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Good, useful, and full of wonder.

SDPB. The Interim Rules Review Committee will now come to order. Madam Secretary, please call the roll.

DeGroot? DeGroot?

Here.

Larson?

Sorry.

Here.

Mehlhaff?

Here. Muckey?

Here. Howard?

Here.

Hansen?

Here.

Mr.

Chair, you have a quorum.

Thank you, Madam Secretary. We have a quorum. The chair will entertain a motion to approve the minutes of our last Interim Rules Review Committee meeting.

So moved.

Moved by Senator Mehlhaff, seconded by Representative DeGroot. Any comments on that motion? Seeing none, all those in favor of approval of the minutes will signify by saying aye.

Aye.

Those opposed, nay.

Aye.

That motion carries. Okay. Welcome, everybody, to the Interim Rules Review Committee. We have a number of proposals on the agenda today. We will take them in the order that they appear on the agenda. And so first up will be the Department of Social Services with a proposal to amend rule to update the TANF payment standard by approximately 6.4% and to update federal medical services eligibility standards that are reflected in The committee will now hear proponent testimony. Good morning, sir.

Good morning.

Thank you, Mr. Chair, and good morning. My name is Greg Tishkoff. I'm an attorney with DSS in the Division of Legal Services, and I will be presenting the rule changes on behalf of the department's Division of Economic Assistance. Thank you, Mr. Chair and committee members, for your time and your consideration today. This package impacts only 5 rules. Updates to ARSD 6710.0503 and 6710.0505 would result in an increase to the standard TANF payment amounts by approximately 6.4%. The increase relates to an $854,000 appropriation made in the 2026 legislative session to increase TANF benefits by 5%. These rule changes adopt that 5% increase together with the 1.4% inflationary increase that was included in the FY27 general appropriation. The other 3 rules for your consideration are annual updates to the ARSD needed to match the yearly adjustments the federal government makes for inflation. The figures must be adopted at the state program level and are used to determine eligibility for services. Specifically, 67-46-0413 reflects the federal adjustment to the Supplemental Security Income standard benefit used to determine eligibility for medical services. 67-46-0515 is updated to reflect the federal adjustment to the home property equity exclusion amount considered for long-term care services. And 6746.0712 is changed to match the FEDS combined spousal allowance to determine eligibility for long-term care services. All LRC form and style recommendations have been incorporated. Now I'd like to review the highlights of Form 15. Approval to proceed was given by the Cabinet Secretary on April 14th, 2026. The proposed rules and supporting documents were submitted to LRC and BFM on April 20th, 2026. Notice of the public hearing was published on April 21st, 2026 in the Mitchell Republic, on April 23rd in the Rapid City Journal, and on April 24th in the Aberdeen News and Argus Leader. In addition, the rules were posted on rules.sd.gov and dss.sd.gov. They were mailed to 8 persons and emailed to 257 listserv recipients. The public hearing was held on May 15th, and lastly, the final rules and supporting documents were submitted to LRC and this committee on May 28th, 2026. And with that, Mr. Chair, I thank you again for your time and consideration of these rules. I'll stand by for any questions that committee may have. DSS Cabinet Secretary Matt Althoff and EA divisional leadership are also present today to assist in answering any committee questions.

Thank you, Mr. Tishkoff. Is there any further proponent testimony? Any further proponents? Seeing none, are there any opponents? Any opponents? All right, seeing no opponents, we'll move to committee questions. Are there any questions from the committee? Representative Muckey.

Thank you, Mr. Chair. Just making sure I'm understanding clearly. So in particular, when looking at $67,460,413, I know when we're going through our packets we're looking at that as a federal standard amount that we're reaching to. Was the previous amount also a federal standard, or are we— how does that compute?

I guess.

Mr. Tishkoff.

If it's all right with the chair, I'll ask someone else to assist in answering that question.

You bet. Mr. Secretary, good morning.

Morning, Mr. Chair. Matt Olthoff, Cabinet Secretary, Department of Social Services. Thank you for the question. That is a schedule we update annually. We actually bring this TANF rules package every year, and we just have codified that on the federal standards that says this is the eligibility benchmark that we use. And so as the federal update is made, we incorporate that annually in our administrative rule.

Thank you. Any further questions from the committee? Senator Howard.

Thank you, Mr. Chair. So a question for either one of you. Correct me if I'm wrong on this, but last year we took the TANF down to the maintenance of effort, at least budget-wise we did on the books, and then we implemented A 10% cut with the rest coming out of reserves. Reserves will run out eventually. So that cut down to MOE on the books is still on the books as far as I know. So am I correct in, in saying that this is just more that is going to have to come out of reserves, and either we, we abide eventually by what we agreed to last year Getting down to maintenance of effort, or we're going to run out of reserves and we're going to be looking at this again next year? I mean, walk me through that, if you would.

Mr. Secretary.

Mr. Chair, so as a part of the general appropriation, additional general funds were added to the ongoing budget for our TANF program. So I think another way to look at it in those terms is that there was a bump up above the maintenance of effort requirement, and that's reflected in the 5% increase in the benefits that We're adding— in addition to that, there was the 1.4% inflation that was added to the number, Senator. So it is fact that there was ongoing programming that was happening. The 5% is not the full 10% we cut. And so we intend to bring that forward to the joint appropriations through our letter of intent that they've asked for us. And we're in the process of composing that, and we'll present all that to the JCA next month.

Thank you.

Follow-up, Senator Howard.

Thank you, Mr. Chair. Okay, so we did put back in money for this 5%. However, we still on the books then have a 25% reduction. If I remember right, we were 30% above maintenance of effort. We took that down to maintenance of effort. We implemented the 10% cut actual dollar-wise, but we're putting back in 5%. So on the books, technically we still have a 25% reduction. 5% has been implemented. So are we sitting at roughly 20% that we— I'm still a little— I just want to make sure the people listening understand this is a convoluted issue. It shouldn't be this convoluted. It should not be this difficult. But I want to make sure that people understand what's happening.

Mr.

Secretary, you You want me to respond to convoluted?

Yes.

I'm gonna do the best I can. So again, the department came forward in session of '25 with a governor's recommended budget reduction that incorporated, and I may get these numbers a little bit off, I apologize, but a total of $5.4 million in reduced TANF spending, general fund. Was incorporated with that was a lot— we just need to understand that TANF funds a lot of things. Part of that is this direct benefit to those families that do require— apply and are found to be eligible. But there's a lot of child welfare monies. There's a lot of other things that we do, and that's going to be all spelled out on the maintenance of— I'm sorry, the letter of intent, Senator. So—

Okay.

This was designated funds. We heard that in joint appropriations. They made it very clear to us they want this added not to just the overall program, but to that particular part of the program, the benefits. And rough numbers, this was about $400,000 added to it, which will then go to the 5%. So I don't know that I have— to your question, I apologize— I don't know that I have the exact math on what is the exact amount to the benefit for that. It's a small minority of, ultimately, of individuals that are benefiting from the TANF program, the families that do receive that amount.

Follow-up, Senator Howard.

Okay. So, thank you. Would you say— okay, we're still— how much would you say we're over, dollars out the door, how much are we over maintenance of effort right now?

Mr. Secretary.

I appreciate the question. I don't think that I'm prepared to answer it. If I may, could I come back to you with an answer on that?

What is—

which I anticipate, I think we will very easily be able to spell that out for you as we are still in the drafting phase of our letter of intent. I'd like to just incorporate that, which is going to show overall the last 5 years what have we been doing, where are we going with the TANF program, and specifically it asks for the reserve, right, the infamous TANF reserve that's there.

Okay.

Put forward some strategy.

Any further questions? Any further questions from the committee? Okay, see no more questions. Thank you, Mr. Secretary. I'll move to committee discussion or action on these proposed rules.

