High school activities association leaders voted to steer ticket money to foundation

By Bob Mercer

State Capitol Bureau

The South Dakota High School Activities Association is under scrutiny over a change in ticket policy that took effect this fall.

One dollar from each ticket for sub-state tournaments now goes to the association’s foundation. The association’s board of directors adopted the new policy Aug. 29.

The decision came after a year of maneuvering by executive director Wayne Carney and some board members to find a source of money for the foundation, which Carney created in 2007.

Officials and others in some school districts are bothered by the move, as are some legislators.

On Tuesday several state lawmakers made clear at a meeting of the Legislature’s Executive Board they’re hearing complaints.

Rep. Charlie Hoffman, R-Eureka, asked why the Legislature doesn’t have strong oversight of the association.

“We don’t have any say over what they do with that money,” Hoffman told other legislators. “They’re autonomous. It’s a fiefdom.”

The association was created in state law but there aren’t any specific directives about how it should operate. The state Department of Legislative Audit looks at the association’s finances annually.

School officials aren’t happy with the $2 increase, according to Sen. Larry Lucas, D-Mission. “So that message is being heard,” Lucas said.

The groundswell against the $2 increase prompted a response from Carney earlier this month.

He sent a letter to school districts statewide on Nov. 8. He promised that money from the foundation will eventually flow back to schools.

The Aug. 29 vote called for a foundation committee to be established. Until those people are appointed, the association board will oversee the foundation.

The foundation committee is supposed to make recommendations to the association board and the board will make recommendations to the SDHSAA member schools for the April annual meeting, according to Carney.

Carney said in his letter that he’s working with Stephanie Judson, president of the South Dakota Community Foundation. Carney and SDCF’s then-president Bob Sutton signed the agreement in 2007 creating the activities foundation.

Records from the board’s meetings in 2012 and 2013 show Carney and his staff presented options for raising money for the foundation on several occasions.

The meeting minutes however don’t show any discussions or explanations about why the foundation needed the money or why the foundation should be used rather than the association’s treasury.

On Feb. 27, the directors voted 5-2 to reject Carney’s proposal that $1 from each sub-tournament ticket sale be dedicated to the foundation for the next five years.

The board voted 8-0 to raise sub-state tournament ticket prices by $2 apiece to $5 for students and $7 for adults on June 5.

Then the board voted 6-2 on Aug. 29 to dedicate $1 from each sub-state tournament ticket to the foundation.

Three things happened between the February and August votes.

The association’s general membership agreed at the April annual meeting to shift $55,000 into the foundation. That was in addition to $10,000 put into the foundation as the result of a refund to the association from its national organization.

Three directors changed from nays to ayes. They were chairman Darren Paulson of Rapid City Central, Jason Uttermark of Aberdeen and vice chairman Rick Weber of Flandreau.

And the board had turnover in three positions. Two new directors became ayes for the August vote: Dan Whalen of Pierre and Mike Miller of Aberdeen Central. The other new director, Eldon Marshall of White River, voted nay.

Two returning members remained true to their original positions. Mike Ruth of Miller voted aye both times, while Todd Trask of Wall voted nay both times.

Of the $2 increase, the other dollar is split between schools and the association. Of that dollar, schools receive 70 cents from district-level tournament tickets and 60 cents from regional-level tournament tickets.

Complete figures from the fall sub-tournaments haven’t been reported yet to the association. But in 2012, for example, sub-tournaments overall generated nearly as much revenue for the association as did state tournaments.

In 2007, the Legislature approved SB 195 allowing school districts to raise money from one event in each activity recognized by the association for the purposes of school funding or interscholastic activities.

The final version of the legislation was both broader and more restrictive than originally planned by its prime sponsor, Sen. Cooper Garnos, R-Presho.

In its original form, the legislation would have allowed schools to remit money to the association or to a local endowment for support of interscholastic activities.

The bill was amended in the House of Representatives by Rep. Mike Buckingham, R-Rapid City, after he failed to kill it at the House committee hearing. His amendment eliminated the provision to send money to the association.

The only witness to testify at the Senate and House hearings was lobbyist John Brown, representing SDHSAA.

Not long after the bill became law, Carney proceeded to establish the foundation.

Two days before sending the letter this month, Carney presented the association’s with a financial report for foundation.

Carney said the foundation’s contributions since its start total $65,000 and the present fair-market value of the foundation’s investments was $67,980.63.

That $65,000 would have come from the $55,000 transfer and the $10,000 refund.

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