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Okay. Welcome. We are going to call the Government Operations and Audit Committee to order. Um, I would ask everybody, hats removed, and we're going to silence our phones. I want to welcome all of you that are here and the millions that are listening on the live web. And watching now, we have to wear our ties because we're audio now, or we're video. So, Madam Secretary, would you call the roll?

Foster. Grove.

Here.

Carr.

Here.

Otten.

Here.

Auch.

Here.

Emery.

Lems.

Here.

Moore.

Here.

Howard.

Here.

Overweg.

Here.

Mr.

Chair, you have a quorum.

Okay, thank you. Now we will have— I'm sure you've all read the minutes from the last meeting. We'll need approval of those. Anybody?

Second.

Okay, it has been moved by Senator Otten and seconded by Representative Auch to approve the meetings that are the minutes of the last meeting. All those in favor say aye. Opposed?

Aye.

They are approved. Okay, the chair would like to remind testifiers to sign in if you're going about our little cute little laptop over there. If you're going to give testimony here today, let's see if you have handouts. We don't have any. Just get a hold of us. We don't have any aids, but our pages, but we will get them distributed. And with that, I think we can get started. With our agenda, and the first thing on the agenda is performance management reviews, the Bureau of Human Resources and Administration. Welcome, sir.

Good morning, Mr. Chair, members of the committee. If you'll indulge me here for a minute, I'm going to try to use 2 computers at the same time and test the limits of my Small mind. So, um, appreciate you allowing us to be here today. We'll cover our 26 performance metrics, and along the way I'm going to try to work through some changes that we would propose going forward.

We're going to have you introduce yourself just for the record. We know who you are, but—

Yeah, I apologize. Commissioner Darren Seeley, Bureau of Human Resources and Administration. Apologize for that. We're going to try to interweave a few changes. So the Bureau of Human Resources Administration is the merger, the result of a merger of 2 bureaus in 2023. We've been carrying pre-merger metrics for this amount of time, and as we've changed some priorities and worked on some things, it's come to light that we should make some updates here. And so we want to talk through some of those as we go today. Excuse me. So if we look at the first few things that we do, um, first goal is promoting employee well-being. And for us, that means a couple of things. It's knowing about people's health and having them know about their health. And then it's giving them ways to improve on that health and whole life and well-being. Well-being isn't just the physical side of things. It's mental well-being, it's financial well-being, et cetera. And so we have goals in both of those areas. And as you can see as you go through, I don't wanna read the whole thing to you, I suppose, but as you go through and look at where we're seeing some activity that's going well, we're seeing some real movement that is very important on Activity A in relationship to the number of men and women going to get an actual primary care visit. visit with a physician or a PA. In the old days, we used to do an onsite screening, and people would come in, they'd get a quick blood prick and a finger prick and a blood pressure. And while occasionally you'd find some things there, the most important thing you can do in terms of long-term health is make sure you're getting a relationship with someone who understands your health over the long term. And so we've been promoting that and pushing it, and we're starting to see those numbers tick up. Particularly in 26, after some outreach and some effort over the course of 25 and into early 26, particularly with men who are difficult to get to go to the doctor. And so we did a couple of campaigns—one that looked a lot like getting preventative maintenance on your car—and that seemed to move the needle a little bit for men. So we were excited about that, and we look forward to some some additional gains there. We've started recording employee testimonies about why it's important to go, and the first one is. is going through the editing process now about an individual who found leukemia that he otherwise might not have found because he went and did what we asked, and that was great. If you look down at Activity B and you see the things that we're offering, we're not where we want to be, for example, in disease management—

Excuse me.

Or the number of high-risk people in our health plan. But we are working with our Wellmark partners to do the disease management to raise that participation up. When we see that happening, we are getting better results for folks. They're more compliant with their meds, which generally when you're talking about long-term diseases like diabetes is a positive. So if you go down through that employee assistance program, we're at about 5% participation. We're from a goal of 8%. It's important to remember the employee assistance program is a very wide breadth of things that cover the entire— the employee and their families. And so—

Excuse me.

The— so that could be anything from mental well-being to financial, family counseling, wills. So we're about right where the book of business for our vendor is. And so We're not quite where we want to be, but we're about where the norm is at 5%. So in relationship to new goals, most of those would stay exactly as they are. In Goal 1, we would change Goal 1 to be promoting the safety and well-being of team members and their families. Part of what we did in '23-'24 was to add the Office of Employee Health, which is trying to combine— is combining The well-being activities, the— and adding a safety component. And so we're adding a goal under Activity C, ensuring a safe environment, and using an industry standard metric for safety, which is the total recordable incident rate in OSHA.

Scroll back a little.

Let me see where it's at on— Mitch, where is it on this?

You've got it right there.

The new proposed?

Yeah, there you go. Thank you. I appreciate that question.

Go ahead, Commissioner.

Thank you.

Senator Howard.

Well, I have some general questions, comments on Goal 1. So, um, it seems like— it seems in a way that we're measuring how much activity can government do versus the outcome of that activity. And some of this goes to personal choices. I mean, you have no control over whether somebody goes to see their primary care physician. As a side note, though, why aren't men and women treated equally? And why don't you have the same goal for both of them? Although I don't think those should be goals. So I struggle with, with several of these. It's like we're setting targets for your agency to do more But we aren't measuring the outcome of that action. For instance, if we're— what's the return on investment from all these activities? We're putting all these activities out there, you know, do a Live Well South Dakota challenge, participate in an employee assistance program, go get your annual physical. Okay, but is that helping our workers' comp days? Is that helping our disability? I want to measure the actual outcome of of what we're doing here versus your agency just having more programs and getting more people to participate. You could have 100% participation in a wellness challenge and it could do absolutely nothing.

Correct.

You got an answer for that? Is that really your question or— go ahead.

Well, Mr. Chair, I'll do my best to answer that. So the first thing I'll say is we're incenting people. So as you may or may not remember, we in our health plan, We contribute to an employee— to the employee's health savings account or a health reimbursement account if they participate in the 3 things that happen in Goal— in Activity A. So if they and their dependent spouse go to their primary care physician and take the health risk assessment, then they get some money deposited into a health savings account, which they can keep forever until you, you know, expire, no longer require it, or a health reimbursement account, which you can't carry over, but you can utilize to, uh, pay bills this year if you're in a low-deductible health plan. And so we're incenting people to do that because we believe, and I think it's playing out in some of the numbers we're seeing on the health plan, that when you send people to go to the doctor and try to incent them, you're right, I can't force them to do anything. But if I can incent them to go do the Couple things that we believe and we know help them in the long run. Go to the doctor, manage your meds, control some of your risk, and know what your risks are. You will ultimately cost less. This is the difficulty of ROI of these things, right? Because what you're asking when you talk about ROI, and vendors will tell you they can measure an ROI in these kinds of things, the reality is what you're measuring is not a return on investment. It's an avoided cost, right? So it's a very difficult number to find, um, with— that's 100% accurate when somebody says their ROI on the dollar spend in an EAP is X or a well-being activity is Y. But we know that if you can start to do the things that help get people to a better place physically, mentally, financially, then they will perform better at work and they will cost us less in the long run. And that's the point of this activity. What you'll see in a lot of our metrics that we're trying to measure going forward is actually result more than activity. Because I agree with you 100%, Senator Howard. We can measure activity all day long. And in some instances, you can come up with something that's a great outcome that's a That's a trailing indicator that says something, but you also want actionable metrics. What am I watching to see how I make decisions? And so what you'll see in our proposals and what you see in this mix is kind of a mix of those things. When it's appropriate, we have a trailing indicator of something that's happening. And when we have an opportunity to use a leading indicator, something that helps us make decisions, we're trying to use that as well.

Okay, we got one follow-up.

Well, I— okay, I heard a lot in your response of we believe this, we can prove this, and— but then, but that's not showing up here. That's what I want to see here. You know, you can— you, you said we can prove that sending somebody to get their well, well check once a year makes them a better employee. Show us Prove that to us by—I mean, maybe you track—I don't know—track the number of meds they're on or the number of days they call in sick. I want it. I—I want to see what you're saying. You know, you're saying we know this, we can prove this, we believe this, but put it in here so that we see it, so that we know the taxpayer money being sent on these incentives. We're giving them money. We're incentivizing them. How do we know that's worth anything? How do you prove to the taxpayer that the money we're spending on incentives is, is a good return for them? That's what I want to see on here, and we're not seeing it. And I believe you. I, I know that going to get your annual physical every year helps make it— I, I know that it makes you healthier in a way because you're on top of everything. You know what your issues are, and you can stay on top of those. I But, but these are taxpayer— this is— taxpayers are concerned about this. So I want to see that here. I want to see proof of it here. Mr. Chair, hold on.

Did you want to answer that? No, I'm not sure what— well, I just said I didn't know if you wanted to comment on it or—

Mr. Chair, no, I'm—

we're going to— we just a second. We got Senator Karr's hand who's been up. So Senator Karr, do you have a question? Then we'll go down.

Thanks, Mr. Chair. Good morning, and good morning, Commissioner Sealy. Good dialogue here, and I think the crux of where Senator Howard is coming from is— and you're right, I think there's a cost avoidance, but is there a way to demonstrate or show the historical cost and maybe some of these efforts and the impact on that cost avoidance? Do we have some data that would Demonstrate the performance of these incentives, and if not, then I think that's something that needs to be contemplated to go. How do we measure this cost avoidance so we can see a trend line perhaps over time?

Go ahead, Mr.

Chair. So Senator Carter, one of the places that you see some of this is JCA. When you're looking at the budget associated with the health plan and the increase or non-increase that's happening, our trend in our health plan when the rest of the world has been at 6% and 9% and higher, this last year I believe we're at about 3% in terms of where we saw an increase in our actual health plan costs on a per-employee-per-month basis.

Okay.

which is pretty significant cost savings. And some of that is absolutely a result of the work that's being done here because you're— if you're controlling the disease now, you're going to be less expensive over time, right? And so we're seeing some of that happening. Now what you'll also see in times when people initially get under control Let's use diabetes as an example. If you're a diabetic and you don't know it and you go to the doctor, you might go from 0 prescriptions to 6. But that 6 prescriptions that's costing us some money today, if it's earlier, is going to save us a lot of money on the other end because we know the toll that diabetes takes on people over time when it's uncontrolled, right?

Right.

You— we can show you some of those outcomes, and we do every year with the budget. And we have consistently shown that our budget is not growing wildly and dramatic for our health plan. And I will tell you, it's a great deal because of this. It's also a little bit of luck, because when you've got 27,000 people on a health plan, the fact that we've not had anything major and catastrophic like we did 6 years ago, where 3 sets of twins were born that cost $2 million apiece. in the same year. That's just a little bit of medical luck on our part right now. So we'll continue to work on trying to find ways to demonstrate that to you all, and we'll make sure that when we do talk about it financially at JCA, you understand the connections back and forth between the activity and the work that's— and the result. But a lot of what my team can do is this kind of thing where we're helping people. And one of the things I've been telling the team is I don't want— we used to incent a lot of activity. We used to give money to take part in a Live Well Challenge or something like that. You could earn points, and if you earned enough points, then you'd get incentive dollars. The reality is what we were doing is we were just forcing people to take part in something they didn't really want to take part in, in order to get points to get some dollars. And I think if you ask these state employees in the room, they much prefer—

Yeah.

Not doing that. And the way we've got it set up today, the other is that means we're giving them programs that when they are ready, we're not spending money on just incentivizing useless activity or paying somebody who already runs 6 miles a day to keep running 6 miles a day. But we're putting tools in place that allow people when they're ready to make a change or when they need to make a change, those are available. And that's the real point of what we're trying to measure. in our work.

Okay. Senator Karr, are you okay? Mr.

Chair, I guess I would request a follow-up and some consideration into that metric that you're talking about. And maybe it's something that's extrapolated from your budget and JCA, but I do think there's something should be reflected here. I don't have an issue with these being in here. I think it's fine so we know what's going on and how you're trying to accomplish some of this. But I do think that the The next step, the missing component, is just that, is that cost avoidance. And I know there's more factors in here than just this, because you talked about 6 years ago. I remember 10 years ago when we had to fill some holes too. And we've made changes to the healthcare plans. I said I can go on and on. But I guess at least broad strokes, we got to see some sort of connection. We got to connect the dots to go, is this worth doing? Is this the right path? So that's what I'd ask you to follow up with this committee, if that's okay, Mr. Chair.

Yeah, I'm fine with it. If Commissioner Seeley, if you could follow up.

We're happy to figure out some different ways of showing you what that number looks like, and we can come back and say here's some potential alternatives.

Okay, good. Are you good, Senator?

Thank you very much. Yeah, thank you. I forgot to ask one question or answer one question, if it's okay, Mr. Chair. Sure, go ahead. The reason that women and men are different Ah, is because women and men are different. And ah, I'd love for the goal for men to be 75 as well. But I'm also realistic to know that I, if I could get 75, I'd, I'd do it. I still can't get 60. Ah, women are much better about taking care of themselves than men are.

Oh yeah. We're bulletproof. Representative Auch, do you have a question?

I do. Well, ah, so with these incentives, a health savings account, that comes at a cost. To the state? What is it per member for that account, each account?

Go ahead.

Let me ask a question about that. I'm not sure what you mean. What is the incentive or how much is the administrative cost?

How much is the administrative cost for an HSA and how many people are actually participating in it? Is it worth to continue to have it if we have, you know, you have 27,000 people and 700 people are participating in it and it's costing The state, you know, you've got 27,000 people participating in the healthcare plan. That's what you just said.

Well, can I stop you just for a second? Sure, sure, sure. So we have 27,500-ish lives, okay?

Got it.

That's children, spouses, okay? How many employees? Add up to the 27,500. You've got roughly 12,000-ish employees that are involved in the health plan in one way or another.

Correct.

So you've got, If I am looking correctly, 78% of those who are eligible, so roughly 2/3, I'm going to look at my phone, friend, for just a second. Roughly 2/3 of our employees are in a high deductible health plan.

HDHP, correct.

Right? So 75% of those are contributing to their own 78% of those people that are qualified with a high deductible health plan are contributing in addition to what we are. They're contributing. That's the measure that's down in Activity B number 5.

I understand. I mean, that's all great. What does it cost for the state to have the HSA? There is a fee to the state for that to be administered. Typically, it's $20 to $25 a month per person.

Mr. Chair?

Go ahead.

I don't know off the top of my head. I can find it. It's— I'm positive it's significantly less That would be great.

But most of all, you'd appreciate— Because I think that would be a real matrix that we can see. And then also the— you have an HRA also, correct?

Correct.

Okay. So the HRA also has an administrative fee attached to it. That would be another matrix that would be very valuable, I believe, to this board to see how many people are participating, what's the cost to the state, does it make sense for us to contribute— to give those dollars to the employee, or would it just make sense to give them back in helping pay for their premium or helping pay for something else? I'm just saying, if we're looking for real dollars on how to see if this is actually making sense in our healthcare plan, would there be other ways that we can utilize those dollars? So when— if you could come back to us with a cost of the HSA, cost of the HRA, how many people are actually participating in it, and how many dollars we actually deposited in real numbers into those different accounts at a cost to the South Dakota taxpayers.

Is that possible? Sure. Oh, it's absolutely possible, Mr. Chair. Yeah, it's, um, yeah, it would help open the—

it would help get a little bit of a better look into the matrix. I would—

yeah, I mean, I think you can— you would know, um, if we can get you that information.

That'd be great. Thank you. Other questions from the committee? Seeing none, please continue.

Okay. So I'm going to scroll down to the next measures, Goal 2. This is mostly the HR work that's more traditional HR, not benefits. So we're talking about recruiting and retention engagement. And so if you look at Activity A, Seeing campus visits, and then— or on one, and 2 is Native American outreach. We've done pretty well. We've actually seen a smaller need for some of our college degree jobs over the last 3 years. We're posted about one-third the number of positions for engineers and nurses and accountants as we had 3 years ago. So because of that, we've let off the gas a little bit on some campus visits. Campus visits, whether it's being at a job fair or being in a classroom, those things are all about brand, right, and awareness. It's— you've got to know that people have to understand what it is. So you're recruiting for today and you're putting people on track for long term. It's the same as why you do internship programs, things like that. We've really struggled with the Native communities to to respond to us. And so, in our proposed metrics— I'm gonna flip over for just a second— we're proposing that we actually combine the recruiting activities there under Goal 2, Number 3, so that everything we do, regardless of whether it's on campus, whether it's at a job fair someplace, like the big job fair in Rapid City that isn't related to a school, or on a— within a reservation community, or on one of their campuses, it's all gonna be the same. And so I think we'll continue to work for that goal. It does make sense to continue to do that. It just— keeping those activities separate does not.

Senator Howard has a question.

Thank you, Mr. Chair. That was one of my suggestions, so I love that. However, I want to hit on— okay, having a goal of how many campus visits we have again seems more like We're just counting. It's government activity versus output.

Mm-hmm.

Where do you come up with your target? I mean, what if, what if you could get twice as many really great recruits from half as many career fairs? You know, I want to know more the outcome of those, the, the cost per hire, or something that tells us the success of these career fairs versus just We just want more career fairs. And maybe there's career fairs that we should never be going to because they just don't ever return anything.

Mr. Chair?

Go ahead.

So I would tell you that I think what asking for that measure on a higher basis is— I will just tell you I couldn't do it and feel good about what I'm telling you. And the reason for that is that there's a couple. The first one is I may talk to— well, I wouldn't. My team may talk to somebody at a career fair. I'm too old to go to career fairs. I don't connect with people. that are of a certain age anymore, right? I'm going the other way. So, um, I might— the team might connect with somebody who doesn't apply for a job for 4 years, right? They met them, they heard about them, they took 3 other internships while they were in school, but they're like, you know, I really enjoyed this. I'm gonna— right? I'm gonna talk to this person again, or whatever, right? I would never— and then we— the second piece of that is we rely on whatever the candidate tells us is their source for hire. When we hire them, whatever that they report in our computer system is, is what gets reported as a— as the actual hire. So it is extraordinarily unreliable. Um, because if, let's just say they went to a job fair and that's where they heard about the job, but when they're clicking through, they went— they followed it through a link on a webpage. They might say that they found the job on a webpage, right? Not the fact that they got introduced to the job at a job fair. So, I can't rely very well on— and make it a report that I'd say, this is 100% accurate. I could tell you what they tell us our sources are, but I can't tell you that I believe with 100% accuracy that's true. I think this is a reasonable measure. Yes, it's activity-based. I agree with you.

Okay.

But sometimes, setting the goal for how much work you're going to get done is also a valuable thing to talk about. Because now, I can say, okay, folks, if we're going to be successful long-term, we can't just go to 10 of these. You might need to go to 20, or 25, or 55, because I need different kinds of people, and they're going to be at different kinds of job fairs. I can go to the business school and recruit business talent at USD, And I can go to the engineering school at School of Mines and SDSU, and each of these places is gonna have multiple career fairs with multiple niches that we're going to go talk to. So, it— I think this is a reasonable measure that my team can say, I need to be active. I need to be out. I need to build relationships with professors. Those things really matter a great deal when you're talking about recruiting college students. Who are professors sending kids to?

So—

While I wish I could give you a 100% accurate report on something like this investment of this activity results in these 50 hires, I could never with a straight face tell you that that's an accurate measure.

Can you have a follow-up, Senator?

Thank you, Mr. Chair. I guess then I want to dig in. How do you come up with your target? I mean, from the taxpayer perspective, I want to know what's your reasoning for picking this target, because every career fair costs money. So they— there has to be a way to show the taxpayer the return on investment here as well. You know, why not 40? Why 50? Why not 60? Why not 70? You know, where do you come up with that target?

Go ahead.

Mr. Chair, we're using this target because we were looking at how many places are doing career fairs. And when we set this target at 50 and 10 a number of years ago, our talent acquisition team was brand new. We wanted to stretch them. We believe that this is a reasonable number when you start to talk about where there's actual options. It's also important to remember this isn't just career fairs. It could be a completely free, we're showing up to talk about a career in a classroom, right? Or we're going to a K-12 school that we've helped the DOT guys arrange to go and talk to kids about what's a job in engineering or what's a job in the skilled trades. And so these aren't all representative of—

Right.

A fee or a registration fee, but it's reg— it's representative of the kinds of activities we believe make sense for us to do over the long term.

Okay.

Thank you, Mr. Chair. Just a point, even if it's a classroom visit, nothing is free because that employee is still paid for it.

100% true.

Yeah.

Okay. Yeah.

Mr.

Chair, uh, Senator over here.

Senator Grove.

Thank you. So just from that conversation, if it's unreliable information, like, how did you determine that with the Native American outreach activities that it wasn't as successful in just doing that alone? And so you're now grouping it together, which I don't have a problem with. I'm just wondering how you came to that conclusion.

Mr. Chair, so because we're— these numbers are not unreliable because they're my team reporting back what they've done. And in '26, we were able to attend and take part in 2 visits. And part of the problem is we've just not been getting the response to our interest. We've reached out multiple times every year when we know there's something happening or when we're trying to make a relationship on the reservation or at the school, and we're not getting responses back. And so it's an unfortunate thing. We've tried to work with our tribal affairs team and gotten the same kinds of response. It's unfortunate, but I think we're not going to give up. We're just going to measure them together.

Okay. Anybody else? Representative Auch.

Thank you. Thank you, Mr. Chair. Just 2 questions. So are you recruiting jobs for just the state of South Dakota, one? And 2, are you going to these job fairs in the state of South Dakota or Throughout the nation? Just curious.

Go ahead.

Mr. Chair, yeah, we're— yeah, no, our job is recruiting for the state, right? And that for us means the executive branch under the authority of the governor. Now, I will tell you that other parts of state government probably get some residual value from the fact that we show up at places, right? But our role when it comes to HR is all about the executive branch and the 9,000 or so employees of that. organization. To my knowledge, we have not traveled anywhere outside of the state, although it is possible a couple years ago, I think we might have gone. I believe there was a— there was an event associated with Standing Rock on the North Dakota side.

Okay, are you good, Representative?

Just one follow-up.

Sure.

Just a follow-up.

So, the executive branch— I may have misheard you. Has 9,000 employees.

Mr. Chair, that's right, roughly. Yeah, full, full-time.

Okay, Representative Moore.

Yeah, did I hear you right? You guys do go into the, the school, elementary schools and some of that stuff? Well, I don't have the matrix, but I can tell you we've been doing that for 20 years in my industry and it works. I can go out and talk to 5th and 6th graders, and they can tell me a lot about the power line world and the safety.

So I don't—

like I said, I don't have a matrix, but I can tell you it works. Thank you.

You just got all those cool trucks though. Kids love them.

That does help.

Well, from someone who does this in a way smaller scale, it is the nature of the beast. We just have to kiss a lot of frogs anymore. Throw your fishing line in a lot of different waters. I get it. Any other questions? All right, please continue.

