The prayer was offered by the Chaplain, Pastor John Fette, followed by the Pledge of
Allegiance led by Senate page Hannah Lopes.
Roll Call: All members present.
The Committee on Legislative Procedure respectfully reports that the Secretary of the
Senate has had under consideration the Senate Journal of the fourth day.
All errors, typographical or otherwise, are duly marked in the temporary journal for
correction.
And we hereby move the adoption of the report.
The Committee on Agriculture and Natural Resources respectfully reports that it has had
under consideration SB 23 and returns the same with the recommendation that said bill be
amended as follows:
The Committee on Judiciary respectfully reports that it has had under consideration SB 19
and 55 and returns the same with the recommendation that said bills do pass.
The Committee on Commerce and Energy respectfully reports that it has had under
consideration SB 42 and returns the same with the recommendation that said bill be amended
as follows:
Also MR. PRESIDENT:
The Committee on Commerce and Energy respectfully reports that it has had under
consideration the nomination of Norbert Sebade of Pennington County, Rapid City, South
Dakota, to the Board of Economic Development and returns the same with the recommendation
that the Senate advise and consent to the confirmation of said appointment and be placed on the
consent calendar.
Also MR. PRESIDENT:
The Committee on Commerce and Energy respectfully reports that it has had under
consideration the nomination of Theodore H. Hustead of Pennington County, Wall, South
Dakota, to the Board of Economic Development and returns the same with the recommendation
that the Senate advise and consent to the confirmation of said reappointment and be placed on
the consent calendar.
Also MR. PRESIDENT:
The Committee on Commerce and Energy respectfully reports that it has had under
consideration the nomination of Pat L. Prostrollo of Lake County, Madison, South Dakota, to
the Board of Economic Development and returns the same with the recommendation that the
Senate advise and consent to the confirmation of said reappointment and be placed on the
consent calendar.
Also MR. PRESIDENT:
The Committee on Commerce and Energy respectfully reports that it has had under
consideration the nomination of Donald L. Kettering of Yankton County, Yankton, South
Dakota, to the Board of Economic Development and returns the same with the recommendation
that the Senate advise and consent to the confirmation of said reappointment and be placed on
the consent calendar.
I have the honor to inform your honorable body that the House has adopted the report of
the Joint-Select Committee relative to setting the compensation schedule for the elective and
appointive officers and employees of the Senate and House for the Ninety-first Legislative
Session.
Also MR. PRESIDENT:
I have the honor to inform your honorable body that the House has adopted the report of
the Joint-Select Committee for the purpose of securing chaplains for the Ninety-first Legislative
Session.
Also MR. PRESIDENT:
I have the honor to inform your honorable body that the House has adopted the report of
the Joint-Select Committee for the purpose of arranging for legislative days for the members,
officers, and employees of the House and Senate.
Also MR. PRESIDENT:
I have the honor to inform your honorable body that the House has adopted the report of
the Joint-Select Committee relative to making arrangements for the distribution of the official
directory, Senate and House journals, and bills and other legislative printing for the two houses
and the state offices.
Also MR. PRESIDENT:
I have the honor to inform your honorable body that the House has adopted the report of
the Joint-Select Committee relative to making arrangements for a memorial recognition of
deceased former members of the House and Senate.
Sen. Brown moved that the temporary senate rules be made the permanent senate rules of
the Ninety-first Legislative Session.
The question being on Sen. Brown's motion that the temporary senate rules be made the
permanent senate rules of the Ninety-first Legislative Session.
And the roll being called:
Yeas 34, Nays 1, Excused 0, Absent 0
Yeas:
Bradford; Brown; Buhl O'Donnell; Cammack; Curd; Ewing; Fiegen; Frerichs; Greenfield
(Brock); Haggar (Jenna); Haverly; Heineman (Phyllis); Heinert; Holien; Hunhoff (Bernie);
Jensen (Phil); Monroe; Novstrup (David); Olson; Otten (Ernie); Parsley; Peters; Peterson (Jim);
Rampelberg; Rusch; Shorma; Soholt; Solano; Sutton; Tidemann; Tieszen; Van Gerpen; Vehle;
White
Nays:
Omdahl
So the motion having received an affirmative vote of a majority of the members-elect, the
President declared the motion carried.
SB 37: FOR AN ACT ENTITLED, An Act to adopt the 2015 edition of the Uniform
Plumbing Code.
Was read the second time.
The question being "Shall SB 37 pass?"
And the roll being called:
Yeas 35, Nays 0, Excused 0, Absent 0
Yeas:
Bradford; Brown; Buhl O'Donnell; Cammack; Curd; Ewing; Fiegen; Frerichs; Greenfield
(Brock); Haggar (Jenna); Haverly; Heineman (Phyllis); Heinert; Holien; Hunhoff (Bernie);
Jensen (Phil); Monroe; Novstrup (David); Olson; Omdahl; Otten (Ernie); Parsley; Peters;
Peterson (Jim); Rampelberg; Rusch; Shorma; Soholt; Solano; Sutton; Tidemann; Tieszen; Van
Gerpen; Vehle; White
So the bill having received an affirmative vote of a majority of the members-elect, the President declared the bill passed and the title was agreed to.
SB 39: FOR AN ACT ENTITLED, An Act to revise certain provisions concerning fees for
sponsored captive insurance companies.
Was read the second time.
The question being "Shall SB 39 pass?"
And the roll being called:
Yeas 35, Nays 0, Excused 0, Absent 0
Yeas:
Bradford; Brown; Buhl O'Donnell; Cammack; Curd; Ewing; Fiegen; Frerichs; Greenfield
(Brock); Haggar (Jenna); Haverly; Heineman (Phyllis); Heinert; Holien; Hunhoff (Bernie);
Jensen (Phil); Monroe; Novstrup (David); Olson; Omdahl; Otten (Ernie); Parsley; Peters;
Peterson (Jim); Rampelberg; Rusch; Shorma; Soholt; Solano; Sutton; Tidemann; Tieszen; Van
Gerpen; Vehle; White
So the bill having received an affirmative vote of a majority of the members-elect, the
President declared the bill passed and the title was agreed to.
