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Mayor: State probing Corn Palace matter

Mark Schilling

State investigators are determining whether the activity that led to Corn Palace Director Mark Schilling's Monday resignation included any crimes, according to Mitchell Mayor Ken Tracy.

The South Dakota Division of Criminal Investigation is looking into the matter, Tracy said. The Daily Republic asked Sara Rabern, a spokeswoman for DCI, about the investigation, but did not immediately receive a response.

The mayor announced Schilling's resignation at around 11 p.m. Monday following a City Council meeting -- which pushed the story to The Daily Republic's B section, because the A section deadline had passed. Tuesday, Tracy spoke in more detail with The Daily Republic.

Other city employees are not expected to be implicated in the set of circumstances that led to Schilling's resignation, Tracy said.

"Whatever actions were taken were the sole responsibility of Mark Schilling," he said.

Tracy asked Schilling to resign, Tracy said, because of an as-yet unreleased state audit of Mitchell's city-owned arena and tourist attraction.

"There were a number of policies and procedures that the city has in place that were not being followed," Tracy said. "They were of such a serious nature that I was left with little choice but to seek his resignation."

Schilling, who spoke with The Associated Press on Tuesday, said that "I don't believe there is any wrongdoing" and that he stepped down as director because "it's just time for a change, and the best for the city." He said he is considering "several different options."

Schilling told the AP he has not seen the audit report and declined to comment on it.

Multiple calls made to Schilling on Tuesday by The Daily Republic were not returned, and no one answered the door at his home in eastern Mitchell.

Schilling had been director of the Corn Palace for 13 years. As of the city's required annual publication of its wages and salaries in January, Schilling was being paid an annual salary of $66,059.

Tracy, reacting to Schilling's comments, said whether there was wrongdoing involved is a matter of interpretation.

"Failure to adhere to city policies and procedures is, in my estimation, a serious violation of city policy," Tracy said. "That was my reason for taking the action that I did."

Tracy, who has seen a preliminary version of the state audit report, declined Tuesday to talk about any of its specific findings.

"The report is going to speak for itself," he said.

The city plans to release the audit report and discuss it in open session at the next council meeting, which is scheduled for March 17.

"It's very upsetting and unsettling," Tracy said of the situation.

Russ Olson, an audit manager with the South Dakota Department of Legislative Audit, performed the audit of the Corn Palace, aided by two of his department's staff members. The department was first contacted by the city about the audit in October, Olson said.

"They had some concerns and questions," Olson said. "We were basically asked if we could come down and have a look, and see what we thought of the operation."

The audit began in earnest in mid-December and is now nearing the end of the review process, Olson said.

The focus of the audit was on the operation of the Corn Palace and, specifically, the arena/tourist attraction's enterprise fund within the city's budget, Olson said. An enterprise fund is any fund within the city's budget that operates in a manner similar to a business.

Olson declined to discuss any of the specific findings contained in the audit report.

"It's our policy that until we present the public report to the management of the city, we don't comment on ongoing audits or investigations," he said.

Assistant Corn Palace Director Jeri Mickelson has taken over for Schilling on an interim basis. Mickelson declined to comment when contacted Tuesday by The Daily Republic.

Councilman Mel Olson said the mayor has indicated to the council that one recommendation will be for the Corn Palace to acquire cash registers with the ability to reconstruct individual transactions.

"I know that Corn Palace employees expressed a concern to the mayor about the way things were being done," Olson said.

Olson also pointed out that during last year's budget hearings, Council Vice President Steve Rice noted that the Corn Palace's profits from concession sales appeared to be lower than they should have been.

Rice declined to comment on the situation when contacted Tuesday by The Daily Republic, as did Council President Jeff Smith, Councilman Phil Carlson, Councilman Dave Tronnes and Councilman Randy Doescher.

Councilwoman Susan Tjarks said she was disappointed by the situation, but declined to comment further.

"The events that unfolded were unfortunate," Tjarks said.

Councilman Marty Barington did not immediately return a call for comment.