Okay, I'm gonna go down. Just mentioned time to fill jobs is a goal. We want to be less than 55 days, 55 days or less from the time a job is posted till somebody's job— somebody's in the seat. It's a fairly aggressive number for an organization like ours that's this diverse in the kinds of jobs we fill. We missed that mark this year. There were some very difficult-to-fill jobs that went way longer, as you can tell. So we were doing very, very well. This year was a little bit of an anomaly. We're going to keep that target where it's been. One of the things we want to replace in our new metrics is the new employee performance score and make that about retention.

Okay.

One of the— the first year of employment is the one where the vast majority of people turn over. And so we're going to— we want to switch to say we're going to keep retention for new employees at 75%. So we think that that target is reasonable for us. We're at about 88% for the whole of state government.

Okay.

But when you start to talk about certain jobs in state government, we're not going to hit 88% in certain parts. So we think that's a better measure given how we're doing performance ratings and things like that. This will help us. It also will drive hopefully better selection processes, that we do a better job interviewing people. We don't just— whoever comes in and fogs a mirror is the way we like to talk about it in HR world. And the other is that We're giving them a realistic job preview so that when they show up, they know what to expect and they don't walk in and go, wait, this is not what I thought my job was going to be and I'm leaving in 3 or 4 months. And so we think that's a much better metric for us in relationship to how we're doing recruiting. If I keep going down the list then into developing and retaining employees in our current goals, A couple of things here that are going to go away. Well, the overall supervisor effectiveness rating is going to go away in the new— in our proposal. That's measured every other year along with employee engagement. It's a subsection of our engagement survey. It is something that we indirectly impact through training.

Right.

Ah. Through hiring better supervisors. And we've spent a great deal of effort over the course of the last 5 or 6 years really working on how do we not do what older organizations historically have done, which is promote the person who's been in the job the longest or might be the most technically skilled into the supervisor job. And I'm certain that Representative Moore would attest that sometimes that works great, and other times that person is not meant for leadership. And so having somebody who's really wanting to be a leader is much more valuable than somebody who's really technically adept at a particular kind of job, and we've done a good job of that, so we feel like we can start to back off on that measure. But continuing to develop people is critical. There's an old joke that says the CFO asks the CEO, what if we develop people and then they leave? And the CEO says back, well, what if we don't and they stay? And so I think that old adage makes a lot of sense. We need to make sure that we're constantly developing people and getting them ready, whether it's technical skill or leadership development or the soft skills that are becoming more and more and more important. In the long run, being able to relate to people because of things like AI is going to be a whole lot more valuable than being able to be a programmer. The programmer will The program will take care of itself. We need people who can take care of people, and so we're working on that now. Also, in relationship to changing in this area, we're going to come. We want to combine the two different measures of who's taking part in what kind of training. The legislature about three years ago, maybe four, was kind enough to appropriate dollars for a. A learning management system. We didn't have one before. Now we do. It has been extraordinarily valuable. We're seeing literally a couple thousand people taking 3,000 and 4,000, more than 3,000 different trainings. And that matters. And so we're going to combine, regardless of how we deliver the training, into one metric going forward. Because it's not measuring very well right now how many people are actually taking advantage.

Senator Howard has a question for you.

Thank you, Mr. Chair. Just hitting on the 2 that deal with supervision development, leadership development, and the BHR training, the employees participating in training. How do you know your training is effective? You know, what if you had 100% participation in the training and it does nothing? How do you know? And that's kind of what I would like to see more of on here.

Go ahead.

I think part of the outcome of that measure is 2 things, right, on the other end. One is engagement, because the supervisor has more direct correlation to engagement than others. The other of that is retention. People leave bad leadership. And so we're seeing in 2026, 89%— N25, 89% retention outside of retirement. Retirement, we know, is going to happen. We know we're going to have about 700 people a year retire. So that number, I would say, speaks to the fact that we're doing some of the right things and have been. We do have an advantage. State government is a place people tend to come and stay a very long time. That's why the measure and the target is 88% and not much lower, like the rest of normal industry. Engagement is down a little bit. Part of that is, I think, timing of when we took the engagement survey, because somewhat that matters. We were very steady, as you can see, '22 through '25.

Mm-hmm.

We took the engagement survey right after the budget address in 2026. So budget address December, engagement survey January, I believe. And the news out of the budget address at the time was zero, right? And so what I can tell you is dollars paid don't actually drive engagement. You give a raise, it's a short-term bump in somebody's feeling, but it certainly can drive— when they hear bad news, it can certainly drive negative responses. I think that's part of what we saw there. In our updated goals, we'd like to go from 33% engagement to 31% engagement. The reason for that is the new Gallup survey that's out from a nationwide perspective. Engagement nationwide is down from 33% to 31%.

Right.

Globally, it's down to under 30. And so we at least want to be as good as the rest of the country, and so we think 31 is the right metric going forward. That's a biannual number, so we only do the engagement survey every other year because you can't respond fast enough to the things that need to happen if you do it every year. When people ask for change, you got to give change time to set in.

Okay.

She has a follow-up there. Senator Howard.

Mr. Chair, a couple. So when you say employee engagement, are you saying just the activity of filling out the survey or a positive response?

Mr. Chair?

Go ahead.

I wish I could tell you how the calculation works exactly, but the organizational psychologists develop a rubric, if you will, based on answers that people give of what engagement across state government looks like and by agency. So it's a mix of responses to several questions in the engagement survey. And so it's— it would probably— it would make sense if we sat down and I showed you what the survey looks like, what the questions are, to kind of understand what it is. In the old days, you used to do an employee satisfaction survey, right? Remember those days? Employee satisfaction surveys tell you very little about what's actually happening because they don't measure whether or not that person's engagement measures the idea that you're willing to give extra, that you're committed, that you're enthusiastic. And so, for the last 20 years or so, organizations have been measuring engagement and not satisfaction because if you ask somebody, are you satisfied with your pay? Very few people respond, yes, I'm satisfied with my pay. Everyone says, I would like more pay, right? And so asking that question kind of fell out of favor. We learned that it doesn't help us do very much if we ask questions like that.

You good? Okay. I've got one for you. I'm going to go up one to the numbers, the second one, the percentage of managers participating in leadership That number is 75%. That's unreal. I mean, as hard as it is to hire somebody nowadays, it's even harder to hire anybody that has goals to be a manager or responsibility. Are you paying them? Are they receiving some kind of payment to go to these leadership deals, or is this just on their own?

Mr. Chair, we are not paying or incentivizing. Um, they have access to a number of different types of training. The online helped a lot. As you can see, the number popped up significantly after '24. And so it is— and then we offer several kinds, like there's the Governor's Leadership Development Program that gets you partway down towards a master's degree. It's been in place since, I believe, the Rounds administration. We did some work for a while on An offshoot of Leadership South Dakota just for state government. That hasn't happened in a little bit, but we're trying to figure out how to bring that back for ourselves. But a lot of this is going to be representative of online work, and it is unincentivized. We also include— like last week, we hosted 400— 380 South Dakota leaders at our annual conference here in Pierre. The agency actually has to pay for that because our training department Representative Lems, do you have a question? Yeah, just one quick question, Mr.

Chair, for Mr. Sealy. Um, so that also on number 2 there, the status is red. I'm assuming you are happy with that number, right? Go ahead. Okay, Mr.

Chair, thank you. Representative Lems, yeah, it appears Darren fat-fingered that when he was filling out the form. I am very happy with that number, yes.

Anything else for you, Representative Lems? No. Okay, Senator Howard, do you have a question? Thank you, Mr.

Chair. I am just going to go back on that and, and Activity A number 2, you know Training can be good. Training can be worthless. In the military, we used to always—I remember TQI—we had a total quality improvement. It was one of those, you know, they were constantly making us go to these, and at the time, I thought it was complete waste of my time. So I still want—I would like to see how are you? How do you know your training is effective? Do we have Do we have fewer complaints about the supervisors? Do we have fewer disciplinary actions? You know, anything that could tell me or tell the taxpayers that the money you're spending on these conferences and the training and whatever is, again, return on investment. How do we know? Because maybe the training needs to be changed. How do you know the training is effective?

Mr. Chair, I'm going to add one more measure to my previous answer. If you call my— I'll call attention to the Net Promoter Score. That's the responses to what people— how people viewed the training that was provided after they took it. It's not an uncommon measure for those kinds of activities. We have a Net Promoter Score of greater than or equal to 50, and you can see a steady increase in those numbers over the years from '22 to 26. I think there's a measure of quality there because people are going and saying, I found value in this. We could tell you if there's a number of disciplines up or disciplines down. Not sure that's actually representative of whether or not the manager is good or not good. I might tell you that if disciplines are up, it might mean the manager is good.

Okay, go ahead.

Just clarification, I meant regarding the super— yeah, no, I know what you mean, but I mean from the supervisor's supervisor, you know what I mean? Because I get it, if somebody's complaining about a supervisor, it might mean that he's actually doing his job really well, right?

Often that's the case, unfortunately.

Representative Moore.

Yeah, Mr.

Sealy, I just was wondering, these classes are volunteer. You do not mandate that the state employees have to take them?

Mr. Chair, there— I believe this whole metric is voluntary. Yeah. So we do offer mandatory trainings, um, that are compliance-oriented, right? Or that are— keep us out of legal jeopardy as much as humanly possible. Um, the world has become extraordinarily litigious. And particularly around employment. And so most of what we're doing in terms of a mandatory training is those kinds of trainings that say, how do you not get yourself in trouble as much as possible? The other are like the mandatory reporting trainings that we do, ethics training that we put in place a little over a year ago, et cetera. So those are not included in the 75% number, but we do have some— 3 or 4 sets of classes that are mandatory for leaders. Thank you.

Okay, seeing no other questions, continue please.

Okay, I'm gonna just point out a couple of things in relationship to some changes. The career development movement, we're going to remove that, that metric, and the number of interns that were hired up above, we're going to remove that metric. If you go look at the new ones under Goal 2 in HR, we really stick to the core parts of the work here, right? Time to fill jobs, first-year retention, that recruiting work, executive branch employees participating in state-offered trainings. While we do offer some of our trainings to other branches, not— it's, it's not necessarily something they take part in. They may show up at our, at our leadership conference particularly. We had a number of different agencies there, but this is just going to be counting the people under the authority of the governor. State retention is an important goal, and it's reflective of overall success of us as an employer. And then the biannual measure of engagement. So we do that on the even years. '26, will the next one be in '28? I'm going to go back and go to the next one, Goal 4. Sorry, I think I got away from the microphone. Goal 4, be a customer-focused organization. This is switching more to what was historically the administrative functions of state government. This is where we'll start to see the most changes in relationship to the kinds of measures that we're looking at. So under the first one, central services is the easiest way to describe them. It's mail, it's print shop, it's design work for pamphlets and things like that. It's— so this is the print shop and orders in that space that we turn around 95% or better in 3 days. We've hit that target for a number of years and plan to— and will continue to use that metric. On the go-forward. Sorry, just trying to make myself get myself all aligned here. Two machines is more than my brain can handle, it turns out. Records management: This is an area where the world is really shifting. So if you think about so in our place, records management is the physical storage mostly of boxes and boxes of paper. Microfilm, microfiche, and as you can imagine, that's going away. And so we're going to remove that measure as something that we're working towards, because we expect after Project Bison goes into place, that world will shift tremendously to a more digital approach to recordkeeping. There are some things that are still mandatory to be kept on paper by statute. We'll continue to be the keeper of those. Excuse me. And then surplus property customers, this was a count metric. It's reflective of the state subdivisions as well as the organizations who qualify to go to federal surplus property purchase things. Veteran-owned businesses, counties and schools, like surplus property, all can go to federal surplus. And so as you can see, the number of customers have— has fallen. We're going to work towards bringing that number back up. A couple of things have contributed to that. One of those is certainly the amount of dollars that came through from COVID to the cities, counties, and school districts for a while. They got out of the habit of using surplus property. The other is that we did close the Box Elder location. We had 2 locations for federal surplus property in South Dakota. We had the main office in Huron and we had a second in Box Elder. Box Elder made a ton of sense when you could go directly across the interstate to the Air Force Base and get surplus and bring it over for sale. The Department of War changed the policy on that a number of years ago, and now everything that's at a base gets shipped to one of 2 locations, one in Kansas, one in Colorado, and then all the states bid for those things, and then they get shipped back to those states. And so having 2 locations makes no sense for us, and so that property is closed, and we're working towards selling that surplus property.

Okay.

under the federal program. But we aren't going to give up on getting customers involved in those programs.

Senator Howard.

Thank you, Mr. Chair. A couple of questions. When you're bidding on the property in Colorado, are you only bidding for what you as a— we as a state want, or are you bidding on other property to try and sell it to other entities?

Mr. Chair.

Go ahead.

It's a combination of things, Senator Howard. So you're looking at trying to get things that you know will sell to— because customers constantly come in and buy it. It's also things that customers call up and say, hey, we would like one of these if you can find it. So that tends to be big things. So if I give you the biggest example that I'm aware of in my time in state government, Lake Area Technical College wanted an airplane, and Federal Surplus found them an airplane that they wanted. And had it delivered to, um, to Watertown. Um, a lot of this stuff is— it can— it's a really weird mix of things. It can be tools. A lot of times it's tools that have never been opened, right? Um, uh, and so it's the, the federal— the federal government has this program. Every state has a surplus property department. Um, and ours really tries to— is really trying to focus on how do we get people to understand we're and how we can help them find things. The thing that's probably the biggest seller and we can't keep around are vehicles. The feds get rid of a lot of vehicles, and we try to get a few to have on site because if you can have a pickup or 2 or a Jeep or 2 sitting around, they'll draw in customers because the county wants one or the school district wants one.

Are you good, Senator? Okay, please continue.

And then I'm gonna go down to goal 5, ensure excellent facilities. This is really an area where Senator Howard, I think, will like where we're headed because I look at these metrics and say, so what? How much activity do we do in maintenance? And so what we're proposing is actually, what does that mean? How are we ending up with something better. So what we're— what we want to move to is what you'll see under Goal 3, providing the physical resources needed for effective government service, Activity A, protecting facility investment. We want— we have 2 metrics proposed, and they're using what's called the Facility Condition Index. An FCI measures the cost, the expected cost of repairs to a facility divided by The actual value of that facility. So anything less than or equal to 10 is either good or excellent condition. We believe this is a much better measure, not of activity, but of the fact that we're doing the right things to our facilities. We're managing the M&R dollars well in order to deliver that those facilities are going to be around for a long time. And so we're, we're dividing that into 2 One is the Capitol Complex. It's treated separately in terms of how we think about M&R dollars. It's also a place where we do the vast majority of work ourselves from a maintenance and repair perspective. Outside of Pierre, the state-owned facilities are— we oversee the M&R dollars, we control it through the Office of State Engineer and oversee projects, but most of those things are done by outside contractors.

Sure.

All of them, basically. So 2 different measures, but we think they're a much better view of how we're actually performing in the maintenance and repair and long-term care of a valued— valuable asset. In the old metric here, then, when you go down from there, you start to— go ahead. I'm sorry.

We got— well, Okay, Senator Howard, go ahead.

Thank you, Mr. Chair. Since we were right there, um, yes, I love those because, I mean, you completely took care of my issues with that. Why do we want more work orders? I want fewer work orders. Um, okay, but you had something on the motor pool, if we can go back to that one wherever.

Yes, ma'am, that's coming up here in just a second.

Okay, you have— where was it? Because it was just right there.

So in the new version, in the, in the proposed metrics, we have a— we have utilization and preventative maintenance as our proposed measures.

Utilization?

Yes.

Why are we shooting for more utilization? Why wouldn't we want less utilization of our motor pool? It would save money, right?

Mr. Chair, so we want utilization at an appropriate metric measure Because we can't deliver everything we do as state government without vehicles. So this measure is for our pooled vehicles that are usable by all agencies to do their work serving the citizens of South Dakota. Utilization is important because we can use this to help determine how many cars we should have and of what type. So if you look at the old metric, it was miles driven and the number of fleet vehicles. Those are very nice things to know. They're of very little value. We cannot contribute one nickel to how much— how many miles are traveled. I can contribute greatly to how vehicles are utilized and how much— by 2 things. First, the number of vehicles that are available for service. The second, how much time they're off the road or not available because of maintenance and repair or issues with the vehicle. vehicle. So utilization becomes a much better metric. It will also help us drive right-sizing of the fleet. One of the things I've been— we have been working on for a couple of years is it doesn't matter if we have 3,243 vehicles if that's not the right number of vehicles and we're seeing most of them sit around. So to your point, Senator Howard, I agree with you. Just having cars doesn't matter. But having the right number of cars so that when somebody gets a call— and I always use this example because—

Yeah.

Because it's the one that always gets me thinking about what state government employees do that we generally don't think about. Because we see the DOT guy, we see the highway patrolman, but when the young social worker at Department of Social Services gets a call to go to somebody's house at midnight to take a child out of their home because it's a bad situation, and it happens unfortunately every day somewhere in our state, a state employee is doing that.

Right.

I want to know that that employee can get in a car that is going to run, that is going to be safe, that is going to get them to their destination and back with that child. And I wish I could tell you we didn't have to do that, but unfortunately we do, and we do it all too often. And so for me, the utilization number is critical.

Senator Howard, follow-up.

Maybe I'm not understanding the number. I mean, if you're saying it's a comparison between utilizing a state state vehicle versus a POV, I've got that. And that would actually make sense to me. You know, we're encouraging people to use the state vehicle versus their own personal vehicle. I got that. But just having a metric that says we want more utilization of the motor pool, that doesn't make sense to me.

Mr. Chair, go ahead. Let me explain the metric because I think you'll agree with it then. So the idea is that 60% of the time a vehicle is available and in use. So 24 hours a day, 365 days a year, a vehicle has been checked out— 60% is checked out for 60% of those days and hours. What will work against that number is if it's just sitting around, which means I've got too many cars, right? Or if it's in repair. Or for scheduled repair, right? That will hit the number, that will take the number out. So for us, it's not about just the fact that we're making it drive more. It's, it's available when it's needed, but we're not just wasting dollars by having vehicles sit around. That's why the 3,200 report here isn't really of any value to me or you, right? That might not be the right number. We want to work towards the right number. And I will tell you this, that I think if we get to the point where occasionally we have to pay somebody to use their personal vehicle, I'll feel really good about right where we are with how big our fleet is.

Okay, good. And I apologize if I missed this, but in, in the vehicles you're counting, are you counting the DOT, the Highway Patrol, the governor, the executive branch's vehicles? Are they all in there?

Mr. Chair, this measure will measure the pool vehicles only. So where we have pools that someone can go and check out a vehicle. So here in Pierre, out at the DOT, there's a lot for state employees to go check out a vehicle. It will only include the vehicles in those places.

All right. Thank you.

DOT manages their own fleet and Highway Patrol manages their own fleet. We have responsibility for the rest.

So if you say the rest, then the Suburbans that the governor, whoever governors use, those are in your fleet or not?

So they're in our fleet, sir, yes, but we will not count them as a utilization metric because they are assigned— there are a number of vehicles that are assigned to different departments. I'll give you an example of one. Game, Fish and Parks conservation officers are assigned a vehicle, right? So we oversee that as part of our Fleet that we care for and maintain, purchase, sell, they're not part of the pool because I, as the commissioner, can't go check out a conservation officer pickup.

Okay, thank you.

I apologize. Sometimes I think everybody knows what I know, and I apologize that I go— it's kind of skip the detail. So then if we go down to the next measure on the report, We have— we've got annual turnover. We want to be in our bureau less than 10%. As you can see, this year we were above that metric. It's an unfortunate reality of a couple of things. The first of those is we have custodians and groundskeepers that occasionally find a better opportunity to make more money and they'll go do that. God bless them. I want them to do that if they can and they desire to do so.

Thank you.

So, uh, we also have had some turnover in an area where they don't necessarily like the direction I'm taking things, uh, in order to make, um, I think, us better at delivering service and more efficient. And so people are sometimes making decisions to leave that part of the organization as well. In addition, there's always some level of turnover in an organization of this size. So we're going to keep that metric. We think it's valuable to us to know that we're, that we're at least going The right way with what we're doing as our own leadership team. I'm going to jump over to the proposed metrics really quickly. There is one metric that we're adding in Goal 4. So instead of counting customers for surplus the way we've been doing it, it's an older metric, it's an older number. We're actually going to count customers, but we're going to change to We want to go to 250 by 2030. The old metric was based on 2024. And then there's a new metric, partner to minimize risk and liability. This is an activity that's going on, been going on for years and years. The Office of Risk Management does audits of our facilities every year. And then for the high-risk facilities, so I'll say a prison is a high-risk facility. You want, you want the facility to be in Uh, the, the right condition. You want there to be very few hazards available to create problems in the prison. And so we do an audit there every year. We don't need to do an audit every year of a boat ramp in northwest South Dakota. And so we want to be on at 75% of state-owned facilities every year. Won't be the same 75% every year. We've been doing this for years and years. It's saving us tons of money by making sure we're fixing things that can be fixed. Where citizens come in, where employees are reducing our liability, saving money on reinsurance and captive rates. And so that's an important measure for us. We wanted to have it be something visible to you. It is activity-based, but it does let you know that we're doing the right kinds of things to save money long-term. So that's my report. We will work on—

Senator Howard.

Thank you, Mr. Chair. Just a grammatical thing that needs to be Corrected on Goal 6, Activity A. Keep should be keeping.

Thank you. There you go. It's like living with my wife.

I'm not gonna blame my alma mater. It's a good school. It's me. It's not them.

Okay. Is there any other questions for the commissioner? Okay. Seeing none.

Mr. Chair. Senator Howard. I would move to acknowledge receipt of the performance management report submitted by the Bureau of Human Resources and Administration pursuant to South Dakota Codified Law 2-6-37. Second.

Okay, it has been moved by Senator Howard and seconded by Representative Auch to receive the report from the department. All those in favor will say aye. Opposed? Aye. That is accepted. We're going to move on to the Department of Revenue, but first I guess I have to say this, and you may come up, that's fine. For you, for those of you that are listening online, if you're calling the switchboard downstairs trying to get on to testify today, you won't be able to. So I guess you could stop. You have to have your request in 24 hours before this committee goes into session.

Thank you.

We have moved other before, but that's totally my call. We had none. So if you're down there raising Cain, I'm going to tell you, you're not getting in. So you can just please stop. With that, let's move on to the Department of Revenue. Welcome.

Thank you, Mr. Chairman.