SB 40: FOR AN ACT ENTITLED, An Act to revise signature and seal requirements for
the Board of Technical Professions.
Was read the second time.
The question being "Shall SB 40 pass?"
And the roll being called:
Yeas 35, Nays 0, Excused 0, Absent 0
Yeas:
Bradford; Brown; Buhl O'Donnell; Cammack; Curd; Ewing; Fiegen; Frerichs; Greenfield
(Brock); Haggar (Jenna); Haverly; Heineman (Phyllis); Heinert; Holien; Hunhoff (Bernie);
Jensen (Phil); Monroe; Novstrup (David); Olson; Omdahl; Otten (Ernie); Parsley; Peters;
Peterson (Jim); Rampelberg; Rusch; Shorma; Soholt; Solano; Sutton; Tidemann; Tieszen; Van
Gerpen; Vehle; White
So the bill having received an affirmative vote of a majority of the members-elect, the
President declared the bill passed and the title was agreed to.
SB 38: FOR AN ACT ENTITLED, An Act to revise certain provisions concerning bail
bondspersons.
Was read the second time.
The question being "Shall SB 38 pass?"
And the roll being called:
Yeas 35, Nays 0, Excused 0, Absent 0
Yeas:
Bradford; Brown; Buhl O'Donnell; Cammack; Curd; Ewing; Fiegen; Frerichs; Greenfield
(Brock); Haggar (Jenna); Haverly; Heineman (Phyllis); Heinert; Holien; Hunhoff (Bernie);
Jensen (Phil); Monroe; Novstrup (David); Olson; Omdahl; Otten (Ernie); Parsley; Peters;
Peterson (Jim); Rampelberg; Rusch; Shorma; Soholt; Solano; Sutton; Tidemann; Tieszen; Van
Gerpen; Vehle; White
So the bill having received an affirmative vote of a majority of the members-elect, the
President declared the bill passed and the title was agreed to.
SB 41: FOR AN ACT ENTITLED, An Act to revise certain provisions related to the Board
of Technical Professions.
Was read the second time.
The question being "Shall SB 41 pass?"
And the roll being called:
Yeas 35, Nays 0, Excused 0, Absent 0
Yeas:
Bradford; Brown; Buhl O'Donnell; Cammack; Curd; Ewing; Fiegen; Frerichs; Greenfield
(Brock); Haggar (Jenna); Haverly; Heineman (Phyllis); Heinert; Holien; Hunhoff (Bernie);
Jensen (Phil); Monroe; Novstrup (David); Olson; Omdahl; Otten (Ernie); Parsley; Peters;
Peterson (Jim); Rampelberg; Rusch; Shorma; Soholt; Solano; Sutton; Tidemann; Tieszen; Van
Gerpen; Vehle; White
So the bill having received an affirmative vote of a majority of the members-elect, the
President declared the bill passed and the title was agreed to.
There being no objection, the Senate reverted to Order of Business No. 7.
I have the honor to inform your honorable body that the House has adopted the report of
the Joint-Select Committee relative to the Joint Rules for the two houses for the Ninety-first
Legislative Session.
SB 10 be referred from the Committee on Appropriations to the Joint Committee on
Appropriations.
SB 11 be referred from the Committee on Appropriations to the Joint Committee on
Appropriations.
SB 12 be referred from the Committee on Appropriations to the Joint Committee on
Appropriations.
SB 16 be referred from the Committee on Appropriations to the Joint Committee on
Appropriations.
SB 17 be referred from the Committee on Appropriations to the Joint Committee on
Appropriations.
SB 18 be referred from the Committee on Appropriations to the Joint Committee on
Appropriations.
SB 36 be referred from the Committee on Appropriations to the Joint Committee on
Appropriations.
SB 43 be referred from the Committee on Appropriations to the Joint Committee on
Appropriations.
SB 46 be referred from the Committee on Appropriations to the Joint Committee on
Appropriations.
SB 47 be referred from the Committee on Appropriations to the Joint Committee on
Appropriations.
SB 48 be referred from the Committee on Appropriations to the Joint Committee on Appropriations.
Which motion prevailed.
Sen. Peterson moved that the Senate do now adjourn, which motion prevailed and at 2:28
p.m. the Senate adjourned.
Pursuant to the Joint-Select Committee Report found on page 12 of the Senate Journal,
the following is Governor Dennis Daugaard's State of the State Address:
The task force undertook an extensive process of seeking public input. Task force members
organized or attended dozens of meetings and sought feedback from thousands of South
Dakotans. They heard an overwhelming message: the public believes we need to be bold and
to act to address teacher salaries, this year.
Following that public input, the task force held five day-long public meetings to consider data,
discuss policy options, and ultimately to make recommendations. I want to thank the task force
members for their very thorough work. The final report makes thoughtful recommendations and
is an excellent overview of this topic.
The key to student achievement is an effective teacher. We all know that. It is the number one
factor that we can control. Despite that, we also know that South Dakota's teacher salaries are
lowest in the nation and have been for decades.
The problem has come to the forefront now because, more and more, we are hearing from school administrators that the teaching workforce is getting smaller. Schools are getting fewer
applicants for each position. Some teaching disciplines, like math and science, are even more
limited. And in remote geographic areas, some schools struggle to attract any applicants at all.
The data supports this anecdotal evidence. The task force report includes projections from the
Department of Education which show that over the next five years, South Dakota will have only
one new teacher for each position that comes open.
