State university students would face sanctions, as do others who haven't paid state government

PIERRE -- The state Board of Finance delayed debt write-offs Tuesday for Northern State University and the Secretary of State Office. The reason: The debts hadn't been processed yet through state government's obligation recovery center that recen...

PIERRE - The state Board of Finance delayed debt write-offs Tuesday for Northern State University and the Secretary of State Office.

The reason: The debts hadn't been processed yet through state government's obligation recovery center that recently began operating.

The board's action came just hours after some legislators questioned a state Board of Regents official regarding the need for state universities to participate.

Gov. Dennis Daugaard won the Legislature's approval in 2015 to establish the center and hire a company to run it for state government.

The center is controversial because the names of debtors who haven't worked out a payment plan are turned over to state agencies for sanctions.


The sanctions include denial of driver licenses, vehicle registrations, hunting and fishing licenses and state campsite permits.

The regents didn't want any current or former students to lose licenses over university debts.

Monte Kramer, vice president for finance and administration in the regents' central office, had worked out a memorandum of understanding reflecting that position.

The memorandum was with the state Bureau of Administration that oversees the center.

But the regents declined to approve the memorandum earlier this month because it appeared to contradict the sanctions language in state law.

The Legislature's Government Operations and Audit Committee brought in Kramer and administration commissioner Jeff Holden to answer questions Tuesday.

Kramer said he would take options to the regents at their December meeting.

Holden said the center recently sent a list of 7,712 debtors to the state Department of Game, Fish and Parks. He said the subsequent search by GF&P blocked 850 licenses.


The list was also sent to the state Department of Revenue for sanctions on motor vehicle registrations. Holden said revenue officials are facing a challenge with registrations bearing multiple names.

The Department of Public Safety plans to start blocking driver licenses Nov. 15, according to Holden.

The 2015 law lets state agencies decide whether to refer their uncollected debts to the center. However, the governor has told all agencies and departments under his direct control to use the center.

The law is permissive for the regents, the state courts system and constitutional elected offices.

Kramer told the legislators Tuesday that university officials "were happy" they didn't have to use the center. He said the regents hadn't intended to use the center because the campuses were "doing a good job."

Sen. Deb Peters, R-Hartford, didn't like the regents' attempt at protecting students from the debt-sanction list.

"Well guess what, they're taxpayers too," Peters said.

Kramer said the universities might refer only debts of $250 or more. He said nothing has been written off in two years.


The universities have their own forms of sanctions.

"We don't give someone a diploma if they owe us debt," Kramer said.

He added that debtors aren't allowed to enroll for a new semester either.

"That hold stays on their record forever," Kramer said. "That's how we've managed to get our debt at less than a percent."

The universities used private debt-collection agencies in some instances for debts of $100 or more. Kramer said universities weren't allowed by the regents to seek write-offs from the state Board of Finance unless the debt was at least two years old and had gone through two collection agencies.

He said existing debt that is being pursued by collection agencies will need to be pulled back and turned over to the state center.

The debt dating back to 2011 and beyond is about $2.5 million while the debt since then is about $18 million, Kramer told the legislators.

He said much of the debt likely belongs to students who dropped out or didn't get the financial aid they expected.

"There are many reasons we don't want to make this entire population unhappy," Kramer said.

Some of the universities were writing off debt and others weren't, Kramer acknowledged.

"I would say we have not been consistent," Kramer said. "We leave that up to the institutions to decide."

The Board of Finance that set aside the write-offs Tuesday for Northern State University and Secretary of State Office plans to discuss its policy regarding the state center at its November meeting.

Jason Dilges, state commissioner of finance and management, serves on the Board of Finance and has been deeply involved in establishing the center.

Dilges suggested bringing a process to the board next month so that any debt that comes to the board must have previously gone through the center.

"For today we'll put this off until we can have that discussion," said Tony Venhuizen, the governor's chief of staff. He is chairman for the Board of Finance.

Northern State wanted a write-off for $119,497.97 of uncollectible amounts. The Secretary of State's Office sought a write-off for $21,500 of uncollectible amounts that had reached the statute of limitation expiration.

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