Representative Muckey, I move to deem the rulemaking process complete.

Is there a second?

Second.

Motion made by Representative Muckey, seconded by Senator Mehlhoff, that the process is complete. Discussion on the motion? Representative Muckey.

Thank you, Mr.

Chair.

So I think it's important to state, um, obviously getting into a relitigation of what went on this last session in appropriations is not what I'm here to speak to because we are the Rules Committee. But I will say I appreciate the Secretary of Social Services and the department for coming forward to bring these forward, as well as their annual package. I think what's important to state here is when you do look at the maintenance of effort that Senator Howard was speaking to, the amount is actually in the fiscal impact. When we talk about how far we have— are above maintenance of effort, the maintenance of effort federally did not change. As Senator Howard stated, it's around $8.54 million. The amount that was appropriated in general funds for that specific purpose was $427,000. That's the amount that we're above. That being said, Again, I know this is part of a larger conversation that I appreciate the Secretary mentioning, which is there is a letter of intent that is a follow-on to what was passed in the general fund budget this year specifying where those funds would go to. This is a rules package to move forward with that. The main thing I just want to highlight is that this will be an ongoing conversation of JCA. I know that there's an LOI that will be presented in July to discuss the future of TANF and where we go from here. And so as far as this year goes, I know this is kind I think that covers this part of that conversation. I will respect the JCA process for going through that and looking at the LOI. I'm happy to offer more discussion, but I think at this point this answers the question of what we're doing for this year. Thank you, Mr.

Chair.

Thank you for the comments on the motion. Senator Howard.

Thank you, Mr. Chair. Well, I think first of all, for those listening, I don't know that anybody— I, I know I didn't— but explain what maintenance of effort is. And that is What the state is legally required to put forward in this program in order to get matching federal dollars. We do not have to go above and beyond. And this is a welfare program, one of many, many in the state. I will be voting no on this because I believe we should not be above maintenance of effort. And I struggle with the fact that, you know, this, this increase This comes on the heels of just last year trying to get down to maintenance of effort. And, you know, deals are made, and I'm not in favor of this deal that was made in a red state. I believe we need to be working to reduce welfare spending, not increase it. So this is— and I know this is the Rules Committee, I get that, but this is the last— this is the last line of defense against that.

Thank you.

Thank you. Further discussion on the motion? Representative Muckey.

Thank you, Mr.

Chair.

I want to clarify something for the record. There was no deal made for this. There was no deal made for this particular funding package by the JCA. This was a decision made by the committee, and so I'm not going to go further than that. But this idea that there is some deal strict deal struck to make this work is hearsay. Thank you.

Okay, uh, further remarks? Senator Howard.

Thank you, Mr. Chair. I'm sorry, but I do have to push back because yes, on appropriations there were many— we were coming down to the wire. What are you going to fund? What are you not going to fund? Um, the second floor was not in favor. This is what I— my recollection from appropriations, the second floor was not in favor of this increase. But certain members of Appropriations really wanted to push for this increase and has been pushing for this increase. What the second floor did want was another agency to be able to hang on to some funding, and I'm not going to go into the agency or what that funding was, but the second floor really wanted that funding, so they were willing to compromise on this and agree to this because certain members of Appropriations really wanted this. By one vote, a slight majority of Appropriations wanted this.

So, all right, anything further on the proposed rule? Senator Melhoff.

Mr. Chair, thank you, Mr. Chair. I'm going to speak in support of approving the motion to deem the process complete, and I have a lot of sympathy for the department on this. As many of you know, I used to I used to work in state government and I understand some of the challenges of complying with legislative instructions. And basically what we have here is the department doing what the legislature asked them to do. And I think it would be inappropriate, whether you agree with it or not, to at this point try to turn them back and basically get out of step with the JCA and, and the legislative chambers in general. So I'm going to support the motion.

Thank you. Further remarks on the motion? Any further remarks on the motion before the committee? Okay, seeing none, then the motion before the committee is that the rules process is complete. All those in favor will vote yea, those opposed nay. The clerk will unlock the voting machine and the members will proceed to vote. Oh my goodness, we're not in the House of Representatives. Yes, the Secretary will please call the roll.

DeGroot.

Yay.

Larson.

Aye.

Melhoff.

Aye.

Muckey.

Aye.

Howard.

Nay.

Hansen.

No.

4 yeas, 2 nays.

Thank you, Madam Secretary. That motion carries. The rules process is complete.

All right.

Next up on the agenda is the Department of Social Services with a proposal to amend and adopt rules to update hospital reimbursement methodologies, including inpatient and outpatient hospital services for both in-state and out-of-state hospitals to more closely align with industry standards, repeal rules that are duplicative of federal regulation or other rules, and make style and form changes. The committee will now hear proponent testimony. Welcome back, Mr. Tishkoff.

Thank you, Mr. Chair. Again, my name is Greg Tishkoff, an attorney with the Legal Division of the Department of Social Services, and I will be presenting now the rule changes on behalf of the department's Division of Medical Services. Thank you again for your time and consideration today. This large package is a cleanup and modernization of Articles 67 716 covered medical services. It would implement changes to current reimbursement methodologies for in-state and out-of-state hospitals covering both inpatient and outpatient services. The department intended to bring this package before the committee last year. However, the department, seeking general agreement with hospital providers on the goals and pathways for modernizing the methodologies, withdrew a previous version of these rules. And specifically, I want to acknowledge that this committee graciously scheduled an additional interim meeting to give the department additional time to engage with providers. Yet even with extra time, when consensus was still not reached, the department chose not to pursue finalizing the rules in 2025. Now, many months later, after help from the legislature and additional funding provided to Medicaid's ongoing budget. Common understanding with providers has been achieved, and we are very pleased to be before you this morning to present this package. The rule changes concerning reimbursement methodologies are found in Chapter 67, 1603, Hospital Services. Under these proposed rules, out-of-state hospitals, in-state acute care hospitals providing inpatient care, and neonatal ICUs will transition to the all-patient Refined Diagnosis Related Groups, or APR-DRG methodology. This methodology is favored over Medicare's version of diagnosed related groups as it better reflects the patient types and diseases treated within the Medicaid population so that claims pricing will better align to case severity. There is no fiscal impact associated with transitioning to the APR-DRG methodology. There is, however, a $2.8 million fiscal impact for critical access hospitals to transfer from the Medicare DRG methodology to a percent of charge methodology under 67-16-0306.03. In the 2026 legislative session, $2.8 million was appropriated $1,381,240 in general funds to accommodate this transition. The $2.8 million has been added to the ongoing appropriation and will provide cost coverage to a select group of critical access hospitals that in 1997 were included in a different methodology. The percent of charge methodology updates that former methodology and is an outcome of extensive extended discussions the department, the Bureau of Finance and Management, and the governor's office held with hospital systems and associations. The department is also grateful for the collaboration it received during session from the Joint Committee on Appropriations. We believe a good path forward has been identified and is reflected in this rule change. The only other fiscal impact in this package is associated with the repeal of 3 rules, 6716.01.25 to 6716.01.27 inclusive, which relate to the use of coding and procedure manuals. The department has updated these sections of the ARSD each year to reference the most recent published edition of the manuals. The information contained in the manuals is also found on the department's Medicaid bill—

Uh-huh.