Now one teacher per opening may not sound like a shortage, but for most districts it is. The new
teachers coming into the profession will not align with the disciplines where there are openings.
There won't be enough new teachers in hard-to-fill disciplines. Rural or remote districts will still
struggle to hire. And the quality of education suffers when the schools cannot be selective and
have to hire from a limited pool. That's why the task force found that "the incoming pipeline of
teachers will not meet the projected needs of districts" over the next five years.
We need to increase the supply of new teachers entering the field, and we need more current
teachers to stay in the field. Now I know that other areas of the workforce are seeing similar
trends. These shortages are caused by many economic and demographic factors. Salaries are not
the only cause of the problem. But we cannot fix this problem unless we increase salaries.
We all know that although South Dakota is last in teacher salaries, we're not last in spending per
student. Depending on the source, we usually rank around 40th. The task force considered
several possible explanations for this. For example, some were surprised to learn that our
spending on administrators, both in terms of salaries and number of administrators, is
comparable to national averages and lower than some other states in our area.
Ultimately, the task force found that South Dakota's spending per student is due to the rural
nature of our state. We actually spend more, per student, on facilities and maintenance than the
national average. We also have more teachers per student than the national average.
Significantly though, we spend less per student than all of our surrounding states. The states that
are most like us - North Dakota, Montana, and Nebraska - spend more per student than we do,
have more teachers per students than we do, and pay higher salaries than we do.
The bad news is: the gap is getting worse. We compete with our surrounding states for teachers,
and we are falling farther behind them. Ten years ago South Dakota's average teacher salary was
about $2000 a year behind North Dakota. We were 51st in teacher pay and they were 49th.
Montana was 47th and Nebraska was 42nd.
Today we are still closest to North Dakota among our surrounding states, but the gap is not
$2000. It is $8000. We still rank 51st. North Dakota has moved to 36th. Montana to 28th.
Nebraska 32nd.
And even when you adjust for cost of living, South Dakota falls behind our surrounding states.
We are closest to North Dakota, but nearly $6000 behind. After adjusting for cost of living,
South Dakota is nearly $10,000 behind Minnesota.
If South Dakota wants to maintain high student achievement, we need a new generation of high quality teachers. And we're not going to get them unless we become more competitive with surrounding states. And when you delve into the numbers you reach the conclusion that the only way to become more competitive is to increase our state's average teacher salary. We need to
add more money into the system. Much like other problems we have confronted together,
South Dakota faces a deteriorating situation if we don't take action.
To address this need I'm proposing a one half cent increase in the state sales tax. This plan will
bring about competitive teacher pay, a transparent and fair funding formula, and a more efficient
education system. This plan is based upon the Blue Ribbon Task Force report and will achieve
its goals.
The one half cent will generate $40 million in new revenue beyond our needs; however, and I
propose that this excess be dedicated to property tax relief.
The centerpiece of the Blue Ribbon report is a revised school funding formula based upon the
real input costs of education, rather than on a per-student dollar amount. This new formula will
calculate funding based on a target average teacher salary and a target student-to-teacher ratio;
those two factors.
South Dakota's average teacher salary is just over $40,000. I am recommending we set a target
average of $48,500. That would be our goal. At that level South Dakota would be competitive
with our surrounding states. And we would no longer be 51st in the nation.
As I mentioned, the new formula will also be based on a target student-to-teacher ratio. To be
clear, this is not a measurement of class size. It is the ratio of students to all instructional staff,
including regular classroom teachers and others such as special education teachers.
To replace the current small school factor a sliding scale will be used to calculate each school
district's target teacher-to-student ratio. Districts with 600 or more students will be calculated
based on a ratio of 15 students per teacher, or 15-to-1. Those with 200 students or less will be
based on a ratio of 12.5-to-1. Those between 200 and 600 are on a sliding scale.
Let's look at examples. Consider a school district with 175 students; the whole district K-12,
175 students. That is less than 200, so this district's state aid is based on a target ratio of
12.5-to-1. If you divide 175 students by 12.5, that results in a target of 14 teachers. We have a
target average salary of $48,500 so you multiply the number of teachers - 14 - by that target
salary $48,500. Then the formula would add additional dollars to cover benefits and overhead
to calculate this district's total need.
For a district of 600 students, the calculation works in the same way, it's based on a ratio of
15-to-1. If you divide 600 students by 15, the result is 40, so 40 you multiply times the $48,500
and then again add extra for benefits and overhead.
This formula will drive a more informed discussion of education funding. Rather than base
funding on an arbitrary per student allocation, the debate each year will be based on the
appropriate target for the average teacher salary.
This is more transparent for both legislators and citizens and will allow for a better discussion
each budget cycle. When you go home, as legislators, you will be able to demonstrate that
school districts are receiving adequate state dollars to reach the target salary.
Now it's important for school districts to understand what this new formula means and what it does not mean.
Here is what the proposal is offering, what it does mean to school districts: We will give you
enough money so that if your staff meets the target ratio, you will have enough money to pay
that target average.
But each district will decide exactly how to use the new funding because the state doesn't
propose to mandate that schools achieve their target student-to-teacher ratio. Now some schools
may choose to exceed their ratios and to have more staff than the ratio funds. That will mean
that those schools will spread their new money among more people, give smaller raises, and fail
to reach the target average.
But although it is not a mandate, this new formula is creating an expectation. From the state
level, we should all expect that the new funding we send to districts will be used to increase
teacher salaries. It may take time for districts to adjust, and we may not achieve the entire $8500
increase in our state average in the first year. But we should expect significant movement toward
that goal, and I will propose specific reporting and accountability measures to allow us to
monitor progress for each district.
At the local level, these state targets will also set expectations. Teachers and parents will expect
their schools to achieve significant increases in salaries. This transparent formula will lead to
more informed conversations among school leaders, teachers, parents, and taxpayers about local
spending and staffing decisions. It will lead to greater accountability at the local level for
decisions that impact teacher salaries.
