James River water district manager resigns

Talk about it

HURON — Embattled manager Darrell Raschke spent parts of Saturday and Sunday hauling boxes of personal materials from his office to his truck and at one point drew the attention of a trooper for the South Dakota Highway Patrol.

Then Raschke resigned Monday morning from his $98,000 job running the James River Water Development District.

His departure took effect immediately during a meeting of the district board’s seven current members.

It came on the heels of a financial review by state auditors that found numerous improper business practices, as well as thousands of dollars in undocumented credit-card expenses that he charged.

“While it is not in my nature to run from a fight as reflected in my past work on behalf of the district, it is clear that I must protect the district and put its interests above my own,” he said in the two-paragraph letter he signed Monday.

But the 61-year-old Raschke’s leaving after 18 years as manager turned out to be insufficient to satisfy state Sen. Al Novstrup, R-Aberdeen.

Novstrup said Monday in an e-mail to the district’s board members, and many dozens of city and county officials, as well as a long list of other interested parties, that he will continue his push in the Legislature to dissolve the district.

“SB 160 will continue forward irregardless of the employment of Mr. Raschke,” Novstrup wrote.

“Last week, I said I would kill SB 160 if Mr. Raschke resigned,” he continued. “Based upon new information from multiple sources, concerning alleged serious violation of state laws by more than one current board member more than 5 years ago, I have genuine concern if the tax payers money will be properly protected in the future and I will continue forward with SB 160.”

The Legislature created the system of water development districts in 1984 to promote water-quality and water-supply projects.

The James River district collects property taxes from landowners in counties along the river’s length through South Dakota. The money is used for the district’s operations and projects. The district’s board members are elected by voters from areas within the district.

Whether enough of the other 104 senators and representatives agree with Novstrup for him to succeed in dismantling the current district will be tested in the remaining 11 working days of the 2012 legislative session.

In its place Novstrup wants to create an essentially identical, new entity called the James Basin Water Development District.

Novstrup earlier indicated publicly on two occasions he would halt the legislation, Senate Bill 160, if Raschke resigned. One of those statements came during a House committee hearing on his legislation Thursday. But Novstrup found a new reason Monday to continue his quest.

Novstrup said the resignation of the district board’s new chairman, Jim Lane, of Yankton, left him without the necessary confidence that the current district will be properly managed.

Randy Stanley, of Groton, who has served on the board since 1993 and had been vice chairman, was selected Monday by the rest of the board to replace Lane as chairman. Carol Millan, of Mitchell, who was elected to the board in 2010, was chosen as the new vice chairman.

Lane is the second chairman to resign from the board in three months. Bob Rademacher, of Huron, unexpectedly stepped aside as chairman and left the board in December.

Their resignations followed the delivery of the financial review by the state Department of Legislative Audit that was conducted at the board’s request last year.

Lane, in an e-mail sent Sunday to Novstrup, said that while he was still chairman he contacted each of the other board members regarding the district’s management.

“Each of them agreed Darrell Raschke was no longer effective in his position and should resign. On February fifteenth I contacted Darrell and as chairman requested he resign immediately. As far as I know he has yet to do so,” Lane wrote.

Board member decries politics

Lane said the purposes and scope of the district, as well as wise use of tax revenue, need to be analyzed within the context of the declining availability of funding from a variety of sources. He said he’s consequently supporting Novstrup’s legislation.

“A broad interpretation of mission statement has allowed funding of anything from a biomass study to municipal infrastructure with no connection to the river. Simply removing the current manager will not address this,” Lane said.

Several board members spoke Monday in defense the district’s work. One, Gary Boomsma, of Wolsey, said he was disappointed that some people were “making hay politically” of matters. Boomsma wondered “where in the h—-” the public expects board members to be recruited to run for election if a senator is dictating the district’s operation.

“This board, and this district, that’s all this has become, political fodder,” Boomsma said.

The board wasn’t scheduled to meet until March 15 but called a special meeting for Monday to discuss Senate Bill 160 and “personnel.”

The board spent approximately 45 minutes in an executive session, with Raschke joining them for the first half, and emerged briefly to approve the resignation.