Billing guidance website used by Medicaid providers. However, updates to the website do not align with the department's annual ARSD updates, resulting in outdated and inaccurate information for providers. Under the proposed rules, the department will no longer update the references to the manuals in administrative rule, and providers must use the website for billing guidance. This requirement is contained in a new ARSD Section 6716.0129. The department will save $462 annually by not ordering extra coding manuals solely to update rules. Now, as I mentioned earlier, most of the package is a cleanup of Article 6716, Covered Medical Services. The department proposes to repeal Chapter 6716, in its entirety, and 16 additional rules that are obsolete or now found elsewhere in the ARSD. These rules would also correct inaccurate citations found in General Authority and Law Implemented and remove citations to statutes that have been repealed. Finally, these rules have been updated to current LRC form and style standards and preferences. Now I'd like to run through the Form 1540 Approval to proceed was given by Secretary Althoff on April 15, 2026. The proposed rules and supporting documents were submitted to LRC and the Bureau of Finance and Management on April 20. Notice of public hearing was published on April 21 in the Mitchell Republic, on April 22 in the Argus-Leader and Aberdeen News, and on April 23 in the Rapid City Journal. The rules were also posted on rules.sd.gov and dss.sd.gov. They were mailed to 8 persons and emailed to 257 listserv recipients. The public hearing was conducted on May 15, 2026, and the final rules and supporting documents were submitted to the LRC and the committee on May 28th, 2026. Thank you once again for your time and consideration. I'll stand by for questions the committee may have. Again, Cabinet Secretary Matt Altoff and Medicaid Director Heather Peterman are also present today should you have any additional questions about the methodologies or the process followed to arrive at these rules.

Thank you, sir. Are there any further proponents to these proposed rules? Mr. Secretary, welcome back.

Mr.

Chair, thank you very much. Matt Olthoff. I suspect you will be hearing from Heather, as well, in just a moment. This has been quite a journey, and I want to emphasize my gratitude to each of you Rules Committee members. What Greg articulated there, in terms of having multiple meetings scheduled, please understand that that was meant to continue to work with our providers. We are not a safety net if we do not have providers that are willing to work with us, that are willing to serve those individuals who aren't, say, qualified for Medicaid coverages and have a desperate need, or in some cases they just have a need for access to healthcare. So very, very important to us that that collaboration happened. So grateful for the assistance of the Joint Committee on Appropriations.

Thank you.

Most notably, the governor's office got involved in this during session. JCA had a workgroup that also really focused in on this and helped to bring us over to this point, what we hope will be a finish line. There's a lot of technical words in that. There's 8 little categories that are moving, 4 types of hospitals, and then you have inpatient, outpatient for each of them. I would emphasize to you methodology, a 4-syllable word. Think of it as a measure of cost containment, a measure of transparency, a measure of the department aspiring to be more forthright and just in the way it treats all providers. That methodology update was made in the case of the critical access hospitals that had been since 1997, basically, that our infrastructure has been in place. And so anytime you're going to update 30-year-old methodology, it's going to exact change. And so that's clearly what a lot more time was needed in collaboration in order to get individuals to where we could all meet. I think this is a path forward. And so I represent all of that to all of you because I think there is a good collaboration that happens. I hope you've noticed in the rules package that there's strong endorsement from our 3 major healthcare systems. As well as our association of hospitals in South Dakota. They were, I think they were valiant in their representation of their particular hospitals' needs, the requirements that they live within, both from CMS and other regulatory, but then too, what does it take to actually be able to, you know, to deliver services with the personnel that are required to hire? I hope that cost containment resonates. I hope that all of you understand that no different on a billed charge versus a percent of billed charge. You see this in an EOB for those of us that are privileged to have private health insurance. We see that there is a reduced amount that our payer, a third-party payer, pays the hospital. That's what's happening on a percent of charge. I hope that you would hear an APR-DRG An all-persons index. That's as close as we can get to market rate. I hope that you would hear that in our conversion to the APR-DRG for out-of-state hospitals, that you would hear that, hey, that is a new mechanism for having cost containment, cost controls in our out-of-state hospitals. And I hope you also saw that that money is being reinvested in our ongoing appropriation to our in-state hospitals, our major acute hospitals.

Thank you.

That we think is— there's a justice in that. There's a— let's treat hospitals no matter where they are on the side of the border. Let's treat them equivalently. And if we have additional funds within our ongoing appropriation, let's put those into our in-state hospitals. Cost coverage for our major hospitals goes roughly from 80 to 83%. They still see Medicaid patients even though it is one of the lowest payers that they have, you know, in their payer mix in a lot of our hospitals. And I'm grateful for their willingness to continue to do this, not because they have to, but because they ought to, as I emphasize in my meetings with leaders of the hospital systems. So I just would ask that you see all that. I want you to know that our team has worked really, really hard. We leaned into third-party competency, that this process began actually in 2024.

Yeah.

And we canvassed, what are we doing today? We started with what does our landscape look like today that is buried in MMIS and it has a lot of variances between one hospital to the next, even sometimes in the same zip code. What is happening in our critical access hospitals that were set an arbitrary number based on the number of inpatient discharges in 1997 that led to inequity across our critical access hospitals where some were being paid Below cost substantially. The ongoing appropriation addition that JCA did, which was instrumental in getting this to sort of a collaborative completion, represents just that. It is those 10 or so critical access hospitals that were on an antiquated APR— MS-DRG, pardon me— methodology set in 1997, and we're moving them to a percent-to-charge. So now all 39 critical access hospitals—

Excuse me.

Critical access hospitals will be treated the same way. I mentioned transparency. I hope that you see— you will see the fruits of this beginning July 1st. A big push from the department is that we don't want all this behind the curtain of the MMIS. Again, that's the mechanism that claims are submitted to and that we pay according to schedules. It's been customized for hospitals. For many, many years. It's an old system. But all that customization, we're moving now to a consistency across for all of our major acute hospitals, a consistency across all of our critical access. And it's every bit our intention to show that, how each of these hospitals will be treated on a public-facing dashboard beginning July 1st. That's a very big thrust so that we can be forthright and transparent. And Do all that we can to show that we're treating hospitals justly across the spectrum. Appreciate you listening to a little bit more context. It is a very detailed technical rules package, dense in some of those. I'd be remiss if I didn't emphasize our gratitude for LRC's collaboration in that too, to just clean up. When you have statutes and rules that have been in there for a really long time, there's a lot of obsolescence that has gone on. Cleanup and style and form aspects, I think, are pretty substantial in this package as well. Again, as has been stated, we will stand by for questions. I just appreciate the opportunity to hear a little bit broader context of the collaboration that is going on.

Thank you very much. Are there any further proponents? Any further proponents? Okay. Seeing none, are there any opponents to these proposed rules? Any opponents? All right, seeing no opponents, we'll move to questions from the committee. Senator Howard.

Thank you, Mr. Chair. Um, so I know during session, if people remember, there was some controversy. I think there was some assumptions made. I know my emails blew up at one time over this, but I'm wondering if you could address how this will impact Lifescape, Black Hills Works, those entities.

If you don't mind just stating your name for the record, introducing yourself, and then you can proceed with answering the question. Thank you.

Good morning. My name is Heather Peterman. I'm South Dakota's Medicaid director. Thank you for the question. This current package does not change the, um, the inpatient hospital methodology for LifeScape. Part of the controversy that included the need to make sure that there was understanding by all of our providers resulted in clarifying for everyone, you know, who was going to be impacted. The methodology that we use to pay LifeScape is on a per diem basis for their inpatient stays, and it remains that way. They were not a DRG hospital and do not move to a DRG hospital under these rules, so we made that very explicit so that it was clear for Mr.

Chair, if I could just amend that too. Thank you very much. Heather's been extraordinary in helping us to get to that point. Leading up to, I think it was the September rules meeting, that we ultimately withdrew from the agenda, you might recall that Mr. Watkins, Steve Watkins, CEO of Lightscape, and I sent a co-authored MOU. That remains today. I just want to emphasize. So that's one of the first things that we sort of concretized is that we got to a mutual agreement about how we could proceed with that. So that, that agreement that was in your inbox is, is valid and true today about what is reflected in this rules package.