Now if the state is going to expect districts to reach these targets, we need to give school leaders
more tools to achieve greater efficiency. One important way we do this is through the Statewide
Center for e-Learning at Northern State University. This center offers high quality courses at no
cost to the school - the state pays for it. These offerings are particularly important for districts
who struggle to recruit teachers in high-need disciplines. I am proposing that we expand the
offerings at the e-Learning Center so that we can make these high-quality teachers available to
more districts.
I also propose that we dedicate funds to incentivize the sharing of services across districts. Now
the state has already done this in some areas. For example, the state already negotiates the cost
of internet bandwidth centrally, and we provide it to the schools at no cost to them. The state
also provides a student information system to schools at no cost. Now these services have a cost
to the general fund, but they save schools more than the cost to the state. In every case, it is
voluntary for schools to participate. But we have found the vast majority of schools will take
advantage of these efficient means to save money.
We can expand this approach to even more areas - from purchasing, to payroll, to software
licensing. We can even incentivize districts to share staff. And by helping districts save money
on these administrative costs or staff costs, we make it that much easier for them to put more
dollars into instructional staff.
For example, we can move to greater equity among districts. Our current system adds state
dollars to school district property taxes; you know that. We send more state dollars to districts
which have low property values, and fewer state dollars to districts with high property values.
In this way the attempt is to provide a uniform level of funding whether a district has low
property values or high property values. But some school district revenue sources such as the
wind farm tax, the gross receipts tax on utilities, the bank franchise tax, and the revenue from
traffic fines, they're all ignored in this equalization effort. This creates unfair "windfalls" for
certain districts, and the task force recommended that we move toward greater equity in this
area. My proposal would treat these other revenue sources just as property tax values are treated,
over a five-year phase-in period.
I'm also proposing that the state reinstate caps on school reserve funds. A reserve is a prudent
management tool, we have reserves so do the school districts, but as the state introduces new
funds into the school funding system, we should expect that those dollars are used to increase
teacher salaries - not held in reserves for future years. If a district exceeds the cap, which would
be established under this proposal, state aid will be offset on a dollar-for-dollar basis, and this
would take effect in three years, so school districts have time to adjust.
And I will also be proposing changes to respond to the dramatic growth of capital outlay in
recent years. Capital outlay is a property tax levy that schools assess to pay for building
construction and improvements. Over the past 12 years, while the per-student allocation has
increased by 25%, property taxes for capital outlay have increased by 117%. My plan will
restrict annual growth to slow that trend. I am also proposing to make permanent the current
law, which had been set to expire in 2018, that allows school districts to shift some of these
funds to general operations. School boards should be able to decide where to spend their dollars,
and this will allow a portion of capital outlay funds to be used for teacher salaries or other costs
on a permanent basis.
Finally, I support the recommendations of the task force to improve our ability to recruit and
retain teachers. We will institute reciprocity with other states so that teachers coming to
South Dakota can avoid unnecessary barriers to entering the classrooms here. A mentoring
program will help new teachers find their way to success so that fewer new teachers leave the
profession in their first years. And we will restore funding to reward the outstanding teachers
who achieve National Board Certification. This is an important way to recognize our best
teachers and to encourage more teachers to pursue this rigorous process.
We all want what's best for our children. We want to provide them with a quality education.
And we know that requires a strong workforce of great teachers. This is the year. This is the year
to get out of last place. This is the year to act. Let's join together this year to strengthen our
schools and keep our promise to the next generation.
hold ourselves to a very high standard. The Retirement System targets 100% funding while
using among the most conservative measurements of liabilities of any public pension plan.
Other states have taken an opposite approach which is why nationwide, the average statewide
retirement plan is only 75% funded. It's one of the reasons why Chicago is rated as junk - their
bonds. Compare that to the South Dakota Retirement System, which, as of June 30, was 104%
funded. While other states have failed to consistently make the contributions their actuaries
recommend, South Dakota does not fail.
The success of our system has been made possible by the effective and conservative
management of the Retirement System Board of Trustees, the outstanding performance of the
South Dakota Investment Council, and the cooperation and support of all stakeholders.
But even with these successes, the Board of Trustees is taking a proactive step to improve the
sustainability of our plan for the next generation of public employees. At its December board
meeting, the Board unanimously approved a new retirement design for new public employees
who begin work after June 30, 2017. The new design accommodates longer life expectancies,
adds variable hybrid benefits, and eliminates inequitable subsidies. Those who fall under the
new design will not be subsidizing members of the current design - both plans will be
self-sustaining.
This change will not affect current employees - not now and not when current employees retire.
This change will not affect those who are already retired. And this change will not require
additional contributions from employees.
The Board's unanimous recommendation is subject to your approval, so you will be hearing
more about this proposal in the coming weeks. I strongly urge your approval. Unlike other
states, South Dakota is not waiting for a crisis to tackle this issue. Our state would strengthen
this system now - when our pension is over 100% funded - so that our pension plan will be
well-funded through any future challenges, whether you or I are here any longer or not.
Some of you have asked me, "Why would a conservative Republican governor propose a plan
to expand Medicaid?" In fact, last month the New York Times ran a front page story discussing
Medicaid proposals by conservative governors in South Dakota, Utah, and Wyoming and
comparing their approach with the U.S. Senators from those states.
If I were in Congress, I would be doing exactly what Senator Thune, Senator Rounds, and
Congresswoman Noem are doing. The federal healthcare law is about far more than Medicaid
expansion, and we're already seeing how it has distorted the market for health insurance and led
to higher costs. In my opinion the law needs to be repealed or significantly changed.
The deal I am proposing makes sense for South Dakota. It is a good deal; it is a very good deal.
