Westerhuis GEAR UP Positions Conflict Of Interest

Your Money Matters

As state auditors pour over where money for the GEAR UP program went, state government earns poor marks from a democracy watchdog group.  South Dakota earned an “F” for overall state integrity.  South Dakota was 47th overall according to the Center for Public Integrity.

State government earned poor marks for ethics enforcement, legislative and executive accountability and public access to information.

The one bright spot?  The state got a B minus for internal auditing, its highest grade.

One of those internal audits involves the way the GEAR UP grant program was being handled.  The state applied and received $24.4 million in GEAR UP federal grant money in 2011 for a seven-year period.  The program is supposed to prepare Native American students for college. 

But after problems found during an audit of Mid Central and the GEAR UP money, business manager for Mid Central Educational Cooperative, Scott Westerhuis shot and killed his family and committed suicide.  Mid Central was a partner with the state in the GEAR UP grant.

Our KELOLAND News investigation uncovers that Scott Westerhuis played three roles in handling the GEAR UP money- all three conflicted with one another.

Scott Westerhuis was a very busy man.  Not only was he business manager for Mid Central, which handled a number of grants and programs for the school districts it represented, Westerhuis also was the Budget Specialist for GEAR UP, a full-time position that paid about $50,000 a year.  

“Then he’s in effect sitting on both sides of the table.  He’s administering the grant on behalf of the Department of Education and Mid Central as the contracting entity with the state; he’s representing them from a financial perspective too, so in effect they’re negotiating with themselves,” Michael Wyland said.

On top of that, Scott Westerhuis was the Chief Financial Officer for the American Indian Institute for Innovation, which got the funds to run the GEAR UP programs in the schools. 

“Apparently the South Dakota Department of Education decided that that was an acceptable way of administering the GEAR UP grant,” Wyland said.

Wyland, who’s written $60 million in successful federal grants says he’s never seen anything like it in his career.  According to the state’s own annual reports, as GEAR UP’s Budget Specialist, Scott Westerhuis would be responsible for “managing all grant fiscal components including expenditures, contracts, drawdowns, monthly reconciliations, audits, and match accountability.” This includes maintaining the documentation.

Angela Kennecke: He would have been doing audits on himself?
Wyland: Potentially, yes.

According to Mid Central’s own policy handbook, its employees, “will not engage in nor have a financial interest, directly or indirectly, in any activity that conflicts (or raises a reasonable question of conflict) with their duties and responsibilities in the Mid-Central Educational Cooperative system.”  

Also, as business manager, Westerhuis was supposed to have all checks or payments going out countersigned by the Mid Central’s Governing Board Chairman or Vice-Chairman.

Kennecke: If somebody was going back and looking to see if they would have been signed by two people, that would have been his job?
Wyland: Right, yes.

The state says it contracted with Mid Central and it was Mid Central’s job to hire the budget specialist.  However, the annual reports to feds state that “South Dakota Governor, Dennis Daugaard, appointed the South Dakota Department of Education and its Office of Indian Education as the authorized lead for the state’s GEAR UP program.” 

“The State of South Dakota bears the ultimate accountability, the ultimate responsibility for the administration of the GEAR UP program,” Wyland said.

Wyland says Scott Westerhuis’ role isn’t the only one that needs to be questioned in how GEAR UP was being run. 

“This is not just a Scott Westerhuis issue. This is also an issue that involves several other entities, from Mid Central Educational Coop’s Director and Board to the Department of Education to how the Federal Government administered the grant from the national level,” Wyland said.

According to Mid Central’s attorney, Scott Westerhuis worked with the South Dakota Department of Education in this role to develop and administer the budget in his position as budget specialist. 

However a spokeswoman for the state Department of Education says they have Westerhuis’ position as “Match/Support,” not “Budget Specialist.”  We have asked if the two job descriptions were the same and we’re waiting for the answer.

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