Legislative auditor warns Yankton County transfers to roads unsustainable; committees to develop options

Jeff Shafer, a representative of the South Dakota Department of Legislative Audit, told a joint meeting of Yankton County’s finance and planning committees that the county’s headline “pool cash” figure can be misleading because most funds are restricted to specific purposes and are not available for general operations.

"If you look on top of the report, it's called the pool cash report…That is not correct. That is the all the county's money," Shafer said, explaining that many funds (911, jail bonds and other levies) are custodial or earmarked and therefore unavailable to cover road and bridge and general operations.

Shafer told committee members the county’s road and bridge costs have “grown way beyond those limitations,” and that while transfers from the general fund can cover shortfalls in the near term, that practice is unsustainable without additional revenues. Using a three‑year average (excluding one‑time ARPA receipts), he projected that the county’s general fund could fall to about $2,357,000 under current adopted‑budget assumptions.

Why it matters: committee members said the county faces near‑term pressure from rising public‑safety and road maintenance costs and from labor market pressures that increase pay and staffing expenses. The briefing framed a set of options — from opt‑out road levies to bonding — that the committees must evaluate before the commission takes formal action.

Committee members pressed Shafer on potential revenue tools and examples. Shafer confirmed that some counties (Hutchinson, Stanley and Lake were cited) have used opt‑out road levies and estimated an opt‑out could raise on the order of $1.5 million to $2.5 million in some counties. He cautioned that bonding for bridge replacement can create 20‑ to 30‑year debt service obligations and recommended consulting bond counsel before pursuing debt financing.

Panelists and members also discussed operational and budget practices: the value of monthly revenue‑and‑expenditure reports for department heads, training so department managers can read financial reports, and adopting capital‑purchase thresholds for commission review. Shafer noted the county operates on a modified cash basis rather than full GAAP and that new GASB guidance has implications for lease reporting.

On staffing and public safety, committee members raised recruitment and retention concerns after state and municipal employers raised starting pay. Shafer said higher pay by other employers is drawing deputies away and that many counties struggle to fully staff jails and law enforcement roles.

The committee agreed to request additional comparative data and levy breakdowns from the audit office and to use those data to develop options and public engagement plans. No formal fiscal policy changes or levy votes were taken at the session; the only formal action recorded was approval of the meeting agenda.

Quotes representative of the briefing:

"Road and bridge costs have grown way beyond those limitations," Shafer said, emphasizing long‑term pressure on county budgets.

"That money's done," Shafer said of ARPA funding, noting one‑time federal receipts had been used for road projects and would not recur.

Next steps: committee chairs said they will review the audit office’s comparative data and levy breakdowns, hold committee work sessions to draft recommendations, and present any formal proposals to the full commission. A vote on specific revenue measures, if any, would require separate public notice and, where required, voter approval.