This plan will fix the longstanding Indian Health Service reimbursement issue, secure better
health care for Native Americans, and cover 50,000 more South Dakotans at no cost to our state
general fund. This change will benefit counties by relieving their indigent care costs and by
reducing the health care costs for jail inmates. It will reduce the charity care expense that
hospitals now pass on to patients like you.
We all know that Native Americans in our state were promised health care by the federal
government as a treaty obligation. When the federal government fails to meet that obligation,
the cost now falls to us. Consider this story illustrating the current level of service from IHS.
Gena is a 39-year-old Rosebud Sioux tribal member and a mother of two. When she was 24 she
received a kidney transplant due to a genetic disease, and her grandmother died of cervical
cancer, placing Gena at higher risk for this disease. During Gena's health exam in April 2014
at IHS, some abnormalities were detected. Given her health history, these results should have
raised an immediate red flag.
In fact, Gena didn't learn of this abnormal pap smear until eight months later, by letter, not by
a phone call. She immediately called IHS to get an appointment with a gynecologist, only to be
told there isn't one available. She asked to be referred to an outside specialist, but this was
denied because it was not considered a priority one "life or limb" case.
Fortunately, in Gena's case, she was able to afford to pay out-of-pocket to see a specialist, and
although there was no cancer, she must remain vigilant.
A few of you may know Gena. I know you all know her husband, Senator Troy Heinert. The
Heinerts gave me permission to share this story so you can understand why we need to do
something about this situation with IHS.
If this plan is adopted, the new relationship between IHS and healthcare providers will allow
Native Americans to get better health care. IHS will be able to use telehealth to provide better
primary care. If a Native American is eligible for Medicaid, the state will no longer bear half of
this expense for this treaty obligation.
This deal makes sense for South Dakota. Most of South Dakota's tribes have already strongly
endorsed this plan, and I believe they all will.
But as I've said before, I will not move forward with this plan unless the State Legislature
expresses its support through the passage of a state budget that includes the necessary budget
authority. And I won't support the plan if it will cost the state any new general funds.
Now, I know some of you are concerned about the soundness of the cost projections for this
plan. Given the experience of some other states, that's a very valid concern, you're right to raise
that question. I raised it myself but let me answer some of those concerns.
In the states where projections have been wrong, in part it was because they didn't expect all
those eligible to sign up in the first year. In our projections, we're assuming 100% of those
eligible sign up by the end of the first year.
We've also been conservative in estimating the costs per enrollee. We believe that each enrollee
will cost about $6400 per year. We calculated that based on actual costs of low income adults
who are already covered under South Dakota's Medicaid plan, but it's also within about $20 of
actual costs incurred by expansion states. To be safe, we added 20% to that and budgeted $7700
per enrollee.
In addition to these safeguards, we're also ignoring that some of the expansion population, about
30% of the expansion population, will be Native American and eligible for 100% IHS
reimbursement. Those savings could potentially be as much as $15 million. We ignored all of
it, we ignored that entirely. We're going to save some of that $15 million if this plan is adopted,
but our assumptions assume none of it. We're also ignoring the likely positive impact that the
new funds will have on our state's economy and the result impact on our tax revenues. We're
ignoring that entirely.
Finally, I would support, and I hope you will pass, "trigger" language to require that, if the
federal government changes the deal, South Dakota would withdraw from expansion. If a
Republican President and Republican Congress are elected in 2016, the federal health care law
could be repealed entirely. Regardless, if the federal funding goes away, so should the program.
But even in that case, however, I am optimistic that our efforts to fix the IHS reimbursement
issue and improvements to Native American health care would remain, even if the affordable
care act is repealed entirely. And in that case, Native Americans and the state would continue
to benefit from that situation.
Now I went through that quickly, and I'm sure you still have questions. Over the past month I
organized four meetings around the state; in Aberdeen, in Sioux Falls, in Pierre, and in
Rapid City, for legislators, to explain the projections and answer questions. I am hosting another
one this week, and I hope those of you who haven't attended one of the other meetings will be
able to come.
My request of you is this, all of you, wait to pass judgment on this proposal until we receive
final word from the federal government. Take that time to scrutinize the cost estimates and ask
questions. As I said last month, there are things about Medicaid expansion that bother me also.
But we all owe it to the people of South Dakota to give this complex issue careful consideration
this year. And if the plan comes together to improve health care for Native Americans, and at
the same time expand Medicaid with no costs to us, I hope you will agree it makes sense for
South Dakota, it just makes sense for our state.
Today, because of the Public Safety Improvement Act which you adopted, the prison population
is now below initial projections better than we even hoped, and we saved millions of dollars last
year by avoiding the cost for a new women's prison. By avoiding the costs of constructing and
operating new prisons, South Dakota should save over $100 million in correctional costs this
decade.
Also thanks to criminal justice reforms, the parole success rate increased from 37% of parolees
succeeding in FY12 to 65% succeeding in FY15. Today parolees can reduce the duration of their
parole by a month of compliance for every month of perfect compliance they can reduce their
parole term by a month. In just one year over 700,000 days of parole credit were earned. That's
nearly 2,000 years of parole credits earned.
In addition, more non-violent offenders are getting the help they need within their own
communities. Our reforms added new drug and DUI courts throughout the state - in fact, we
increased the number of drug courts by five times. Today, over 500 children have a parent who
is enrolled in a drug or DUI court. Instead of going to prison, these parents are getting the help
they need, while staying in their own homes and supporting their own families, instead of
putting those kids in foster care where we're supporting them.
Today we've also launched a pilot program for parole with the Sisseton Wahpeton Oyate. Under
this program, the tribe supervises enrolled parolees on the reservation so these parolees can
return to their homes. As of last summer 97% of offenders in the pilot program had not
absconded or committed a parole violation.
