South Dakota Department of Social Services Secretary Matt Althoff presents the department’s budget to the Legislature’s Joint Committee on Appropriations on Jan. 21, 2025. (Makenzie Huber/South Dakota Searchlight)
South Dakota officials said Wednesday in Pierre that click-by-click audit trails, multi-person payment approvals and other new security measures are in place following a string of criminal cases involving state employees.
“We resolved as a team, let’s never let this happen again,” said Matt Althoff, secretary of the Department of Social Services.
The Legislature’s Government Operations and Audit Committee also heard from officials with the Department of Revenue about how each agency has tightened oversight.
Revenue Secretary Michael Houdyshell said computer access for staff is now limited to what they need for their jobs, and the department’s upgraded computer system logs “every single click” on an employee’s computer. He said the department now has automated alerts for unusual transactions, routes outside users through a secure e-portal, and blocks employees from accessing their own or family members’ records.
Those upgrades followed revelations of former departmental employees creating fake vehicle titles to avoid excise taxes or secure loans.
Houdyshell said the agency has also set up an anonymous tip line, requires annual conflict-of-interest and ethics training, and hired extra staff to ensure the department’s system is secure.
Althoff spoke about a former Child Protection Services employee who stole $1.8 million from the state over the course of 13 years. She was sent to prison earlier this year after being convicted of submitting fraudulent financial requests on behalf of children no longer in the state’s care, depositing the funds into accounts opened under their names, and withdrawing the money in cash for herself. Prosecutors said she did that 215 times between 2010 and 2023.
“This is a situation where a voucher was being requested or initiated by the same employee that was approving it,” Althoff said. ”Well, that’s a problem. That’s a big problem.”
Althoff said the department has since overhauled its financial protocols. The department now segregates duties and requires multi-step approvals for new providers and payments, automatically closes accounts when a child ages out of the system, and is shifting from paper checks to electronic transfers. The agency also hired extra employees to evaluate risks and additional management for Child Protection Services.
Committee Chair Sen. Taffy Howard, R-Rapid City, praised the new safeguards.
“Fraud will always be an issue, but it sounds like you guys are doing a great job of getting a handle on it,” Howard said.
In other recent cases, former state employees faced accusations including self-issuing a medical marijuana card, forging food service inspection reports and spending vouchers intended for foster families on personal expenses.
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In response to the run of prosecutions, Attorney General Marty Jackley supported a package of four bills passed during this year’s legislative session that expanded the investigatory authority of the state auditor; strengthened the Board of Internal Controls; instituted mandatory reporting requirements for state employees and penalties for failing to report; and established protections for whistleblowers.
Gov. Larry Rhoden signed an executive order in April mandating the creation of a “secure standard reporting mechanism” for employees. The portal delivers whistleblower reports of malfeasance to the state’s auditor and attorney general.
Lawmakers also passed legislation this year strengthening the ability of the Legislature’s Government Operations and Audit Committee to conduct investigations and issue orders known as subpoenas requiring people to testify or supply information.
Last year, then-Gov. Kristi Noem added an extra internal control officer position to the executive branch and ordered state employees to undergo annual training aimed at preventing criminal activity.