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Mid-Central Notes: Almost Broke, Still Paying GEAR UP Costs

Mid-Central Educational Cooperative has posted the minutes of its January 14 meeting. We get no bombshells, just details of the organization’s continuing efforts to recover from the scandal opened by the cancellation of its GEAR UP contract and the murder-arson-suicide apparently committed by its former business manager Scott Westerhuis.

  1. MCEC board member and Ethan school board president Tim Neugebauer attempted to put the brakes on some remaining GEAR UP payouts. He moved to “pay all bills with the exception of the Gear Up employees travel reimbursement and to send those on to the State for payment.” No one seconded that motion.
  2. Instead, Brandon York of Burke moved to pay all bills except for a $6,000 payment to the state for a GEAR UP refund to the Red Shirt school. York tied to that motion the transfer of donations to the Platte-Geddes school district’s Westerhuis Scholarship Fund… and who would dare vote against that? Someone did—the vote on Burke’s motion after Todd Reinisch of Kimball seconded was 10–1.
  3. MCEC thus approved $3,024.61 in GEAR UP payments, bringing MCEC’s GEAR UP payouts since the loss of its contract with the state to $24,118.87.
  4. Maybe the board wanted to hang onto that $6,000 because they are almost broke. After appearing to arrest a steady decline, MCEC’s ending balance dropped to $42,898.98. Under Scott Westerhuis’s business management, from May 2011 to December 2014, MCEC’s average reported monthly ending balance was $2.08 million.
  5. Nothing in the minutes indicates MCEC’s interest in responding to the request I sent to MCEC exec Dan Guericke and interim business manager Stephanie Huber in October to explain the monthly balance discrepancies from May 2011 through March 2014 that add up to $3,442,649.45.
  6. That dwindling ending balance didn’t stop MCEC from paying very positive auditor Eide Bailly another $1,334.85, on top of the $5,147 paid last month.
  7. Swier Law racked up another $6,650, up from $5,147 last month. The state and federal investigators looking into MCEC’s finances must be asking more questions.
  8. MCEC paid Sam Gingerich $2,083.33 for College Access grant services. Since October 2014 (just before MCEC’s approval of a contract with Gingerich in November 2014), MCEC has paid Gingerich $36,141.72 for College Access grant services. Gingerich retired from the Board of Regents in 2014. The state Department of Education has transferred responsibility for GEAR UP from MCEC to the Board of Regents in October 2015.


  1. rsterling 2016-01-25

    Close this admonition down. This so-called coop has no useful purpose.

  2. Mark Winegar 2016-01-25

    So much money for lawyers, consultants, and cronies but did any go to actual scholarships?

  3. rsterling 2016-01-25

    Mark, There “may” have been two Native American students who went on to a college or university (who would not have gone had the grant program not existed). The evaluation showed that after $62 million dollars in grant funding to the Mid-Central and the state of South Dakota no more than two Native American students benefitted. What a joke that the gov and Jackleg will bury deeper than Davey Jones locker.

  4. Jackie Jessop Rising 2016-01-25

    The Governor and Jackley don’t even have to dig a hole to bury it; they just ignore it.

  5. Michael Wyland 2016-01-25

    To clarify:

    1) No GEAR UP funds, from either of the two SD GEAR UP grants, were ever used for postsecondary scholarships.

    2) The $62 million figure includes both federal funds and state/local match from 2005 through 2018. The actual figure will be slightly lower because the SD Board of regents has reduced the annual budget for the 2016 period at least, with a likelihood that 2017 and 2018 will be similarly reduced. The final total will be closer to $60 million.

    3) More than two Native students benefited. One goal of the 2005 GEAR UP program was to increase Native American: a) acceptance; and b) enrollment by five percent annually by the end of the six-year program (2011). That would have been three students annually (from 46 to 49). As noted in the SD Dept. of Ed.’s final report to the feds (2011), the actual number was closer to 175-180. The higher number represents a 384% increase from 2005 to 2011, which is good. The number also represents about 5% of Native American students in the age cohort potentially eligible to enter or potentially ready to enter postsecondary education, which is disappointing.

  6. Troy 2016-01-25


    As a matter of public policy, lawyers and accountants (both regulated by professional standards boards) are encouraged to provide services in these situations. Rationale: Without them, the losses/damages could be worse.