According to the most recent crime reports from the FBI and our Attorney General,
South Dakota's crime rate decreased from 2013 to 2014. And we can't definitively attribute the
reduction in crime to the Public Safety Improvement Act, but it's certainly a positive sign.
Experts say that it will take three to five years really to know to see all the results of these
reforms and know if they have had the effect we intended. Still, the early data is promising, and
I'm hopeful these reforms will save the state money, hold offenders accountable, and make
South Dakota an even safer place.
The state has been working to prepare for the most significant changes, they just became effective January 1st.
The Unified Judicial System has been working to ensure judges are aware of the statutory
changes that impact them, and that probation officers have the tools they need. Probation
officers will utilize a guide of graduated consequences, much like in the adult system, to hold
youth accountable for their conduct by responding consistently and quickly to violations, and
also to incentivize positive changes.
The Department of Corrections has created a financial incentive program to encourage counties
to divert juveniles from detention to other programs, and yet allow counties to request funds
when the number of detention beds in a given calendar year exceeds an established baseline.
And, a Native American Focus Group was established to determine how state and tribal
governments can better partner to serve youth. The group recently held its third meeting, and
the Department of Tribal Relations reports they have been receiving positive feedback from
tribal leaders.
Just as adult system reforms have helped us avoid building new prisons, the juvenile justice
reforms are impacting our juvenile corrections facilities. Over the last few years the number of
juveniles being sent to STAR Academy has been decreasing already, and the juvenile justice
reforms are expected to reduce those numbers still further. We recently closed the
STAR Academy's East Campus, at the old Youth Forestry Camp, and consolidated programs
at the main campus near Custer. In the coming year STAR Academy's programs will be
downsized to reflect the smaller population being served there.
In the midst of this downsizing, I must say the STAR Academy staff members have continued
to do their jobs with commitment and dedication. In some cases, they may be working
themselves out of a job. Yet staff members continue to work selflessly placing the needs of the
youth ahead of their own.
We have taken many steps to address this issue over the past few years, and we all understand
that this is a marathon, not a sprint. It needs constant attention.
We have a low unemployment rate and a nearly 1-to-1 ratio of job seekers to job openings. Now
just like in the teacher shortage situation 1-to-1 seems ideal, but most of those who are seeking
jobs don't have the skills in this situation needed to perform the jobs that are available, there is
a misalignment, and we must overcome this misalignment through education.
Students need to be able to attend college or tech school and finish in a reasonable time without
an unreasonable debt. Two years ago we froze tuition to keep schooling affordable, and my
proposal this year to freeze tuition again, by using one-time funds to repay debt, will again move
us toward tuition affordability.
Our successful state-subsidized dual credit program also pursues this goal. These are the
cheapest credits a student will ever take, and they help make college more affordable. Last
school year South Dakota students saved more than $2.5 million by using this program -
averaging more than $1,000 per student in savings. Completing college credits while in high
school also helps that student succeed in college, by reducing the course load they need to take
because they already have credits under their belt, also it can potentially reduce the time they
need to graduate.
The Build Dakota Scholarship is also making postsecondary education an option for more young
people. Just over a year ago the state announced a partnership with Denny Sanford to create a
$50 million fund for this full-ride scholarship for those who will work in a high-need technical
fields in South Dakota. Last fall, nearly 300 students made up the first class of Build Dakota
"skilled scholars." Overall enrollment at the technical institutes went up - and it went up by even
more in these high-demand programs. Before we know it, the first Build Dakota scholars will
be graduating and entering the workforce in South Dakota.
Department of Labor and Regulation initiatives
And of course, young people need good information in high school to help them choose a career
path. The Department of Labor and Regulation recently rolled out a new system which enables
people to view employment and wage outcomes, by program, for graduates of our public
universities and technical schools. Students and families can use this tool to make informed
decisions on postsecondary programs they're considering. For any degree program, they can find
out how many graduates are earning a wage in South Dakota, how much graduates are making
on average, and in which industries those graduates are employed.
The Department is also overhauling its SDWORKS jobs database. Employers will post openings
by the specific skills and competencies required for the job rather than using job titles and job
descriptions. Job seekers will have a tool to translate their resume into those same skills and
competencies. This improvement will ensure there are no missed opportunities in making the
match between employers and job seekers.
Employing People with Disabilities
As we face our workforce shortage, there is an untapped labor pool of people who are ready,
willing, and completely able to work. The unemployment rate among Americans with
disabilities is over twice the unemployment rate of those without a disability. Even though more
of those with disabilities are working in South Dakota, there are still too many South Dakotans
with disabilities who want a job but can't find one.
The council met five times over the course of the year, and the meetings included conversations
with students who shared their very personal and powerful stories of struggle, challenge, and
success. Two important themes that emerged from those conversations were the students' desire
for high expectations of them and the tremendous impact that caring teachers can have on their
educational experience.
In December, the council issued its final report and offered several recommendations, including
creating a grant program to fund the establishment of up to three pilot schools aimed at
improving academic outcomes for Native American students. Council members visited schools
in other states, which solidified their vision for an educational experience that incorporates not
only academics but an emphasis on the whole student, including cultural background, and on
challenging students while also recognizing their individual interests and skills.
Recognizing the absolutely critical role that teachers play in a student's educational experience,
as well as the difficulty of attracting qualified candidates to teach in rural, isolated areas of the
state, the council also recommended a program to assist paraprofessionals who already live and
work in some of our struggling school districts to become fully certified teachers.
This year, as you know from the Budget Address, I'm recommending we allocate $2.2 million
in one-time funds to start these efforts to improve educational outcomes for Native American
students. We need to do better in this area. We really need to do better.