Good morning, Mr. Chair, members of the committee. My name is Mike Houdyshell. I'm the Cabinet Secretary of the Department of Revenue. I've got Toni Richardson with me today. She's the Director of our Division of Administration, and we're pleased to be here this morning to go through our FY26 performance measures. I'm going to try to get into my presentation here. We kind of did things a little bit differently this year. with some slides to kind of highlight some of the changes that we've made here or are proposing to make to our performance measures going forward. I did have a real quick just agency overview in the interest of time. I'm just going to take about 15 seconds here just so the committee is aware of the scope and breadth of the Department of Revenue. You can see our department leadership team here on this page. I'm very fortunate to have a very experienced leadership team at the Department of Revenue. Most of the folks that make up our senior leadership team have many, many years, in some cases decades, of experience in state government, specifically at the Department of Revenue as well. So very fortunate to have a strong team that works with me on a day-to-day basis to provide customer service to the taxpayers of South Dakota. We have 6 divisions in the Department of Revenue and 1 commission that's attached to the department for reporting purposes. When we look at our performance indicators, we really try to encompass the entire department. It's easier said than done. Some divisions definitely have functions that are more easy to measure and to come up with performance indicators, others not so much, but we definitely try to include the entire department in our performance indicators that we'll discuss here this morning. And when we looked at getting ready for this presentation this year, we really wanted to take a step back. And, and asked ourselves the questions, are we measuring the right things? And Senator Howard, to your comments, you know, to Commissioner Seeley, we were doing a lot of counting things, you know, issue X number of licenses, those types of things, where we wanted to focus more on outcomes. And so we actually looked at our entire matrix and basically did a complete rewrite. And so we're proposing a whole number of new performance indicators for this upcoming cycle. There are some that are carryover, and you'll see that on the slides here as part of my presentation. But many of these are brand new, where we either just started measuring them for FY26 or we haven't started measuring them yet or will be starting to measure them going forward. So you will see some that don't have trend lines. That's because it's a new measure. You'll see some that don't necessarily have a target because that's a brand new measure and just in FY27 we've started to measure that. So a lot of these that I'll talk through today, We are really just trying to set the benchmark, and then as we go forward the next you know few years, you know pending your approval of our measures, we will start to see kind of what the trends are in these various areas and be able to better determine whether or not we're measuring the right things. So turning to goal one, and again all of the goals are are new as well for for this. Presentation. Our first goal is to license every business/retailer, individual device, and vehicle as required by law to do business and/or operate in South Dakota. When you think about one of the core functions of the Department of Revenue, it is to license businesses, it's to license, you know, vehicles, it's to license video lottery machines, gaming devices, those types of things. And so we tried to capture that in our first goal here. So looking at the measures that we're proposing for Goal 1, you know, I think most of them are fairly self-explanatory, but I did want to explain a couple of things. I know the LRC staff had some questions that they sent over, and I'll try to cover all of those questions in my presentation. But please stop me on these. I'm not going to go through every single measure. But just wanted to kind of highlight some on each slide. So if you look at measure 3 there, percent of license applications worked within 7 days. And when we use the term worked, what we're referring to is that is the first touch in our office on that application. So we broke it into 4 core areas. Business tax, so those would be like your sales and use tax, contractor excise tax licenses, our special taxes licenses like alcohol and tobacco, motor vehicle dealers, motor carriers, and motor fuel licensees. And so in all of those areas, our target is to have a first touch on those applications within 7 days of that application being received. By our department. It's really hard to have a completed goal for these particular types of functions because some of it's outside of our control. So for instance, somebody applies for a motor vehicle dealer license, we want to start working on that application within 7 days, but we may have follow-up with that applicant. They may have not submitted all of the necessary documentation. We may have questions. Depending on how responsive the application is to our request for additional information, it could take a number of days or weeks in some instances to actually complete that application and issue the license. So we think a reasonable goal, and one that's a good target for us, is to work all of those applications within 70 days, or at least 90% of those within 70 days. And you can see for the business tax, we're already at that benchmark. So we'll look here in FY27 to see if we need to increase that. For the other license types, these are new measures like I indicated. So we need to dig in deep and see, okay, on the motor carrier, for instance, we're way below that 90% percent target. And so what do we need to do going forward to meet that benchmark? And that's hopefully what we'll be able to measure here going forward.

Thank you, Mr. Chair. Yes, I, in general, I like these. However, I'm curious if you ever take a look at, A, well, the regulatory burden on the person Applying, you know how many hours does it take them to actually fill out the application? Whatever. If if if they are having to come back with you with more material, is that because the application is not well laid out? They are they're missing something. I mean, I guess I am curious how many hours are we spending on processing, and what's the regulatory burden on the person having to do that? Because is there something? Is there that? I would be interested in knowing that because then we could go, okay, this is obviously too burdensome, or maybe it's not, you know, maybe it's just fine. Maybe we can look at that and go, yeah, it only takes some however long to fill out the application, we can get it processed in this many hours, so everything looks good. Does that make sense?

Senator Howard. Mr. Chair, it does make sense, and, you know, the, the things you're describing, like Reviewing the application to make sure that you know it's clear that we're asking the right questions, or or we're not asking for you know documentation just to ask for documentation. Those types of things, or there's redundancy. That's part of what we will look at to move the needle on these these measures. Right? If we're not making the mark, for instance, on the the motor dealer applications. That tells me we need to look at that application to see what— why is that, right? Why are we not getting all the documentation we need? Maybe we need to make some changes to the application or the process. So, yeah, I think you're spot on with that, and those are the types of discussions that we'll have on these measures to make sure that we're trending in the right direction.

You good? All right, please continue.

So goal number 2 is to ensure that licensees and partners are compliant with state laws through targeted and consistent regulatory efforts. At the end of the day, the Department of Revenue is a regulatory agency. We do a number of different regulatory functions, and we're responsible for a number of statutory duties when it comes to regulating. Certain types of industries. Auditing is one of the primary regulatory functions that we do. So you'll see here for these measures, a lot of these are related to the audit function. I did want to focus in on one of them. If you look at number 3, that's talking about percent of zero audits finished in less than 32 hours to reduce the audit cycle time. We're quite a bit below our target on that one. The primary reason for that is because we've had a lot of new auditors come online in the last couple of years, and it takes, you know, 2, 3, 4 years in some instances to fully train an auditor. And the more You know, the more experience that they have, the quicker that they can identify in a particular audit that, okay, there's, there's not going to be any issues here. I need to close this audit on and move on to something else. And so when we talk about zero audits, it's just that. It's an audit where the finding is that there's no additional tax due, which is a good thing, right? That means that taxpayer is in compliance and They understand their obligation and are reporting the tax correctly, but we don't want to spend a bunch of time on those types of audits. So we have a number of things that we do, you know, in the audit division to identify audits that we think are unlikely to generate assessments because of the business type, the length of time that they've been licensed, prior audit history with that particular particular taxpayer, those types of things to try to reduce our zero audits. But some of it again is just training on our end on our auditors so they understand that, you know, these are the indicators that, that I need to be looking for and I'm not spending an excess amount of time on a particular audit. I need to get this closed up and move on to another audit. So that's So, that's what that is measuring there. We think a target of more than 75% of those zero audits being closed within 32 hours is manageable, but we have some work to do there, and again, primarily because of the inexperience of some of our auditors and the fact they still are getting trained up. Any questions on this slide?

Okay.

Yeah. Just a couple other, you know, measures here to touch on under the regulation aspect of goal number 2. We do have one here that has a trend. So property tax county levy approval average turnaround time. So we used to also have a measure for the number of levies that we approved, and that, that's just counting numbers, right? We have to approve every levy that gets submitted to us by local governments. Doesn't really tell us anything as far as our performance. So we did keep this one though. We think it's a good measure, and this is the turnaround time. We try to turn around the approval of the levies in less than 29 days, and we've actually been meeting that. And we're trending in the right direction on this one too. That's primarily due to our new property tax system that we implemented, oh, I want to say about 5 years ago now, that greatly reduces the manual entry work that was being done in our property tax division. A lot of these approval processes are done automatically now. And that helps with that turnaround time. This is a critical function of the Property Tax Division because a county can't spread the levies, they can't issue that tax bill until we've certified all of their levies to make sure that they're in compliance with state law, that they're properly calculated, they're not overtaxing their property owners.

Senator Howard.

Thank you, Mr. Chair. I want to touch on number 5 on there— or no, number 10, sorry— the number of counties requiring an equalization factor greater than 1. Um, not that I'm looking to change this, but I'm curious what counties are they and how far off are they. Is it 1.2, 1.3, or just 1.01?

Go ahead, Mr. Chair. Senator Howard, I, I do not have the counties. We can get that information I don't know the answer to that. I don't want to venture a guess. I would say, though, that most of them aren't very far over 1. If they're equal— so just to explain what an equalization factor is, I know this is one of the questions that LRC staff had. So Department of Revenue is required to determine the level of assessment of every county on their property tax assessments. annually. And the way we do that is we look at sales of real property, and based on those sales, we can determine how good of a job the assessor is doing relative to what's going on with the market. So state law requires that all property is assessed at its market value, which is essentially what it would sell for on the open market. So by utilizing sales data, we compare it to the assessed value of that property that sold to determine the level of assessment. And state law requires that counties have a median level of assessment of at least 85. And so when we look at those sales, if their median level of assessment is below 85, they need to increase their values. They need to increase their assessments to get to that minimum level of assessment. What an equalization factor is, is in state law, the taxable value of all property is 85% of its assessed value. So that assessed value is only taxed at 85%. However, if they're not assessing property at 100% of its market value, they have to have a factor to get them to the 85% level of assessment. And so what that does is it ensures that if a county has a low level of assessment, they're only at 85%, that people aren't paying property taxes on 85% of that low level of assessment. And so when it says that the factor is greater than 1, that's when a county has a level of assessment that's less than 85%. And so their factor to bring them to their taxable value is actually more than 1. And so what happens in those counties, in those 4 counties, your taxable value on your property tax bill is greater than your assessed value because your county is under-assessing property in that county. And we— that's not a good thing. We want counties to stay obviously above 85%. There's not really a hard and There's no hard and fast rule on what the right level of assessment is, but most counties try to stay kind of in that 92-93% range. That gives them some flexibility for addressing market conditions from year to year, so they're not falling too far behind, but they're not also over-assessing property if there's a decrease in market values. Our target is zero. We don't want any counties to have an equalization factor greater than 1, but it seems like every year we have a couple, and this last fiscal year we had 4.

Mr.

Chair, excuse me, I choked on my microphone here.

Representative Auch, thank you, thank you very much. So I mean, I, I believe I understood that. So where do you come up with your baseline? I mean, where is the base for the equalization? Like, you know, the assessed value, 85% of, you know, sales. But are you taking into account, you know, in our county, 2, 3 years ago, there was maybe 4 houses for sale on the market at a time. Now we're up over 50, and they're not selling. So what basis of an equalization value are you using? Are you using ones from 2 2 or 3 years ago when the market was really high, or now the market's come down. So where is that baseline that you determine that factor or where values are?

Representative Auch, it's a great question. We only use sales from the prior year. We set an equalization factor for both non-agricultural and agricultural property for every county. Unique to every county, and it's only sales occurring within that county in the prior year. There's, there's a little bit of an exception there. If it's a county that has less than 15 sales, we can go back a year or 2 to get to 15 sales because, yeah, there are some very rural counties that they may have 1 or 2 sales of an owner-occupied house in a And that, that's not really representative of what the market is. You need several sales to actually see what the market is. So to your point, if, you know, if the market is really slow and we don't have enough sales, they can go back, I believe it's up to 3 years, to get enough sales to come up with what their level of assessment is.

You good?

I think so.

I think so. If I have further questions, I know your number.

Absolutely.

Okay, thank you.

I would like to go off of that and say, are the counties geographically challenged as to where they can get their information from? Because in my small county, there was years where there was, I think, zero transactions. I mean, do they have to stay within their county or can they go out?

Mr. Chair, it's a good question, and I believe that there used to be an allowance to what they called bridge sales where you could go into an adjoining county. I don't know if that's still permissible. I will check on that and get back to you. I don't— I think it might have been in an administrative rule, and I don't recall if that's still there, but at least at one point in time, Historically, I know that when we, you know, for instance, under the old ag market system before productivity, you had some counties that went years without having good sales that they could use. So they were looking at adjoining counties to be able to come up with a level of assessment. But I will, I will check on that and get back to you.

You don't have to. I would just say, just if you think that that's the way it is, then I believe that you are correct. That's what my understanding was, but I just wanted to make sure.

I know that— I know they used to do it. Okay, thank you. I can't remember if that's changed.

Thank you, Mr. Chair. Number 11, why is that N/A on the percent of new TIF base valuations worked within 10 working days?

Go ahead if you have an answer for that.

Yep, Mr. Chair, Senator Howard, we did— we did not track that in FY 2017. So you will see some NAs on here. Those are ones where we are just now tracking those for FY27. So we didn't have a target in FY26.

Okay, good. Representative Auch.

Yes, thank you, Mr. Chair. Is there a way for you to track that or figure that out, or for, for you to teach a county how to track that payment of tax increment districts base valuation? No, no. I mean, certainly going forward.

Yep, yep, going forward. So that— what that major is talking about, 11 there, that's something that we do at the Department of Revenue. We have to determine both the initial base value of All TIF districts, and then we recertify their value every year. So basically what we want to do on the new ones that come in, which there are still a lot of new TIF districts being created, we want to make sure that we are starting to work on those within 10 days because, again, often there's, there's the need to have a relatively quick turnaround on those. So yeah, we will have numbers on that one next year.

May I have a follow-up, Mr. Chair?

State your question.

Okay, so do the TIF districts follow the exact same rules as the homeowners in the, you know, whatever district they're in, or do they fall under a different category of the 85% of actual valuation? Do they fall under the exact same rules as every other taxpayer?

Yep, go ahead, Mr.

Chair. Representative Althoff. Yes, so any properties that That sell within a TIF district, we would be using those sales in the equalization process just like any property that was outside of the district. So all of the same rules with the equalization apply to the TIF districts too.

Are you good, Representative?

Thank you. Yes.

Okay, please continue.

So Activity B under Goal 2, I just wanted to touch on just real briefly here. Stakeholder outreach and education. Obviously, regulation is a big part of what we do at the department, but a key component of that is education and outreach to our stakeholders. So whether that's taxpayers, whether that's motor vehicle owners, whether it's video lottery establishments, whoever it may be, the more that we can interact with those folks and educate them, it helps our regulatory efforts. because it helps them stay in compliance. One of the main things that we do, and this is on all of our license types, is routine license reviews. So you can see there we exceeded our target. We're going to reevaluate that here for FY27 because I think we can do more there. Routine license reviews are just that. What it means is that Especially on new licenses, we like to get in there early on in that new license's life and take a look at things and just to make sure that they're not screwing anything up with their bookkeeping or their accounting for sales tax reporting purposes, for instance. Or if it's a new motor vehicle dealer, that they're maintaining their books properly. So, you know, a little mistake today doesn't turn into a big one 3 years from now. And so we like to do these routine license reviews early on, you know, once a license is issued. And the more of those that we can do, the better, because that's one of our best teaching tools that we can do for our licensees. We're not going in there, you know, with a heavy hand to, you know, smack them down, you know, you're doing something bad. Hey, here are some issues that we see or, you know, potentially could become issues. Here are some ideas on how you can fix that problem so you don't get it out of compliance going forward.

Senator Howard.

Thank you, Mr. Chair. Talking about number 1, why not have that as a percentage? You know, total number of routine license reviews Just have it as a percentage of the total number that you receive.

Sure. Yeah, I mean, it's a good suggestion. Um, yeah, we will look at that and see, and, and maybe it's even another measure that we could add. Um, you know, do we— I, I don't know what the right percentage is. I'd have to look at it. I mean, we issue a lot of new licenses every year, and it's just getting to be more and more every year. Um, so, um, it's definitely something we could look at. I think that makes sense.

Follow-up too on the other—

Okay, go ahead, state your follow-up question.

Well, before we move on, numbers 3 and 4 under there, these 2 kind of hit me like, I— okay, I don't care how many classes you provide, you know, why are we shooting for a certain number versus I mean, maybe one class attended by everyone that needs to take the class would be better. So I guess those 2 I struggle with, because maybe instead of having those 2, we could look at, do we have reduction in filing errors or whatever? You know, what is the outcome? What are we shooting for in these classes? And then measure that versus just how many classes we're giving, because maybe you could hit what you need to do in 10 versus, you know what I mean? Okay.

Go ahead if you want to comment on that.

Uh, Mr. Chair, no, Senator Howard, I mean, it's a good comment. We'll definitely take that under consideration. I mean, I, I think one of the things is, you know, we do a, a kind of a broad array of different types of seminars because we, we, you know, regulate so many different things. So, you know, what we look at there is kind of, okay, you know, we know that we want to put on X number of classes a year, and here's typically how many attendees we think we want to have in each class. And so some of the measure is just how well are we promoting that, how well are we reaching out to folks to make sure that they're aware that this training is available to them. Of course, it's all voluntary. They don't have to do it. Are we making it convenient for them, right? We do a lot of this now via Zoom or Teams meetings instead of in person, which has definitely increased the number of folks that participate in these trainings, which is great. But yeah, I think, you know, to your point, it is kind of just counting to a certain extent. So Okay, moving on to Goal 3, which is collect all monies due to the state and our partners, accurately account for the funds, and distribute the monies according to state law. Again, one of our primary duties at the Department of Revenue is to collect revenue and to make sure the money goes to the right place. So a couple of these are ones that we've had for several years, and we You know, we want to keep these measures on there because we think they're important. And that's number 2 and 3, both returns filed electronically and revenue collected electronically. Our goal is 100%. In a perfect world, all taxpayers would be filing their taxes electronically and they'd be paying electronically because it's way more efficient for us than dealing with paper. We still receive thousands of paper returns every month that have to be processed by our staff, which granted is just kind of the reality of it, but it's not a very efficient way to do business in 2026.

I would like to comment on that because I am one of your holders. Here's the thing. Personally, I don't feel comfortable giving the state access to my bank account, so I don't want to do it electronically. So the other part is this: you have to remember when we're forcing this, you have a whole workforce out there that don't cost you a dime. Every business that has a tax license is collecting your tax, state's tax, free. We don't get paid to do it. So let's be careful when we're forcing the state's initiatives on This free workforce that you got out there, because it, it, you know, we have to work with them too because they are doing us a huge favor collecting our tax, right? I mean, so I mean, to force them to do it electronically, I, I know I get your letters all the time and they go and file 13 because I'm not doing it. So I just wanted to make sure that we're kind to the people that are helping us.

Mr. Chair, no, it's point well taken. We don't have a mandate that folks file electronically. Most folks choose to file electronically because, you know, it's more efficient for the taxpayer too, you know, quite frankly. But understand that some folks still wish to file on paper and that's still an option for folks. As you can see there, you know, the numbers don't match because, you know, the big taxpayers are filing electronically. Right. The Walmarts and the Amazons. And so most of the revenue is already being remitted electronically. It's with the paper returns where we still would like to keep moving that needle a little bit. But to your point, you know, I don't think we'll ever have a mandate. I think some states have mandated it. Quite frankly, I think Minnesota has a mandate where you—

Because we used to get paid to do it. You know, we used to get paid to do it for a few years. We got to keep a half— I think it was a half a percent of the total you got to keep for doing the reporting and collecting. It's been quite some years ago, way before your time, but I mean—

Well, actually, the collection allowance just— it was suspended just, I think, 2 years ago, actually.

A little longer than that, I believe.

No, it was only a couple of years ago.

Oh, yeah, I don't remember that then. I'm sorry.

No, that's okay.

I got an old mind.

So anyway, we think those are important measures to keep on here. We'll keep working to make things as convenient for taxpayers as we can. I will move on here unless anybody has any other questions on this slide.

I think we're good. Oh, wait a minute. We have a hand up here. Representative Lim, sorry I missed you. State your question. Thank you, Mr.

Chair. Just a quick question. Is it— it's been a number of years since I personally did the sales tax return in our office, so I'm just wondering what— it seemed to me there was a fee for a while that if you did not remit electronically, is that still the case?

So go ahead and answer that, Mr. Chair. Representative Lems, so the collection allowance that I was just referring to Was actually an allowance that was given to folks that filed electronically. If you filed on paper, you weren't entitled to the allowance. And the allowance, I believe—I don't remember the percentage—but it was like a maximum of $70 per month. And so that was just for folks that filed electronically. So there's not there wasn't a fee per se. On the paper filing, but you just didn't get the collection allowance.

Okay, thank you. Representative Lems? No. Okay, any other questions? If I've seen none, please continue.

Okay, moving on to our last goal, which is to provide excellent customer service and tools to become licensed and compliant with all state laws. Kind of ties into the education component on one hand, but also Just making sure that we are providing good customer service, because at the end of the day, taxpayers are customers. That's how we treat them at the department. One of the one of the areas that we've been measuring for years is our contact centers. So our business tax division has a contact center, and our motor vehicle division has a contact center. We try to keep the abandoned call rates and the abandoned chat rates. As low as possible. You can see in the Business Tax Division, our goal is less than 2% abandoned calls or chats, and we've met both of those goals the last several years. We're going to keep at it to get those as low as possible. The Motor Vehicle Division, it's been a challenge. So we went to a new system, as most of you are probably aware, About a year and a half ago. And as any big change to any sort of an IT system goes, there was lots of calls from both, you know, customers, motor vehicle owners, but also counties, county treasurer's staff that were using the new system and had issues or questions. And so we had— we saw a dramatic spike in the number of calls coming into our motor vehicle division.

Okay.

We actually utilized some temporary support from a third-party call center that we hired up to help with some of the, the call volume, which helped tremendously. Things are getting back to normal, but the Motor Vehicle Division just generates more call volume than the Business Tax Division, even in normal times. And so that's where those targets are, are a little bit higher. In the motor vehicle area, we did meet the abandoned call rate target there of less than five percent this last fiscal year. On the abandoned chat rate, it it looks bad, and I asked the question: Why does that look bad? And the answer that I got is is they are essentially operating on three systems right now. We recently updated. Updated our contact center software. We use Amazon Connect as the product that we use, and that handles all the calls. But our chats still come through our Cedar system, which is our legacy tax administration system that we use for both the business and motor vehicle division chats. And so if you're a motor vehicle division customer service representative, you're basically working on the Amazon Connect Center. You've got the 605 driver, new motor vehicle system, and Cedar operating somewhere in the background. And so what's happening or is happening is some of those chat notifications that come through on Cedar aren't getting picked up quickly enough by our agents. We consider an abandoned chat when they basically disengage engage on the chat after a minute. So if I go on and I say, hey, I've got an issue with my vehicle title, and I'm sitting there and waiting and I don't get a response back within a minute, and I, I cancel that out and I decide to call instead or whatever, that's considered an abandoned chat. So really it's just kind of more of a workflow issue. We're trying to get transition fully onto our Amazon Connect product for the chats as well, and we think that'll help us get that abandoned chat rate down. But something we're looking at closely going forward. Still, most people call. I would say 90% of the contact we get from customers in both business and motor vehicle is old-fashioned telephone calls. People still want to pick up the phone and call, but we still offer the chat because we know that there are some people that prefer to do that.

Representative Moore has a question. State your question, please.

Thank you, Mr. Chair. I was about neck deep in that 605 drive with the counties, with 8 counties up there, and I guess my one question is, are we getting back to pretty close to normal that, uh, the treasurers are getting and the car dealers are getting Timely service?