Thank you. Further questions from the committee? Representative Muckey.

Thank you, Mr.

Chair.

Just making sure I'm dotting my i's and crossing my t's when it comes to feedback. I know when we're talking about the NICU and psychiatric inpatient hospital rate changes, are there any concerns or feedback that have been brought forward about those changes from those providers.

Ms. Peterman.

Representative Luckey, we've received positive feedback about those changes. As was noted, the previous methodology reflected more of a Medicare population, so it didn't have all of the data necessary to allow us to appropriately pay for services that reflected a NICU or a population that experience behavioral health issues. The new methodology is much more robust in that area and does result in more robust reimbursement for those service lines.

Follow-up, Representative Muckey. Thank you, Mr.

Chair.

Making sure I also have for the record, when we're talking about the website function, can you explain how the— can you walk us through the process of how those rates are being eventually placed onto a public website so we understand how those rates are being arrived at and then being published online.

Ms. Peterman.

Thank you, Representative Muckey. One of the advantages of streamlining and modernizing our methodology allows us to use a consistent base rate for, for providers. We will publish the base rate as well as the conversion factors on our website, and it allows for the Ability for all providers to have that assurance that they understand and know the components that go into their rate. Previously, some of the issues with our old methodology, which just happens over long periods of time when it's not reviewed and kept up to date, is those hospital-specific and other factors create a greater mismatch between the intensity of the service and what we're paying, and we would end up having a great portion, about 30% of, of this amount that's paid on the bill, being in an outlier payment. So this helps smooth that out, allows for providers to see all those components, which again, that's the, the beauty of being able to put those components out on our fee schedules websites and keep those up to date.

Could I follow up? Representative Muckey.

Thank you, Mr.

Chair.

Um, I know we've worked pretty tirelessly with you to figure out how do we make sure that we're holding as many folks harmless as humanly possible. Are we aware of— now we're at the final stage— are we aware of anybody that may possibly be negative— negatively impacted as far as a system or a hospital location?

Thank you for the question, Representative Muckey. There are a couple of hospitals— it results from the outpatient side, the modification there— where they're seeing reductions. Some are within a system, one is not. But I would emphasize there are a lot of out-of-state hospitals that are going to see reduction because they're, they're a percent-to-charge methodology moving to APR-DRG. So We look at it in the totality, and there are great reasons why people seek treatment out of state. There are parts of our state that live along a border. The nearest hospital is there. It's not just tertiary care that's being sought. But it is a large number of hospitals that are actually experiencing it in this conversion, not just one or two, if I may. One more.

Representative DeGroot.

Thank you, Mr. Chair. Question on classification. Can you just explain to me how a hospital is classified and how does a hospital become a critical hospital?

Mr. Chair, thank you very much for the question. So critical access is a CMS designation and they set that criteria. South Dakota just aligns to that and those criteria. And so it's a voluntary designation. sought by a hospital. That's a hospital administration determination. What we are trying to do is just simply align to that. There's no sense in reinventing the wheel. And so that's something that, you know, we're grateful to do it. I would just quickly add that another example of that, of where we do all that we can to align to CMS, is on the cost reporting. So the critical access hospitals, one of their functions for their Medicare methodologies is that they do annual cost reports. We in DSS just simply said, well, let's just use your Medicare cost reports. So let's not be duplicative in that effort. And so that's a good example where we would just do all that we can to streamline. But again, a lot of factors go into the critical access designation, and it is 100% federally set.

Follow-up, Representative DeGroot.

Thank you, Mr. Chair. As you know, my hospital is a loser, over $100,000 loss with this methodology change. Can you tell me why they are a loser? And, and second, follow up on that, is there something that they can do to get reclassified so they would not be that much of a loser?

Mr.

Chair, so there was an adjustment made in 2016 Where the outpatient rates were benefited, and there was an intent at that time to move to normalization, to bring them to a consistent level. And that didn't happen. I'm not here in that time. There's a lot of reasons why that didn't happen. But what has happened since then is some hospitals were receiving a higher rate at the outpatient side.

Okay.

Now I get it. Medicaid is still usually one of the lowest payer. But from a department perspective, there were hospitals that were receiving much higher rates than other hospitals in that outpatient side. So I resist the notion of winners, losers. I don't like that. It's safety net. This is about care for the injured. But the reality is that they've been benefiting from that inaction that didn't happen after what was Perceived to be a strategic implementation phase in. And that predates Heather's and my arrival to the department. A lot of good reasons for that. So what is happening is that that's ultimately being implemented. We're getting consistency on the APC, is the methodology, on the outpatient side. And that results in a lower rate for the outpatient side. Now I do want to emphasize on the inpatient side they're getting a A pretty sizable bump. And I do, you know, back in the contextual comments, you know, there was a strategic decision with the help of our third-party consultancy to say reinvesting in inpatient, it's really essential if you're going to have a hospital, they have to be able to care for inpatient. And so that ultimately was a strategic decision and strong recommendation from our third party. So that's sort of what's Baked into the result of, to your point, Representative, it is fact that based upon experience of, you know, most recent 2024 cost reports, they would see a reduction overall. We've worked very closely with that administration. I feel we've tried to get more data, good information for they— so they can make an informed decision about how to strategically react to this, adjust to this. We're still working on rural health transformation to say, is there ways that that could help them expand service delivery and therefore they increase their volume. A lot of those things are sort of being contemplated. But that's the reason, that's the origins for it, is the APC rate that went into effect in 2016 didn't get fully implemented.

Just one more follow-up.

Go ahead.

Thank you, Mr. Chair. Did you just basically say that Brookings was charging more than other hospitals for outpatient? Is that what you said? And so now that they're not getting reimbursed at that level?

Secretary Althoff.

Mr. Chair, so they, they were receiving a higher rate of reimbursement for the same charges as compared to other hospitals, correct?

Thank you.

Yeah.

Senator Howard.

Thank you, Mr. Chair. Okay, so if I'm understanding this correctly, switching to this different methodology is going to cost us $2.8 million.

Ongoing.

Is there any, you know, I just— they don't pay property taxes, these facilities don't. They don't pay sales taxes on most of, probably all the equipment that they purchase. So at what point do we do ask them to have a little skin in the game? I mean, what are, you know, taxpayers just keep getting asked to pay more and more and more But these facilities are getting a good break in other areas. So, you know, do we ask them to contribute to this? Because we, you know, if we're taking care of the indigent in this way, it should be all of us in on this. So do they— are we asking anything in return? Any cost-saving measures? Anything from them?

Secretary Aldous.

Mr. Chair, I would quickly go Senator, to what I said a few minutes ago, and that is that the cost coverage for our major hospitals is moving from 80 to 83%. You know, and I think for every dollar of expenditure they have for spending to deliver the care, you know, they're getting 83 cents now versus the 80 cents. I, you know, I think to use your terminology, that would seem to me that there's some skin in the game legitimately. And, you know, Medicaid has always been Reliant on the goodwill of providers. It always has been specified in statute. It is the lowest, you know, least last resort for payment and typically has the lowest reimbursement levels. So I'm grateful every day that I see our providers willing to serve. But that would be to me my immediate reaction to that.

Senator Howard, follow-up.

Thank you, Mr. Chair. Okay. So you mentioned what's going to be put out there for the public to able to see. And you talked about the base rate and the conversion factor, but you're going to make sure that it's understandable for the general public, correct? I mean, I know I— if, if I weren't here, what I would want to know is what's the cost and what they're getting reimbursed above that cost, or at— or related to that cost, if it's below cost, above cost. So, Mr.