The Bureau of Finance and Management has revamped the Open SD web portal, so if you haven't visited Open SD in the last several months, I encourage you to take a look at it. The public can more easily access state financial information. The Bureau also now posts financial metrics to its website every week. We launched the administrative rules website to help citizens find and follow rule making. We also established the Boards and Commissions Portal which is the one-stop site for meeting notices, agendas, and information for the more than one hundred
state boards and commissions. And that portal is going to be improved in the next couple
months as well; we're continuing to improve that.
We've improved on transparency so much that the US Public Interest Research Group has
named South Dakota among the top states for transparency. Since 2011 South Dakota has
improved its transparency rating from a D+ to now an A-.
My administration has also worked on "red tape repeal" efforts. Over the past five years we've
proposed and you have supported the elimination of over 4,000 sections of obsolete or
unnecessary laws and rules, accounting for 450,000 words. This year state agencies will again
be introducing still more bills to continue this effort. I know from my time as a legislator that
the trend is always to add words to the statute books - thank you for helping us remove needless
words as well!
Like every South Dakotan, I am disappointed and disheartened when I learn about allegations
of financial wrongdoing. I am also frustrated at the necessarily slow pace of thorough criminal
investigations, and, like you, anxious to know the whole story.
When a situation like this arises, it's important to handle it in an open and forthright manner, and
that is what I've tried to do. First, we report to law enforcement and request an investigation.
Second, do everything possible to aid in that investigation. Third, share information with the
press and the public as soon as the investigation allows. And finally, invite audits and reviews
to identify areas to improve and act quickly to implement those recommendations.
Overall, South Dakota in our state processes has very good internal controls aimed at
safeguarding state government assets and providing assurances that state and federal tax dollars
are spent correctly. However, we've learned plainly that our processes don't go far enough to
oversee entities outside of state government. These grantees or sub-recipients are not part of
state government but may be used by the state to administer federal grants.
The state needs better internal controls to manage these entities that are "arms length" to the
state. We must install safeguards that will ensure that federal and state objectives are met,
expenditures are documented and appropriate, and potential conflicts of interest are recognized
and avoided.
I have asked Lt. Governor Michels to lead an effort to review state government's internal control
processes and recommend changes. In particular, focus on situations involving these "arms
length" outside entities, such as Mid-Central Coop, where it is more difficult for state
government to maintain direct oversight.
Good Earth State Park
I'm very excited about Good Earth State Park at Blood Run. Three years ago you approved
$2 million to establish our newest state park. The South Dakota Parks and Wildlife Foundation
is in the home stretch of a $7.5 million fundraising effort to match public funds with private
charitable gifts. This will pay for land acquisition, trail development, and a visitor center with
exhibits. Trails have been established, native vegetation restoration is underway, and an entrance
road has been constructed. Work on the new visitor center is just now beginning where the
Native American history of the park will be told in a spectacular building near a wooded area.
Last summer, seizing an unexpected opportunity, the Parks and Wildlife Foundation acquired
the Spring Creek Country Club property bordering the park to the south, adding 200 acres to the
park, and increasing the park size by 25%. A portion of this property lies within the
Blood Run National Historic Landmark and the preservation of those historic resources will
become an important element of the park. My son, Chris, and I canoed to Good Earth State Park
this past summer on the Big Sioux River, and it is just as beautiful when viewed from the
riverside. In fact we canoed up Blood Run Creek.
Custer State Park
I'm also enthusiastic about all the progress underway at Custer State Park. Last year the
50th Buffalo Roundup attracted a record crowd. Over $3 million of private donations are
supplementing the $1.5 million appropriation the legislature made in 2013 and the $500,000
investment from Game, Fish, and Parks. Contractors are making progress on the park's new
visitor center which is scheduled to open this spring. The new visitor center will include a
theater where visitors can view a film about the park before exploring it themselves.
Following the Buffalo Roundup last fall, work began on the resort improvements you authorized
last year. The motel wings on the State Game Lodge are being remodeled, and 15 old clapboard
sided cabins are being replaced with more spacious and modern units. The Legion Lake store
and restaurant are being replaced and upgraded, and three additional reunion-style cabins are
being added in the park. Infrastructure improvements will follow next spring, and renovations
in the historic portion of the Game Lodge will begin next year.
It is because of the generosity of many people that we're able to build world class facilities at Good Earth State Park and Custer State Park Visitor Center. Thanks to their generosity, as well as the legislature's continued support, these parks will remain world-class destinations for generations to come.
My hope is to establish Spearfish Canyon State Park in the northern Black Hills. The proposed
state park would contain iconic natural features in the canyon including
Roughlock Falls, Spearfish Falls, Spearfish Creek, Little Spearfish Creek, and fishing ponds.
Game, Fish, and Parks would improve existing camping, hiking, fishing, and sightseeing
opportunities and upgrade facilities and roads.
Spearfish Canyon is a truly a special place. Our family has visited many times. I remember
being there when Spearfish Falls was restored. Water flow that now feeds the falls had been
diverted for 86 years for use in hydro-power generation for the Homestake Mining Company.
In 2003, Homestake returned water to the stream and the long dry falls were reborn. I remember
riding my bike up Spearfish canyon, climbing the never ending hill near Cheyenne crossing into
Lead-Deadwood and then experiencing the thrill going down the hill at full speed. Whether on
a snowmobile ride in the winter, or a hiking trip in the summer, or a day enjoying the beautiful
colors of the fall foliage, many people from across the state and nation have fond memories of
Spearfish Canyon. The famous architect Frank Lloyd Wright said this after his 1935 visit:
But how is it that I've heard so little of this miracle and we, toward the Atlantic, have
heard so much of the Grand Canyon when this is even more miraculous. My hat is off
to South Dakota Treasures.
