New state grant oversight board grinds ahead on trustworthiness questionnaire

PIERRE -- The new state board created in the wake of the EB-5 and GEAR UP scandals made progress Wednesday in trying to choose questionnaires for government agencies to use when gauging the trustworthiness of applicants for government grants and ...

PIERRE - The new state board created in the wake of the EB-5 and GEAR UP scandals made progress Wednesday in trying to choose questionnaires for government agencies to use when gauging the trustworthiness of applicants for government grants and contracts.

The panel's members seemed to settle on the general position a state questionnaire for assessing risk should be used if the federal government doesn't require a specific one.

Some federal agencies provide their own risk assessment tools. By designating one or more state versions, there would be a higher degree of consistency in those instances where there isn't a specific federal version.

Keith Senger is chairman for the panel, known as the state Board of Internal Control. He said a workgroup would assemble guidelines and a propose a model state tool for state agencies to use.

State Auditor General Marty Guindon urged that federal assessments be modified to include state questions that aren't covered by the federal versions.


Guindon also said it is "extremely important" that assessment results be available to be shared throughout state government.

Monte Kramer, the vice president for finance and administration for the Board of Regents central office, suggested that agencies and vendors both complete the assessments.

"I think it's important they understand how we're looking at them," Kramer said.

Kari Williams, representing the state Department of Health, said she can use a standard state tool as long as the entity can provide answers when the department doesn't know them and the department can add questions.

Senger called the Department of Health "a great leader" because it's been one of the first in state government to be conducting risk assessments the past few years.

"They're the experts and we're trying to pull from their expertise and get something that works," Senger said.

Senger said he "firmly" believes letting an agency make small modifications and tweaks. He asked that the agencies bring those changes back to the board to see whether the changes should have broader use.

The concept of the board came from Gov. Dennis Daugaard and Lt. Gov. Matt Michels as a response to the problems involving the federal GEAR UP grant.


GEAR UP was supposed to help Native American students and their families understand what was necessary for further education after high school graduation.

Several millions of dollars are passed annually from the federal Department of Education to the state Department of Education. The state department contracted with Mid-Central Educational Cooperative at Platte as a sub-recipient.

Mid-Central in turn contracted with GEAR UP Director Stacy Phelps, who paid employees and sent money to two non-profits he had helped create.

State Education Secretary Melody Schopp initially defended Mid-Central and the GEAR UP program against the findings of the state auditor general. She reversed her position in September 2015 and didn't renew the Mid-Central contract.

Within 24 hours, the Mid-Central business manager, Scott Westerhuis, and his wife, Nicole, who was an assistant business manager, along with their four children were found dead of shotgun wounds in the burnt remains of their home.

State Attorney General Marty Jackley determined that Scott Westerhuis shot the five others to death, lit the house on fire and then shot himself to death.

Jackley has felony charges pending in state court against Phelps and Mid-Central Executive Director Dan Guericke for allegedly falsifying documents as they faced document requests during the second round of the state audit last year.

Felony theft charges are filed against Stephanie Hubers, an assistant business manager, for allegedly accepting $55,000 in additional pay from one of the non-profits. Jackley estimated that the Westerhuises might have illegally taken $2 million from GEAR UP.


So far there aren't any criminal charges filed against state Department of Education officials or against Rick Melmer or Keith Moore, the two men Schopp agreed should be paid to oversee the Native American education program at Mid-Central.

Melmer is a former state secretary of education and Moore is a former state Indian education director. Schopp had worked with both of them while they were at the state department.

The Board of Regents now is the sub-recipient for the GEAR UP grant as the replacement for Mid-Central. The regents, who govern the state university system, have Black Hills State University in charge of GEAR UP. Mid-Central will eventually disband in 2017.

Beside Senger, Kramer and Williams the other Board of Internal Control members are Greg Sattizhan, state Unified Judicial System; Jason Dilges, state Bureau of Finance and Management; Steve Barnett, state auditor; Laura Schaeffer, state Department of Social Services; and Tami Darnall, state Department of Education.

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