By Bob Mercer
State Capitol Bureau
PIERRE – Executive director Wayne Carney answered questions about the South Dakota High School Activities Association for two hours Tuesday from legislators who want more transparency and accountability from the organization.
Seventeen members of the Legislature’s Joint Committee on Appropriations met with Carney in a special afternoon hearing. He promised to provide more information to lawmakers and the public.
“We will do what we need to do to be better communicators in what we do,” Carney told the panel in his closing comment.
It isn’t clear yet what legislators might do next.
One proposal under discussion by Sen. Corey Brown, R-Gettysburg, would make clear the association is subject to South Dakota laws on open meetings and public records and would require the association to report on a regular basis to the Legislature’s joint committee on government operations and audits.
Brown spoke with Carney several times in recent months. He wasn’t a member of the committee that met Tuesday with Carney.
Legislators raised points Tuesday about the association being covered by the South Dakota Retirement System, which is for public employees, but not being subject to open-meeting and public-record laws.
Lawmakers also learned that Carney and other top members of his staff receive free automobiles to use, through a corporate sponsorship, and that he receives extra compensation through a variety of commissions ranging from 3 to 5 percent for corporate sponsorships he secures and renews.
Carney said the commissions average $16,638 annually for sponsorships that average $259,727 annually. He said commissions of 15 to 20 percent previously were paid to a Minnesota marketing company before he became executive director.
The association also operates a foundation that was empty until last year, when the directors voted to put $55,000 into it from excess association revenue and $10,000 from a refund by the national association.
The board also voted last year to increase ticket prices for district and regional events by $2. The board subsequently dedicated $1 from those sales to the foundation. That generated $73,628 from football and volleyball last fall.
The board voted last week to halt the $1 for the foundation after school district superintendents rose against it.
Sen. Deb Peters, R-Hartford, and Sen. Phyllis Heineman, R-Sioux Falls, challenged Carney to explain how the foundation was created after the state House defeated several pieces of legislation that were intended for foundation funding.
“That’s a great question,” Carney replied to Heineman. He said the legislation would have allowed “foundation games” but it didn’t address district, regional or state ticket prices.
Several legislators said the foundation should have its own board. Carney said that is intended and the association’s board is acting as the foundation board in the meantime.
Peters described the association as “a quasi-public organization” that operates through public funds and conducts activities at taxpayer-funded public facilities. She said its lack of openness contributed to a current controversy over soccer.
The association has legal authority under state law to exist on behalf of public and private schools that delegate to it some of their authority on athletics and other activities.
Carney said the board’s meetings are open and the agenda for each meeting is available on the association’s web site. He said the audits are now posted.
State law requires the Department of Legislative Audit to look at the association’s books annually and to submit the report to the Legislature.
However legislators claim they’ve been told they can’t get the reports from Legislative Audit because the association is a non-profit organization that isn’t a public body.
Sen. Al Novstrup, R-Aberdeen, asked Carney whether the association is public or private.
“That’s probably up for debate,” Carney said.
Added Lindsey Riter-Rapp, the association’s lawyer: “That’s an interesting question.”
She said open-meeting laws don’t apply to the association but the board tries to follow them.
“My reading of the statute is we don’t fit squarely within that definition,” she said.
The association’s annual budget is in excess of $2 million with approximately 70 percent coming from ticket sales at district, regional and state events, according to Carney.
He said the association has built a contingency fund of approximately $1.4 million that is equal to approximately 70 percent of the budget. The money came from corporate sponsorships that weren’t needed for the ongoing expenses.
Sen. Bill Van Gerpen, R-Tyndall, wondered how the association could claim to be outside open-meeting and public-records laws when it relies on schools that receive state aid and participates in South Dakota’s public-pension system.
He was among a wide variety of legislators from across South Dakota who called for more openness by the association.
Rep. Fred Romkema, R-Spearfish, said many non-profits in South Dakota would like to be in the South Dakota Retirement System too.
“I found this corporation appears to have it both ways,” Romkema said.
The association operated for years without legislative oversight, but school officials and community leaders have contacted lawmakers in the past year about the ticket price increases, the foundation funding and a report delivered last week that used red boxes to highlight cities’ deficiencies for hosting specific state events.
Carney said Tuesday he should have used yellow ink rather than red. “Red is a stop,” he said.
“As schools have been calling us, we’ve been taking the marks off,” he said. “People who were at the meeting (last week) took it very personally, which was not the intent.”
“I applaud what you’re doing after the fact,” Sen. Jim White, R-Huron, told Carney.