Secretary, I think I hear a question in that, right? I, I, I I feel the statement. But rest assured, it is our intention to turn around on the cost reporting that they will be submitting to our finance team every year. Again, just submitting what they submit to CMS, so it's not a duplication of effort except they send it 2 places. And we would show what our numbers will overlay our reimbursement to their costs and publish that. Is that always going to be a piece of refinement? Well, every dashboard I've ever met leads to more questions. So we know that we're going to We're gonna start there and aim towards that, and we're gonna— our goal is transparency. And you're right, there is a technical aspect to this. You know, you have some meets and bounds here about confidentiality. When you have a— some of our providers, over 21,000, have very few patients, and we're very cautious about wanting to show— if you've got one patient, you can kind of reveal an identity, and that stuff, we'll be very sensitive about that. But we hope that a layperson, South Dakota, and that's who we build our dashboards for. We take the stewardship of the taxpayer money for the delivery of the safety net very seriously, and we want them to have an understanding of who are the persons and the lives that are being impacted.

Any further questions from the committee? Okay, seeing none, thank you both. We appreciate it. We'll move to committee discussion or action on the proposed rules.

Mr.

Chair, I would move that the process be deemed complete.

Second.

Motion made by Senator Mehrlhoff, seconded by Representative Muckey, that the process is complete. Any discussion on the motion? Senator Mehrlhoff.

Mr.

Chair, yes. I'd just like to recognize the department for taking on— this was a huge undertaking, and when you're moving that much cheese around. People get upset when you move their cheese. And I think to get to a point where, where we largely have consensus and agreement from the stakeholders, that I think we have a pretty good process in place. And again, like to commend the department for their hard work on this.

Thank you. Further discussion? Representative Muckey.

Thank you, Mr.

Chair.

And I again want to thank the department as well too. This is months, years of effort. I know, and I asked the question I did very intentionally at the end to figure out if we've left anybody else out of this. And I appreciate the questions and comments from Representative DeGroot as well. I know when we worked together, especially this past session, to figure out how do we keep our critical access hospitals held harmless in this process. We know this is an extremely complicated, in-depth process, and so I think it's important for us to continue to keep in mind we are trying to reach a sustainable and transparent process. We're going to have to continue to put in the effort to figure out how do we continue to support every hospital in the state, because we cannot allow, especially critical access hospitals or those regionals, to, to fail. And so I appreciate the opportunity to work with you on this, Mr. Secretary, and your team. And I know for our committee, it's good to see this type of depth that we've gone through to get to this point. So thank you, Mr.

Chair.

Thank you, Representative DeGroot.

Thank you, Mr. Chair. The secretary referred to this as a journey, and he talked about how long this has been in place and hasn't been tackled for many, many years. A package was brought before us last year. I don't think it quite made it all the way to the committee. But he swallowed his pride, went back and reworked it. He included people in the process. I had— I came here today with a no vote in mind. But I just got a text that said, please vote for this because it's good for most hospitals and we will continue to work to make sure that it's It's good for Brookings as well. So that's just my comments. Thank you, Mr. Secretary, for all your work, and not just your work, but your— all the people that were involved. Thank you.

Thank you. Any further discussion on the motion? All right, seeing no further discussion, the motion before the committee is that the process is complete. All those in favor will vote yea, those opposed nay. Secretary, please call the roll.

Aye.

Aye.

Melhoff?

Aye. Muckey?

Aye.

Howard?

Aye.

Hansen?

Aye.

Mr.

Chair, unanimous.

Thank you, Madam Secretary. That motion carries. The rules process is complete. All right. Chair will pass the gavel down to Representative DeGroot.

Thank you, Mr. Chair. Moving right along, we have a proposal by the Game, Fish and Parks. Come forward, please. They are proposing to amend a rule to increase the Black Hills elk hunting season length in Unit BHE-4B from October 15th through the 31st and December 1st through the 16th to October 1st through 31st and December 1st through 16th. Proponent testimony, Mr. Kirschman.

Thank you, Mr. Chairman, and good morning, committee members. Tom Kirschman, Director of the Wildlife Division, Department of Game, Fish, and Parks. If you recall a month ago or your last committee meeting, we had some lengthy discussions and conversations about several elk hunting seasons in South Dakota, so you're probably asking the question, why are you back with another rule related to the elk hunting season? It's a very simple answer to that, and this is a direct result of a public petition that was brought forward to the GF&P Commission. We had a landowner representing himself and some additional landowners from our elk hunting unit, which I'll just say is Unit which lies on the east side of Custer State Park, to give you a geographic reference of where this is located. This particular unit is very unique in the Black Hills, as it is primarily composed or comprised of private land versus public land. And in the Black Hills, public land is primarily Forest Service land. But this particular unit is primarily composed of private land. Private land. Those landowners had discussions with our staff and then ultimately brought forward a petition asking for this change in respect to the dates themselves for hunting opportunities. Right now, what opportunity would exist for anyone that does draw a cow elk tag in Unit 4 would be that October 15th, 16th through the end of October, and then the first 15 days December. What they asked for in their public petition was to include the first couple of weeks of October as well for a cow elk hunting season. And the reason they asked that was to provide more time and opportunity for hunters that do draw a cow tag to be successful in harvesting an elk. We work very closely with these landowners in this particular unit because it is primarily private land. And for anyone to harvest an elk essentially in Unit 4, you are working with and obtaining permission from these private landowners. So they brought that petition forward. The commission accepted the petition, put it through the rule promulgation process, the public hearing, and then at their May commission meeting, they did adopt that proposal that they put forward for this rule change, adopted and finalized it at their May commission meeting. So we went through the rule process, and hence where we are here today. So it is unusual for us to come before you and have just one rule that needs to be adjusted or amended, but that's what you have in front of you today, is one rule or a component of a rule that asks for Unit 4 to have those dates adjusted. And that's how we got here today. So I will keep this fairly brief and try to answer any questions you have, but that is the background of this particular rule. particular rule adjustment and appreciate your consideration of this, and we'll answer any questions that you may have.

Thank you, sir. Are there any other proponents? Seeing none, are there any opponents in the room or online? Seeing none, are there questions for Mr. Kirschemann? Any committee questions? Seeing no questions— yes.

Thank you, Mr. Chair. This is a fairly simple question, but what's the benefit to the agency or to the landowners to have this extended period to increase the chances of being able to harvest one? Yeah, through the Chair.

Senator Mehlhoff, again, when we look at this particular unit as private land in primary composition of that geographic area. We work closely with these private landowners, especially when elk numbers will— or elk will congregate. They will cause depredation concerns and issues, competition for forage, some of those things. So what this comes down to is elk management and herd management in that particular area of the Black Hills. So with the additional potential opportunity of harvesting some additional cow elk will help with overall herd management and the numbers of elk collectively in that geographic area. So it's working with those landowners, but it's from a herd management perspective and a population management perspective.

Thank you.

Any further questions? Seeing none, seeing no questions, further questions from the committee, Is there any committee action and/or discussion?

I move we deem the rulemaking process complete.

It's been moved by— excuse me, I just about said Senator Muckey, but Representative Muckey and seconded by Senator Mehlhaff that the rule process is complete. Madam Secretary, please take the roll.

Aye.

Aye.

Aye.

Aye.

Aye.

Aye.

Mr.

Chair, unanimous.

The vote is unanimous. The rule process is complete, and I will move the—

Thank you. All right, next up on the agenda is the South Dakota Board of Accountancy with rules to amend rules to clarify the definition for education experience in issuing a license to an applicant licensed by another state. Good morning and welcome.

