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Mid-Central Sticks Around to Face State’s Lawsuit for $4.5 Million

The mortally corrupt Mid-Central Educational Cooperative was supposed to dissolve last week. But at its supposedly penultimate board meeting on June 15, Mid-Central voted to authorize continuing contracts, expenditures, and board meetings, including a meeting to authorize a Fiscal Year 2018 budget at the Platte Pizza Ranch on July 13.

So even as most Mid-Central member schools move their cooperative activities to the administration of their new Core Educational Cooperative, we’ll still have Mid-Central to kick around… and the state does intend to kick them around. On Thursday, the state sued Mid-Central and its 13* member school districts to recover $4.3 million in matching funds from the GEAR UP program. Bob Mercer gives the exact figure and additional expenses the state wants to claw back:

The lawsuit filed Thursday in Hughes County circuit court specifically asks for $4,316,431 from Mid-Central and its member schools for projects matching requirements. GEAR UP requires a 50 percent non-federal match.

The suit also seeks $97,544 from the cooperative and its members as compensation for: billings of $65,000 from Stacy Phelps, who was Mid-Central’s head of GEAR UP; overbilled salaries totaling $18,095; services without required personal activity reports totaling $11,325; travel expenses without Mid-Central’s approval for $1,795; and unapproved food expenses of $1,329 [Bob Mercer, “State Sues Mid-Central for $4M over GEAR UP Funding,” Rapid City Journal, 2017.07.01].

In its June 15, 2017, minutes, Mid-Central reports an end-of-May bank balance of $915,311.44. If the state wins its $4.5-million lawsuit and claims every one of those Mid-Central pennies, the member schools will still be on the hook for almost $3.6 million. That’s 27% of the $13.3 million in state aid those 13 school districts are slated to receive this school year.

*13 or 14? Mercer and Walker/Raposa list 14 MCEC member school districts; however, two of the listed schools, Corsica and Stickney, are consolidated in one district.


  1. Bob Mercer 2017-07-03

    They were separate school districts for part of the period covered in the lawsuit.

  2. grudznick 2017-07-03

    Do those other two fellows who were Education Secretaries have to pay back any money too, and what happens when the state takes money from schools? Do they spend it on roads or give it back to other schools to pay good teachers more?

  3. grudznick 2017-07-03

    Isn’t this like when Mike, who is from Iowa, was rejoicing about the remote chance the State of South Dakota might have to pay damages for some nonsense and he didn’t understand where the money has to come from? It will come from teachers and aid to poor people and old people. Just like here. Where are these schools going to cough up the millions from? Teacher salaries, I expect, but where they should really get it is from the fatcat administrators. Maybe that’s the state’s game after all.

  4. mike from iowa 2017-07-03

    And the state skates on their total lack of institutional control and oversight?

  5. grudznick 2017-07-03

    Government suing government (the State suing School Districts) is like taking taxpayer money from your right pocket and putting it in your left, but dribbling a few bucks on the ground in the process.

    What really needs to happen is some heads need to roll.

  6. John 2017-07-04

    Piercing the corporate veil, suing the involved board members severally and personally for alleged violations of fiduciary duties of trust, fair dealing, reasonable care, etc., for damages may be what it requires to get justice

  7. mike from iowa 2017-07-04

    South Dakota has an office of risk management that carries liability insurance for all kinds of stuff.

    They have a Grudz, so I guess everything must be covered.

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