Yeah, thank you for the question. I would say yes. As I indicated, our call volume is way down. We went from about 800 calls a day average to now we're about 300 calls a day. So our call volume has dropped significantly. A lot of the issues with the initial launch of the system Have been fixed. I don't I don't know the exact count of things that are still hanging out there, work tickets that still need to be processed. But the core functionality of the system is is where it needs to be. And now, you know, we're just fixing things, kind of one-off things that come up. I think from the county's perspective, things have improved significantly. One of the things that we have. Rolled out here the last 6 months is county scanning of documentation. The last update I got, I think we had 20 counties, primarily the large counties, that are scanning the title paperwork right at the county counter at the treasurer's office, which drastically increases the processing time for those title applications. We've gone from, you know, weeks to months in some instances for title turnaround to a matter of days for those counties that are scanning that paperwork right there, because it doesn't have to be mailed to us. Right? We have dealt with the same postal issues as everybody has, right? Like we've had boxes end up in Louisiana for a month before it finally comes to us, like those types of things. So to the extent we can get away from that and The counties can get that paperwork entered into the system right then and there without having to mail it to us. Greatly improves turnaround time and customer service. So I think we're in a much better spot than we were even 6 months ago, let alone back in February of '25 when the system went live. So I'm feeling pretty good at where we're at.

Are you Go ahead, follow up.

Yeah, well, first of all, my hat's off to you guys. You guys were in some difficult times, and it wasn't just the state. We—

I think we had issues with counties. But I will say, when I did get a hold of the right person at the state, we got to— we got everything resolved. So my hat's off to getting, getting us through them times.

Okay, are you good, Representative? Okay. Seeing no other questions, please continue.

One more slide. Just kind of continuing on Goal 4 here with our customer support and tools, you know, just some other measures here that we're looking at. Again, to that point, you know, Representative Moore, customer service for our motor vehicle customers is kind of at the forefront right now for us. We are looking to provide more electronic notifications. So if you look at number 6 there, you know, I get my renewal notices electronically. I just get an email now. You know, a lot of folks do. About a quarter of vehicle owners are electing to get electronic notifications. We hope to kind of, you know, reevaluate that to see if we can kind of bump that number up more. Thank you. And then the motor vehicle kiosk and our portal usage, we'd like to see that, you know, over 20%. We were at 25% actually this last fiscal year, which is good. So we need to reevaluate that target and probably be more aggressive there, especially in our bigger counties, right? I've heard the stories about folks, you know, in Minnehaha or Pennington County, for instance, going to the treasurer's office and it takes 2 or 2 or 3 hours to get through the line to do your title work or to renew your tags. Most folks, you can do that at one of our kiosks, which we have, you know, I think we have 20, 22 of those now located throughout the state. We just, I think we're in the process of adding a couple to Pennington County because there's heavy usage out in Pennington County on those kiosks. But the My605 Drive, you Portal, just a little plug. If you have not set up an account out there, I would encourage you to do so. It's it's super slick. If you get that notice that says you need to renew your tags, you can go right out there. You can you can complete your registration, pay your fees, get the tags mailed straight to your house. Don't even have to go to the courthouse. I know Representative Overweg you won't be doing that, but. Other folks may be interested in doing that, and we think it's a good tool that's now available to our customers.

If I did it in my little county, the treasurer would think I was mad at her if I didn't come and talk to her. Senator Howard.

Thank you, Mr. Chair. Could you touch on the different— I'm going to start. I want to dig in on these, too, but touch on the difference between 3 and 4. Increase responsible gambling advertisement views and increase the average number of views per paid lottery advertisement.

Go ahead.

Yep. Mr. Chair, Senator Howard, thank you for the question. So we looked at a couple of different measures here for our lottery folks, and I do want to just clarify, this is for the instant online games. So like Powerball, Mega Millions, the scratch tickets. We don't do any advertising for video lottery. So just wanted to say that initially. These are just the scratch tickets and like the Powerball type games, the draw games. We are very active in the responsible gaming movement. The national organization that we belong to, they have a campaign Every year, and we participate in that. And in fact, we've been very successful in that in some of our some of our campaign materials that we've used. And so we are look at that as kind of a separate issue as our normal just advertising for the lottery. And so what that is what that is measuring is the number of ad views that were specific to that ad campaign. That we do, and we do that ad campaign every year. So in FY26, we actually exceeded our target for ad views for the responsible gaming campaign that we ran. The, the other one, number 4, that is just the general lottery advertising, and it's for the digital campaign. So we've looked at digital campaign campaigns differently than your traditional print media and television media. So this is like, like your, your YouTube ads and your, your Reddit and your Facebook, your social media buys that we make in conjunction. Lawrence and Schiller is our marketing partner. And so they work to place these digital ads in various spots. So that's again, a It's a separate campaign from number 3, the responsible gaming campaign, and it's even separate from like the lottery commercials that you see on TV like around Christmas time. And so that's measuring the number of digital impressions that we're getting from those efforts because that's really where people are consuming their media nowadays is on their phones, it's on their laptops, those types of things. And so we've set a goal to increase those views by 2.5% annually because again, that's just where, that's just where the viewers are. That's where the industry is going. And that's where we think that we can get in front of our lottery players more effectively.

Follow-up, Senator Howard. Mr. Chair, we know that lottery revenue also flows to DSS. To take care of gambling addiction, people who have issues with this. Who makes the ultimate decision to decide to encourage what somebody referred to— and I love this because it's absolutely accurate— statistically illiterate behavior? So we know we— who is making this decision? I hate this metric because we are encouraging behavior behavior that we should not be encouraging. Now, I'm all for freedom. You have the freedom to gamble if you want to gamble. I— whatever. I won't because I understand statistics and I know everyone loses over time. That's just the way it is. So who makes it— who is making the decision to actively go out there and spend money to try and get our citizens There you go.

Answer that.

It's a good question. So the Lottery Commission is governed by a 5-member board, and that commission, or that board, one of the functions is to promote the South Dakota Lottery. We do that for a number of different efforts. Well, I understand, you know, your concerns, and yes, we do provide funding to DSS on an annual basis for problem gaming services, and we also spend, you know, considerable money on responsible gaming. You know, all of our advertising has a component of responsible gaming. At the end of the day, it's a form of entertainment, and it's a significant revenue generator for the state. So understanding that you're kind of balancing, you know, the negative aspects of gaming, you know, for some folks with, you know, the entertainment value for a lot of folks who like to play, you know, the lottery games. And so that's really what the advertising is focused on is to make players aware of, you know, the different products that are out there, but also to make sure we're carrying forward that responsible gaming and that it is, you know, it is an entertainment activity. It's for fun. And if you do have issues with it, there are resources available.

Follow-up, Senator Howard.

Thank you, Mr. Chair. So is the Lottery Commission mandating that you shoot to increase this by 2.5% annually? Who is making this decision? I would love for I would like for this metric to go away. If people choose to gamble, they can choose to gamble on their own. We as, as a state that is representing all the taxpayers and all the citizens of the state, I don't believe should be encouraging this behavior.

Do you want to answer that question, Mr.

Chair? Of who? Senator Howard. So we established this measure at the department in the lottery division. You know, this information gets reported to the Lottery Commission. They're not mandating to us that we spend X number of dollars on advertising. They approve all of our contracts, so the advertising contract that we have, you know, that has to be approved by the Lottery Commission and the budget that we spend on this function. As does the legislature, you know it goes through the Appropriations Committee as well. As far as the measure is is concerned, really for for for our purposes, we're we're trying to measure how effective this effort is. It's kind of a return on investment. It costs us money to advertise, so we want to make sure that that it's reaching customers. If this you know committee doesn't believe that it's an appropriate measure, we can certainly, you know, remove that or reevaluate it.

Okay, Senator Howard, you good? Okay, Representative Carla— Representative Lems, you have a question? Thank you, Mr.

Chair.

I would just like to piggyback a bit off of Senator Howard's comments and echo them myself. I understand that this is legal under our state law in South Dakota and that it is a source of revenue for our state. But I also am not in favor of trying to increase what we are already doing with more taxpayer dollars for gambling purposes. So I just want to go on the record saying that. Thank you.

Okay, thank you. Any other questions? Okay, please continue.

Mr. Chair, so that does conclude my presentation. You know, hopefully these measures are meaningful and are within the scope of what the committee is asking for us. We definitely, like I mentioned in my opening remarks, took a step back and wanted to focus more on outcomes instead of just counting things.

Thank you.

It looks like my phone-a-friend let me know that as far as the equalization factor is concerned, Senator Howard, the 4 counties were Jackson, McCook, Sully, and Walworth, or yeah, Walworth County. So those were the 4. But other than that, I would just, you know, be available for any other questions you might have.

All right.

I apologize if I didn't see it. And this will be a very— you probably won't be able to answer this. I'm not trying to back you in the corner, but do you have any matrix in a year on fraud? Like, what do you guys think is not getting paid? Now, I'm not talking about accidentally through recordkeeping, but just people out there just fervently, just right up front, just keeping tax money. I mean, do you have a matrix on that at all, or is there Would there be any way to do something with that?

Mr. Chair, you know, a couple of different things that we look at. Obviously, you know, I didn't specifically call this one out, but the delinquent rate for returns, right? If you're not filing returns, if you're a licensed taxpayer, not that that's an indication of fraud, but there's issues there, and we will address those with that tax Right. Again, just because you're delinquent doesn't mean you're engaged in fraud. But that's one of the things that we do look at. We have, we have a separate unit of revenue agents, the ISB agents that are certified law enforcement agents that focus primarily on criminal violations of the tax laws. And so There, yes, to the extent that we do have some information on fraud, it would be more based on like number of convictions that we've had. So it's something that I can certainly, you know, share with you, you know, in the future going forward if you're interested.

Like I said, I wasn't trying to back you into a corner. I just didn't know if you had any, you know, it's because it's, it's so easy for some to, you know, especially cash, that kind of thing. It can go.

Yep. Okay.

Thank you, Mr. Chair. This is for the Secretary.

I know in the meeting that you just had with Tribal State Relations, one of the topics that was talked about was tax collections for the tribes. Is that somewhere listed within your matrix, or is that something that we could talk about having within your matrix?

Go ahead.

Mr. Chair, Representative Emery, uh, thank you for the question. And, and what the representative is referring to, I believe it was maybe 3 weeks ago now, um, the State and Tribal Relations Committee met down in Rosebud, and I went down and, and gave a presentation on our tax collection agreements that we have with 8 of the 9 tribes. Um, and so there, there isn't anything specific Representative, in this current set of measures, we do report on the tax collection agreements in our annual report every year. But if there's something specific that you think that, that would be worthwhile of measuring, certainly let us know and we will see if we can come up with a measure specific to that.

That answer your question, Representative?

Yeah, but I mean, I think the question more or less surrounded the remote sales. Some of the sales practices like franchise taxes are not being really—

and I know that goes from tribe to tribe, so that's kind of hard to measure.

I know, I understand that.

But I think it's just for more transparency, you know, because I know one of the examples Lower Brule has absolutely no agreement with the state, but yet we're collecting motor fuel tax and other sales tax for that, for them. But it's not— I mean, it's being remitted, but that's not really in agreement with that tribe specifically. So there's some question as far as how that taxation is happening.

Okay. So did you have a question then, or did you just want to make a comment? Is that just a statement?

No, no, I mean, I guess the question is what can we do to remedy that?

Okay. Mr. Secretary?

Mr. Chair, it's a good question, you know, Representative Emery. You know, like I discussed a few weeks ago in Rosebud, you know, I think ideally we would have an agreement with every tribe. We would love to have an agreement with Lower Brule because it just, it just, it makes it much easier to ensure that, you know, the remittances are getting back to the tribe that they're entitled to. You know, we do have a process with Lower Brule for like motor fuel tax and cigarettes that we currently have, but I'm not necessarily sure how that would fit in with, you know, our performance indicators and what that would look like as a measurement. Okay. But certainly something that is an ongoing discussion that, you know, we are more than willing to have with the legislature, with the tribes, to see if there's things that we can do to improve how taxation works in our tribal areas.

Okay. Anything further, Representative?

No, I'm not.

I think just a statement, just that, you know, for transparency purposes, I think that that's something to really look at just so that both the state and the tribes are kind of at ease as far as taxation when it comes to this topic. Thank you.

Thank you, Mr. Chair. Senator Grove.

Thank you. So we've had this conversation a lot over the last couple years, especially regarding Laura Brouillette. So one of the things that I've been thinking about regarding this issue, I don't know how you could It on this type of a thing either, because each tribe does their own. They have their— you guys have worked it out with each tribe how they're going to collect taxes and on what and that kind of a thing. But as far as confusion, which there seems to be a lot of that, just one thing that I don't know to throw out there is, you know, during session, when we're talking about various bills, you come by with kind of a cheat sheet on the bill and the issue and how it could impact good or bad, whether you stand for it or you oppose it. Is there a way to create some kind of a cheat sheet that would explain where some of these issues are, the confusing, the sticking points, to where someone could go, whether it's online or whether the legislative body has it, I don't know, but where people could get access and there would be an explanation as to how the taxes are collected and then disbursed without getting into the weeds, but like where there's just a— I can go on and I can kind of educate myself to that.

Go ahead.

Mr. Chair, Senator Grove, yeah, I think that's something we could do. And I'm trying to remember if we have a publication on tax collection agreements. I'm not sure. But if we don't, it's something we certainly could have. You know, kind of like you said, it's kind of a cheat sheet, just like a 1 or 2 pager that explains, you know, how they work and what tribes we have agreements with. They're kind of a moving target, right? So I mean, it'd be something that we would, you know, have to make sure that we keep updated as things change. But it is an area that there's— you take a very confusing area, taxation, and then you couple it with Indian law, which is also a very confusing area of the law, and you have one of the most complicated areas that you could possibly imagine. So you're right, it's something that I think, you know, there is a lot of confusion and misunderstanding and certainly something we can look at if there's, you know, documentation, publications, whatever that we can put out there, make available to the legislature. So when you get the questions that you're more prepared to answer them.

Great. Okay, you good? Senator Howard.

I'm wondering, Mr. Chair, if we could— if I could ask if you could ask the committee if they would be okay with eliminating 4.4 and not having that as a performance metric to increase the views to lottery by 2.5% annually. I'll say again, I don't care what you do with your money after government. takes its many bites out of whatever you earn, you have the freedom to do whatever you want to. But I just don't believe as a metric we should be pushing government to do this more and more and more when we know that we have to end up giving money to DSS to treat the issues with gambling, the negatives. So I don't know.

Um, I guess I would say as chair that that should come into a, a more formal Motion. I mean, it's kind of a question now, but it's like, would we be able to? But I guess it could come as a motion. Would be better, but it should be stated right. Okay. As long as Representative Auch.

Yes, Mr. Chair, I would like to make a motion that we do consider. Ben. Striking number 4 on the— what page is this— goal for continued in customer support and tools, completely striking that and work on lowering that number, correct? Second.

So you— your motion is to remove number 4 from the matrix?

Correct.

Number four. Number four. Not consider it, but you want it removed. Correct. Okay, that's the motion then.

Mr. Chair.

Representative Lems, was that you? Yes. Just a quick question.

So we're we're talking about under goal. Roman numeral IV, correct?

Correct.

Thank you.

Senator Karr?

Yeah, Mr. Chair, my question is these are all mostly proposed new metrics. I'm just wondering if the motion should be to, you know, adopt and accept these and just exclude number I mean, a motion to remove it before we've adopted it, I don't— it just doesn't sound like the right process. Could I ask our staff to comment on a suggestion on how to move forward?

Yeah, that's what we're talking about right now. Okay, Mitch, would you like— or Jacob, or did you—

Good morning, Mitch Honan, LRC. I would suggest that the committee first acknowledge the receipt of the data from the Department of Revenue to complete the reporting requirement, and then the motion would apply to the future version of the revenue performance measure report.

Senator Otten.

And I'll just remind everybody, This committee gets changed every two years. Its its matrix and its its setup, and what we see here is many years of things that we the committee wants as as new individuals come. So even though that you may strike it this year when a new group gets in there, understand that they may want that again. So, um, I apologize to you guys, but it can get a little maddening. So that's all I've got on that.

Thank you. Appreciate those comments. Um, so hang on one second. Okay, Senator Howard— or excuse me, Representative Auch.

Thank you, Mr. Chair. I withdraw my former motion and would like to approve the actual report.

Okay, Senator Howard.

I would move to acknowledge receipt of the performance management report submitted by the Department of Revenue pursuant to South Dakota Codified Law 2-6-37.

Second. Okay, it's been moved by Senator Howard, seconded by Representative Auch to approve the report. All those in favor will say aye. Opposed? The report has been approved. Senator Howard or Auch?

Representative Auch, I guess it is. Thank you, Mr. Chair. I make a motion to strike goal 4— strike number 4 on goal I move to remove item number 4 on the continued page, customer support and tools, from the report for future use.

Second.

Okay. It has been— motion has been made to remove item number 4 and supported by Senator Howard. Okay. Any comment on that?

No comment. I do think that it is a legitimate reason to remove it from the report, especially since we are— I too feel we shouldn't be encouraging advertisement for actual video lottery— excuse me, lottery spending in our state, because those individuals that are enticed into this kind of an extracurricular activity are just— we're just respending dollars through the Department of Social Services to recuperate them. Thank you.

Okay. Further comment? Okay. Seeing no comment, we're going to take a roll call on this. So, Madam Secretary, please call the roll.

Foster? Excuse me. Grove?

Aye.

Carr?

Aye.

Otten?

No.

Auch?

Aye.

Emery?

Nay.

Lems?

Aye.

Moore?

Aye.

Howard?

Aye.

Overweg? Aye.

7 ayes, 2 nays.

Okay, receiving the amount of votes it needed, that motion will pass. Okay, thank you, Mr. Sayre, and your lovely staff. Appreciate you guys coming in. So we're going to move on to, uh, our next is the Department of Social Services. Welcome, sir.

Mr. Chair. My name is Matt Althoff. Privileged to serve as the Cabinet Secretary for the Department of Social Services. It's an honor to be with you and your committee today. The department has approximately 69 indicators here. What I propose to do is I'm going to hit just some wave-top ones and then certainly welcome questions from specific ones. As we go through this and recognizing the time and all that, I'll just try to jump into Unless there's any further instruction from you.

Nope. It's your floor. I guess if you get off on the wrong step, we'll bring you back.

You'll rein me in.

We have a way of doing that.

I need a lot of people, so thank you for— up front. Just real quick, I think the committee member is well aware that the Department of Social Services, a lot of what you'll see here today has really been driven by a strategic planning effort that was overseen by my predecessor, Secretary Yeah. And it's been a 5-year plan that we wound down, and we're in the process of revising that. So, we would look at some of these as having met fulfillment or having met the end of their life, if you will, of a meaningful indicator. I do want to emphasize, having been privileged to be a part of the audience here today and some of the conversations that have transpired between committee and my My colleagues here in the cabinet. 51% is what we always talk about in the Department of Social Services. 51% of so many of our safety net programmings, it's up to those that are receiving our benefits. They have a lot to say in terms of whether or not we achieve good outcomes. Those aren't reasons to not collect data. Those aren't reasons to not attempt to get to self-sufficiency. I think that's a great point. —to get to independence. Tracking of data is a little bit more difficult. Some of the— very sympathetic to Commissioner Seeley, some of the hard things it is to get to those data when you can't necessarily control it. But I just want to emphasize, that's really where we are trying to move our department as we look at revising our strategic plan and looking forward to what we call pathways that we'll be navigating as a department, and then therefore getting to better outcomes, more outcome-focused goals.

Thank you.

So it's a little bit of a forecast of what's to come. Please stay tuned for for all that unfolding here in the upcoming months. Meantime, where we've been, as I said, these are guiding principles that have really formed a lot of daily decision making. I just want to emphasize to all of you with 1,523 FTEs, with a you know. Appropriated budget of about $1.9 billion. There's a lot of daily decision-making going on from from you know right there with an interview with somebody, a specialist working with a family that's making application for government assistance. Certainly, a child welfare space working with a family daily at our human services center. So our indicators are really trying to be at a macro scale. But I do want I do want to emphasize to all of you that these sort of guiding principles. I believe and I observe, they inform a lot of decision-making that goes on every single day. So while that doesn't play out in indicators, hopefully you'll see that we believe it helps to inform a culture and it emphasizes what we ultimately aspire for in DSS, and that is to be a lift-up for those South Dakotans that are experiencing poverty. Be that as it may, you'll see if you score on your tally sheet here, we have 41 of the 69, we reached our target, and very pleased about that positive trend in another 7 of those. And we have 4 indicators that there are no more available data, so they sort of outlive their— the life expectancy of those indicators. And then there are a number of—

Can you scroll your—

Sure.

To have on the page what you're talking about.

And I'm just kind of giving you an overview. I apologize. That's just the forecast of what's to come. Yeah, I apologize. I don't have those all outlined. I did not— our wavetop, I understand that all members of the committee have received this. So that's why—

In an email, yes.

Yeah. So those are the indicators. When I talk about the numbers, that's just sort of an overview of what that is, Mr. Chair. Thank you for clarifying. And my slides are just going to highlight a couple of those, and I'll point to those.

The only reason I asked for slides is So, people watching on shared video and in the crowd can see it. That's the only thing. If you got it, I'd ask you to post it.

So, that's just the high level where we're at. Let me just jump into what we deemed to be some of the more significant indicators. Again, I would just urge committee members, if you have specific questions, I'm more than happy to do it, but I think going through 69 would be a little laborious. So, it was our proposal. Let me start with— today is 988 Day. And we're celebrating that because it is a way, regardless of where we're at in life, our financial circumstances, it is not a discriminator. Anyone can receive help today. And this network did not exist 5 years ago. And most importantly, you can see that persons that are experiencing mental health crisis need someone to talk to. 98% of those callers, those texters, those chatters are receiving the help that they need because they that it deescalates for them. They get the help from 988 and they don't have to go to a higher level, more expensive level of care that is available to them. Similar, those that are participating in where we have a responder model, either a law enforcement in accompaniment with a live behavioral health specialist or law enforcement in accompaniment with a virtual behavioral health specialist, those two are similar. Seeing that about two-thirds, three-fourths, pardon me, 76% of those responses are leading to de-escalation. There's no need to go on to a still higher level of care. We see those as really good outcomes. We want to care in place. We want to not encumber somebody. As you all are well aware, this could in fact lead to an involuntary commitment process. That's an imposition on anybody's civil rights. And so these protective factors are really highly successful. Helpline Center has an outstanding metric on their website showing how many calls— they're exceeding 16,000 a year now, and I think it's a very high number. So we look at that as meeting our metric of some of the factors.

Excuse me, Mr. Secretary.

Please.

So 98%, now that sounds like a— that's— how do you How do you come to that number? If of all the people that call to talk, how do you realize or know that they never need further service delivery? I mean, that's a pretty dramatic number.