Good morning, Mr. Chair, members of the committee. I'm Nicole Cassin. I'm the executive director for the Board of Accountancy. On behalf of the board, I would like to take this opportunity to thank you for your time reviewing spent on our agency's amendments, and I also want to thank LRC staff for their help and guidance with this process. I'm here today to ask that you deem the administrative rule process complete for the changes to the Board of Accountancy. They were unanimously approved and adopted by the board at their public hearing on April 30th. The rule changes do include clarifying the definition for education, experience, and issuing a license to an applicant licensed by another state by creating a new pathway to sit for the CPA exam and to obtain a CPA license. These changes are an implementation of House Bill 1035, which passed this past legislative session unanimously in both chambers. During the rulemaking process, the board did not receive any public comment on the rules, either written or oral. So thank you for your consideration of these proposed changes, and I will stand by for any questions.

Thank you, Ms. Casson. Are there any further proponents to these proposed rules? All right, seeing none, are there any opponents? Any opponents? Seeing none, are there any questions from the committee? Senator Howard.

Thank you, Mr. Chair. Um, can you just walk us through Just walk us through essentially— it's been a while since I looked at the bill especially. Just walk us through primarily what this changes.

Ms. Casson.

Mr.

Chair, Senator Howard, this bill keeps all of the components of what the law had. What we're adding is the opportunity for a candidate to now sit with just a bachelor's degree instead of having to have a master's degree or 150 semester hours. We're keeping those options open for them. If they choose to just sit for the exam at a bachelor's degree, it will require when they go to get licensed that they have 2 years of experience instead of the 1-year requirement if they have a master's degree or the bachelor's degree plus extra education.

Follow-up, Senator Howard.

Thank you, Mr. Chair. What are your safeguards? How are you going to ensure that we We do not lower the standards.

Senator Howard, this has been a national movement, so when we did make these changes, we did keep our education requirements in place with this. So we are reviewing official transcripts, reviewing this. The— that level is staying the same. It's just allowing them to sit a little bit earlier, but they still do have to have all of the college degrees and then pass the Uniform CPA Exam and have the experience to obtain that license.

Follow-up, Senator Howard.

Thank you, Mr. Chair. If you're— if you say you're not changing the educational requirements, then do you still require a master's degree? It's just they can sit earlier, but then they still have to go get their master's?

Senator Howard, we're not requiring it. We are allowing them to make the choice. The candidate will have the opportunity to do what is right for them. So we have the path that allows that. We allow the path for a bachelor's degree. We allow the path for master's degree. We do not— we're not saying it is a requirement to have a master's degree.

Follow-up.

Thank you, Mr. Chair. Okay, but it was a requirement before to, to even sit for it, correct? You had to have your master's?

Mr. Chair.

Ms. Hansen.

Senator Howard, you did not have to have a master's degree. You could have a bachelor's degree plus additional education, and the— it was 150 hours, which some individuals chose to do a master's degree at that time if that was right for them.

Mm-hmm.

Some were with a bachelor's degree and then just getting— in the rule requirement, you see there's 24 hours of education in accounting, 24 hours of education in business. Those hours remain. And so they're going to have to either get those hours inside their bachelor's degree, if it's somebody who made a life change and they want to go back to school and get those, or if they want to choose and have a master's degree for that.

Any further questions? Senator Mehlhaff.

Thank you. Just for clarification, when you sit for the exam, whether you have a bachelor's degree or a master's degree, the difficulty of the test is the same. Would that be a correct statement?

Mr. Chair, Senator Melhoff, you are correct. It is a uniform exam. It does not look at what education level you have coming in to take that exam.

Follow-up.

Thank you, Mr. Chair. So if you can pass that exam and earn your license as a CPA, is there any thought of Allowing somebody with an associate's degree or somebody who's just very skilled in accountancy to sit for the exam at some point?

Mr. Chair, Senator Mehlhoff, at this time we like to keep the exam components uniform across the United States. So then if a CPA is in South Dakota, they have— we have a mobility law that says they can be a CPA in Iowa or a CPA in California or New York. Right now, the associate's degree is not what the national standard is, so we are not moving to that at this time. Right now, we are looking to make sure a CPA in South Dakota is recognized as a CPA in other states and to be on par with the rest of the United States.

Follow-up? Actually, if I could just make I just wanted to make a comment, no question. But I appreciate every— the answers you provided. But I think there's been a tendency to make regional institutions the gatekeeper of every profession, and I think this is good to step back a little bit and make it so people are competent to do that job or able to do it without having to go through the time and expense of picking up a master's degree.

Thank you. Any further questions?

All right.

Seeing none, thank you so much. We'll move to committee discussion or action. Representative Muckey.

Thank you, Mr. Chair. I move to deem the rulemaking process complete.

Is there a second?

Second.

Motion made by Representative Muckey, seconded by Representative DeGroot, that the rules process is The motion is complete. Any discussion on that motion? Representative Muckey.

Yes, Mr. Chair, thank you, and thank you for returning. I know this is a topic that we had heard throughout session. One thing that I know coming from a family of accountants, that this is an important piece to move forward with to make sure that the profession actually has more folks coming in that will have the same stringencies but be able to do so in a different pathway. So I appreciate you bringing this forward and ask for Thank you.

Any further discussion? Seeing none, then the motion before the committee is that the rules process is complete. All those in favor vote aye. Those opposed, nay. Madam Secretary, please call the roll.

DeGroot.

Aye.

Larson.

Aye.

Mehlhaff.

Aye.

Muckey.

Aye.

Howard.

Aye.

Hansen.

Aye.

Mr.

Chair, unanimous.

That motion carries. The rules process is The roll call is complete. And the chair will pass the gavel to Senator Mehlhaff.

Thank you. Next on our agenda, we have South Dakota Division of Insurance, Department of Labor and Regulation, to amend rules to update the sources referenced in rule and incorporate the 2026 Medicaid supplemental coverage amounts set by the federal government. Do we have any proponents? Yes. Good morning.

Good morning, Mr. Chair, members of the committee. My name is Lisa Harmon, and I'm here on the Department of Labor and Regulation Division of Insurance to, to present our rules packet before you today. I will go through our timeline and process that we followed before giving you an explanation of the packet. So the approval to proceed was signed by Secretary Holtman on April 20th. The proposed rule was submitted to LRC and BFM on April 28th. The notice of public hearing is published in the Aberdeen News, the Argus Leader, and the Rapid City Journal on April 28th. We sent notice of the public hearing and the rules via 2 email listservs to approximately 141,000 recipients. We also posted the notice and the rules on the division's website as well as the rules.sd.gov site. The public hearing was held on May 19th where no members of the public attended, and the division submitted this packet to LRC and this committee on June 1st. So the packet before you today contains 2 buckets. It is our date certain rules and our Medicare supplement coverage amounts which we bring forth every year. Starting with the date certain rules, these rules start on page 1 and then begin again on page 32 to the end of the packet of the final rules. So throughout our rules, the division references and refers to various sources that are published by the National Association of Insurance Commissioners, or the NAIC. The NAIC is made up of state regulators in a state-based regulatory system of insurance. These state regulators come together every year and update sources such as the Accounting Practices and Procedures Manual to provide uniformity in areas like insurance statutory accounting. As such, we are updating these sources referenced in our rules to ensure that parties are referring to and utilizing the correct and most up-to-date sources. Switching gears to the Medicare Supplement Rule that is on pages 2 through 31 of the final rules, the change before you today incorporates the latest Medicare Supplement coverage amounts in Chapter 2006.13 Appendix D. Under the Division's Administrative Rule in Section 2006.13 2006-1306, or excuse me, 2006-1336, insurance carriers must provide outlines of coverages and includes coverage amounts such as your deductible, your copay, your coinsurance. These amounts are set by the federal government. By updating these amounts in our rules, we are matching our Appendix D to the current federal amounts, and we're also ensuring that applicants or enrollees are given correct plan information. I do want to mention that the division worked with LRC and we accepted LRC's form and style changes. Also, the division did not receive any written comments, oral testimony during the public hearing, and also no comments during our 10-day comment period. With that, I thank you for your time today and I will stand by for questions.