The board then returned to executive session for approximately one hour to discuss his severance package.

The board agreed that Raschke will get his accumulated vacation and sick leave, eight months of paid health insurance totaling $5,351 until he reaches age 62, and $18,000 in cash.

Boomsma said the $18,000 reflects $1,000 for each of the 18 years Raschke has worked as manager.

The votes were 7-0 regarding the resignation and the severance package.

A financial review conducted last year by the Department of Legislative Audit found numerous instances of improper practices in Raschke’s conduct of the district’s business affairs, as well as some irregularities by some board members.

A tipping point seemed to come when Raschke changed, without the board’s authority, the board’s approved language for a letter of response to the review.

Novstrup’s legislation has been approved by the Senate and awaits action in a House committee. Raschke attended the hearing but didn’t testify. Stanley said Monday that Raschke was directed to stay silent.

The situation that has pushed the James River Water Development District to the edge of elimination by the Legislature began in 2008. State lawmakers approved legislation changing the boundaries of three districts, including the James River district.

During a House hearing on the legislation that year, then-Rep. Tim Rave, R-Baltic, specifically asked whether the new boundaries would lead to higher property taxes. Raschke told legislators their world wouldn’t change, an answer that legislators took to mean no.

But the James River board then raised taxes to be paid in 2010. They did so by defining the district as a new entity because the boundaries had changed. That allowed the district to get around state law limiting the growth of local government budgets.

A Brown County farmer approached Novstrup at breakfast one day to complain about his property taxes, which had approximately tripled for the water district. That led Novstrup to look into what happened.

Novstrup has been on a mission since then.

Legislature reduces district

In 2010 the Legislature rolled back tax increases imposed by the James River district’s board and others. Legislators forced them to return to the 2009 levels.

Legislators also made it easier for a county’s voters to decide whether the county should join or leave a water district; the Legislature reduced the threshold from a 60 percent majority to a simple majority.

Novstrup was the prime sponsor of that legislation, Senate Bill 184.

Voters in Day and Hand counties subsequently removed their counties from the James River district in the November 2010 election.

Novstrup tried to get a broad range of financial records from the James River district in 2010. He eventually won the dispute before a state hearing officer, but he didn’t pick up the records because, in part, he didn’t want to pay the high fees.

Newly elected board members for the district instead led the push in 2011 for a review of the district’s financial practices by the state Department of Legislative Audit. That review, released in December, showed numerous practices that didn’t follow state and federal laws.

The review also revealed many instances where there wasn’t information to support the spending as a public purpose, such as thousands of dollars of credit-card use by Raschke to pay bills charged at the Longbranch, a downtown Pierre bar and restaurant.

The district’s board accepted Legislative Audit’s findings and gave specific directions to Raschke for the content of the district’s response. Raschke disregarded the board’s directive and wrote a different response letter to the review, describing audits as subjective

When caught having made the unapproved change, Raschke told the board during its January meeting he was told to do so by Legislative Audit.

That same afternoon Raschke, when questioned by a reporter, changed his story twice about who told him to alter the letter.

Marty Guindon, the state’s auditor general, was contacted by the reporter afterward. Guindon said Legislative Audit didn’t tell Raschke to change the response letter.

Novstrup meanwhile went down a different path in 2011 because of the financial records dispute with Raschke. Novstrup succeeded in passing legislation, Senate Bill 101, imposing penalties in open records actions.

The new law gave a public entity 30 days to comply with a hearing officer’s order in an open records case, and set a $50 daily civil penalty if a court finds a public entity acted unreasonably and didn’t act in good faith on a records request.

Novstrup’s current legislation originally sought to move three counties — Brown, Spink and Marshall — out of the James River district and create a new north-central district. Other senators disagreed, saying the root problem needed to be addressed.

The Senate subsequently changed and passed the legislation seeking to disband the current James River district altogether. Novstrup said at the House committee hearing last week that he would be back to seek House approval of the legislation unless there was a resignation by Raschke.

After that Thursday hearing the James River district’s board called a special meeting for Monday morning. That led to Raschke’s resignation and Novstrup’s subsequent about-face.

Tags: james river, water development district, al novstrup, darrell raschke, news, updates, state