Thank you, Mr. Chair, for the clarification. So 988 has built-in recommend— ways to refer somebody so they can immediately lateral the call to 911 if in fact there's a crisis that somebody needs to respond to. And so let me just emphasize, The metric is that during the call, it did not escalate. That does not mean that there aren't repeat callers. It does not mean that there aren't somebody—

Thank you. Does that clarify that? Yeah, it does.

Yeah. So at that moment, it was de-escalated. That's not to say that they're protected forever. Obviously, they're suspect to that if people experiencing major depression and things like that. So thank you for clarifying that question. And again, happy 988 Day to all of you. So today is September 8th. And a brief shout out to our behavioral health team and to Janet Kittams, the CEO of Helpline Center. This is a great resource for South Dakota.

Senator Howard has a question.

Mr. Chair, I'm going to guess that the slides kind of follow in the order. Okay. So if it's okay, I'm going to ask a question about numbers 1 and 2. You say part of the goal of offering the classes and the number of successful completions is to increase the recipient's ability to obtain gainful unsubsidized employment. So I'm wondering, could we have that as a metric?

Go ahead.

Mr. Chair, yeah, thank you very much. So again, to level set, this is in the economic assistance, and we use the third party. This is new. Most of our employment services are either self-performed where we do not have job services offices in some areas of our state, and we've recently, the SNAP-Ed, gone into a partnership. So far we have one. We've put out 3 RFPs hoping to gain more partners in this. But that's what we're after here, Senator Howard, is we're doing our best to say, can that lead to gainful sustainable employment? That's our goal in that metric. It's early. And so, I would emphasize, while our target may have been a little overly optimistic, this program, which happens to be run by Catholic Social Services, it was in flight before they made their application. You didn't know how many of those applicants were going to be SNAP eligible. And that's one of the things where the— if the target was right. But I would emphasize, we see great things happening in that third-party partnership accompanying those, in this case, mothers.

Okay.

who are seeking a degree or seeking job skills or seeking, you know, gainful employment through that program that Catholic Social Services does. And by the way, all that is matched in the benevolence on that program is the federal dollar. There's no general fund contribution to that mechanism. So, read early, but promise you that's part of the lift-up that we're looking for through third-party partnerships.

Okay, but follow-up.

Yeah, follow-up, go ahead.

I mean, but I would like to I would like to see it on here. I mean, if I see 6 successful completions, I want— okay, that's great, but how many of those are actually employed? So I do think that should be a metric on here, if you would consider that, and maybe track them over time. Are they still employed a year later?

Mr. Chair, if I could, and I'm going to borrow from the Chair's voiced skepticism towards sharing government information. Sharing personal information with the government, right? I think we heard some of these in the exchanges and revenue and the like. And that is this reality that while recipients of our benefit, we obviously have a tracking mechanism. Once they sort of graduate out, we're really at their mercy if they're going to voluntarily participate. So the spirit of what you say, Senator Howard, I want you to know that we as a leadership team really embrace the mechanisms to actually get that voluntary contribution of Yep, don't need government assistance today. I'm 6 months out. I still got the same job. Thank you very much. That's sort of what you're looking for, is that data point.

I assume he's okay with me following up. So, okay, I'm— that makes sense. But you would know if they did at least gain unsubsidized employment, right?

That's part of the completion of the program, correct. Yeah, that's— you sort of graduate out with that program that I've I've entered into— I've completed my degree, and/or I've now entered into a job that I've, you know, so there's a completion of a job transition. Another way we look at it going forward is what I would call recidivism. So how many times do we come to government assistance and never come back? And you would only be able to assess that on the negative, right? So if somebody has a prior history, they were on Medicaid for a time, Right. They've been away from us for 3 years, but they come back. You know, those are the types of data points that we can more accurately track. It is not the only indicator, but it is a way to sort of get at, I think, what you're saying is to say, hey, we're grateful to have the privilege to help you at this moment in time. Our hope is that while we lift you up, you do achieve independence, self-sufficiency. We're going to be here when you need us, but let's do all that we can to help you achieve, because independence is a far better, more fulfilling life than as reliant on government assistance is sort of our— the ways we'll track this, again, with the limitations of what they owe us for data and survey results.

Okay. Good. Please continue, sir.

So I'm going to jump then to continuing in our behavioral health slides. Thank you for those questions. Just one other piece, and, you know, just right set the context. 5 years ago, we all had— still trying to digest and understand what was going on with this pandemic. It was life-changing for every one of us. And suicides were very front of mind. We had a lot of those. So I do want to emphasize this is just one way. The more that we can empower people with what is the right words to say, what is the right actions to take, what is the right questions to ask of somebody. So that's, you know, I freely admit to some of the tension that the GOAC committee has sort of leveled here this morning. These are inputs. How many trainings did you complete? How many people did you train? For our ability to say we're going to fully ward off suicides, you know, that's still a personal decision. They're 51% of that equation. But to the degree that we can show and track this, solving for an increasing population in South Dakota and still examining very intensely, do we see reductions in suicides? And this has vacillated a little bit every— we work with Department of Health especially Especially, they keep the vital statistics on this. But we are looking at this as an input in concert with other external indicators to do all that we can. And by the way, I would emphasize there is always— there's a monthly meeting that happens when there's new data, when there's a rash, when there's episodes. We are able to deploy strategically some of the resources. So not just— We're shotgunning everywhere. We're very rifle-shotting.

Okay, Senator Howard has a question.

Thank you, Mr. Chair, and I swear I don't have questions on all of these, but, but this is jumping down to like 7, 8, 9. So, but again, I'm going to ask, how do we know these trainings are effective? Could we, could we, is there something we could track? And you mentioned the number of suicides. As a percentage of our population. I mean, the goal should be zero, but I mean, that to me would be one way we could track whether the training is being effective. I just— I mean, again, these are great numbers. I'm thrilled that these people are taking this training, but I want to know if the training is effective versus— I know in here it says they, they feel more confident. Okay, well, I can feel a lot of things and may not actually be able to accomplish it. So I want hard numbers as to how can we show these— this training is effective.

Go ahead, Mr. Secretary.

Um, you know, I would just say, Mr. Chair, that the challenge we have is every human being has a free will. And in this, you know, to have zero, I think, is— can, can government really achieve that? Um, but be that as may, if we can continue to see trend lines where we're seeing reductions in the numbers of suicides. More importantly, we're getting the deployment of protective factors like gun locks and things like that. These trainings that are people really are frontline staff that can be the difference for somebody, at least at that moment in time, sort of like the chair's question about the 988. You know, I would just hope we'd be sensible about that because I would say these things also motivate staff. You know, hey, we're doing all that we can sort of get good information out there. But I hear you. I'm not trying to be dismissive. I'm just trying to contextualize that it is— to track to a zero-sum game is going to be really difficult, right?

Follow-up? Go ahead.

Thank you, Mr. Chair. It's not— and I'm fully aware of that. I'm just looking for some way to evaluate whether this training is effective.

Yeah. Yeah. Okay. Please continue.

Thank you for that, Mr. Chair.

Senator Grove.

Thank you. Mr. Secretary, I'm just wondering, just in Indian Country overall, I guess there, you know, you talked about that there are, I guess, I don't know what word you use, but I'll use seasons where perhaps there's more suicides, that kind of thing, than others. I'm just wondering, is the state working in collaboration with any of the tribes to combat the serious situation that we have with the number of suicides? And, um, because when you're talking about suicide prevention, suicide trainings, that sounds like a really good deal— idea to me. And I'm just wondering, um, if the state is working with the tribes on that.

Mr. Chair, the short answer is yes. And, you know, anytime we deploy resources, they're available to all comers. They're not fee-based. We just last month held a late major behavioral health conference. It'd be our 5th annual. Many tribal partners, those that are delivering services on tribal lands, affiliated with tribes, some not participants in that. You know, I think we had nearly 700 registrants to that conference. So the short answer is yes. And when we know about I would say the last thing is when we do see the data coming in through Department of Health where there is a rash, there's an uptick, we do have a hot wash team that's multidisciplinary across a couple departments and they analyze that and they contemplate what are the resources we need to deploy, who are the providers that we need to engage, can we help you, these are some of the things we have. And so I'm really proud of that work that again involves military, health, Human services, social services. It's a really robust group that's standing meeting every month looking at that data.

Go ahead. I think we're good.

Let me transition to a different safety net then, away from the behavioral health. Honor for DSS to be that behavioral health agency for the state. It's also the child welfare agency. So this area is pretty Sensical, I think, to all of us. If in fact through law enforcement and a court it's been determined that a child is either being physically or sexually abused or is in a position where they are facing present danger, they're— the parents are neglectful in their care of them, they're not able to safekeep those children, they come to state custody and DSS receives those into its custody and provides services to them. As we all know, there's a good reason why you'd want to place that child into a loving home. They've been through a traumatic experience. So what this number shows is a dramatic increase through an initiative effort that is really multifactorial, but you can see a dramatic increase from, from 195 just a year ago to 360 new families that were licensed. This is an ever-present strategy in DSS.

Yeah.

It's hard work. It is full of lots of ups and downs for those families that receive a child that has been impacted by trauma. Behaviors reflect that every single day. So, you know, we'll never arrive at this, but we'll always pursue, are there more resources available to us? So we're really proud of this being a pretty good indicator, Stronger Families Together.

Senator Howard.

Thank you, Mr. Chair. Okay. So I think we're ahead of where I had another question. Number 18 on the Health Home Program, the cost, net cost avoidance in millions. I'm wondering just if you could explain to us how you come up with the $15.3 million. How do you actually come up with that?

Mr. Secretary, go ahead, please.

Please. I apologize. We're probably a little out of order. Can I just go to the slide and I'll go back to the other ones if that's all right? Thank you, Mr. Chair. So, this is actually a pretty profound point, Senator Howard, if I may, because in the health home, what DSS is able to do is a control. And that's what you need in science, right? We have to sort of limit a variable and then watch it. So, what we do with the help of HMA, it's a consultant, they do this work all the time. They basically set up a control to say, well, what happens if a Medicaid recipient and they have to have certain criteria, namely 2 diagnoses that are long-term or significant, whether we enroll them in the home program or not. We call it Care Connect as it is today. But what you can do is essentially you create your double-blind randomized controlled trial at that moment and say, well, what happens if you don't enroll them in a Care Connect program and what do their expenses become versus if you do? And again, just Care Connect is somebody that is Oftentimes it's a social worker or a community health worker. They are doing all that they can to help that patient make certain they're attentive to their appointments. They're, you know, vigilant about their meds. They're on on top of the checks that they need to go do. What's blood pressure or glucose checks? Those types of things. They're a minder, if you will, in that, and they do really important things because a lot of this population is facing a lot of barriers to just doing. those simple things. And what you find is amazing cost avoidance. So if you run the 2 populations, and I'll give you some numbers here, Senator Howard, an average of $182.19 in calendar year '25. We had a lag in the data, but in calendar year '25, $182.19 per member per month spent more on the control group than what was on the Care Connect, those that were enrolled in our home program. Now, if you extrapolate that out with actuarial sciences, that's where we are estimating that there's $15.3 million in cost avoidance happening in fiscal '26. And so this is a regulatory mechanism that we do. And as I said, the critical aspect of this is you can create a control group within our population of Medicaid because there's enough population there. So let me, let me pause and let you—

Okay, follow-up, Senator.

Thank you, Mr. Chair. Is the control group people who are refusing to enroll in this?

It's a great question.

Go ahead and answer it.

Yeah, thank you. I appreciate it. And I'm going to have to come back to exactly how we establish that. I apologize, I don't have that detail. So how do I— I want what they're having, right? Why do I stuck in the control. I don't want to be the lab rat. Yeah, let me, let me come up with that. And I'll shoot an answer back. So how do you get in the control? Apologize. Just real quickly, that was $1,750 annually. And then we also, if you again, you extrapolate that out, that's where you get the $15.3 million. So. So, you know, we have the benefit of scale sometimes in DSS, and most importantly, there's some actuarial science going on there that we're actually sort of saying, where can we actually show the benefit of an investment? 'Cause there is a per-member per month charge on the Care Connect, and we're reducing that out, by the way. But to pay that care coordinator, there's a fee that's associated with it, but you can see that it's paying for itself with the cost avoidance. Other things that we're thinking about, if in fact we're safety net, we want to lift people up. A lot of times they come to DSS seeking Medicaid coverage because they know that their health is not good and they're underemployed. They have challenges in just a lot of life. We can all appreciate that if our health is preoccupying our minds, we don't get ambitious. We don't go forward and lean into the saddle, as the expression might be. So Here's just examples of our accessibility to care. And I think this ultimately, I just want to emphasize, this is not the department's. This is our providers. 21,000 enrolled Medicaid providers, they're saying, yes, we will see you. That's what these statistics are. How grateful we are that we live in a state where that is still a really important part of providing and delivering healthcare is that we will also treat those that are Medicaid enrolled. Those are disadvantaged economically. And so you can see here we're beating national averages. These are indicators 14 and 15. Just some really important things that are happening. As we all know, once you can begin to get healthcare, that restoration can happen within that human being and they can, they can get on to a more independent lifestyle. Similarly, these are other preventative visits. Representative, or sorry, Secretary, Commissioner, I can get the term right. Commissioner Sealy talking about this within the state employees group. We know that these well baby checks as well as the adult preventative visits, they're part and parcel. A quick commercial, as we see this positive trend going on in the adult preventative visits, our rural health transformation initiative known as PACT, Primary Care Accountable Transformation, is really gonna be needing this, 'cause you'll have to baseline where is that patient at when they first become your patient, and then how did you move them when you think about BMI, or you think at A1C, or you think about what is, what are some of their metrics on their glucose levels or on their lipid panels. Those have not yet been determined, but that's the whole premise of our moving to a value-based care system. And so this metric will be very robust going forward as we continue to say you have to get in early and then we're gonna baseline you on those so that we're gonna pay providers based upon their ability to get that patient to being healthier than where they were when they first came to you. And I did the Health Home Care Connect. To HSC, again, you know, it is a traumatic thing. A good majority of our patients at HSC come there involuntarily. And I think that's something that we really should sort of contemplate. They were in such a bad way as determined by an independent court or a body of examiners that they need to be into protective custody, and that's what HSC is built to be. It's a safe place for people that are a harm to themselves or a threat to others. And here you can see that they've been through a regimen of treatment, of therapy, and you see that we're getting better at handling crises when they arise. We're getting skills that way. We're not as symptomatic, though that we didn't get quite to our established goal on that. So they still have good days, bad days, we presume, in that Social situations, not where we wanna be as well, but we're trending in a good direction. And I deal more effectively with my daily problems. Just wanna emphasize, we just in the hospital just opened what we call a treatment mall that is really aimed at these 4 things. So a treatment mall is basically I can go to a place on my schedule while I'm admitted to the hospital, while I'm sick, Right. Receiving care there, and I can participate in a lot of different programs at my pleasure. So it's not just the therapies, group therapies, personal therapies, it's also life skills. Sort of think of occupational therapy and what am I going to do when I go to the grocery store, what am I going to do when I, when I go to the doctor. Those types of programming is what we're building out in this treatment mall, all aimed to sort of continue to build protective factors for these patients in anticipation of their If we're going to be a safety net, we need to be accessible. So these were all metrics just looking at how people find information on our website. I would say we have an immense amount of website territory that's covered. There's a lot, probably to a fault. Sometimes it becomes a little bit of a resource. We're continuing to look at that.

Yeah.

Yeah. How do we make it even more accessible? But you can see that people are finding it. This is immediately translating into how many people are applying for Medicaid online. That number continues to grow. They find accessibility there, but how can they get questions answered right there? That's one of the more affirming ways in those that are in this population. We want to empower them by saying, I can navigate a website and I can find the answer for myself instead of having to be told. That's something that's really important to us. It's those little things that can really contribute to that lift-up.

And again, I apologize.

This seems a little helter-skelter. It is, for the most part, following your overall metrics. I welcome any questions as I go through this. I wanted to go to the Medicaid transactions. It is an extraordinary thing when you realize that there's a little over 9 million claims that went through the department last year. That's inclusive of the medical claims that are paid through MMIS, our dental claims, which goes through a third-party administrator, Delta, and our pharmacy claims, which goes through a third-party administrator, Optum. 9 million claims. And you can see that we're still trying to get to that point.

Okay.

We're trying— Chair Overweg, I want to be very clear. I hear exactly what you're saying. You know, hey, we're paying you a favor, first of all, by serving Medicaid patients. If that's where their business is at and they want to submit paper claims, we meet them where they're at. Many of these, I will tell you, is actually in the world of third-party liability. Medicaid by law is the final payer, last payer of last resort. There are many, especially children that do have coverage is through commercial insurance and Medicaid is filed after all those claimings goes on. So that's a big driver of the paper claims. And then how do we get them to engage in their own care? Simple things like selecting their own primary care doc is sometimes the first step. Not being told what to do. So often society telling this population what it should or shouldn't do, judging this population. How do we help them I feel I'm a driver in this. I select my own primary care doc. It's not given to me. So we're seeing not quite to goal, but we're doing our best to help them achieve that and get that sense of self-preservation, self-survival. These were SNAP. Again, wave topping here. We were really pleased with some of these. with the help from our partner at SDSU. Again, just survey data. Wouldn't say that every SNAP recipient conforms to this. It's only those who are in the survey population, but nonetheless, good decision-making. And as we all know, healthier food typically costs more. It's an oxymoron that we all navigate in this society today, especially in the impoverished where you have food deserts and the like, but that they're Consciously choosing to purchase more fruits and vegetables, more proteins, and also incorporating physical activity. We're really pleased with this. This is ultimately what's— that's the 51% that I talked about earlier. The more of the decision makings that they take for their own will definitely be a good predictor, a good outcome of them being on government assistance for a time, but not forever and ever. Is our goal. Jumping back to child welfare, again traumatic moment for these individuals, but you can see the the reunification rates took a really constructive jump in in fiscal 26. Very very pleased with that increase from 58 to. 76— 72%, pardon me. That's significant. How does that happen? Well, number one, it takes the birth parent being more engaged and more responsive to what the judge's orders are. These are the behaviors I need to see changed in you. It takes a humility to say, I need help. And it takes resourcefulness on the part of our child welfare workers.

Right.

To say, here are some of these ways that you can help. We want to, we want to align you with these resources. How do we work together to get to reunification? That's always our North Star. So we're really pleased with that number. Great credit to some great systems and good leadership on our child welfare team. Similarly, I think we got a question here from Senator Howard.

Thank you, Mr. Chair. Do you track— I didn't see it in here, but reunification that's great, but do you track how many go back into foster care after reunification to see if, you know, if there's something we could improve there?

Go ahead.

Mr. Chair, we— I could get the data for you to say how many are repeat cases for sure over a period of time if you'd like that, Senator Howard. Yeah, it would be in our FACE system. It's a legacy system that continues, and, um, you know, I don't have the data obviously in front of me, but I will say it's It's unfortunate sometimes that there's, you know, multiple times where families become what I call child welfare involved. So we'll put together a metric for you to look at and follow up to that.

Okay, please continue.

And lastly, you know, there is a reality, a legal reality that sometimes, and let's be mindful, sadly, tragically, sometimes this is death. You know, we have Children under custody whose parents are deceased. That's, that's an all-too-often tragedy that comes across my desk. But nonetheless, there is a reality that you get to separation or termination of parental rights. And at that point, you pivot, and it's, it's our desire to get those children to their forever home forever. Now, again, we'd love to have that happen within, you know, a hop, skip, and a jump from once the termination happens, but you first of all need an adoptive home. And families need to be really picky choosy about, you know, what are that child's needs, what are our resources around us. So that's always a delicate dance. But you can see that, you know, we're at 32% within the 24 months goal. And that goal is universal across all 50 states. It's kind of a federal benchmark. So our desire is always to make that much closer to 24, much closer to 100%. A lot of factors that go into that. I also had, just speaking of the placement pieces, this is a new one that really took off in fiscal '26, kinship. Again, what that allows the department to do is to identify family members that can go through a lesser scrutiny Yeah. And so it's a little bit less money than what it is to be a foster. I do want to emphasize foster provides 30 hours of invaluable training. And children who have been traumatized will have behaviors. The evidence is pretty overwhelming. Those trainings can be very helpful. But nonetheless, in kinship, if we can do the licensing quickly, that allows us to pay the daily stipend. It is a cost to have another mouth in the house. And so that's ultimately what is happening there, is we find Find relatives, and we make certain that there isn't any known criminal background check, some of those things, a home visit to make sure that it's actually a safe place. But those minimal barriers, if you will, to licensure are overcome pretty expediently, and then we're able to place those children much closer to home with familiar loved ones, somebody that, you know, recognizes the child. So we're pleased. That number will grow, would be my prediction, because this is just year 1. Okay.

Hold on, Senator Howard has a question.

Thank you, Mr. Chair. How much is the stipend that you mentioned, and is there any— I think I've asked you this before, but is there any— oh my goodness, do you— are there anyone— is there anyone based on their pay that does not receive the stipend?

Go ahead.

Thank you, Mr. Chair. In licensure, no, there's not an income scrutiny to that. I suspect you'd have a case where somebody would refuse it, but that's not a scrutiny that we give. I'll have to come back to you about the exact rate. I could ballpark this for you. It's roughly $23 a day. I want to say something along those lines. It's not something that anybody becomes a Brewster's Million off of. You know, it is basically sustenance for that. It's what it equates to. But we'll get you the exact number, Senator.

Okay.

Okay, please continue.

Um, and then there you have the 87%. Again, you're contrasting that to, uh, uh, PRTF, an institutional level of care. And there are those many kids that unfortunately their behavioral issues are so strong they need that. Um, there's some step-down to some group homes. Uh, the group— McCrossins would be a good example of one of those. But our desire is home for each of these kids while they're in our custody. That's a place where they can transmit love and unpack some of these pent-up emotions that they will oftentimes deal with for many parts of their life, the remainder of their life. Home is where we want them in that home setting. So really pleased with 87% solution in fiscal '26. You know, program integrity is something I think we're all very concerned about. And I'm pleased to tell you that I think the department has a long history of doing this well. Perfectly, of course not. Free will and opportunists are always, you know, out there and lurking. But nonetheless, here's just a couple of statistics that you can pull off of our metrics that show 100% accuracy in payments for Medicaid, that program integrity team is looking at all of our data, scouring it. They shop notes, compare notes with other states. What are fraudsters doing? What are the things you need to look at? What are the tricks? And they're scouring that and looking for things that they need to take deeper dives on. And, you know, to Secretary Houdyshell's example, sometimes it's not just fraud. Sometimes it's just, it's misunderstanding. It's a lack of administrative competency or, you know, familiarity. Those are real issues that our team is more than willing to try to TA them, give some technical assistance. But sometimes, unfortunately, we're turning them over to the Attorney General's Office for prosecution as well. Child support. This is an area that, you know, we continue to see ultimately a reduction in cases. That has a lot to do with a lot of things, most notably just having fewer kids. Fewer marriages. So we're seeing a reduction. We're certainly— those that are incarcerated for extended periods of time, they're not— we're not carrying them on our caseloads anymore. There's still an order out there that individual, that parent that's incarcerated for an extended period of time still has liens or debts to that household. But we're really focusing on how do we lift those families up. So that's what some of the metrics are.

