Legislative Week 7 February 24,2017

There is an old saying that “’Close counts’ in horseshoes, dancing, and grenades.” It also counts—for a lot of money—in the world of public education in South Dakota.

This week I brought legislation (HB1192) to the Judiciary Committee for consideration to address the ongoing “Conflicts Of Interest.” Unfortunately this legislation was killed due to other legislation related to establishing “State Accountability Board.” I want to share the information that I brought forward during the committee process to show the problem associated with “Close Relationships” within government.

During Spring Semester 2016, students at the University of South Dakota created a giant wall-sized map depicting the GEAR UP grant in South Dakota. The administration of the GEAR UP grant has been characterized from its 2005 beginning by especially close relationships. Some people believe these close relationships are not only beneficial but also necessary in a small state like South Dakota. Other people believe that some of these relationships are conflicts of interest that are illegal, unethical, or both.

Gear Up Pin Map (Click to view)

Since last spring, the USD students have shown their map and given a related factual presentation to 29 different visitors, including both the prosecution and defense in criminal cases and the plaintiffs and defendants in civil cases. The students derived all the information on their map from public sources. Their map reveals the following close relationships:

Kelly Duncan was appointed to the SD Board of Education in 1996. Her term expired on December 31, 2017. Her picture is no longer on the web site of the SD Board of Education, so we do not know if she is still a member of the Board. During 2006-2015, Duncan held various positions within the School of Education at the University of South Dakota. During part of that time, (2008-2012) the Dean of the USD School of Education was Rick Melmer. In June of 2012, Duncan started Dakota Plains Consulting in Vermillion. Mid-Central Educational Cooperative (MCEC) in Platte, SD, paid Duncan to manage the federally funded College Access Challenge Grant, the purpose of which is to increase the number of low-income students who are prepared to enter and succeed in post-secondary education. The federal government awarded the grant to the SD Office of Indian Education in 2008 and renewed the grant in 2010. In November of 2015, Angela Kennecke of KELOland News reported that during the past three years, Duncan had received $124,000 in contracts from the SD Department of Education. All of those contracts were below the state’s limit for required competitive bidding. In June of 2015, Duncan became the Dean of the School of Education at Northern State University in Aberdeen, and she moved her Dakota Plains Consulting from Vermillion to Aberdeen. Even though she accepted money from MCEC to manage the College Access Challenge Grant, she also accepted money from the Government Research Bureau at the University of South Dakota to be an “independent evaluator” of the GEAR UP grant at MCEC—all while serving on the SD Board of Education.

Julie Mathiesen was appointed to the SD Board of Education in 2011. She resigned from the Board in June of 2016. During the time Mathiesen was a member of the Board, she was also a Director at Technology and Innovation in Education (TIE) in Rapid City, SD. During the time Mathiesen was a member of the Board, she was, according to the SD Department of Education, also the Superintendent of Three Rivers Special Services Cooperative in Philip, SD. A Schoenfish & Company audit of Three Rivers for the year ended June 20, 2015, reported, “A material weakness in internal controls was noted due to a lack of proper segregation of duties for revenues. This finding was first noted in 1992.” In January of 2016, Angela Kennecke of KELOland News reported that during 2014 and 2015, in her leadership roles with TIE and Three Rivers, Mathiesen signed nearly $2 million of contracts with the SD Department of Education.