Thank you, Miss Harmon. Are there any further proponent testifiers. Seeing none, we will open up for opponents, which there's none of them either. So we'll move to committee questions. Any questions for Ms. Harmon? Seeing none, we will move to committee discussion and/or action. Representative Muckey.

I move we deem the rulemaking process complete.

We have a motion by Representative Muckey, second by Representative I move, Mr. Hansen, to deem the process complete. Is there any discussion on the motion? Seeing none, I'll ask the secretary to please call the roll.

DeGroot? Aye.

Larson?

Aye. Muckey?

Aye.

Howard?

Aye.

Hansen?

Aye.

Mehlhaff?

Aye.

Mr.

Chair, unanimous.

Having received a unanimous vote, the rulemaking process This is hereby deemed complete. This time I'll move the gavel back to the chairman.

All right.

Thank you. That completes our packets for the day. We do have a staff report. Mr. Goetz, good morning, sir.

Good morning, Mr. Chairman, members of the committee. Justin Goetz, Code Council. There are 2 items under the staff report portion of the agenda today, and I'll put up the first item here. The first is requesting your formal consideration of a form change. The current form— let me see if we can get that up on the screen here. We will do the witness. Share this. It should come up here. The current Form 14 reads as a small business impact statement. That small business impact statement has been incorporated within the regulatory impact analysis by virtue of Senate Bill 133. enacted in the last legislative session. In essence, this becomes the all-encompassing fiscal impact form, with the exception of the fiscal impact statement. So, the greater impact of the rule upon society, um, the, the costs of implementation, the cost-benefit analysis, the alternatives to implementing the rule in the manner that the agency has Proposed through their rulemaking. All of that is to be put forth in this document as dictated in statute. So in reviewing this document, a lot of these entries, you'll see comment bubbles that tie it back to particular subdivisions and sections of Senate Bill 133. And I would be remiss without referencing the very helpful input that agencies provided throughout this process. The Governor's Office, Jon Katilnik leading the effort to take this document and get the perspectives of the agencies. And I will say that I adopted most of what was recommended, but I did not adopt all of what was recommended in the form. And it really— the agencies' feedback helped to, I think, streamline what was in this form.

Okay.

The one question that I have, besides obviously your perspective on the items in this form, whether you ultimately approve of it as the replacement for the Small Business Impact Statement, is this item here at the bottom. This footnoted item speaks to something that is rather important with the new process. Specifically, the statute contains within it a safety valve, if you will, a feature Whereby, if a proposed rule is going to have a cost of implementation that is higher than the major rule threshold, is there still the ability of this Rules Committee to approve of that rule and not have to go through either a reversion or an outright— well, it would be a reversion plus a, if you can't bring it back to us, here's what we recommend the legislature do.

Right.

Should this be brought before the legislature as a bill instead of through the rulemaking process? This exception, um, and had a chance to talk with, you know, the executive branch on this one, there appears to be this idea in creating this exception that the legislature may at times intend for rules to necessarily have a high cost. And it would be, uh, sort of against legislative intent to essentially force that whole rule framework that the legislature intended be high cost and be, you know, proposed through the rulemaking process back before the legislature again, um, basically creating this sort of causal— this, this loop, if you will, this never-ending loop. Um, and, and that would be, um, you know, something that obviously could, could really stymie the entire, um, legislative and rulemaking process altogether if, if we keep getting this feedback loop, if you will, back to rules and it keeps getting sent back to the legislature. So, the 2 instances are, the one directs in statute the propounding of particular rule language, and you've seen that in a few bills Uh-huh. In legislative session, where there's a caption above that says, by X date, the interim, you know, this rule will be propounded by this agency before the Interim Rules Review Committee, and then you have in-context revisions to a section of administrative rule. That is what that is referencing. The second exception authorizes or requires that the rule be propounded and the rule could not be reasonably executed in a manner that would place the rule below the major cost Rule cost threshold. That would be an instance where the legislature, say, directs an agency to propound a broad regulatory framework. That is, say, to be in alignment with the federal government's regulations, which is the case in a number of areas. Well, there isn't a way to implement that but through the federal framework, because that's what the legislature directed. Well, that framework could have a large implementation cost, right? So the idea is, is that legislative intent ultimately governs throughout all this with this exception, that the legislature said, yes, the language changes in this particular way, so it gets implemented despite the fact that it costs a lot, or the legislature dictated broadly that this framework must fit this certain rubric, and that cannot but be implemented at that higher cost. So, I wanted to point out that item in particular, but obviously, all of these sections here are meant to, per the comment bubbles, reflect various aspects of the regulatory impact statement that is now required— will be required, effective July 1st, with rules packets, all rules packets going forward.

Okay.

And I will stand by for any questions and appreciate your consideration of a motion to approve the form either as presented here or with any edits that you may suggest. Thank you, Mr. Chairman.

Thank you. Any questions on the proposed Form 14? Any discussion? Any action? Representative Muckey.

Mr. Chair, I move to approve the form that was presented.

Motion made by Representative Muckey, seconded by Senator Howard, to approve the revised Form 14. Any questions or comments on that motion? Okay, seeing none, then the motion before the committee is to approve the Form 14 as presented to the committee. All those in favor will vote aye. Those opposed, nay. Madam Secretary, please call the roll.

DeGroot.

Aye.

Larson.

Aye.

Melhoff.

Aye.

Muckey.

Aye. Howard.

Aye.

Hansen.

Aye.

Mr.

Chair, unanimous.

Thank you, Madam Secretary. That motion carries. The form is approved. Mr. Goetz.

Thank you, Mr. Chairman. The second item on the agenda under staff report relates Somewhat to what was just discussed. So in addition to Senate Bill 133, there were the 2 bills that were requested by this committee that were ultimately adopted in the last legislative session. All 3 of these pieces of legislation are effective July 1st. The question that has been posed, frankly, by both LRC staff and by the agencies that is before you is an informal Question, one that you don't have to take a formal motion on necessarily, but one that would be very helpful, is this idea of those 3 pieces of legislation.

Are—

is it the intention of this Rules Committee that the agency rule packets that may be ongoing at the time that we hit July 1st should be Should then comply with all 3 of those pieces of legislation, or is it a requirement that any rule packet that is filed on or after July 1st be bound to it, only those packets? So, essentially, it's ongoing plus anything going forward, or just anything going forward from July 1st? Should these statutes apply? Now, just to— I know I provided a staff memo on that. We have the one statute that pertained to the public website, a single website for containing all of the rules documentation filed by these agencies. There was another web— or another provision that spoke to the agency financial resource information. Should there ever be a failure fee increase, uh, in, in the rule packet proposed. And then, finally, SB 133, the major rule, uh, threshold, the major rule review, the regulatory impact analysis. Obviously, there, we are dealing with a form that was just now approved, so that may make, um, implementation, um, you know, something of a, a little bit of a logistical feat, but, but—

Yeah.

Maybe not something that is impossible. So I say all that as a preface to this point, and any guidance that the committee can provide is greatly appreciated.

Thank you, Mr.

Guest.

I think they better be ready to go and have all of the packets that come before this committee after July 1st have satisfied the requirements of these laws. That's my position. Senator Howard?

Thank you, Mr.

Chair.

I would agree. They knew from the time this was signed by the governor that this was coming. I think they should be ready and they could be ready.

So, Representative Muckey, just to clarify, make sure I'm understanding where we're talking about that, Mr. Goetz, we're talking about— I'm reading back your staff brief, A versus B. I'm pretty fond of supporting A, just making sure I understand we're talking about rulemakings that are outstanding, not yet filed as final. Is that the same as B? I'm just trying to make sure I understand logistically what, what's being shared.

Sure.