Okay.

In terms of overall numbers, not so good, but we're finding what I'll call higher-performing cases in child support. I'm really proud of the team that they're getting greater engagement from the payer, and that money is immediately translating to the receiver, and that is in everybody's interest. When the parent that's noncustodial is paying their weight, and the custodial parent is receiving that, that limits how many times that custodial parent is coming to government assistance, For help, it certainly betters our society, because if you understand your first responsibilities and you put your money where those responsibilities are, I think you end up being a far more contributing member of society. And childcare, another one where our metric was really high, 99% of accuracy, and then one that has just proverbially never to be taken advantage of. I remind our team, you can only fall from number one, but our SNAP error rate continues to be significantly lower than national averages. And as many of you who are also on appropriations are well aware, that's also right now saving the state quite a bit of general funds to continue to administer our SNAP program. So really proud of the work. We want to help, but we want to help in a just way. And those— and I would just emphasize, one of the biggest things that drives us is we say no to a lot of people every day that make application. Not everybody who applies receives our benefits. And so, we know consciously as a department that if you're going to be eligible, then you ought to get only what you get, right? Get what you're entitled to, what you deserve. So, I'm really proud of the efforts of many teams in our department that focus on the integrity. Staffing is a challenge for all state governments. You heard Commissioner Sealy earlier today. I would say, you know, a couple of our agencies are front lines and face a lot of difficult, difficult human melodrama, you know, that's projected onto them. Certainly our CPS workers go to in-home investigations. For example, at the hospital, it's a protective place, but that doesn't mean that people don't act out. It can be a dangerous place as well as people, you know, react with physical as opposed to their minds, right, when they're in a difficult state. So all these factor into our recruitment retention. These are hard positions to fill. We do everything we can to help them be prepared, be trained, well qualified when we hire them, and certainly wet the noodle, right, early on. I appreciate, Representative Moore, your comment about 5th grade. We're realizing that at HSC too, that it's really important to say, what is psychiatric care? What is behavioral healthcare? How do we, even at a younger age, help kids understand that there's really fulfilling work that awaits people that, that have a calling towards this? So working on those as well in the recruitment retention area. By design, this was pretty fast. Let me pause if there's any other specific questions.

Mr. Chair.

Senator Grove.

Um, if we could just go backtrack really quick to, uh, slide page 11, I guess. Um, just in dealing with, uh, you know, the patient survey after hospitalization, Socialization and issues with dealing effectively with daily problems. Oh, social situations. That was kind of the one that sparked a thought. So I have had, not necessarily in my district, but just people from outside of my district contact me regarding marijuana use in Apartment buildings, public places, your private home, but it's a public place because you're sharing all this space with people and they're smoking weed and whatnot in their apartments. And I'm just, I'm just wondering, like, because I'm thinking of like the psychosis and all that stuff that we're potentially going to be dealing with when you have People who are smoking a lot of weed and then the secondhand smoke issue. Like, I guess it's probably a far-out question, but I'm just wondering, like, what are we— are we thinking ahead in that area? Are we considering what issues may be coming that maybe in the past we haven't really had to deal with because we've—

It's Go ahead and answer that, Chair.

Yes, although I don't think HSC is going to be the sole solver of the marijuana, you know, in apartments. So we do provide in our behavioral health team a lot of trainings to a lot of frontline staff, whether they're community mental health centers or, as I said to you earlier, we do all that we can to make our trainings available to anybody who's in this provider space. And I would say that, you know, practice trends, practice methodologies, all continuing to look at a treasure trove of evidence is ugly. Whether it's a social media phenomenon, what have we done to, you know, the biggest endorphin-kicking thing that's ever hit humankind, or the increasingly accessible substances that are on, the addictive mechanisms that are in our society and our culture today are Pretty ubiquitous. So that would be the first place we're doing is like, what are the tools? What's evidence showing? What are the ways to do it? But it's a tidal wave, you know, and are we preparing? Sure. I would say the first thing we're doing some of this triaging, the 988, the response to crises, the appropriate regional facilities, that's making the population we're serving at HSC quite a bit more ill just by default because many people do not make it to HSC. They get care elsewhere, which is our goal with this triage mechanism. But, you know, it is a deluge of young persons that are waking up in a world that was very, very different from the one we grew up with, with all these addictive substances and/or devices in our midst. So that's the short of it, is just doing all that we can to make sure that we have resourcing for providers. Thank you. That they're staying current. What are practice trends? What's the research showing them to better address whether it's secondhand marijuana or it's Instagram, yada yada yada on the screen? So, okay, you good?

Senator Howard. Thank you, Mr.

Chair. Numbers 61 through 65 under program impacts, they all are based on Somebody reporting something, you know that that Medicaid recipients report having improved their ability to receive preventative care. It's all based on subjective. I feel like yes, I learned more about energy conservation. Have you guys tried to think? I mean, I look at these and I go, okay, well, SNAP recipients report having learned about new more about nutrition and food budgeting. I believe we track SNAP purchases, so we should know, did they actually learn something by our— is the amount of soda being purchased going down, or is the amount of, you know— I would rather see those metrics than just somebody's subjective, you know, TANF recipients report being better able to address barriers to employment. Well, I just want to know how many TANF recipients have found employment. You know, something. So I don't know.

Can you find a question in there to answer?

First, a clarification. But yes, I do. We don't currently track SNAP purchases. We will, God willing, with our vendor FIS January 1st. We'll be able to see at the itemized level in the transaction. Currently, that's not the case. I do. And I want to emphasize Senator, I hear your frustration. Inputs are easier to gather from government, right? Here's the things that we offered. Here's what they said on their survey. We will be better going forward with the goal of saying, well, what's your recidivism, right? What's your duration in the safety net? If we can shorten the duration, that's a good thing, not something to be cowering towards. We should be celebrating it. If we can limit the times that you come back to us, even looking 10, 20 years back kind of thing, those are the types of things that our next set of goals are aiming to have, be more inclusive of. So, and we'll be socializing those.

Okay, follow-up.

I think overall you do a great job, and you— I wouldn't want you to add more metrics. I don't want to increase the work burden on your agency, so I would I would love to just tweak some of those, change them. So thank you.

Any other questions for the secretary? Seeing none, Senator Howard.

Thank you, Mr. Chair. I would move to acknowledge receipt of the performance management report submitted by the Department of Social Services pursuant to South Dakota Codified Law 2-6-37.

Second.

It has been moved by Senator Howard and seconded by Senator Otten to receive and accept the report. All those in favor will say aye. Opposed? Aye. That report is accepted. So we went a little long this morning, but we're going to have a working lunch. Sorry, but we're going to break here for just a little bit and we're going to put some groceries down our throat and we'll be back. I'd like to say 20 minutes, but I know it's going to be a half hour.

Hang out.

We'll be right back. Okay. We're going to call GOAC back into session— into order. And we are going to continue. We are up to our 3rd on our agenda, report from the Bureau of Human Resources and Administration on compiled authorizations to derive a direct benefit from a contract. Welcome, sir.

Thank you, Mr. Chair, members of the committee. Good afternoon. My name is Greg Engler. I'm the General Counsel for the Bureau of Human Resources and Administration. On behalf of the Commissioner, I'm here to present the fiscal year '26 conflict of interest waivers report, which BHRA compiles pursuant to SDCL 5-18-17. These statutes are apply to executive branch officers and employees whose duties include approving, awarding, administering state contracts. And what the laws prohibit or are trying to get ahead of are having people who are engaged in those activities, approving, awarding, or administering contracts, and then derive a direct benefit from the contract. And to derive a direct benefit Is you have to have 5% ownership of the contracting party or receive compensation from the contract or the contracting party or acquire property under a state contract or serve on a board for a for-profit that derives a benefit from a contract. That's separate from the absolute prohibitions. So those prohibitions that I just mentioned can be waived, and that's what we're here to do for the report. But it's separate from the absolute prohibitions, which are such as soliciting or accepting a gift, favor, reward, or promise from future— of future employment in exchange for influencing the award of a contract. So, the process, the employee identifies the potential conflict that they have, and they submit a request for a waiver to their agency head. They submit a full written disclosure. Of the potential conflict, and then the agency head alone has the authority to grant or deny the waiver, reviewing the essential terms of the transaction, the employee's role, and whether the contract is fair and reasonable and does not— and a waiver would not materially affect public interest. Every approved waiver must be in writing and becomes a public record. BHRA plays no substantive We do not have a substantive role in approving or denying conflict of interest waivers. The agency head is the sole decision maker. BHRA receives approved waivers from the agency, compiles them into the annual report, which we then submit to GOAC, and which we're doing here today. BHRA does not see any denied waivers unless the employee files an appeal. If there's an appeal of a denied waiver, they will forward it to BHRA, and we help facilitate it to the governor for action.

Okay.

action on that appeal. There were no appeals submitted in FY26 or in recent memory. FY26 waiver report, our waivers from July 1st, 2025 through June 30th, 2026, and BHR received 11 of them, 11 approved conflict of interest waivers across 7 different agencies. And then finally, the consequences Right. So, the burden is on the employee to come forward with their potential conflict and to seek a waiver. If they act to approve or influence or award or administer a contract when they have— and do so knowingly, then they are— they can be charged with malfeasance in office, and the state officer or employee who did so can— shall be removed from office and the person is guilty of a Class 1 misdemeanor. Any benefit to a person or entity derived is subject to forfeiture and the contract is subject to being voided. With that, I'm happy to answer any questions the committee may have.

Okay. Is there any questions from the committee? I guess I'll start with one. I see a lot of these are coming by This is for item 5. Oh, sorry, that's right. Okay, no, I have no questions. Anybody else?

Senator Grove, do you have a question?

I do, if I'm looking at the right thing. I don't know what you were looking at. Um, I just wonder about— and so this is already a done deal. But when you have situations like the waiver— do I say the person's name or no?

Are you looking at this?

Oh.

We're not doing this.

I'm looking at the wrong thing.

We're doing conflict of interest.

Oh yeah, that's this.

Yes, number 3.

Number 3, yeah. So when you have like a conflict, I'll just make it general here. When you have this conflict of interest where— so you have someone who's on staff, and they have quite a situation with people who have passed away, and— but they're serving as legal counsel, and they're working with the same attorneys, group that's dealing in legal contracts with the state of South Dakota, and that's their attorney that's handling, um, the estate. Do you know who I'm talking about?

Yep.

Okay. How— it just seems like a lot of stuff is happening there, um, and I'm just wondering, uh, was that handled well? Do you feel like All is well with that one, because it kind of sets off some of my alarms, I guess.

Well, I would tell you—

Go ahead and answer the question if you'd like.

Yes, sir. Yes, Mr.— I would tell you that— so first of all, BHRA doesn't get involved in any substantive review of any waiver request. That's done entirely by the agency head and their legal counsel. And so I haven't reviewed— the one you're talking about, I'm aware of, of course, and I haven't reviewed it. Myself in a substantive manner, but I would tell you that the goodness in the policy is that people will be overcautious in what they bring forward as a potential conflict to have it resolved, and either they are recused in their duties from acting on that contract in some way, or they're given a waiver and they can act in that way. And the one you're talking about Is, um, I'm not sure the statutes are, are— that we're talking about, the conflict of interest statutes, are actually triggered. Uh, because you're talking about, in the one instance, an attorney who has the ability to, say, influence or administer letters of engagement with a law firm. And then on the other hand, uh, they have family members who hired that law firm to handle an estate matter. Right. Totally two different things. I'm not sure the interest, the conflict of interest statutes are triggered in that in that instance, but the employee out of an abundance of caution brought it forward because the other thing that could be triggered is the worst thing, and that's the the conflict of interest that would be absolute. You can't give a waiver for, and that is this idea of a quid pro quo where. Uh, I'm, I'm giving you— I'm awarding you contracts over here in exchange for influencing how you, uh, work on, you know, my family's estate over here. And that would be an absolute, uh, prohibition, and there's no waiver for that. And so when an employee brings that forward, they're like, you know, I want to let you know that this is out there and I need to recuse myself. And they go through this process, but this process Probably isn't the right process. It's good that they brought it forward, and in their in their write-up, they said that they were recusing themselves and finding some other person who was going to process those those invoices. Okay, you good, Mr. Chair?

Follow up. Go ahead. Thank you. So you're saying that there so this was like an extra thing that they did, but there is a different place. for them to file this type of concern, but what they did here, um, was just kind of like this extra precaution to say, hey, I'm palms up, this is what's happening. So they didn't really actually have to file this here, is that what you're saying?

I don't think so. Yes, sir. Um, I, I, in my, uh, I've only given a cursory review and I wasn't involved in the substantive review, uh, but in my cursory I'm not sure that it triggered our conflict of interest statutes, but they certainly couldn't engage in, you know, a quid pro quo, and they may have felt that and felt that the appearance of impropriety was such that they wanted to take themselves out of it and make it known, which is a good thing.

All right. You good? Okay. Any other questions from the committee? Senator Howard?

I move to acknowledge receipt of the report from the Bureau of Human Resources and administrations detailing state employees who were authorized to receive— derive a direct benefit from a contract, submitted pursuant to South Dakota Codified Law 5-18A-17.2.

Second.

It has been moved by Senator Howard, seconded by Senator Otten, to receive and accept the report. All those in favor will say aye.

Aye.

Opposed? Thank you, sir.

Thank you.

The report has been received. Let's see, we're going to move on to our 4th, the annual report from the Obligation Recovery Center, Bureau of Human Resources. Welcome, sir. Please introduce yourself.

Mr. Chair, Jason Ketwig, the Deputy Commissioner for Bureau of Human Resources and Administration. And I oversee the ORC from that perspective. Is it—

Should be the next one over.

Right there?

Yep. This is just some background on how the ORC was committed— or was Was created. The one thing that I would mention here, and and just for your information, is that it's it we're celebrating the tenth year of the I don't know if we're celebrating, but it's been in operation for ten years now. Looking back over those ten years, and I do a little bit of that in this presentation where I take it at a ten-year look. It's gone through some ups and downs. And a lot of that depends on the partners we have. And I think that we've got some good partners now. And I see good things in the future for the ORC, at least right now. So this first slide is a 10-year look. This is the amount of money that has been collected by agency over the 10 years or Over the entirety of the ORC. Obviously, UJS is our biggest customer. We collect the most for them. They represent about 45% of the collections that happen in the ORC. Here again—

Excuse me. Can we go back? Was that what she did for the UFC? Is that, um, or the UJS? Is that mostly court costs, or are we collecting money that then gets paid to private citizens in judgments?

Both.

Both? Yes. But you don't have a breakdown of how much is what?

No, I don't. Okay, thank you. I'm not— I'm going to be honest with you, and I'm not sure that I actually know. It comes to me, it comes to the I would have to see how that debt is broken down. That would be something UJS, I'm sure, could talk about.

The point I'm getting at is that we're paying to collect bills for private citizens.

Restitution, yes.

Is that a fair assumption?

Yes, on a court order.

So when you collect this debt, Do you just write a check to the UJS, or do you write the check to whoever is supposed to receive the payment?

No, the check goes back to UJS and is processed back through there to whoever has— wherever it's owed to.

Okay, that's interesting. Thank you so much.

Yep. These are the annual collections, uh, from '18 to '26. As you can see, Or as you may notice, last year was the second highest year for collections that we had with just a shade over four million dollars that were collected. The second bar on this graph indicates the amount of fee that is paid in collection fee, or yeah, how much is added to that debt in order to pay the collection fee on it. Last year it was 19.2 percent. The The standard is 20, that we try and stay at 20 or below.

Senator Howard.

Thank you, Mr. Chair. I just want to double-check that I understand that right. So when we go to collect a debt from someone, we add on a 20% surcharge to that debt?

The ORC— Mr. Chair, go ahead. Yes, the ORC has a collection fee on it that gets added to that debt.

Follow-up?

Follow-up, go ahead.

Is that— does that adequately— or does it reflect the cost of administering it? Because it seems really high.

That's— we do it according to the way the law is. I mean, I don't know that— I guess I'm trying to understand exactly That's exactly the question. 20% too high.

Sure, go ahead. Go ahead, follow up.

If it only costs you 2% in administrative costs to collect that debt, why are we charging 19%? That's what I'm trying to get at. We need to, we need to know what it actually costs you to, to collect that debt, because it seems like that's a really high amount to be putting onto a debt that's, you know, somebody obviously probably already struggled to pay. Yeah, Mr.

Chair, and maybe I'll go with Senator Howard. I'll try and, I'll try and answer it through the, the procedure. I, I'm, to my knowledge, other than a little bit of, of, uh, lawyer assistance that I get, I'm the only person who spends a very small amount of my time on the ORC. The ORC is a, is a, is an entity that was created so that we could contract with a collection agency in order to do our collections. So to say what our administrative costs, the state's administrative costs are very, very low. I mean, they would be almost nonexistent. If we had to go back and we're collecting these by ourselves and we had employees that were doing this work for us, the administrative costs would be Much greater. So I'm not— I mean, we're paying someone to pay the healthcare, to pay the phone bills, to send out the mailings, to do all of the things that we require when we collect a debt. And this is where we're at. I'm not— I'll absolutely try and figure out anything that you're looking for above that. But go ahead.

Okay. So what we are charging, are we only charging what we need to charge in order to pay the contract? Yes. Okay.

It's pretty cheap. Standard, if I turn someone to collect, it's about half. So we're— it's very— 20% is not— I mean, I wish I could— you could collect my bills for me for 20%. I'd be happy. Okay. Another questions? Go on.

I think we've got that one. This is the annual collections by entities. So this just breaks down by our biggest clients, who we are collecting money for. UJS, obviously it shows on the chart, is the biggest. The one that goes up and down and probably shows the most variance, in my opinion, is the technical colleges. It seems like when we work with them, That we have to be very careful when someone that is doing that job at that technical college leaves in order to get it transferred. It's not— we'll wind up, and we usually notice it a couple months where we just don't get any referrals. It's probably an opportunity for us to go train them on how to put those referrals in again, and then we end up getting a backlog of referrals and we're back on track. But if we miss that, then that would show That would be kind of why there's a dip in those for a year, maybe. The outside collection agency is once the ORC has dealt with it and done its actions and has worked on an account for so long, we send it to an outside collection agency. In order to do further actions and to put more attention on it to try and get it collected. In 25, we got notice that our outside collection agency was not going to was going to terminate the contract, and so we went through the process of doing an RFP and getting everything lined up so that we could we could hire a new one. That person that that group was hired in March. So when you look at the amounts collected this year, it's very low compared to what they've collected in the past. But that's just a reflection of how short a time they actually worked. The amount they've collected has gone up every month and appears to be a good partner for us and is ready to take the ball and run with it.

Can you tell us what that's costing us when we go to the outside?

It's the same amount. Yeah, it's the same base amount. There are a few— there are a few things in law and in rule that allow the outside collection agency to collect on interest and penalties, which the ORC cannot collect on. So they get to add the full total of the debt, where the ORC only collects on the principal of the debt.

Okay, thank you.

This net referral slide, this is a calculation that we do that shows the amount of debts that get referred to the ORC, in this case on an annual basis, minus the amount of debts that are recalled from the ORC. And they are recalled for any number of reasons, especially and a lot with the UJS debt. There's times when the judge says we're going to handle it back here and he puts them into some sort of payment plan back in the county or in the judicial system. There's somebody that may have passed away and we're not going to be able to collect that debt or somebody that's gone through bankruptcy.

Right.

And we're, we've, we've, we're not on that list either. So there's a whole wide range of reasons why they get recalled. This year, I think we probably saw some agencies do some auditing. We had a few more recalls than normal, and I think that's why our placements look so low. We were a little low in placements, but not as dramatic as what the graph shows.

Thank you.

The payment plan strategy, in my opinion, is one of the highlights of what we do. We try and meet the taxpayer or the debtor where they're at. And so we look at their debt, we try and get them into a payment plan that could range from $25 a month to much more than that if their ability to pay is more, but they still can't take care of the whole debt. So we don't look at debts being satisfied, and I may have used the wrong term there, but we don't necessarily look at success in being that a debt is paid in full. We are trying to get people on the road to being back paid in full, and so that they've lived up to their obligations. So when we talk about debts that have been— Paid in full. That have been resolved, those include ones that are in payment plans. And as long as that payment plan is current, there's no further penalty or anything that goes on with that debt. We— as long as they live up to their end of the agreement, we continue to move forward with that.

Question from Senator Howard.

Thank you, Mr. Chair. So while they're in the payment Is it— is the debt collecting interest?

Go ahead, Mr.— Senator Hardy.

In some cases. I mean, that goes back to the laws that govern the debt and the way it was. In revenue, there's debt that accrues interest all the time. There's— it's different for every agency, and I don't know the rules to that level. But yes, some does.

Continue, please.

I'm sorry, um, I was trying to find something really fast, and I don't, I don't know if this is the appropriate time to ask the question, but I'm going to ask it anyway. So you're talking about payment plans and the strategies. Um, I want to know, I had, um, a constituent who worked with— um, they had a child who did some— had some medical stuff that, that was done. The medical institution is connected with the university here in South Dakota and also a hospital. The results came back through the other portion of the institute that they were working with, and the parents had concerns that perhaps it wasn't, you know, they didn't get the right information or whatever. At the end of the day, what happened is this institution refused to work with the parents and refused to offer a payment plan and put the bill through the university as if the parents were somehow connected to the university and demanded immediate payment.

Or—

Or it would be seen as, you know, all of the things that go wrong when you don't pay your college tuition. Is that standard? Is that a part of the— is that something that's supposed to be happening with this payment plan, or—

Mr. Chair?

Go ahead, sir.

I'm grabbing my pen, Senator Grove, because I think I might understand what you're saying. And it sounds very convoluted. I mean, we don't collect money for the medical institutions in the state, and so that would surprise me. I may need to reach out and get in contact with you to get more so I can try and look it up and see. But when it comes to me, just for the purposes of this hearing without any other stuff, When it comes to us, it's a debt from the Regental Institution, and it's tied to a name and an address and hopefully a Social Security number, you know, so that we can track down and make sure that we're making contact with the right person. We don't know what that debt is for, you know what I mean? It would be impossible for me to look in our system and tell you, oh, this is medical debt that got referred back through this way. So it would— I don't know. I'm more than happy to I'm happy to try and dig into it, but it's not something ORC would know.

Are you good? All right. No other questions. Please continue.

