South Dakota's Conflicts of Interest Law - 7 Questions Answered

Question #1 - What is South Dakota’s “conflicts of interest” law?

In 2016, the South Dakota Legislature passed HB 1214 (SDCL Chapter 3-23). This new law rolled more than twenty state boards into conflicts regulation and required public disclosure regarding conflicts and official decisions as to whether the conflict can be allowed. 

The new law also required similar disclosures and decisions regarding business conflicts for school board members and various other key officials for any education organization that receives funding through state government. In sum, the law attempted to prohibit school board members, school district business managers, school officers, and school administrators from having an interest in a contract, or receiving a direct benefit from a contract.

In 2017, the Legislature passed HB 1170, which amended the new laws to address several concerns raised by school boards and officials throughout South Dakota. 

Question #2 - Who is a “board member”?

A “board member” is an elected or appointed member of the governing board. 

Question #3 - What is a “cooperative education service unit”?

A “cooperative education service unit” is a legal entity created under S.D.C.L. §§ 13-5-31 through 13-5-33, including subcontractors, agents or assigns of the cooperative education service unit.

Question #4 - What is “disgorgement”?

“Disgorgement” is the act of giving up on demand or by legal compulsion something that was obtained by illegal or unethical acts.

Question #5 - What is a “local service agency”?

A “local service agency” is an entity created under S.D.C.L. § 13-15A-1.  

Question #6 - What is a “school district”?

A “school district” is a school district as defined in S.D.C.L. § 13-5-1.

Question #7 - Who is prohibited from having an interest in, or deriving a direct benefit from, a contract?

No board member, business manager, chief financial officer, superintendent, chief executive officer, or other person with the authority to enter into a contract or spend money in an amount greater than five thousand dollars of a local service agency, school district, cooperative education service unit, or jointly governed education service entity that receives money from or through the state may have an interest in a contract nor receive a direct benefit from a contract in amount greater than five thousand dollars or multiple contracts in an amount greater than five thousand dollars with the same party within a twelve-month period to which the local service agency, school district, or cooperative education service unit is a party except as provided in § 3-23-8. 

For more about our state's Conflicts of Interest Laws, read Chapter 34 of The South Dakota School Law Deskbook (2017-2018 Supplement).