Stacy Phelps was appointed to the SD Board of Education in 2008. He resigned from the Board in October of 2015. While Phelps was a member of the Board, he simultaneously held several positions associated with the GEAR UP grant from the SD Department of Education. He was the Program Director of the GEAR UP grant for Mid-Central Educational Cooperative. He was also the CEO of the American Indian Institute for Innovation (AIII), which received hundreds of thousands of dollars in GEAR UP funding from MCEC, which received the funding from the SD Department of Education. AIII was one of seven corporations created by Scott Westerhuis, who was simultaneously the Business Manager of MCEC and the Chief Financial Officer of AIII. Scott Westerhuis also created Oceti Sakowin Education Consortium, which a 2015 Eide Bailly audit showed was the recipient of at least $171,000 of GEAR UP funds. The Registered Agent of Oceti Sakowin was Scott Westerhuis, and the Business Manager was Nicole Westerhuis, who was also the Assistant Business Manager of MCEC. A Dana Ferguson story in the January 13, 2016, Argus Leader reported that on a recent South Dakota Public Radio “Dakota Midday” program, Governor Dennis Daugaard had said in reference to the interlocking memberships in MCEC and Oceti Sakowin, “That’s ridiculous. That’s a conflict of interest.” Phelps was also the President of Blackrock Consulting, another Scott Westerhuis corporation, in which Scott Westerhuis was the Vice-President and Nicole Westerhuis was the Secretary. Phelps was also the Director of the GEAR UP summer camp in Rapid City. On February 10, 2016, Angela Kennecke of KELOland News reported that as Camp Director, Phelps had hired 10 of his family members. An MCEC-commissioned audit revealed that during a two-year period, the 10 Phelps family members received $386,000 in salaries, benefits, and expenses. An 11th Phelps family member has been on AIII’s payroll for $90,000 per year as the Principal of a school run by AIII, for which she is also an Administrative Coordinator. In March of 2016, Attorney General Marty Jackley announced that he had charged Stacy Phelps with two felony counts of falsifying evidence and two felony counts of conspiracy to offer forged or fraudulent evidence.

Rick Melmer was the Secretary of the SD Department of Education from 2003 to 2008. In 2005, he helped secure the original GEAR UP grant for SD. (The grant was renewed in 2011 and extended through 2017.) He was the Dean of the University of South Dakota College of Education from 2008 to 2013. He became a consultant for the US Bureau of Indian Education in 2010, when he was Dean of the School of Education at USD. He organized Dakota Education Consulting in 2013; the business’s web site listed Melmer’s address as Delzell Hall at USD. He became a consultant for the Council of Chief State School Officers (CCSSO) in 2013. He started RVM Consulting in Sioux Falls in 2015. He founded Leadership South Dakota in 2015. Melmer started receiving $1,000 monthly payments from MCEC in 2012, a year when Melmer was on MCEC’s Advisory Board, on the SD Department of Education’s Oversight Board for Native American Education, and was the Dean of the School of Education at USD. A Bob Mercer story in the May 19, 2015, Pierre Capital Journal reported that the SD Department of Legislative Audit’s audit of the administration of the GEAR UP grant for FY2014 found that Melmer and former SD Office of Indian Education Director Keith Moore had been paid $32,000 by MCEC for several months, even though neither had submitted effort logs showing what they had been working on. In July of 2013, MCEC contracted to pay Melmer $185,000 to be a Senior Advisor over the next 12 months. On April 23, 2014, MCEC contracted to pay Melmer $223,250 in 12 monthly payments of $18,604.17 each to be a Senior Advisor. The contract also gave Melmer 12 days of vacation leave, 15 days of sick leave, two days of personal leave, state rates for mileage, and full single health and dental insurance. (In a September 28, 2015, interview with KELOland’s Angela Kennecke, Melmer said that only a third of his salary was paid for with GEAR UP money.) On July 10, 2014, the MCEC Board of Directors approved a contract with the SD Board of Regents for “Rick Melmer Services” for $49,500, which was $500 below the limit for competitive bidding.