I am very excited about making Spearfish Canyon more accessible as our newest state park; but
we have many steps to go before this idea can become a reality. Senator Thune is leading an
effort by our congressional delegation to authorize a federal-state land exchange. This isn't a
certainty, but we're working on it, and I'm hopeful. This map shows in green the property which
the state owns or will shortly acquire with the Spearfish Canyon Foundation, and the outline
shows the surrounding National Forest land, which we hope to add to it, to comprise the larger
Park. The state has been instrumental in the past in improving Spearfish Canyon, and I believe
this plan will carry on that tradition to preserve and improve this jewel for future generations.
"Dignity" statue at Chamberlain
Another exciting project is figuratively on the horizon today but will be literally on the horizon
this fall. If you're driving east on Interstate 90, and beginning to cross the Missouri River bridge
near Chamberlain, you will see something very striking on the eastern horizon. I'm talking about
a 50-foot stainless steel statue, called "Dignity," which will be placed on the high bluff near the
Lewis and Clark I-90 rest area near Chamberlain.
As a gift to the people of South Dakota, and as a tribute to South Dakota's Native people, Norm and Eunabel McKie of Rapid City commissioned South Dakota Artist Laureate, Dale Lamphere, to design and create this sculpture of a Native American woman receiving a star quilt. This sculpture will be lit at night, and just as Mt. Rushmore and Crazy Horse have become
iconic images in the mind of our visitors, I believe "Dignity" will become one as well. The
sculpture will be in unveiled in September.
In October the U.S. Department of Transportation awarded the RCP & E Railroad a $6 million
TIGER grant to upgrade its line near Huron and to install a long siding near Philip. A siding
project might seem insignificant until you understand the situation. Today, between Fort Pierre
and Rapid City, that 165-mile stretch of rail has no siding long enough for head-to-head trains
to pass each other. A train leaving Fort Pierre forces a train in Rapid City to wait for the
Fort Pierre train to reach Rapid City before the other may start eastward. Construction of the
new siding will allow up to 100 more trains per year to run over this section if demand wants.
This is good news and this good news follows the state's launch, just over a year ago, of four
other rail projects in South Dakota. Two of these projects involved sidings in Huron and Aurora
and reconstruction of a portion of the Sioux Valley line in southeastern South Dakota.
A larger project will upgrade the Britton Line in northeast South Dakota. This $11.5 million
project will construct the south leg of a "Y" at Jarret Junction and replace 29 miles of light rail
with heavy rail, to enable it to handle modern traffic. Dirt work for the "Y" is complete. Final
delivery of heavy rail will be in March, and installation will begin in the spring. A $30 million
grain terminal in Britton is under construction, prompted by these rail improvements.
Another $35 million rail project was supported in part by your appropriation of $7.3 million.
This is reconstructing the state-owned line, which, between Chamberlain and Presho, has been
unusable for many years. Here is a picture of how badly that line has deteriorated over the past
few decades. That rail is like a rollercoaster. Work on the smaller bridges is on schedule with
93% of work complete east of Reliance and the balance to be finished by the end of March. The
Missouri River bridge work is substantially complete with minor punch list items remaining.
Culvert repairs are 100% complete. 100% of the ties, rail, joint bars, tie plates, anchors, and
bolts are on hand. Rail, but not ties, is in place from near Reliance to east of Kennebec.
Installation will resume in the spring. The contractor, as I said, is installing rail first and then
will go back to install ties, and we anticipate an operating railroad by this fall. A $40 million
grain and fertilizer terminal, prompted by this rail improvement, will also be complete this fall
as well.
other site preparations for this monumental experiment. We're hopeful that funding for the
project will be included in the President's FY17 budget proposal next month. Our state's
investment in the facility, and your continued support, has put the lab in an unprecedented
position to succeed.
The Lieutenant Governor and South Dakota Department of Veterans Affairs spent many hours
considering alternative designs and working with the VA. After months of long meetings, the
federal VA agreed to extend the state's grant, giving us time to reduce the cost of the project
without additional state funds.
Now the State Veterans Home is finally finished. It has been completed on time, under budget,
and it is debt-free. It is a beautiful building and a fitting tribute to our veterans. A grand opening
event is planned for the spring.
For the past two years the South Dakota Department of Veterans Affairs has been on a mission
to contact all veterans in South Dakota. With over 70,000 veterans, this has been a challenging
undertaking. This year the Department is focused on contacting veterans of the Korean War.
Over 60 years have passed since the Korean armistice was signed. Wedged between
World War II and Vietnam, the Korean War has been referred to as "the Forgotten War."
To thank our heroes and to let them know they are not forgotten, the Republic of Korea is
awarding Ambassador of Peace medals to all American veterans who sacrificed for
South Korea's freedom. Hundreds of those medals will be conferred today, both here at the
Capitol and in other locations across South Dakota.
Joining us today from South Korea is the Honorable Sungchoon Park, the Minister of Patriots
and Veterans Affairs, along with his staff. Let's welcome them to South Dakota.
Following today's State of the State Address, I invite all of you to join us in the rotunda, where
hundreds of South Dakota veterans will receive the "Korean Ambassador for Peace Medal." The
ceremony will start at 2:30.
And look where those values have brought us. Our budget is structurally balanced. We have no unfunded liabilities. Standard and Poor's has upgraded our credit rating to AAA. We've made new investments in our roads, rails, schools, and Medicaid providers. We are keeping up our
Capitol Building and other state facilities through regular maintenance. We have
comprehensively reformed our criminal justice and juvenile corrections systems. Our tax burden
is low; our regulations are reasonable; and our stellar business climate is bringing in companies
like AGP, Advance Health, SpecSys, Lehigh Defense, and Midwest Fresh Logistics.
We must continue to govern by our values, and I remain committed to our values and to making the tough choices to meet the challenges we face. We will join together I know to meet these challenges and to serve our state. I am proud of what we've accomplished together over the last five years. I'm looking forward to the work ahead, and I continue to believe that South Dakota's best days are yet ahead.