Lake Area Improvement Corporation Breaks State Law on Financial Reports

Last updated on 2012.01.17

In discussing the Lake Area Improvement Corporation's begging for public dollars, I have previously cited state statute that empowers the county to obtain and review financial records of any non-profit organization receiving county funds. Here is the statute in question, SDCL 7-18-12:

7-18-12. Expenditures for industrial, tourist and recreational activities to nonprofit corporations or associations--Reports required--Inspection of books and records. The board of county commissioners may promote industrial, tourist, and recreational activities and make payment from the general fund to nonprofit corporations or associations engaged in promotion either within or outside of the boundaries of the county. Any nonprofit corporation or association which accepts funds from a board of county commissioners, shall file an annual report of all receipts and expenditures with the county auditor not later than December thirty-first of each year. All books and records of the nonprofit corporation or association may be inspected by any member of the board of county commissioners, or by any agent or attorney representing the board, for any proper purpose at any reasonable time [emphasis mine].

SDCL 7-18-12 has been on the books since 1969, with amendment in 1985.

Eager to review all receipts and expenditures of the Lake Area Improvement Corporation, I visited the Lake County Courthouse and asked to see the reports submitted by the LAIC under SDCL 7-18-12.

The auditor could find no such reports.

The Lake Area Improvement Corporation has received funding from the Lake County Commission every year since 1998 except for 2001 and 2009. Those disbursements through the end of this fiscal year total $230,000. An extensive search of county records reveals that the LAIC has not once fulfilled its statutory obligation to submit a report of its receipts and expenditures to Lake County.

Now I can understand how one tiny clause in one tiny state law might escape a person's attention. After all, how on earth could any average citizen who's busy with a family and a job and everything else be expected to find out about some arcane financial reporting requirement for county-funded non-profit organizations?

Oh, let's cut the crap. We're not talking about some average citizen. The Lake Area Improvement Corporation is a high-powered, high-finance organization made up of local business and government leaders. It pays an executive director over $100,000 a year to navigate complex questions of finance and taxes and law. Yet somehow they've managed to operate for fourteen years without noticing that they are violating a pretty basic financial reporting requirement.

If someone were paying me $100,000 a year and I broke the law multiple times, I'd expect to hear about it. I might even expect not to be doing that job much longer.

p.s.: My first legislative prediction for 2012: Senator Russell Olson, a former executive director of the LAIC responsible for violating SDCL 7-18-12 himself, will introduce a bill to repeal SDCL 7-18-12 or to amend SDCL 1-27-1.5 to explicitly exempt economic development corporation receipt and expense reports from South Dakota's public records law.