Keith Moore was Director of the SD Office of Indian Education within the SD Department of Education from 2005 to 2009. He was Chief Diversity Officer for the University of SD from 2009 to 2010. From May 2010 to June 2012, he was the Director of the Bureau of Indian Education for the US Bureau of Indian Affairs in Washington DC. He became the State Director of the SD Fellowship of Christian Athletes in July of 2012. He also served briefly as the Interim Director of the SD Office of Indian Education beginning in June of 2013. The August 24, 2015 Rapid City Journal reported, “Moore became chief diversity officer at USD in 2009 and was appointed as the director for the federal Bureau of Indian Education in 2010. He left the agency in 2012 amid an investigation into a contract matter that also involved Melmer and Moore’s chief of staff at the federal agency, Brian Drapeaux. Moore and Drapeaux tried a steer a contract to review the bureau to a Pierre business, Personal Group. Drapeaux had worked for the business immediately prior to joining Moore at the federal agency. The contract was initially blocked because of a federal requirement for a one-year break of service between a federal employee and a potential contractor. The contract eventually went to a business subsidiary for the Winnebago Tribe in Nebraska. That company, All-Native, Inc., then sub-contracted with Personal Group and Melmer. The inspector general’s 15-page report concluded Moore and Drapeaux ‘appear to have acted in violation of Federal ethics regulations governing impartiality…and the use of public office for private gain.’” A 2015 Eide Bailly forensic audit of MCEC revealed that from October of 2013 through August of 2015, MCEC paid Moore $99,767.97 while Moore was leading the Fellowship of Christian Athletes.

Tom Oster served as Secretary of the SD Department of Education from 2008 to 2011. He served as Superintendent of the Sioux Valley School District in Volga, SD, from 2011 to 2016. He is Co-Director of Dakota Education Consulting with former SD Education Secretary Rick Melmer and a Co-Director of Leadership South Dakota with Melmer. In 2011, he started Oster Consulting in Volga, which in 2016 moved to Sioux Falls. In 2016, the Sioux Valley School District hired Oster Consulting to conduct the search to replace Oster.

Don Kirkegaard is currently the President of the SD Board of Education. He was appointed to the Board in December 2006. Kirkegaard previously served as Superintendent of the Britton-Hecla School District. He currently serves as the Superintendent of the Meade County School District. At the time he was a partner in Sioux Falls-based Dakota Education Consulting (with former Secretaries of the SD Department of Education Rick Melmer and Tom Oster), Dakota Education Consulting, on its web site, listed its clients as the Britton-Hecla School District, the Meade County School District, and the SD Department of Education.
The officials of the SD DOE and other state education organizations who testify on education issues are not unbiased. They have conflicting interests because they populate the boards of various organizations that benefit directly from South Dakota keeping Common Core standards and the Smarter Balanced Assessments. Consider the following: – SD Secretary of Education, Dr. Melody Schopp, formerly served on the Executive Board of the Smarter Balanced Assessment Consortium (SBAC), which holds a multi-million dollar contract with the state to develop and administer formative, interim, and summative tests to all children in South Dakota public schools. Dr. Schopp is currently the president of the Council of Chief State School Officers (CCSSO), an organization which is co-owner, along with the National Governor’s Association, of the copyright for the CCSS. It was in the best interest of the CCSSO to keep South Dakota married to these standards.
- Sarah Lutz was South Dakota’s ‘Teacher of the Year’. This is a CCSSO program that gives a cash award to teachers who exemplify the ideals of Common Core.
- Paul Turman is a representative of the SD Board of Regents and also serves on the Smarter Balanced Consortium governing committee as the Higher Education.

Other SD Department of Education officials who often testify before the Education Committees who serve other entities:
- Abby Javurek-Humig, Director of the SD DOE Division of Assessment and Accountability, is the Chair-elect of the Executive Board of the Smarter Balanced Assessment Consortium.
Jan Martin, SD DOE Administrator of Assessment, also serves on the Smarter Balanced Consortium governing committee with Paul Turman for K-12.

Conclusion: Since 2005, the State of South Dakota has spent almost $62 million in state and federal money and resources in an attempt to help Native American children go to college, and no one anywhere has come forward with credible evidence of how many young people went to college because of our expenditure of that $62 million.

As always, you can contact me at the House Chamber number 773-3851. Leave a phone number and I’ll call you back. The fax number is 773-6806. If you send a fax, address it to Rep. Elizabeth May. You can also email me at Elizabeth.May@sdlegislature.gov during session. You can keep track of bills and committee meetings at this link: http://legis.state.sd.us/ You can also use this link to find the legislators, see what committees they are on, read all the bills and track the status of each bill, listen to committee hearings, and contact legislators.

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