PIERRE, S.D. (KELO) — Two of the Noem administration’s numbers wizards on Thursday laid out to a group of state lawmakers the governor’s plan for spending the rest of the $1.25 billion of federal coronavirus relief aid that Congress awarded to South Dakota last year.
Commissioner Liza Clark from the state Bureau of Finance and Management and Cassie Stoeser, finance director for the Governor’s Office of Economic Development, delivered an overview and answered questions from members of the Legislature’s Joint Committee on Appropriations.
Clark told them that more than $1 billion — $1,084,173,425 to be exact — has already been spent or committed. Nearly all of the $165,826,575 that’s left will be spread across eight specific spending areas, she said, with $7,865,644 held in reserve.
State lawmakers in a special legislative session last fall adopted a resolution that said as of September 29, 2020, there remained $597 million of coronavirus relief funds that were unexpended or unobligated. The resolution recommended that $450 million should be used for grants to small businesses, nonprofits and startups.
The numbers that Clark and Stoeser presented Thursday reached about three-fourths of those amounts. Grants sent or obligated to small businesses totaled $292,005,147, while nonprofits were at $24,700,724 and startups $7,559,350.
The governor contracted last year with a private company, Guidehouse, to process applications and oversee the distribution of the grants. Many hundreds of South Dakota businesses had difficulties with applications.
At the time, Congress had set a December 30, 2020, deadline for state governments to spend or obligate their allocations of coronavirus relief funds. In December, Congress extended the cutoff by a full year to December 31, 2021.
The congressional extension gave South Dakota more time to sort out the widespread application problems. State government in turn revised its internal deadline so it had more time for processing grant applications and getting money out the door to eligible businesses.
“We had processed all applications by January thirty-first,” Clark said Thursday. “And so yes, they have all been processed by Guidehouse, and now we’re just working with those companies to finalize it.”
She said 210 small-business applications are still being actively worked. The bureau issued a request for proposals this week seeking firms interested in performing an audit.
“We want to do an audit of the entire program. So they would look at random applications from start to finish through Guidehouse, and then they would review paid funds to verify that funds were used appropriately, identify any improper payment, review denied applications and make sure those were properly done, perform desk and on-site review of the awards, and then establish, maintain and staff an inquiry center,” Clark said.
She continued, “So we’ve had some complaints — I’m sure you folks have heard complaints — and so this would be someone reviewing valid complaints and researching and identifying any improper use. In the contract that was signed, we did say that if they were improperly accepted, or they reported improperly or any of the boxes that they checked, they would have to reimburse us those funds.”
The bureau is still waiting for responses to the RFP, according to Clark. “The cost of that we’ve estimated at $1 million to $2 million. It could be way less depending on what they find and depending on complaints and depending on what they see in their review process,” she said. The goal is to finalize a contract early next month and have the audit start in April. “It really depends on how many applicants we have and how long that process takes to select a vendor, but we’re hoping to have that done by next month,” she said. “The sooner the better.”
“I would tell you that obviously we’re receiving complaints, but we’ve also — businesses most of the time have been great to work with. We’ve had businesses send us money back and say they realize they reported some of their information wrong and they sent their payment back,” she added.
The resource center would serve as a place for legislators to steer people with complaints, she said. “We’ve had different people ask how they can complain anonymously. We’ve had calls come into us where there’ve been kind of a ‘Here’s all the people we think that shouldn’t have gotten it,’ and when we followed up with them, they just feel that way.”
Between the two rounds, there were 8,508 applications from small businesses, 997 applications from nonprofits and and 528 applications from startups. Top reasons they didn’t get grants included 1,870 that had no loss of income; 1,305 whose loss of income was less than other grant aid; 497 whose reduction in business was less than 15%; and 77 whose potential award was less than the $500 minimum payment.
Stoeser said she and other state staff have been meeting for a half-hour daily with a Guidehouse team to discuss what they’re seeing. Stoeser said payments sometimes have been delayed because a taxpayer ID number was incorrect or a document was missing.
Representative Linda Duba, a Sioux Falls Democrat, asked about applicants who have given up. “You know that when they try to call into the call center, it’s difficult at best,” Duba said. Stoeser said every person who had a returned application received an email and a phone call last month. There were a variety of responses and no-replies.
“Everything’s been reviewed at this point at least, for most of them, probably several times, but they’re requesting more information or verifying some information within the application. So those ones that are still in review are still actively being worked and being paid out twice a week,” Stoeser said.
Another internal group follows up on legislators’ requests for help for specific applicants. Stoeser said that as of Wednesday they had worked on about 1,800.
Of the remaining aid, $75 million is planned for the state’s reemployment assistance fund that pays unemployment benefits. Clark said nearly $88.7 million had already been shifted into it.
$53 million will go to payroll among various state employees in the courts, corrections, human services, parole and public safety, according to Clark.
The governor wants to put $25 million into her $100 million plan to further expand high-speed broadband into underserved areas of South Dakota, while $5 million would go into meat processing grants.