Note to readers: This story updates a previous version that carried an incorrect headline. The dollar amounts added to this updated version in the ninth paragraph weren’t discussed during the verbal testimony and answers to the committee. I apologize for the earlier version.
PIERRE, S.D. (KELO) — State lawmakers want more data about how the South Dakota Governor’s Office of Economic Development has been spending money that was meant to help attract workers from other states and to help employees raise their skills so they could move into higher-level jobs with their current companies.
The Legislature in 2021 provided GOED with an additional $1 million a year for those purposes, with the increase intended to be ongoing. GOED marketing director Nate Welch told legislators Thursday that 38 people moved from outside South Dakota to work at businesses in the state as a result of the program and 13 other employees received training needed to advance.
A report from the office of commissioner Steve Westra said nine communities came up with $175,000 to participate in GOED’s $351,000 marketing program. One organization and 17 communities requested $1,045,000 from GOED for the workforce incentives program and offered to invest $1,619,000 in it.
Welch acknowledged that state officials were “a little bit disappointed” that the results were “not as successful” as some had hoped. “I think we all wish we could have gotten a few more in there,” Welch told the Legislature’s Appropriations Committee.
He said GOED required that a job pay at least $20 per hour to qualify for incentives such as paid moving expenses or sign-on bonuses. He said GOED didn’t track whether the recruits stayed in the jobs because that would add layers of work at both ends. He said participating communities were better positioned to do that.
“Shouldn’t we be tracking?” Representative Linda Duba, a Sioux Falls Democrat, said. “I guess I think that’s rather important.” She asked whether GOED had internal metrics for the programs. After Welch said no, Duba encouraged GOED to develop them.
The recruits came from Arizona, California, Iowa, Idaho, Illinois, Indiana, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New York, Oklahoma, Texas, Washington, Wisconsin and the nation of Philippines, according to the report.
The report said GOED used the services of two marketing agencies, Lawrence & Schiller of Sioux Falls and Designsensory Inc. of Knoxville, Tennessee. State records show GOED contracted to pay Designsensory $1.9 million for a two-year period and to pay Lawrence & Schiller $450,000 per year for a three-year period.
The report showed $33,780.38 was spent on workforce incentives during the budget year that ended June 30. Another $81,830.92 was spent on cooperative marketing, while $884,388.70 was carried over to the current budget year that began July 1, according to the report.
Senator Jean Hunhoff, the Yankton Republican who co-chairs the committee, suggested GOED get lawmakers more information, such as the location and size of participating businesses, and the professional status of the new or better-trained employees.
“Yes, we would be able to provide that,” Welch said.
Representative Chris Karr, the Sioux Falls Republican who co-chairs the committee, told Welch that GOED needs to show more to legislators and the public about how the office has been spending taxpayers’ dollars on recruiting and training.
“What’s the return, and what did it do?” Karr said.