The state Department of Social Services is facing pressure to release millions of dollars in opioid settlement funds.
South Dakota lawmakers recently discussed the possibility of passing legislation that would force the department’s hand.
At the final Legislative Appropriations Committee meeting of the interim session, lawmakers heard from both the attorney general’s office and DSS on the opioid settlement dollars. The funds come from multiple settlements with opioid drug makers.
According to DSS’s opioid settlement dashboard, the state’s expecting to receive just under $99 million in settlement funds through 2038. Of that, 70% goes to the state and 30% is shared locally. The dashboard said the state has received $23 million as of October. The dashboard also shows that DSS has given out $8 million in actual expenditures of the state's share and committed nearly $4 million. The rest of the funds are unallocated. The department has received scrutiny for not dispersing the money immediately, including from Sen. Chris Karr during a legislative task force meeting assessing the state's recidivism rate.
The funds are administered by the department. By statute, they're overseen by an Opioid Advisory Committee in the state.
Attorney General Marty Jackley cautioned appropriators against using the funds for an endowment, which he said could result in penalties to the settlement funds.
Matt Althoff is the DSS Secretary and he spoke before the Interim Appropriations Committee. He said it’s “not the heart of the department” to withhold the funds or establish an endowment.
"It is not in the mind and the heart of the department to create an endowment, and this has been brought up many times. It is absolutely of the mind and the heart of the department who works every single day, particularly with the income qualified in our state, to get them over barriers, namely substance addiction, and wanting them to be lifted up through our efforts," Althoff said. "It is not in our desires in the least, it’s not in our DNA, to squirrel away the money. It is in our desire to put that money to work to impact gaps that exist today so that no person, not one more person falls victim to the scourge of opioid misuse in our state.”
The department recently announced plans to alter the settlement grant structure to a three-tiered system: resource funding for up to $5,000, organizational projects for up to $50,000, and transformative projects for over $50,000. Some grants are still under review. Althoff said he hopes the transformative grants can be used to fill large gaps in treatment and other areas around opioid and substance addiction to create long-term change.
Some critics say the time to act is now. That includes Attorney General Marty Jackley.
“I don’t say that being critical of the DSS approach. I think it’s great that they’ve begun moving forward in this fashion. I just think because of what we’re facing in South Dakota the time is now. And you can put an influx, with the local share and everything at $99 million, you can hit this problem with a sledgehammer," Jackley said. "Or you can tap dance a couple years. These dollars have been available, really $22 million came in 2024.”
Jackley told the committee he recommends working with DSS to get the funds out to communities now. He has previously advocated to give the funds to Sioux Falls and Rapid City for disbursement of block grants through a request for proposal. Proponents of the plan say it also improves existing addiction treatment options. In August he held a press conference announcing the plan. He told legislators on Tuesday he felt comfortable with that plan because of the "process."
"Sioux Falls already has its own health department; it's set up. The two mayors are working well together. They agreed as part of the proposal it would be a Request for Proposal, which gives it a bidding process which gives some of the entities that provide these services the ability to be part of it," Jackley said. "And frankly, it avoids some of the fraud issues. I'm not saying it can't happen, but when you have an open and transparent process on the RFP side, it takes away some of the misspending."
Jackley said he believes around $25 million should be made available now.
Rep. Liz May is on the committee, and she expressed her support for getting the dollars out there immediately.
"Let me emphasize maybe stronger than what the attorney general is. No. This isn't just kind of a crisis. This is make or break. This isn't just poor people," May said. "This is every walk of life. It is destroying my family. It is destroying your families. It's got to stop."
She said her concern is the grants that have been approved thus far by the Opioid Advisory Committee.
"You cannot get over these drugs without in-house, door locked, and I don't see that. I see transportation. I see all these things. And I don't know what the [Rapid City and Sioux Falls] mayors proposals are. I would be very interested in seeing them, but I'm telling you these are not your normal drugs," May said. "There's going to have to be some serious, serious commitment made because these people can't get off these drugs by going and seeing a counselor once or twice a week. It isn't going to happen."
She said while she doesn't like the state spending that much money, the situation calls for it.
The other legal avenue the Legislature discussed is passing a special appropriation during session. Rep. Al Novstrup said he thinks it could potentially be done separate from the entire budgeting process since the funds have restrictions due to settlement requirements.
It's in South Dakota statute that the money may only be used "for purposes relating to opioid abuse treatment, prevention, and recovery programs and must be appropriated through the normal budget process."
Chair of the Appropriations Committee Ernie Otten told Secretary Althoff that he should make working with Sioux Falls and Rapid City "his top priority" by session time.
"There is serious consternation on our end," he told Secretary Althoff.
