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Former students' debts put state universities in a tangle

The state Board of Regents, whose members govern South Dakota's public universities, don't want former students to lose their driver licenses over debts owed to the campuses.

The state Board of Regents, whose members govern South Dakota's public universities, don't want former students to lose their driver licenses over debts owed to the campuses.

That's despite a 2015 law that allows the driver license for any South Dakotan to be revoked eventually if debt owed to any part of state government stays unpaid.

The regents don't know at this point what they can do. They backed away this past week from a work-around agreement that an official for the universities system had negotiated.

That would-be deal was reached with state officials and the contractor running the state's new obligation recovery center.

But when Monte Kramer, the regents' vice president for finance and administration, explained it Thursday to the state board, several regents said "Whoa."

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Instead, Kramer agreed to bring the topic back for the regents' next meeting Dec. 6-8 at the University of South Dakota in Vermillion.

Regents John Bastian, of Belle Fourche, and Kevin Schieffer, of Sioux Falls, put the brakes on the proposal that Kramer presented Thursday. Bastian is a retired circuit judge and Schieffer is a lawyer.

Both made clear their discomfort with what appeared to be an end-run around state law.

Kramer said the center under the proposed agreement wouldn't withhold driver licenses or license plates for former students who still owed money to the universities.

The universities' administrators try to collect debts and then decide when to turn debts over to the obligation recovery center.

The original amount was $250 or more to trigger the center's involvement. The proposed deal would have raised that trigger to $1,000.

Kramer said the regents previously referred debts of $100 or more to collection agencies.

Bastian said he agreed with the proposed policies, but questioned what authority the center and the state Bureau of Finance and Management have to enter into the side agreement with the regents.

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Bastian cited state law on the center. It states no person that owes a debt that is referred to the center may renew, obtain, or maintain any of the following:

• Any registration for any motor vehicle, motorcycle or boat, in which the person's name appears on the title of the motor vehicle, motorcycle, or boat;

• Any driver license; or

• Any hunting license, fishing license, state park permit or camping permit.

Those penalties are lifted when the debt and cost recovery fee is either paid in full or the debtor has entered into a payment plan with the center and payment pursuant to the plan is current.

Bastian said he didn't see any room for exemptions.

"Without a legislative fix, I don't know how they can make that fix without violating state law," he said.

Kramer said the regents' agreement was to be with the contractor.

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Bastian didn't accept that explanation.

"That makes me wonder how many other side agreements they have that violate state law," Bastian said.

Kramer said he "totally" agreed with Bastian.

"I think it takes a legislative fix, so I don't think I'm in favor of the proposal, only because it's contrary to state law and I don't know what they're doing," Bastian said.

Schieffer joined Bastian's position.

"I'm in complete agreement. Us passing this resolution would be a knowing violation of state law," Schieffer said.

Kramer said the agreement was the center wouldn't refer the names to the state agencies responsible for vehicle registrations, driver licensing, hunting and fishing licenses and state campgrounds.

Kramer said the regents wouldn't be violating state law. Schieffer disagreed and said the regents would be entering an agreement to violate state law.

Kramer said the Daugaard administration doesn't want to go back to the Legislature and seek a change. He said the administration had a hard time passing the law in 2015.

"We're kind of caught in this middle," Kramer said.

He noted the law doesn't require the regents to use the center, but the regents would need to convince the state Board of Finance to proceed in writing off debts without having taken the unrecoverable debts first to the center.

The governor's chief of staff, Tony Venhuizen, is chairman for the state Board of Finance.

"So we're just trying to make this work," Kramer said.

Schieffer said he couldn't agree with the regents participating in a deal that would be a knowing violation.

The regents president, Randy Schaefer of Madison, said the board is looking for legal direction.

"We don't want to be a body that encourages violation of state law," Schaefer said.

The regents could continue with their old approach but forego writing off the debts, according to Kramer.

"We can sit on the debt. We can go out and hire some third-party collections," Kramer said. "I can make it work."

Bastian asked for the matter to be deferred until December meeting and allow the regents' legal counsel to review the issue.

"Right now I'm not comfortable with it," Bastian said.

Kramer revealed that one campus had started "piloting" the work-around arrangement and said he would stop it.

Regent Harvey Jewett, an Aberdeen area lawyer, agreed with the delay.

"Probably shouldn't practice law on the fly in the middle of a meeting," he said.

As to whether the regents could offer their own legislation, Kramer said if there's a change it needs to come through the executive branch.

"I know they don't want us bringing a change to their legislation," Kramer said.

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