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Legislator, expert caution scandals could happen with COVID funding in South Dakota

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Published: Mar. 24, 2022 at 10:17 PM CDT
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SIOUX FALLS, S.D. (Dakota News Now) -With the influx of COVID funding coming into our state, questions are being raised about the oversight.

The State has a few “black eyes” about the lack of keeping an eye on programs. The EB-5 investment for Visa program eroded into a business closing and the death of one of the administrators. Another is the Gear Up Scandal. Residents are asking, Could another similar scandal happen again with COVID funding?

It’s been three decades of helping establish, manage and consult non-profits for Michael Wyland, as a partner at Sumption & Wyland. He says a good program needs more than just a passion to serve.

“To be run well, and to have a good foundation of leadership and management upon which to build the programs and services that benefit the people they serve in the community,” said Wyland.

He diligently followed the Gear-Up scandal. The 62 million dollar program unraveled into piles of receipts from expensive restaurants, hotels, casinos, and gas stations. Wyland says there’s no documentation that even one person was successful in the college readiness program for Native Americans.

“The reports the state had to file with the feds had some problems. Gear up came to public attention in 2015 when the State Education Department had decided to stop contracting with MidCentral Educational Cooperative to manage Gear Up,” said Wyland. “And in hearing that, Scott Westerhuis, who was the business manager for MidCentral, went home. And according to the State Attorney general, killed his family, his wife, and four children by shotgun and then committed suicide immediately after setting the house on fire.”

After Gear Up, the bureau of finance and management established the board of internal controls and looked for applicant red flags, such as multiple sub-organizations.

Once the funding is approved, Wyland believes more needs to happen from those in leadership positions in the state.

“Then you as a leader of state government need to have some accountability for making sure that it’s done well, as well as being done in a fiscally responsible way,” said Wyland.

The question is: Could another Gear Up type of scandal happen again, with the influx of COVID funding?

“Absolutely it could. Anytime you have people working with large amounts of other people’s money you have the potential for people to make bad decisions. It was an unbelievably large amount of money that was made available,” said Wyland.

Appropriations committee member Senator Reynold Nesiba agrees, saying:

“The potential for control fraud exists anytime a trusted person—or small group of trusted people—with a high degree of authority, use their power in a business, non-profit, or government entity to subvert that organization and engage in fraud for personal gain. It is impossible to eliminate from human systems, but we should strive to mitigate against it with appropriate management, oversight, and review processes.”

Rep Randy Gross of Elkton is the Chair of the Government Operations and Audit Committee says the legislature created a solution:

“We (Joint Appropriations and Joint Government and Operations GOAC committees) look at both financial and operational controls that should be in place to minimize the potential for misuse of funds. The legislature does not hire or fire employees that work for the state unless they specifically work for the legislature (LRC and Auditor General).

In light of the large amount of federal funds that have been received and are still expected, HB 1281 is an effort by the legislature to implement appropriate legislative oversight of federal funds that change current policy. This action is consistent with our state constitution which charges the legislature with appropriating general fund expenditures and other and federal fund spending authority.”

But there is a snag. The bill has been on Governor Noem’s desk since March 11th and She’s is vocal about her displeasure of HB 1281.

“Bill is bad government and it’s gonna slow it down from people who utilize some federal funds to help individuals in our state,” said Noem.

While the fate of HB 1281 is uncertain, many South Dakotans hope those who need the help will receive it.

“We expect as taxpayers that the money we pay to fund our government is used responsibly and used for the intended purposes,” said Wyland.

Wyland believes there are some lessons from the scandals that could have been acted on and it’s more than just watching the money. The management of the program and the value of what it brings also needs to be reviewed.

“Am I getting what I’m paying for? Well, we don’t know that for a lot of state government because we don’t have the ability to correlate what was done with what was paid for,” said Wyland.

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