Sorry, just writing a real quick note. So here's where I mentioned earlier that when we talk about account resolution, we talk about payment plans and Paid-in-full plans. In '26, we put into payment plans 8,974 accounts, and we had 6,088 that were paid in full. So again, a good, a good year as far as getting things resolved. Our engagement strategy with our, and I look at our customers as being twofold. One is the agencies that we collect money for, and two are the the people that have debts that that need to get back on the right track so they can fulfill their obligations. The you know customer service, the the beauty of of what the ORC provides is that when they call. Uh, back to the ORC number, they're going to get that— a person that can talk to them right away, one-on-one, who has the information about the debt that's there and can, and can understand the different options that are available to them, whether that be a payment plan or whether that's payment in full, and, and all the other actions that might be taken on their account. So it gives them an immediate response. Um, What we hope is that, once they have that conversation, they enter into some sort of resolution, as we would call it, into a payment plan, because that will stop all of the negative things that are allowed by law from happening to that debtor. And so, we look at it not so much as trying to— as to collect the debt, as to why we do a negative action on someone, but as a way to start a conversation. Because typically, once someone calls, we can work out something that will make their life easier. We, we are not in the business of trying to revoke someone's driver's license, is the reality. We are trying to make sure that they can keep their driver's license and can continue to go to work and support their families, as well as pay off their, their debts. Customer engagement strategies. We've gone through and tried to do a number of different things. It still comes down to, in South Dakota, honestly, letters, outbound calls, and inbound calls. We did a text— added a text feature where we could text individuals about their debt or have them respond. Okay. Not, not nearly as successful as I would have thought it would have been. I would have thought that that would have been a way that people may have, have wanted to, to communicate with us. Not in South Dakota. And, and according to the partners that we work with, we were pretty low on, on that response rate as far as texting. So we still focus on inbound and outbound calls. The decline in 2026 And honestly, the tail-off in 2025 in calls is due to the OAC not being— the outside collection agency, OCA, I'm sorry, not being on for a full year.

Senator Howard.

Thank you, Mr. Chair. Could you expand on that a little bit as to why not having the OCA there? Kept, kept your, your employees from making the outbound calls and, you know, taking the calls?

Can you answer that a little bit clearer? Thank you.

Yes, sir. Senator Howard, so, you know, the, the ORC did as many or more calls than what they've done in the past, but our, our, our collection efforts were They all stayed there. They didn't go to the OCA or OAC. I apologize, there's too many O's. But didn't go there to get that extra follow-up that they get. And so it was just cutting a link out of the process.

Okay. Please continue.

This chart just reflects the average payment amount. As you can see, with the outlier of 2023 being a little bit higher, I wouldn't even call that that much higher. It has been incredibly stable as to what people have for an average payment in their payment plans. I think that What this tells me is that I think we've reached that point with these partners and with the process that we've worked through the backlog where we're going to get some of the easy collections done. We've worked through, you know, we're pretty stable and we've stayed right at that point. I would tell you that this March and April were probably a couple of the best months we've ever had. I think that's reflected in the potential that maybe some people got some more back on their tax returns. That portion of the year is always a good time for us to collect money, but I think it was especially good this year. So I think that's a reflection of some of the tax changes. Driver's license suspensions.

Suspensions.

Suspensions, everybody's least favorite thing to talk about and definitely mine, have stayed again very stable over the period of time. We're at 249 requests for suspensions a month. We have again made it through another year without a due process hearing, and this is where they usually raise their head is when somebody thinks we haven't followed the process. In getting to the point where we've revoked their license, we had no one file one of those, and that's been for a number of years now since we've had a due process hearing. So I think what that tells me is that our staff at the ORCs are doing the right thing. They're following the rules, and for the most part, it is an automated system that generates the letters and puts the number on the dialer in order to make sure that We've met all the requirements prior to ever sending a request for revocation of a license. The important part about the license that I just want to leave you guys with is that it's not something that we— we don't collect money because we get their license taken away. We collect money because we are able to talk to them and explain to them what they can do to make it right. Okay. But sometimes the only way we can talk to them is to have something that they feel and that makes it uncomfortable for them for a while. And so that's kind of the ugly of the business of trying to collect debt. 27 initiatives. Our goals haven't changed. Our goal Our goals are to improve the collection results and the customer experience, which those 2 things are potentially diametrically opposite, but we've found that by focusing on communication and by answering questions and being available to answer those questions, we can do both. We can provide them a way to improve their credit and get their debts paid and not make it the worst day of their life when when the— when they're calling, just by improved communication. Um, the other one, uh, we're constantly working on, and that's enhancing communication and engagement with agencies that we support. Um, we added another agency, or a subset of an agency, this year with the Electrical Commission coming on board, and we, we do some debt collection for them, very small amounts, and a lot numbers sometimes. But we are trying to make sure that everybody knows about our program. If there's someone that is having staff time spent to collecting debt, we probably could reallocate that because we have a process that has proven to work and it's working. We just need to get everyone to understand that and move forward. So we spend August or a week in August, where we do meetings with our current customers, and then we try and do outreach to customers or potential agencies that may not know about our processes and try and educate them on what we do and try and get them to utilize our services if possible. I think other than questions, I'm—

Is there any questions from the committee? Okay, seeing no questions, Senator Howard.

I move to acknowledge receipt of the report from the Bureau of Human Resources and Administration detailing state employ— no, never mind, sorry, scratch that. I move to acknowledge receipt of the report from the Bureau of Human Resources and Administration on the Obligation Recovery Center pursuant to South Dakota Codified Law Second.

It has been moved by Senator Howard, seconded by Representative Auch. Oh, um, I'm going to let Senator Karr have a comment here before we vote on this motion. Senator Karr, did you want to make a motion or a comment on the motion?

Thanks, Mr. Chair. Um, we just kind of gleaned over questions really quick, and I had a question I wanted to ask Mr. Kittwig. We still under— let me enter. Let me ask a question.

Yeah, sure.

I didn't get my, my little button pushed fast enough, and I understand you're trying to keep things going. So, and maybe I missed this in the report, and, uh, and good to see you there, uh, Jason. But you talked about one of the goals really focusing on these individuals themselves that have gotten into some sort of, you know, debt concern, debt issue. Do you keep track and do you have any type of data on how many are repeat and have gone through this process more than once? And have we been able to eliminate them coming back so they have better budgeting, better financial management skills? You know, it's easy to say that that's a priority. I'm just wondering if there's anything that would point to some data to support some efforts here. Go ahead, Mr. Chair.

Senator Karr, good to talk to you too. I would tell you that the answer is, is we have a lot of people that have debts that come back and forth and back and forth. And, and we see debts referred multiple times, uh, under the same people, and we have multiple debts referred under the same person. Um, I would also tell you that, that, again, I, I'm the state person that works on this, um, and that's a— it's a small portion of my time. The rest are debt collectors, and I— we, we're—

Uh-huh.

We're not positioned, I don't think, in order to provide educational services for it. Would it be a great way to try and increase the financial intelligence of the people and to try and give them better training on budgeting and all that? Absolutely. I would love to see it, but I— it would take a restructuring of how we do things in order for that to be possible.

Okay.

Senator Karr, are you good?

Yeah, thank you. Just real quick then, and if you can make this succinct as possible too, when you talk about helping them to, you know, be better financially, better financial managers, so what is your definition of success there?

Go ahead, Mr. Karr.

What does that look like?

Senator Karr, our definition of success is getting them into a payment plan or into a paid-in-full status so that they are working towards being— not having any financial obligations owed to the state of South Dakota. Thank you very much. Thank you, Mr.

Chair. Thank you. Okay, the last round for questions, then we have a motion to— on the front of the committee to accept the report. All those in favor will say aye. Opposed? That report is accepted. Okay, we're up to number five, and 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 the committee goes to executive session. All those in favor? Opposed? We now will go into executive session. Please ask everyone if they would step out of the room, please, and we're going to go off air for just a little bit while we hear this testimony. All right, the committee is coming out of executive session. Senator Howard.

Mr. Chair, I move to acknowledge receipt of the annual report on complaints from youth in state custody submitted by the— submitted by the Department of Social Services pursuant to South Dakota Codified Law 26-6-57.

Second. It has been moved by Senator Howard, seconded by Representative Auch, to accept and receive the report. All those in favor say aye.

Aye.

Opposed? That report is received. Thank you, ladies. Okay, with that, the committee is going to move to the 6th on the Agenda, annual report from the Public Integrity Unit. Welcome, gentlemen. Please introduce yourselves when you sit down, and then we'll get going.

Good afternoon, Mr. Chair. Brian Kempema, Chief Deputy Attorney General on behalf of the Attorney General. It is my pleasure today to announce, I guess this would be our inaugural public integrity report to the legislature and specifically this committee. As this body is aware, in 2025, the legislature passed SB 62, which mandates the reporting of certain governmental misconduct.

Correct.

Including felony offenses and certain conflicts of interest. As a part of that legislative process, our office agreed and requested that we present to this body a report of our findings annually, the goal being to increase transparency, let the public know what we are doing, What we are finding with respect to our state employees, taxpayer money, and conflicts of interest. A little bit of an overview about our program: the way we have set it up internally within our office, we have assigned an assistant attorney general to lead that program and one supervisory special. Special agent. When we get reports, those are the 2 individuals that will primarily be looking at the reports that are coming in, and from there they will assign it out to either another assistant AG for prosecution and potentially another special agent for investigation. The way that the reports come into our office That can be one of two ways. The first and foremost is through the executive branch. I believe all state employees have a reporting form on their desktops that allow for the reporting of criminal activity or conflicts of interest. That form that is completed, it's approximately 14 questions on what the Allegations are, what the concerns are, and copies of that will go to a supervisor within that agency, the head of the agency. It will go to the Division of Legislative Audit, and it'll come to the Attorney General's Office. And I believe BHRA is also also informed in that initial reporting. The other way that reports come in is we have a direct reporting system directly to the Attorney General's Office. Those are meant to be situations in which an employee might not feel comfortable going through their normal chain of command for reporting. I'm happy to report I don't think we've gotten any reports that, that have come into our office that way. I think that's a testament to the way that the government agencies have been handling Handling these matters, they've been taking them very seriously. I don't think we've had any allegations of retaliation, things like that. I think people are comfortable with the system, but I think it's also important that we have that alternate means of reporting potential criminal conduct. As far as the types of statutes. The statutes that are implicated when we're talking about the mandatory reporting system, really we're talking about felony-level offenses and conflicts of interest. And what the— what SB 62 does is for supervisors and supervisors only, it'll create criminal liability at the misdemeanor level for supervisors who are aware of improper conduct and don't report it. Generally speaking, our process is once we have a report for of some sort of misconduct, we're going to index that into a master list so that we can report to this board and to the to the legislature on the kinds of crimes that are being reported to to us. Our attorney and the supervisory special agent. Agent will then review that report to determine if follow-up investigation is needed, warranted, and then we're really communicating almost immediately with BHRA and the agency heads, saying, here's the allegation that came in. We might ask that agency to do some follow-up once we determine that additional follow-up will not create investigative problems down the road. And potentially hamper a prosecution or investigation. But generally speaking, we're communicating right away within a day probably of receiving that report with the agency head and figuring out collectively what can we be doing or should we be doing. And of course, legislative audit would be a part of that process.

Senator Otten.

Okay, let's make sure that I got this step by step. So a report comes into you. At that point, I eventually—

it's just an allegation. Is there any backup information that has to be given to you, or how do you—

how do you get the thing to comply with the statute itself and the information that we need to be able to see if a crime has been committed?

Mr. Chairman, yes, excellent question, Senator Otten. That's a part of that initial process. So when, when the reports come in, one of the fields for the reports are what are the allegations, what sort of proof do you have that these allegations occurred. If that is absent, we're talking to the agencies about, hey, this kind of general allegation has been has been made. We don't have— if we don't have enough information, we're reaching out to the agency to find that information, or we're reaching out to the complainant. Sometimes the complaints can come in that are just very general in nature, that don't have any specific— that don't have anything we act upon. In those situations, what we will do is we will reach out to, like I said, either the agency or that individual and say, can you give us some more? Give us, you know, point us in the right direction. And if we get that direction, we go there. If we don't have any sort of direction from either the agency or the reporting party as what kind of crimes have been committed or where they're being committed, we really don't have anything to go on other than it's just, you know, trying to find a needle in a haystack. But we make diligent efforts to kind of get backup information and say, Now, where can we go?

Follow-up? Go ahead.

Make sure I got this.

So in other words, you get the information, you're looking—

you actually turn into a detective at that point.

Where's the documentation? If you've got the documentation and all that lines up, you start working yourself forward.

If there is none, then it's just pretty much dropped.

Go ahead and answer the question. Thank you, Mr. Chair. It would not be dropped initially. We would make efforts to follow up on information, take affirmative steps to try to track stuff down to get us some kind of direction to go to. But if we don't have that direction and we don't have anywhere to go, yeah, by, by the nature of the beast, so to speak, we're kind of stuck where we're at without any specific—

Yeah.

Kind of indication of wrongdoing.

Go ahead, follow up.

So in other words, you're—

I think the proper word is you're looking for compliance within the system to make sure that everything is correct.

Go ahead, Mr. Yes, we would be making sure that everything within the system has been complied with, and you know, we are At least our DCI is an investigative agency, so if there's some sort of allegations, even vague, we want to make sure that we're doing it right and we're reaching out to the appropriate people to get information that might lead to criminal conduct.

Are you good, Senator? Okay. Any other questions over here? All right. Please continue.

Once the— once we do get that initial report, and We've done the follow-up, and we've asked questions, and we have you know some sort of direction on where to go. We at that point need to make a decision: Are we going to open up an official criminal investigation? Does this warrant an official criminal investigation, or is this something that should be referred back to the state agency to be handled administratively? In cases in which a criminal investigation is warranted, the The case will then be assigned to one of our special agents for DCI who will conduct an investigation just like we would any other investigation in which we come in to assist local law enforcement. Once that investigation is complete, then it will be re-reviewed by the attorney that is assigned to that case, whether it be, you know, Our, our attorney who's assigned to lead the division or the unit, or he can assign it to another attorney within our criminal division who might be located more conveniently to handle the potential prosecution.

Senator Otten.

So as you're doing your investigation, if an investigator has familiarity with the individuals or whatnot, he would be If there were a situation that were to develop that there was a conflict of interest with any, any of our investigators or prosecutors for that matter, what we would do, and it's standard protocol within our office, we would wall that attorney off at that point or that investigator off, and we would handle it with a new You good?

I got a question on your reporting, and I apologize if you're not there yet. Maybe I'm helping you get there. But you have some of these reports, other felony crime, no investigation, and referred to administration— administrative action. I don't— I mean, we're setting up a matrix of how you're going to report in the future, but I mean, like, when you When you say felony, bells go off in my head like felony, what? No investigation, this type administrative action. Can you just kind of talk about how your reporting is going here?

Absolutely. So when we list the types of allegations that are— I'm assuming you're talking on page 5 of the report.

I'm talking about page 7, 7 and 8, where you have a list of Of grievances or reports received and dispositions. I'm just wondering, I see felony and then no investigation, no nothing. I mean, we're setting up a matrix here for the future, so I'm just saying they get contradicts with me.

Sure. And perhaps a little bit about the way that the crimes are reported and they're labeled. The initial labeling comes in from the complainant itself. There's a Yes. And then, you know, there's a dropdown menu, what are your allegations? So, they can come in as fraud, theft. We're really asking people who might not understand the law to make a legal determination on what the category is. So, we're not bound by those particular categories of what is being alleged. When we get to the point where we talk about Warranted, and and I can go there now if the chair would like about what our different dispositions are. I'm more than happy to go through those categories and what they mean.

Well, I'm not looking for a long lengthy thing. I'm just trying to help you when you set up a matrix instead of putting felony. Just probably say what the accusation was or whatever. I mean, it it just sounds funny when you have felony crime, no investigation. and referred back to administrative. That's all I'm saying.

Yeah, and I understand. Thank you, Mr. Chair. With respect to, again, how those are labeled, we can certainly take a look into how we're going to report those out. It's probably— I think it would be impossible to differentiate every single possible felony that we have, but I think it's safe to say that anything that comes Through our reporting system, if it meets the criteria for an SB 62 filing, will either be a felony or a conflict of interest statute. So, while I understand what you're saying, the way the system was set up was consistent with what the statute is. But there are certainly things that we can look at, and we are more than open to suggestions.

Okay.

inaugural report, so we are happy to make this as beneficial to this committee as we absolutely can.

You are good. Please continue.

Okay. Within our reporting system, we have identified various categories that we will list for the reporting purposes. The first of those is being unsubstantiated. Really what that means is there is not enough evidence evidence to support the allegation, or in fact, the evidence indicates that there was no— there was no crime there. So, we would unsubstantiate that. Referred for administrative action is just that. There might be something there, but it's gonna be handled more appropriately by that state agency, whether or not it's a policy violation that is gonna result in some sort of, you know, employment action, Or, you know, some remediation at the agency level, we would report it out that way. We have a level that we call substantiated, but we've declined criminal charges. What that means is we do believe, or there's evidence to indicate, that the allegations did happen. However, for whatever reason, we cannot prove the case beyond a reasonable doubt. Okay. Within a criminal context. So what we would do in that case, we would substantiate it, but we would decline to prosecute. And then obviously we've got to substantiate it, and then criminal charges would be filed. And those will be some of the more public-facing allegations that are made within, within, you know, Senator Vought.

Okay, backing up on that. So you're saying that something isn't substantiated, so it hasn't risen to the point of what you're saying is actual breaking of the law? Or you're— can you just expound on that?

Sure. When we're talking about substantiated And charges declined, really what we're getting into is a decision prosecutors have to make every day. Whether or not, one, do we believe a crime has been committed, and two, can we prove that crime beyond a reasonable doubt? Our office feels it's our ethical obligation to only bring cases which we believe we can prove beyond a reasonable doubt, so while we might have probable cause to We have to believe that a crime has been committed, but if we don't have a realistic chance of getting a jury of 12 of that person's peers to say guilty or to vote guilty, we won't bring the charges.

Follow-up, Senator Otten.

So let's just say that everything that you said has happened.

Does it just go into a closed file, or do you kind of set it in limbo looking for something else into the future that Go ahead, sir.

Thank you, Mr. Chair. I like to think we don't have closed files. We always, within a statute of limitations period, have the opportunity and the ability to relook at things as new evidence is developed. Now, does that mean it's on somebody's, you know, on the top of their pile every date? No, but what it means is that if we have new information, we can always reopen that file as long as we're within the statute of limitations.

Go ahead, Senator.

And what is the time frame on that?

Go ahead, sir.

Generally speaking, uh, the statute of limitations will be 7 years from the offense. On theft cases, it might be 7 years from the date the theft was discovered. Um, those are Generally, our parameters, absent, you know, Class A, B, C, and 1 felonies, I believe, then we're probably going to have a much longer statute of limitations.

Okay. Please continue.

Okay. Within the report, we have kept track of certain demographics or metrics. You know, last year in the calendar year, we had 47 unique cases or unique reports of criminal activity that resulted in us opening up 14 investigations. And then that led to ultimately 4 state employees being charged through the SB 62 reporting system. We did substantiate 3 cases without criminal charges, and those would be that example that I talked about where we, yeah, we believe that there's a lot of smoke there, but we're never going to get a jury of 12 people to convict under the facts of those cases.

Good. All right. Please continue, sir.

At the time of the drafting of of this report. Some of those cases you'll see that they're pending, and it's for some of the same reasons that Senator Atten was talking about. We don't always close the cases and we're always doing follow-up. And some of the pending cases that were pending at the time that this report was generated are actually still pending. We're doing follow-up investigations. I think I'm about through the report and the items that I wanted to discuss today, or I thought I would highlight today. I'm obviously available for questions, but I would be remiss if I didn't comment on you know the cooperation that we've received from all of the state agencies, BHR, the governor's office. This process is successful because of their active participation, and of course legislative audit who are great partners with us. So I would be remiss if I didn't say thank you to those folks for the help that they provide us.

Okay. Senator Otten.

Just to clarify, so then if something ends up in that limbo land where you haven't moved forward, is it normally documentation then that you're missing?

Go ahead, sir.

Mr. Chair, yes. Either documentation, it could be a lack of credible evidence. The things that you would think about when you might think about what you would expect to see at a jury trial. Are there witnesses to the events? Is there more than an allegation? Or is there something that, that we can back up either through witness testimony or through documentation that we could present to a jury?

Senator Otten, follow-up.

So the individual that is doing the investigating, if he runs into that brick wall, as it were, he would make contact then with the accuser and say, is there any more documentation?

Go ahead, sir.

Mr. Chair, absolutely. If it was a lack of documentation that was our issue, or for lack of a better term, our shortfall, we would reach out. If it was a lack of, you know, having Witnesses, we might reach out and say, anybody else have any information of this?

You good? One more. Go ahead.

I've watched too much Law and Order.

You're fine.

And so your boss then, it would be the Attorney General in himself that would oversee all this and make sure that it's— everything is in compliance to the law?

Go ahead, sir.

Yes, Senator. The Attorney General is our boss, and he is directly involved in this process and would be familiar with what is happening within the Public Integrity Unit.

Okay. I was just looking to make sure that there's somebody still overseeing the overseers.

Absolutely. Oh, Mr. Chair.

Are you good? Go ahead.

I would say absolutely. And, uh, with— within this particular realm, there's also Legislative Audit who's also going to be informed of all of these reports. So the legis— Mr. Olson would also be kind of involved in, uh, helping our decision-making processes at times.

You good, Senator? Okay. Any other questions?

Mr. Chair?

Senator Grove? Thank you.

So I'm just wondering, when I'm looking at, I guess, 7 and 8, I understand as I'm reading the paragraph on top of the chart there that there might be reports or allegations that are submitted, but you've only included it the one time so as to not inflate your numbers. But is this all-inclusive, or are there— is there any reason why something would not show up on this report? Like, was there any— are there— is there anything that was filed that's not here outside of— there were so many of them.

Go ahead, sir.

That's a good question. This report would just track the reports that came through the SB 62 portals that I spoke at at the beginning. So if we've got allegations that arise outside of those, there's possibility that they're out there. We try to— when they implicate an employee who's committing a crime during the course of their employment, we do try to circle back and incorporate those. Specifically, one that comes to mind is one that is listed presented under the notable cases, which was the Rathbun case out of Brown County. That originally did not come as a report through the SB 62 report— reporting mechanism, but because it did involve an employee acting through, at least partially as we alleged, through their actions as a state employee, we went ahead and put it into the system so that we could double-track it and so we don't miss those. Now, can I tell you we catch all of them? I can't make that promise, but we make a conscious effort to include those. And I should say that trial has not occurred, so Mr. Rathbun is presumed innocent under the Constitution.

Senator, you good?

Okay. Any other questions? Senator Howard.

Thank you, Mr. Chair. What is his portal? consist of? What— I mean, I guess I, until you said that, I was under the impression that this report would cover every possible violation that SB 62 would cover, not necessarily just the ones that were reported in a certain way.

Go ahead, sir.

Thank you, Mr. Chair. The portal is the mechanism in which to Report the crimes that are intended by SB 62. So it's just a mechanism that we use and the state agency use to fulfill their— an employee's obligation to report this stuff. There would be 14 separate fields that the employee would fill out, starting with, you know, their name, what agency they work for, What agency are the allegations pertaining to? What are the general nature of the allegations? Things like that. So the portal is really just the tool that we use to make sure that there's a mechanism for the employees to report the conduct that has— that the legislature says needs to be reported.

