Most of the money comes from employer tax fund controlled by governor
By: Joshua Haiar – SD Searchlight
Governor Kristi Noem’s administration has signed a contract amendment raising the maximum spending on workforce recruitment ads starring the governor to $9 million.
The contract is publicly viewable in the state’s online portal for financial documents, Open.SD.gov, which also shows the state has paid $8.5 million to the firm managing the campaign so far. The original contract from last year, prior to amendments, was for $5 million.
The Freedom Works Here campaign showcases Noem stepping into various high-demand jobs and inviting applicants to fill openings in the state.
Launched last summer, the campaign entered its third round Monday with a new video ad featuring Noem as a homebuilder. The national campaign has further elevated the profile of Noem, who is under consideration as a running mate for presumptive Republican presidential nominee Donald Trump.
Some lawmakers have criticized a lack of clear data demonstrating the workforce campaign’s effectiveness or lack thereof.
The governor’s Monday press release about the newest ad said, “Thousands and thousands of families have already moved to South Dakota, and thousands more are in the process of coming here.”
In response to questions Tuesday from South Dakota Searchlight about the ads’ effectiveness, the Governor’s Office of Economic Development responded by email. The office said the number of job openings in the state has dropped by 4,000 since the campaign began. The office also said 9,400 people who “worked directly through the Freedom Works Here process” have shown interest in moving to South Dakota, and another 2,400 have received individual assistance to begin the process of moving to the state.
“Anecdotally, we are hearing from even more folks who did not utilize the formal process but were spurred to move here by the ads,” the office said.
The Governor’s Office of Economic Development contracts with an Ohio firm, Strategic Media Placement, doing business as Go West Media, to run the campaign. Both entities are subsidiaries of The Strategy Group, whose CEO Ben Yoho managed Vivek Ramaswamy’s unsuccessful campaign for the Republican presidential nomination.
During a legislative hearing in January, a former Noem administration official testified that the Ohio firm seemed predestined for selection to carry out the campaign. State Sen. Lee Schoenbeck, R-Watertown, said during the hearing that the Ohio firm’s idea for the campaign was “clearly stolen” from a similar proposal submitted by Lawrence & Schiller, of Sioux Falls.
Most of the money for the workforce campaign comes from state government’s Future Fund, which is controlled by the governor.
South Dakota employers pay into the Future Fund when they submit payroll taxes for unemployment benefits. The Future Fund receives a fraction of an additional percent — which the state describes as an “investment fee” — on top of those payroll taxes.
According to the most recent data available from the state Department of Labor and Regulation, 28,261 employers paid $23 million into the Future Fund in 2022, which equated to an average of $814 per employer.
State law says the Future Fund must be used “for purposes related to research and economic development for the state.” Unlike other funds administered by the Governor’s Office of Economic Development, Future Fund expenses don’t go through a board of citizen appointees for vetting or approval.
Responding to recent controversies about the fund, lawmakers passed and the governor signed a bill in March requiring biannual reporting to legislators about the governor’s use of the fund.
Rep. Scott Odenbach, R-Spearfish was one of the bill’s sponsors.
“Many people wonder if this is a proper use of tax money,” Odenbach said Tuesday. “As the spending on this program grows so does the need for more vigorous oversight. I am hopeful that this session’s bill is just the beginning of reforms to Future Fund spending.”
Of the $8.5 million paid to Strategic Media Placement so far, $7.5 million has come from the Future Fund, and the rest has come from other state funds, according to Open.SD.gov.
The Governor’s Office of Economic Development spent an additional $130,000 from its marketing funds last year to wrap a NASCAR vehicle with a Freedom Works Here-themed design for two races.
South Dakota Searchlight is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. South Dakota Searchlight maintains editorial independence.
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