, that was number one.

Okay. And so they would not speak with me on this. Okay.

And the congressional delegation, you said— This is your second question.

AG. The AG. I did take this to the AG after he signed the South Carolina Attorney General's office letter to Senator Thune in February of 2025. And I brought this to him and asked the question, would— since that letter laid out a legal framework for which we could prosecute specifically those that had received federal immunity, specifically Anthony Fauci, under state law, had they violated state law. I brought this to him as a path towards using that legal framework to, to do that. And He declined to pursue it with the information that I gave him. I since have filed an open records request against his office. It was then declined under attorney-client privilege. And then I filed— as of yesterday, they received my— the Office of Hearing and Examiners received my appeal on that specifically, and all the information related to that submission to the AG is in that appeal. With respect to the rest of the U.S. congressional delegation, I have spoken to each of them in person, face to face. And I have dealt in writing with their offices. All 3 have declined to pursue it any further. Senator Thune's office specifically declined to pursue it. He claimed— his office claimed it would be a violation of Senate ethics rules to pursue it. And Dusty showed no interest.

Did you have a comment?

Just a few comments. I personally have family members that were affected. By this at the time. I remember Governor Noem specifically speaking about this study. I was excited they were doing this in South Dakota. We heard nothing. Then we remember the Sanford CEO himself spoke about this and then retired, or, you know, whatever. I was also at the protests that day in front of Sanford, and I think this is a very important issue that we need to know why, because this could have literally affected the world to have the results of this. And so I do— I thank you for coming, but I do encourage you to come back and get on the agenda so that we can, can continue this discussion. Thank you.

Any other questions? Okay, thank you, Mr. Bishop.

Thank you.

I think we have one more online that wants 5 minutes of our time. Ma'am, if you're on, could you introduce yourself and give us your 5-minute testimony, please?

Yes, my name is Christine Keaton. I am a resident of Sioux Falls, South Dakota, and I'm a disaster relief chaplain, community advocate. Members of the committee, I am here regarding the I-229 corridor, specifically how the fragmented Construction from Exit 6 down to the future project at 26th and Cliff Avenue creates a systematic danger for the community. To understand the risk, imagine a fishbowl. At the top, the sharks, which are the feds who provide the housing and funding mandates— or just funding mandates, excuse me. The whales, the state, enter and steer the resources.

Thank you.

While the porpoises, the city, facilitates the process and keeps the public calm. But trapped at the bottom in the saturated sponge basin of the Big Sioux landscape are goldfish, the students at Lincoln Senior High, and the adjacent neighborhood families. We are being turned into a sacrificial retention basin for a project that prioritizes frictionless highway transit. Over our physical safety. This hierarchy uses engineering to enforce its priorities. The project team, which includes SDOT, the— and the city firms like HR Green and SEH, build reinforced MSE walls for the highway while leaving the community to rely on vulnerable dirt berms on an unstable foundation. Private contractors like Sukup Construction Act as cleaner fish, prioritizing their contract status over public interest. Specifically, Sukup is listed in municipal stormwater portals as the contractor of record for stormwater systems that protect Lincoln High School all the way back to 2011, yet they simultaneously acted as a highway contractor for the projects on the I-229 corridor. That fundamentally altered their own drainage basin that feeds that exact school. This is a direct systematic conflict of interest. They were tasked with highway expansion while being the firm responsible for the very stormwater infrastructure the highway work threatened. If you doubt the impact, all you gotta do is look at the school's physical entrance. It was recently elevated. A costly reactive engineering correction necessitated by the highway's project disruption of the natural drainage. We do not know what was negotiated behind closed doors, but the lack of public disclosure regarding the contractor's dual role is what I'm here to find out. This conflict needs to be brought into light. TNR Contracting, also culpable. Operating alongside key material suppliers and subcontractors like Knife River, whose heavy equipment and aggregate supply chains dominate the adjacent neighborhood while major interstate work progresses, working local corridors and the interstate simultaneously with zero public disclosure of overlapping roles. It creates a direct conflict of interest and a complete failure of oversight. That I'm asking GOAC to please enforce. When you hear from the city and state, they're going to claim they defer to the federal highway priority. Please don't accept this. It's a distraction they use to deflect accountability for the local disasters they're personally engineering. They use a salami slicing tactic, breaking massive corridors into small segments to ensure each one. Falls below a threshold for federal oversight. Goac is the only entity that's currently outside this fishbowl. You have the authority to hold the sharks, the whales, and the porpoises accountable. I am requesting that the committee break the chain of this oversight for the Lincoln High School campus in the entire I-229 corridor. Please require the independent truth that this requires. To be clear, I'm not an attorney, but in reading the plain language in the laws in Long versus State 2017 SD 78, it's pretty straightforward. When public infrastructure projects or alters natural drainage and floods community. Property without justification, it triggers inverse condemnation. I'm coming before you today to ask, as you read this protection and see the dossiers, can you please hold this works to this standard? We are not a man-made holding tank. This The children at Lincoln High School need—

Ma'am, this is the chair. I'm going to interrupt you. Your 5 minutes are done. Did you want to just say one thing before we quit? You may. I didn't mean to cut you off, but we do allow it 5 minutes.

Yes, sir. I am just asking that GOAC step in and oversee and go over the documents regarding the I-229 corridor and hold them accountable.

Thank you. Thank you for your testimony. Is there any questions from the committee? Okay, seeing— did you have a question, Senator Grove? Okay. Yeah.

Um, um, Miss Keaton, did you send any of your information to us? Did you email anything?

Uh, I tried to send it through several portals yesterday, and I do not know if it went through, but I do have 14 of the dossiers I could not get through ready to overnight.

Thank you. Okay, thank you. Any more comments or questions from the committee? Okay, that being said, that concludes this committee's work for today, and the chair would look for a motion. Mr. Chair? Senator Howard? I move we adjourn. Second. It has been moved by Senator Howard, seconded by Representative Ms. Auch, that we adjourn. All those in favor say aye.

Aye.

All against? We are adjourned. Thank you, everybody.