SD Gov. Noem brings back foster scholarship, sidestepping lawmakers with federal funds
“There’s a considerable amount of trust given to the administration on federal fund authority,” a top Republican senator said. “They ought to work to protect that trust.”
PIERRE, S.D. — Gov. Kristi Noem is planning to use pandemic-era federal funds to make good on a program offering educational aid to foster families in South Dakota.
However, some lawmakers are unhappy with her unilateral decision to divert federal funds in this way, especially since a version of the proposal was blocked in the legislature earlier this year.
“What we've seen is that the executive branch has treated [federal pandemic] dollars like they're just a big bucket of money and they can use it for whatever they want,” said Rep. Chris Karr, a Republican from Sioux Falls and longtime member of the joint budget committee.
Rather than the $5 million annual price tag on the Stronger Families Scholarship shot down by the legislature, the South Dakota Department of Education confirmed to Forum News Service that the department is making $500,000 available to subsidize private school tuition for foster children in the state during the upcoming school year.
“By providing this resource to youth in foster care, the Stronger Families Scholarship gives students and families peace of mind knowing they can access the school that meets their needs,” Joe Graves, the secretary of the state Department of Education, wrote in a statement.
Applications are being accepted by the Department of Social Services, with a maximum scholarship of $4,000.
Those dollars are coming from the Federal Emergency Assistance to Non-Public Schools program, an influx of $5.5 billion to non-public schools around the country, sending $15 million to South Dakota, addressing “the impact that the [pandemic] has had, and continues to have, on non-public school students and teachers.”
But the undertaking is rubbing some state lawmakers the wrong way.
“Funds shouldn’t be diverted for things that have specifically not been authorized,” Senate President Pro Tempore Lee Schoenbeck, a Republican from Watertown, said, noting lawmakers had already given a version of the policy the “kibosh” during session. “And I'll tell you, the administration will say they have broad authority under the federal authorization. But the legislature is going to look at how to fix that so it can’t happen again.”
Federal funds and foster care
As initially proposed in January 2023, Senate Bill 100, introduced as the “Stronger Families Scholarship,” would have created a state-funded, three-year, $15-million pilot program offering foster families in the state up to $4,000 per year for a variety of educational expenses: tuition at private schools, test preparation courses and tutoring services, among other related costs.
Opposition from lobbyists representing public education in the state helped lead to a quick end for the bill, which failed 4-2 in the Senate Education Committee in early February. These opponents criticized the program as a quasi-voucher program that could remove resources from the public school system. Additionally, some critics feared the program, despite the funding coming from a single investment, would become a permanent, annual expense after the three-year pilot program.
Noem did not hide her disappointment with the result, writing in a weekly column at the time that lawmakers had “left foster children behind once again.”
An attempt to revive the bill in the House of Representatives during the final week of the legislative session was unsuccessful as well.
However, through a combination of pandemic education funds and a significant reshaping of the program’s size and scope, it appears the third time’s the charm for Noem.
But making this scholarship program work within the federal requirements on the $15 million forced the administration to change the program from its proposed legislative form. For example, program rules make clear that these dollars must go directly to non-public schools. As a result, rather than reimbursing foster parents directly for a wide array of incurred costs, the funds will only be used to pay for private school tuition.
Another hurdle for using these specific funds is a requirement that these dollars go to private schools with “significant” portions of low-income students, potentially meaning foster children would only have their tuition subsidized if they attend certain private schools in South Dakota.
A complete set of rules for exactly how the $500,000 will be disbursed this coming school year was not made available to Forum News Service prior to the deadline for this story.
For Karr, one of the issues with the administration’s implementation of this program is that the decision did not follow the set process of rulemaking that other spending programs must undergo.
“There's a process and we need to stick with that, we need to stick to the separation of powers. They're there for a reason,” Karr said. “It’s not because there's an agenda toward one particular issue. But if we don't follow our process, it all falls apart.”
Fraying 'trust' between branches
Federal funds that come into the state are allocated to executive agencies by lawmakers, who give these agencies a limit on their federal fund budgets each year. But in the early months of the pandemic, this process was all but overrun by the volume of stimulus coming from Washington, D.C.
“If the authority is there, and if federal funds are received, the agency may administer them according to the terms of the federal funds, so it basically gives them the authority to operate a federal program,” said Rep. Tony Venhuizen, of Sioux Falls, a member of the budget committee since 2023 and a former chief of staff for Noem and Gov. Dennis Daugaard. “The rub here was that it was pretty clearly written with the idea that the state was receiving a million dollars in federal funds, not a billion dollars. So the legislature all of a sudden was saying, 'Wait a minute, we feel like we should have a little more say.'”
Although lawmakers have used their control of the purse strings to attach rules to some of the larger federal fund injections, like $600 million in water investments in 2022, the executive branch has broad authority to spend funds that haven’t had specific guardrails placed on them by lawmakers as long as the use follows federal regulations and the executive branch is given enough spending authority to make it work.
“There’s a considerable amount of trust given to the administration on federal fund authority,” said Schoenbeck. “They ought to work to protect that trust.”
The stress placed on state budget norms by massive stimulus is not unique to South Dakota. A brief from the National Conference of State Legislatures from 2021 argues the unprecedented amount of federal funds showered into state coffers has “affected the state budget process and in some cases strained relationships between executive and legislative branches.”
Some state legislatures have passed laws to clear up any confusion. In Oklahoma, for example, a 2021 law prohibits executive branch agencies from spending these pandemic funds in a way that “will or likely will lead to increased demand for state-appropriated funds or any other state funds,” unless authorized by lawmakers.
A similar effort in South Dakota came in 2022 with House Bill 1281, which would have transferred certain federal funds into the general budget, making clear that these funds would follow the process for state funds and remain primarily under legislative control.
The bill was vetoed by Noem, a decision that lawmakers were unable to overrule upon reconvening.
“I want conversation and input to continue on these extraordinary federal relief funds before any programs are rolled out,” Noem wrote in the veto letter, saying she would ensure that the executive budget agency would communicate the receipt of any new federal funds to lawmakers. “I do not believe legislation is necessary to achieve these goals, so long as we are all willing to work together based on common trust and good faith.”
The disagreement was contemporaneous with $61 million in daycare grants that lawmakers believed Noem could not disburse without individual legislative approval; for Noem, since the grants fit within the allowance of federal fund expenditure authority given to the administration, specific legislative approval was not needed.
A Senate resolution from the time sided with Noem on the issue.
Lawmakers keen on re-asserting control of federal funds — and preventing unilateral actions, large or small, by the executive branch — say they hope Noem going against the wishes of the legislature on education dollars is enough to bring about conversations on changes to how federal funds are overseen.
“The legislature is going to have to take a stand and say the power of the purse is our prerogative,” Karr said. “But if we don't protect that and we let somebody spend money without authority, that's on us, too.”
Jason Harward is a Report for America corps reporter who writes about state politics in South Dakota. Contact him at 605-301-0496 or email@example.com.