    Not having them paid as services are provided would result in either:

    1) They don’t do anything
    2) They agree to do so with a big retainer.

    Without either of them, the doors locked, there would not be any semblance of an orderly shut-down, and you wouldn’t know anything about what occurred with any evidence. It would almost guarantee there would be no investigation or charges as the work to do so would be huge.

  7. leslie 2016-01-25

    A trustee is needed of some kind. And $36k to a retired crony but fire the employees?

  8. caheidelberger Post author | 2016-01-25

    Troy, I take no issue with auditors or lawyers providing necessary and competent service. I simply document the costs Mid-Central has incurred by not keeping its poop in a group in the first place. Corruption costs taxpayers even after we catch it.

  9. grudznick 2016-01-25

    I’m confused about this Gear-Up business. Was all this money supposed to go for scholarships, or was it supposed to go for a program that taught these kids how to succeed and encourage them to go to college along with paving the way for the to do better once they got there? I am an old man and am more easily confused and distracted from facts than some of you younger fellows.

  10. Troy 2016-01-25


    I guess I was reacting to reference Eide Bailly and what appeared to be an inference they were being paid for something that isn’t proper. Otherwise, why the editorial comment.

  11. leslie 2016-01-25

    The eide audit was like chris christie’s lawyers’ white paper absolving him of all guilt at taxpayer cost.

    We all wonder these things grudz. I don’t think jackley’s whitepaper will answer the necessary questions. Just keep voting republican the rest of your life though. Dems will keep digging.

  12. caheidelberger Post author | 2016-01-25

    Oh, that! Troy, I’m less inclined to say “not proper” and more inclined to say “far from a complete accounting of all that we need to know.”

  13. Michael Wyland 2016-01-26


    The intent of the federal GEAR UP program was to provide scholarships for low-income students and prepare those students to be successful in postsecondary education. Between 50% and 75% of the federal money provided through GEAR UP is designated for scholarships, UNLESS AN APPLICANT IS GRANTED A WAIVER FROM THE REQUIREMENT (apologies for the all caps, but I intended to stress the phrase).

    In its 2005 GEAR UP application, the SD Dept. of Ed. didn’t allocate enough money for scholarships to meet the requirement (4% instead of 50%-75%). The state apparently received a waiver from the requirement after the application was submitted, because no money was used for scholarships between 2005 and 2011.

    The 2011 GEAR UP application included a waiver request from the scholarship requirement. The waiver request was apparently approved when the 2011 grant application was approved for funding.

  14. Porter Lansing 2016-01-26

    As I See It … Gear-Up and EB5 can be summarized thus, South Dakota Republican shysters saw the Obama election as an opportunity for graft (the acquisition of money, gain, or advantage by dishonest, unfair, or illegal means, especially through the abuse of one’s position or influence in politics, business, etc.). As Anne Beal wrongly and strongly spews, “This guy’s never even had a real job.” and these Republican shylocks thought they could get a big piece of the money that we Democrats allocated to help underprivileged, disadvantaged and low income groups across USA by charging fees for services they commissioned of themselves and salaries to administer those fees that they themselves initiated, only for their own personal profit. That dumb ******* in the White House would be none the wiser. Little did they know that the smartest guy in any room was now our President and eventually they got busted for their unethical, dishonorable, unprincipled, sneaky and criminal behavior. Now what’s left are just attempts to sweep it all under the rug by Marty Jackley, Mike Rounds, Pat Powers and their Pierre cohorts.
    PS …*This is where Wyland and Troy Jones start backstroking like they’re headed to Rio for the Summer Games.

  15. Oldhag 2016-01-26

    Cory: Use the codified law to get this response as they have to respond to your request for information according to law. As a citizen you are entitled to get a definitive answer to–

    Nothing in the minutes indicates MCEC’s interest in responding to the request I sent to MCEC exec Dan Guericke and interim business manager Stephanie Huber in October to explain the monthly balance discrepancies from May 2011 through March 2014 that add up to $3,442,649.45.

    Send the request again using the SDCL

  16. Porter Lansing 2016-01-26

    PPS … The latest ultra-right wing, quasi-governmental organization to be investigated for EB-5 violations is Disney. They fired union workers to hire immigrants at below market wages.

  17. Troy 2016-01-27


    I guess someone will have to pay more money to the auditors to find out. :)

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