Senator Howard, follow-up.

Thank you. What was the process before this? Because surely we were, you know, asking for people to report issues before this.

Go ahead, sir.

It's my understanding there wasn't a formalized reporting system other than, you know, we might get an allegation of a crime and we'd investigate it, but there wasn't a formalized mechanism for reporting criminal activity within the state government.

You good? Follow-up?

No, I'm still I'm struggling with us saying that before SB 62 came along, I mean, surely our employees were trained before SB 62 to report criminal activity, behavior that they thought might be criminal. I mean, surely if it was just going to their supervisor. But now I'm concerned. I guess I'm concerned that things be in here that possibly are not in here because it didn't go through this specific form. Maybe, maybe people who have been working for the state for 20 years, they're still going to do it the way they were always doing it, or, you know, it was always done before. You go to your boss and you tell them the issue. And so I'm really kind of lost here.

Well, I don't know if there's a question in there, but if you can help her Mr.

Chair, maybe I can a little bit. You know, the way these things would have been handled originally, individual office policies on reporting, but to combat some of the concerns, one of the things that we have partnered with the executive branch to do is to create and mandate training for state employees on if you see criminal conduct, These are the methods that you are to report. I mean, I remember I've gone through the training. It's an online training that is offered by BHRA. All state employees are required to do that.

Senator Howard.

Okay. So I'm just going to ask this because a lot of legislators understand there's an ongoing concern. I was just surprised that there was nothing on here regarding anything being questioned regarding the Investment Council.

On the Investment Council?

May I answer that, please?

Yeah. I believe I'm familiar with the situation that you're talking about. There was no report that came through the SB 62 on any allegations with the South Dakota Investment Council. Now, there is our understanding we heard about some allegations outside of that. We reached out to that complaining party on numerous occasions. We were initially told that the person wanted to meet with an attorney before talking with us. An attorney was eventually retained by that person. We again reached out and said, we're happy to meet with you. We were told in response, We'll get back to you. And other than us following up and trying to get more information, there was nothing, nothing for us to act upon.

Senator Howard? Okay. Any other questions from the committee? Oh, Senator Grove.

So even in that situation, if the party didn't respond, Shouldn't it still be listed in here as, um, even a potential? If we did that with that other one, uh, Rathbun, however you say the last name, um, should we have also listed that here just to keep things, um, consistent and, you know, Mr.

Helms?

Mr. Chair, the Rathbun case was a unique case because it was clear that there was an allegation of criminal activity. With the SDIC case, there wasn't a clear indication that there was criminal activity, and there was actually nowhere for us to go with investigative leads. Otherwise, it would have been a needle in a haystack type situation.

Senator Grove, you good? Okay. Any other questions? Representative Althoff.

Whistleblowers. Are you familiar with any, you know, retroactive behavior or anything with a whistleblower? Are whistleblowers punished? Are they— I mean, is there— how are whistleblowers handled in the state government?

Go ahead, sir.

Thank you, Mr. Chair. At the same time that SB 62 was passed in 2025, we did enact whistleblower protections. I am not personally aware of any instances of retaliation on state employees for reporting governmental conduct. As I stated at the beginning of my dialogue here, I think the fact that We're not seeing these come as direct reports to the DCI portal is an indication that people, at least state employees, are comfortable going through the executive process where their supervisors would know of the allegations as long as the allegation isn't against that supervisor.

A follow-up, just quickly, if you don't mind. So, so you're, you're not aware of any kind of retaliation against a whistleblower or anyone getting fired from, from basically if, if your direct supervisor is the head of the department, what other option does that whistleblower have except reporting to their direct supervisor?

The other option—

Thank you.

The other option would be the report system to the DCI. Employees are trained as a part of the training that that is an option for them if they're not comfortable reporting because of those concerns. So, so we do have that built into the system, that protection built into the system, just in case we do have a situation where somebody might want to make an allegation against a cabinet secretary, for example.

Okay, you good? Are you good, Representative Auch? I can come back to you.

May I ask one more question?

Yeah, sure.

My other question is in reference to, I mean, these whistleblowers and these, and, you know, in this last session, we saw some behavior that was disturbing, and I know that is why, you know, Attorney General I'm not sure exactly how this is put together, SB 62 and 63. What happens when— I know whistleblowers, no retaliation, and then the employee, to kind of keep them somewhat in the dark, is asked to sign an NDA. Are you familiar with any whistleblower being asked to sign a nondisclosure agreement in any department in the state of South Dakota written in your office in the Attorney General's office?

Go ahead, sir.

Mr.

Chair, I wouldn't be familiar with any situation like that. There's not been an allegation made that's come to my attention, at least.

Okay, if you're good. Representative Moore.

Just a question, more of your opinion. So in the last several years, fraud has been on all of the news stations in South Dakota.

And it looks bad for the department secretaries, but it even looks worse for the legislators.

So is we just doing a better job at catching some of this, or has it always been there and it's just getting out into the public eyes? Can you answer that?

I mean, I know it's going to be just your opinion, but— Sure. Go ahead, sir.

Mr. Chair, I imagine it's a little bit of both, to tell you the truth, to take kind of a middle-of-the-road stance, but it probably really is a little bit of both. We would like to think that in the last couple of years we've done a good job of public awareness that might make people more comfortable in reporting, but with 14,000 employees, it's It's going to be there. I think we're just doing a better job, maybe with public awareness and bringing these things to the forefront.

Thank you, Moore. You good? Thank you. Okay, Senator Howard. Thank you, Mr.

Chair. I think I saw just one on here from Goed, and it was possible fraud. But there was no investigation, or no, wait a minute. Yeah, no investigation because no Senate Bill 62 predication. Can you just talk about that one briefly?

Thank you, Mr. Chair. When we're talking about no SB 62 predication, what we're talking about is there might be an allegation of criminal activity by a state employee, but that would be in their private affairs And not in their role as a state employee. So what we would do in that situation is we would refer it back to local law enforcement for investigation and action. We wouldn't necessarily, you know, if a GOED employee— and I don't know the particular facts of this one, so I'm not in danger of outing anybody. So if a GOED got a DWI or something like that, that wouldn't be— That's a different issue. unless he was in a state vehicle, that wouldn't be within the purview of SB 62. So we would refer it back to local law enforcement for investigation.

Is there a way— because, you know, you're not— you're just giving us case highlights. Do you guys have information on all the unique cases and you just chose, you know, which ones to put in here? Because I would like more information on several of these.

Go ahead, sir.

We could certainly do that. You know, on these cases in which, you know, they're unsubstantiated, we typically don't disclose that kind of information, but if there are specific things that the committee would like to know about, we can certainly look into.

Mr. Chair?

Senator Grove.

Just kind of along those lines, I guess. I'm looking here and I'm, you know, looking at the percentages of the different departments that have kind of the highest number. And of course I looked at the list as well. And I'm concerned that DNR DSS is at 23% of the pie. It's probably not the best time to be at the highest number of the pie. And this is an organization that can literally take your children away. So I— if there's a way to get more information on some of these cases, I'd also like to know, is there anything that we're doing when you're kind of the winner here, like what happens then? Are we just solely focusing on the portal and what comes through the portal, or is there a next step as to like we have a serious issue in this one department?

Go ahead, sir.

I would first point out that I think the divisions or agencies that have the largest number or percentage of these reported are also our biggest agencies. So to some degree, it's kind of a numbers game. More employees within can mean more allegations. I mean, some of the more telling numbers might be, you know, the actual criminal cases that come out of those cases, I think, is maybe the more telling number. You know, it's It was an old line from a TV show, anybody can sue anybody. I mean, you can make— anybody can have an allegation made against them. A large number of these allegations, as you'll see, are unsubstantiated. And so it's really in large part, or at least partially, to do with just the numbers game, that they have more employees.

Senator, are you good?

Just a follow-up.

Go ahead. Ask your question.

So with that in mind, then, is there one— is there an agency here that you're seeing that's had the— maybe they've only had a couple of times, but what has occurred has been, like, quite notable? And then what do you do about that organization or that agency?

Go ahead, sir.

Mr. Chair, I don't know that there was any that I would say or agency that I would say is more notable than the others. You know, obviously Department of Corrections has a number of allegations against it, but they're also dealing with a segment of our population that's tough to deal with, right? So that doesn't mean we're not going to open up an investigation when an allegation It's not that an allegation is made, but there might be just— this is the population that we are dealing with, which might create maybe inflated numbers, or there's just an increased chance that an allegation will be made.

Okay. You good, Senator? Okay. Any other questions from the committee? I would just say that before we vote here, I mean, I realize this was your first year, inaugural year, but I think you could tell there's some Some stuff you could work on in your next report. Some of the stuff in here was just kind of window dressing that wasn't needed. And I think there's more information that you guys, with a little time and effort, could dig a little bit farther into the report next time. But you get good— you get passing grade for your first time. I don't mean that. I really appreciate the hard work you did to give the report. I know it's tough, the very first one, but that's the way it is.

Thank you. Mr. Chair, I appreciate that, and I appreciate the fact that you know this is an ongoing process, and we want to work with all of our legislators to be as transparent as we can and to provide the best report we can so you guys have the right information.

Absolutely. Thank you. Thank you, Representative Moore.

I move to now in receipt of the annual report from the Public Integrity Unit pursuant to SDCL 3-6.

C-31. I should have my mic on. You want me to redo it?

Okay. No, it's been moved by Representative Moore and seconded by Senator Otten to receive the report. All those in favor say aye. Aye. All those opposed say nay.

Nay.

I'm going to roll call that. Madam Secretary, does everyone understand we're voting yea to accept the vote, nay to not? Let's call the roll, Madam Secretary.

Foster? Excused. Grove?

No.

Karr?

Aye.

Otten?

Aye.

Auch?

No.

Emery?

Aye.

Lems? Aye.

Moore?

Aye.

Howard?

Nay.

Overweg?

Aye. 6 ayes, 3 nays.

Okay. Receiving the votes it needed, that report is received by the committee. Okay. We are going to move into our— let's see. This will be the last thing on our agenda We have one more item on our agenda today, and that is public comments. Public comments give anyone in the room 5 minutes to come up and testify on certain matters that they're concerned with. So is there any public comment here today? Okay. Step up. We'll put time on 5 minutes. Please introduce yourself and give us your testimony.

Chairman Overweg, Mr. Overweg, Vice Chair Aylward, and members of the committee, I am Renae Randall, and I'm speaking on my own behalf. First, I want to give my immense and genuine gratitude and appreciation for the people that voted to reject. Second, I want to speak to the people of South Dakota. If you are a state or municipal or education employee, SDRS and SDIC are stealing your retirement savings.

And the South Dakota government is not going to do anything to stop it.

So make a plan because your pension isn't going to be there when you retire. If you're thinking about applying for one of those jobs, I want you to know that this is how the state of South Dakota treats their employees. If you are an SDRS member and not working for the state of South Dakota or drawing benefits, I recommend you pull your money out of SDRS. As you are the only people that can, the The rest of us are all trapped. 3-6-28 clearly states that I'm legally required to report the very concerning management behavior inside the South Dakota Investment Council that I was fired for whistleblowing about. All the management of the SDIC and the boards of the SDRS and SDIC are also legally required to report.

They sent me an NDA instead.

I'm concerned that GOAC could be open to legal exposure by accepting this public integrity report that may be fraudulent, as it does not include the SDRS and SDIC whistleblower report. I have tried to report this to the AG office through the GP&A law firm, but they refused to file it for 4 months and cyberattacked me.

Wow.

Hank Prim, who is an SDRS board member, was assigned to me as a special agent to take this report, did not contact me after I sent him the notice of claims for wrongful termination that had Mueller in it. I suspect that Marty Jackley was involved.

Ma'am, I'm going to have to say, you can't, you can't just sit here and make accusations that you cannot hand out proof I have proof. Well, then hand it out.

It's in, it's in these documents.

Well, I'm not going to— as chair, I'm not going to let you sit here and make accusations against people's names when they're not here to defend themselves and you're not giving the committee proof that you have for these accusations. Please give us your testimony, but please do not make accusations that you cannot back up. Thank you.

Okay, I have I have that proof in these files of a friend's email that came through the South Dakota dot gov portal after an SD it had SDRS attachments in it, and the computer systems and everything went down after I got sent that notice of claims of wrongful. Termination. So, it is true, I have not successfully reported it to him because I couldn't use my computer or phone or emails for months. I put up the billboards because I couldn't communicate with anybody. I mean, it was terrorizing. The cyberattack was terrorizing. It's state-sponsored terrorism.

So Hank Prim, who's an SDRS board member, is required to report this.

So, and along with the boards of the SDRS and SDRC, so there should have been about 30 reports on this. I tried to report my whistleblower termination to numerous other South Dakota entities, but all have refused to take this report. It's been 15 months of trying, and I still have not been successful. This is likely to open large legal liabilities for many, so I want to alert GOAC of, of the risks criminally and civilly for a lot of people. I request an investigation into my illegal whistleblower firing, my inability to report this to the AG office and the cyber attacks.

You can go to exposelies605.com.

I have hundreds of pages of documents that no one will look at. Thank you.

Thank you, Mrs. Randall. Is there any further testimony, public testimony today? Come on up. Oh, I guess— okay. I guess ladies first. Ladies first. The chair is going to reiterate that we're going to be respectful here today. Thank you. Please state your name and give your testimony.

My name is Julie Burgard, and I'm from Mina, South Dakota. And I'm here today to— thank you for hearing me. I'm here today to— because I believe there are serious questions about government accountability, transparency, and the use of government authority that deserve to be examined. I want to be very clear about my purpose. I'm not asking this board to decide the merits of a zoning dispute, a property tax issue, or any other underlying Excuse me, disagreement in Edmunds County. I am asking about process, authority, and conduct. I have been actively involved in raising questions about county government zoning and the proposed Riverview Bell Dairy. I have asked questions about county ordinances, conflicts of interest. Public records, and how decisions affected the people of Edmunds County are being made. And I raised those questions, those concerns. A complaint was made about me to the Attorney General of South Dakota, and which then followed up with a complaint to the DCI, or they— I was investigated by the DCI. I was contacted by the South Dakota Division of Criminal Investigations. My understanding from that conversation was that the matter was being treated as a potential fraud complaint. That was concerning to me because I am an elected official. I ran for county commissioner in Edmunds County and won in the primary, and I will take office in January, who has been publicly questioning actions of my own government. Then approximately a week ago, my story became a national story. So we've put South Dakota on the map with my story through Farm Journal. And we again made national news again this morning with the statement that the Attorney General put out last week. Within hours of that story being released, the Attorney General's office contacted the Farm Journal and wanted to make a statement initially, or they initially declined. So the Attorney General's Office had declined the complaint or the comment initially. The narrative has changed from what had been discussed with me by the DCI agent. Instead of the matter being described as a potential fraud issue, The public statement characterized it as an owner-occupied status issue. That raises a very broad question to me. Why is the Attorney General involving themselves in an owner-occupied status issue? My understanding is that property tax and owner-occupied status questions are handed Handled by the the county director of equalization, and to follow up with that, I did contact our director of equalization and asked her if she filed a complaint regarding my owner occupied status and my candidacy, and she said she did absolutely did not. And in the statement that was released today. The Attorney General's own statement acknowledges that the matter is outside the scope of the authority of the Attorney General's office. So then why was DCI sent to my office to investigate me? What authority were they exercising? What was the original complaint? When was the complaint filed? On August 12th, I sent a certified written request to the Attorney General's office requesting a copy of the complaint and all related documents. I have received no response. I called the office on Friday and left a message requesting a return call. I have had no return call. That lack of transparency is part of the reason I'm here today. When government investigates a citizen, particularly an elected official who is publicly raising questions about government actions There needs to be confidence that the investigation is based on legitimate authority and a legitimate purpose. And when the Attorney General's Office becomes involved, there needs to be an understandable explanation of why it became— why they became involved, what authority it was acting under, and what process was followed. I am not asking GOAC to determine that retaliation or intimidation occurred. I am asking whether the circumstances warrant examination to determine whether proper procedures were followed and whether government authority was used appropriately. Because there is a larger issue here, citizens should not have to wonder whether speaking up, asking difficult questions, challenging government decisions, or exercising their right as elected representatives will result in government scrutiny being directed at them.

That's your time, ma'am.

Thank you.

Thank you. Appreciate it. Further public testimony? Welcome, sir. You have 5 minutes. Introduce yourself, please.

Chairman Overweg, Vice Chair Howard, members of the committee, my name is Chad Bishop. I am a resident of Sioux Falls. I spoke to you on July 21st. That testimony stands, including the 2 patterns I named. Consider this a continuation of my ask for operational oversight of the Department of Health. Chairman Overweg was kind enough to speak with me and inform me why he would not add me today's— to today's agenda. I am here to ask for your consideration in being added to the agenda for the October meeting. This is a continuation of asking for your operational oversight of the Department of Health pursuant to its policies and actions during the COVID-19 pandemic. 8 days after your July 21st meeting, on July 29th, Dr. Anthony Fauci appeared under subpoena before the United States Senate Committee on Homeland Security and Governmental Affairs, chaired by Senator Rand Paul. He declined to answer substantive questions. He invoked the 5th Amendment. It took 6 years. Patience is a virtue. What drove the fear into rationality? Go back to the spring of 2020, March and April. The Smithfield outbreak in Sioux Falls was, at the time, the largest known single-source cluster in the United States. It happened in our largest city in a state that did not lock down, had no mask mandate, and purportedly would never allow a vaccine mandate. No other state had that combination. South Dakota was a place where you could actually see what happens and measure it. It was somewhere to live to be proud of. April 3rd, 2020, at Governor Noem's press conference, the Department of Health presented a projection built in consensus with Sanford, Avera, and Monument. The slide put 30 to 70% of the state infected between March 10th and September 1st of 2020. The governor put a headcount on the on the record in her own words: 265,000 to 600,000 South Dakotans infected, with the peak expected in June. Note: They project the number of infected, not cases. They also project the need for 5,000 hospital beds and 1,300 ventilators. April 28th, the Department of Health's own slide titled Testing plan to combat COVID puts antibody testing in tier one of their strategy alongside PCR. Antibody testing in tier one. In that same briefing, a reporter asked whether any part of the three-tier plan covered people who were not showing symptoms. The Secretary of Health answered that antibody testing would really come into play for asymptomatic people. That is the test, she said, that shows a person may have had COVID in the past. When it is, when it is more available, she said, we will see it as a resource for those people. May 4th, the secretary goes further. She says the state is waiting for antibody testing to improve in quality so it can have better surveillance of the population as a whole, and that is going to be, in her words, really a game changer as it pertains to population-based strategy. May 29th, the FDA authorizes an antibody assay that will later be used in the Sanford Survive healthcare workers study. An authorized test existed, more than one actually. Our state epidemiologist co-authored the CDC report on the Smithfield outbreak. Their investigation ran from March 16th to April 25th, 2020. Within that window, 929 employees met the case definition out of roughly 3,600. Sadly, 2 employees died. 2 deaths from 929 documented cases in a workforce whose median age is 42. November 18th, 2020. The department presented testing to a Joint Committee on Appropriations. Representative Jean Hunhoff, a member of that committee and registered nurse, asked whether those results told you a person was positive right now, or whether they also told you the person had been exposed in the past. The department's witness, Joan Adam, the Director of Division of Administration, answered plainly. Her words: We are not doing antibody testing, just checking for active disease. The right question was asked of the right person, and it was answered honestly. Antibody testing is how you see months. They had already named that test the game changer. They had added it to the Tier 1 strategy in November. They still were not running it. In the same slide pack, antibody testing is still on the page. I'm quoting their slide, 3 bullets in full: tests for prior infection, still learning about protective factors with antibodies and how long they last, makes the most sense when a substantial community spread. That's on the slide. No state population survey in the state that hosted the largest outbreak in the country in April 2020. So put those together. In April, the governor, the Secretary of Health, the state epidemiologist, Sanford, Avera, and Monument collaboratively projected how many South Dakotans would be infected across a season. In May, it named antibody testing as the game changer for measuring a population. In November, it told the legislature it was not doing antibody testing and that it was still learning. We know we didn't need 5,000 hospital beds that June. We know we didn't need 1,300 ventilators that June. Those 2 predictions didn't hit.

Did we have the infection rate predicted?

How would we know if we didn't deploy the game-changing antibody testing? What does it mean if that prediction did hit? See my previous testimony. 100 deaths out of 100 known cases and 100 deaths out of 100,000 infections describe 2 different states. Without serology, the state could only ever publish what appeared to be the worst-case numbers. Thank you. Thank you.

Any other testimony? Any other public testimony? Okay. Seeing none, I think that takes care of the committee's work today, unless anybody in the committee has anything else. Mr. Chair, uh, Representative—

or Senator Karr. Yeah, thanks. I would just, uh, like to offer a couple comments if that's all right. Absolutely. Thank you. I just want to address— I think we've had some important, uh, information presented today, and I thought a pretty good report from the Attorney General's Office. You know, something that I think all of us take really seriously is this idea of whistleblowing, and it's been thrown around a lot over the last 9, 10 months. And I take it very, very seriously, as I think all of my colleagues here on GOAC, as well as the AG's office. I know that I've been involved with several bills that deal with integrity and oversight in the State state government, how we operate. I've brought bills on whistleblowing and coercion myself. I've supported those types of bills, and so I just wanted to be known that this this committee and this group of legislators do not take it lightly. However, we do need to follow certain processes, and we do need facts. So I'm going to just refer to. Ms. Randall for a second. She's made several accusations regarding us taking this matter seriously. I did receive her report last year. I've read it. I have followed up several times with the AG's office. I followed up with them this morning before we started. There still has not been a complaint that's been filed. I don't know. I don't understand. According to the AG's office, they've asked for this to be filed. They want it to be filed. They want to pursue a crime if a crime was committed. If there's a crime that was committed, then report it. That's why we have these laws. That's why we have these rules, and we will support that. So far, nothing has been filed.

So.

If that's the case, I've heard that it's something has stopped or been put some sort of impediment has been in the way of filing. That doesn't make sense. We just heard from the AG's office. We know of several cases that of fraud that have been pursued and also prosecuted. The AG's office is not afraid to do this. If there's a crime out there, they're going to pursue it. We've seen them do it. And many of the executive branch departments, DOC, Department of Revenue, etc. So I just want to say, you know, making unfounded accusations is not appreciated. Take those just as serious as I do real whistleblowing charges. File the complaint. State the crime that was committed. Thank you.

Thank you. Any other comments from the committee? Okay, then, as chair, I would like to thank everybody who came and gave reports today and all those who public testimony. Um, thank you all for taking time out of your busy day to come visit with us a little bit. We have one meeting left, and I think that is October 13th. And so I will see y'all there. So that concludes our business unless anyone else has anything else that they want to say from the committee. Otherwise, I'd be looking for a motion to adjourn.

Second.

It has been moved by Senator Otten, seconded by Senator Howard, to adjourn. All those in favor will say aye. Opposed? We are adjourned.