No, Mr. Chairman, Justin Goetz, Code Counsel. That's an excellent clarifying question, Representative Muckey. What I was getting at there is if there are rules packets where the process has not made it up to the Rules Committee, so basically there are a number of packets that have been filed with LRC that we have Maybe been in the process of reviewing or have reviewed. They have not come before this committee yet. They will be coming before this committee at the July meeting, August meeting, or any meeting thereafter. But they're still out there, right? They've been submitted to us. And so would all those requirements apply to them effective July 1st?

Mm-hmm.

Or is it— On July 1st and after, the packets that then for the first time file with LRC. So that's the A and B difference right there, if that makes sense.

Understood.

Thank you.

So what does that mean to LRC? If you already have a packet, do you have to go back and redo it to—

Use your microphone there.

Follow all the rules, the new bill?

You can just restate his question, I suppose.

Yeah, Mr. Chairman, Justin Getz, Code Counsel. That's a good question.

Thank you.

Mr. Representative DeGroot, so you are inquiring as to whether, if in fact this committee says, yes, you all need to, you know, comply, even those outstanding effective July 1st, for those that have submitted their rules packets, do they need to then, say, with SB 133, go back and file a regulatory impact analysis? I would read I would describe the committee's take on this, if it goes that route, as requiring that there be a regulatory impact analysis filed for LRC to review. And I mean, obviously, that's the reason why I posed this question here, because there are 3 to 4 weeks to— well, let's see, 3 weeks until July 1st. So there could conceivably be enough time for the to produce this. However, you know, there's always the question of, this is the first time we're doing this, and how onerous is this? You know, who knows? I think at this point, it's kind of an open question.

Follow-up questions? All right. Well, you know my position. Anybody else want to weigh in?

Well, I was, you know, I was in your camp a minute ago, but after listening, going back, and I would be on the other side of the fence. I'd say if they're submitted before July 1st, they do not have to follow the rule that comes July 1st. Now, if they're not submitted anything after July 1st, then I think they should follow the SB 133. That's my thoughts.

Senator Howard.

I just have a question. Do we have any rules packets that have been submitted before the governor signed that bill, the bills? Or have all the rules packets that are pending that you guys are reviewing, have— were those all submitted after the governor signed the bill?

Mr. Chair, Justin Goetz, Code Counsel. I believe just in going through our files here that all of the rules packets that were submitted at the end of last interim after all of our meetings and during the legislative session before the governor signed have all been processed, so to speak.

No follow-ups.

Senator Howard.

So every bill or every rules packet that we'll be hearing from here on out, they, they submitted those rules packets after the governor signed the bill. So I would, I would echo Speaker Hansen's opinion that they knew this was coming, so they should be ready.

Further thoughts? Senator Mehlhaff.

Yeah, I, I have some mixed feelings on, on the whole thing with regard to if— I mean, if a law— if something becomes law at a certain I think that's a good point. Why waste time if you've done all this work under the previous law? Should you have to go back and redo it simply because your hearing date is scheduled after it becomes law? I think there are some good questions to that, and I'm not sure. Mr. Goetz, I mean, is there any possibility that We could wind up with the Supreme Court having to come and weigh in on this, so whether they have to provide all a bunch of additional information.

Mr. Chairman, Justin Getz, Code Counsel. It's pretty speculative, I think, Senator, on the Supreme Court doing that, particularly with it being really an interbranch procedural concern in how best to Uh, execute on the law. The law is largely procedural except for the substantive requirement in Senate Bill 133 that major rules with their higher costs receive additional scrutiny and potential reversion. So beyond that, it's, it's largely procedural. And, um, you know, ultimately, if the committee decides that there isn't really a consensus You know, if the committee is okay with choosing the effective July 1st, anything filed on or after is enforceable, you know, or, you know, if there's no consent. I—

that—

it—

I'll go either direction. Just anything that you can provide in terms of where the majority might be, too, that would be helpful.

Okay.

The way I see it, the law goes into effect July 1. Our next meeting is July 14. I mean, a lot of the stuff that we pass in legislature, people are operating under the old law until July 1 comes around, and then they need to change course and operate under a new law. So I think these agencies should just be held to that same standard that we hold everybody else to when we change laws that affect all sorts of industries all across the state. So again, my position is if they're coming in here July 14, and they should. Abide by the law that was passed and then went into effect on July first. Representative Muckey.

Thank you, Mr.

Chair.

Mr. Getz, as we're looking at the packets that are outstanding, are there any that have a particular urgency for implementation to your knowledge, or is it just a matter of they're going through the standard process like anything else?

Mr. Chairman, Justin Getz, Code Council. I'm trying to recall where we sat with these. I have my file here of all the documents that have been submitted, the rules packets that are outstanding, and I know Kelly had helpfully provided some of those in chart form here. And you know, we we have the South Dakota Cosmetology Commission's. Section, which was one of those directly revised-in-statute sections. Okay? So, there, there's a statutory deadline by which they need to propound. So, there would be an urgency. You've got the apprenticeship rules, which there's a— something of a timeline there, where it triggers— the entire framework triggers on the approval of the federal government. For this state apprenticeship agency. Well, the rules aren't effective until the feds approve it. The feds want these rules to be in place for that to happen. So there's a sense of urgency there, to my knowledge. I'm not as familiar with the appraiser certification program's needs, but I presume that there's a, you know, a standard that they need to meet, and that's tied into federal banking.

Right.

concerns. And so there may be some sort of need there. There are games from the Lottery Commission that are upcoming— X's and O's, Powerball. So there again is a national game where they may have a timeline that they need to meet. The Gaming Commission has treatment of parimutuel racing And having electronic infrastructure in place and the rules to support that electronic infrastructure. I think they wanted to have that as close to July. Well, I don't know. That's maybe speculation. But I know that there was some statute that was enacted for that. So there may be some of that. Housing Development Authority revising rules for the new airport funding, getting that all in place for— maybe. Okay.

Sorry to belabor that, but no, it's good belaboring. Thank you for answering that. I think, you know, from my thought, Mr. Chair, so long as we're moving with all due speed to communicate to all of these outstanding packets and give them as much time as possible to be successful, I'm open to A, and staying consistent and moving forward. I think the biggest thing is just making sure if we are going to move forward with that, we do everything our power to help them procedurally comply with the law.

Okay, other thoughts? Do you have sufficient direction, Mr. Goetz?

Just so I— yeah, Mr. Chairman, Justin Goetz, co-counsel. I, I thank you for that, and thank you for your consideration with all this. It, it means a great deal. Just so that I'm clear then, When it comes to the options posed in the staff memo, we are talking all rulemakings that are outstanding on July 1st and any rulemakings brought thereafter is how the committee generally wants to proceed with these requirements. Is that a fair assessment?

I think that is right. As of July 1st, in other words, as of our next meeting July 14th, I believe, they, they should be directed to be in compliance with all the laws that went into effect on July 1st.

Does that make sense?

Mr. Chairman, Justin Goetz, Code Counsel. That does make sense. That means they would be up on the website, which I believe is rules.sd.gov, as indicated by the governor's office, um, and then that any fee increase needs to have a— an agency financial resource Information Form— what is it— 17, I believe, and that there be a regulatory impact analysis submitted and review conducted by LRC staff to see if there is, in fact, a major rule being presented and to alert the committee to that.

Yes, sir.

Okay.

Thank you, Mr. Chair.

Thank you.

Absolutely. Thank you for all your work. We appreciate you guys very much. Anything else for the committee? Okay, seeing nothing further, the chair will entertain a motion to adjourn. Moved by Senator Howard. Seconded by Representative Muckey. All those in favor of adjournment will signify by saying aye.

Aye.

Those opposed, nay.

Nay.

We are adjourned.

Thank you.