PIERRE, S.D. (KELO) — Turns out the Governor’s Office of Economic Development spent only about one-third of the $1 million that state lawmakers provided two years ago for recruiting people to move South Dakota for jobs that employers found hard to fill.
GOED is now using the $681,587.87 that remained for other marketing instead. That’s in addition to the extra $1 million that GOED received from the Legislature last year and the extra $1 million it’s getting again for the budget that starts July 1.
Republican Rep. Chris Karr asked why the carryover wasn’t reverted. State government agencies normally turn over any money that isn’t obligated under a contract when the state fiscal year ends June 30, with the money flowing into a state reserve account that the Legislature can tap in case it’s needed later.
Travis Dovre, who serves as GOED’s fiscal officer, said the carryover is being used as part of $1.6 million for marketing in the current 2023 budget. He said the office is trying to make “a big splash” to take advantage of South Dakota being on people’s minds and “keep South Dakota’s message front and center.”
Responded Karr: “It just seems like we’re growing a slushy fund here.”
Dovre said most of the money will eventually be spent. Added Joe Fiala, the partner-relations director for GOED, “We are continuing to market and spend those dollars.”
Karr asked, How does GOED carry-over those dollars without a contract in place? Dovre said GOED has multi-year contracts for the money.
One is with a Tennessee-based firm, Designsensory. The three-year contract originally was for $450,000 for the first year, but was expanded last summer to $1.9 million total for the first and second years.
The other contract is with Lawrence & Schiller, based in Sioux Falls. It also is for three years and called for L&S to receive $450,000 the first year. It also stated, “Subsequent year amounts will be determined based on available budgets.” According to state government’s Open.SD.Gov financial-tracking website, Lawrence & Schiller received $19,871,720.35 from contracts with various state-government agencies in fiscal 2022 and $14,798.450.82 so far this fiscal year.
Karr said GOED should send the committee information so lawmakers could “connect the dots.” Answered Dovre, “We will.”
Fiala said the marketing piece aimed at seven states in the region and California. He described one of the slogans: “’We saved you a spot in South Dakota’ and that seemed to resonate.”
There were three components, with local matches required for each. GOED planned to spend $450,000 on marketing, with the same expected from communities, but GOED spent only $175,500, because only $175,500 was received from the communities that chose to participate.
On the relocation incentives, those costs were split three ways for larger communities, with GOED, the local economic-development organization and the business each paying one-third. Those efforts brought in 66 people from 27 states and two foreign countries.
There also was a third component, where current employees would receive training — “upskilling” was Fiala’s word — for higher positions that were hard to fill in their workplaces. Those targeted smaller communities, with GOED providing 50% and the local organization and employer responsible for the other 50%. A total of 35 current employees used that route.
Said Democrat Rep. Linda Duba, “I’d like to see where these people are landing.”
Fiala said GOED would pull together the relocations: “They were kind of sprinkled around the state, if I remember right, big and small.”
Republican Rep. Tony Venhuizen, a former senior aide and a former chief of staff for Governor Kristi Noem, somewhat defended GOED, saying he assumed that providing marketing money meant there would be a sustained marketing effort.
“You’re exactly right,” Fiala replied, saying people have to hear the message repeatedly over a number of months and sometimes years for it to sink in.
Venhuizen asked whether GOED was cooperating on marketing with the state Department of Tourism, which spends many times what GOED does on marketing South Dakota to visitors. And, Venhuizen asked, does GOED have other funds going into marketing?
Fiala took the first question. He said GOED coordinates with Tourism and the state Department of Labor and Regulation on general messaging.
Dovre, the fiscal officer, took the second. “There’s nothing that we’re using on a regular basis for the normal marketing campaign,” he said.
As the meeting wrapped up, Venhuizen noted GOED Commissioner Steve Westra was in the room but hadn’t spoken. Last week, the governor announced Westra was leaving the post next month and Dovre would serve as interim commissioner. Venhuizen asked for a round of applause for Westra.