Federal money is a big part of South Dakota budget

SIOUX FALLS S.D. (KELO) — During a time when President Donald Trump is making cuts to federal funding, South Dakota could be a in a more vulnerable position than some other states.

Generally, the state takes in more government money then it pays out. Pre-COVID 19, the federal money share of the state’s budget was about 38% or less. But that changed in 2021 when the federal portion jumped to 56%, according to several sources. The percentage has declined since then but it still hovers above 40%.

DOGE having an impact in South Dakota

WalletHub, a financial organization, ranks South Dakota the 11th most dependent on federal money when compared to all other states. The 11th place ranking is the overall ranking. In terms of the state government dependency, South Dakota ranks 4th. The rank for resident dependency is 25th. Those combined help account for 11th place.

South Dakota ranks 4th in the amount of grants it receives per $1 paid per capita to the federal government. It also ranks 4th in other financial assistance it receives compared to $1 paid per capita to the federal government, according to WalletHub.

In February, Scioto Analysis said the state receives 36% of its budget revenue from the federal government which placed it 9th of dependency. The listed federal money was $3.7 billion.

The Tax Foundation said South Dakota ranked 26th in federal government dependency for fiscal year 2021 as 39% of general revenue was state aid. This differs from the Urban Institute which said in FY21, federal aid made up 56% of the state’s budget.

World Population Review said the state will receive 51% of its revenue from federal funding in 2025. Per capita without COVID, the state receives $2,428.

Republican Rep. Scott Odenbach said in a news conference on March 6 that a big issue is “what’s happening with DOGE and with the percentage of South Dakota’s budget that comes from federal dollars, it’s huge.”

Odenbach went on to say, “We were talking about this with some of the governor’s staff (Wednesday). You know, 50% depending on how you look at the numbers or more, comes from federal payments and there’s going to be a drawback in that.”

What is federal money used for in the state?

Federal money is used for education funding, transportation, natural disasters and more.

Some of it is used to help pay for federal mandates but others, are more geared toward general need like money for roads and bridges.

South Dakota Republican Sen. Mike Rounds highlighted in March of 2024 state projects that would received federal money under the Consolidated Appropriations Act. Rounds listed 10 projects some of which were $10 million for the South Dakota Department of Transportation reconstruction of state Highway 13, and $26.7 million for SDDOT improvements on U.S. Route 385 and $10.6 million for SDDOT improvements for SD Highway 37.

In fiscal year 2026, South Dakota is estimated to receive $455.6 million in federal aid, according to the federal highway administration. This funding is for roads and bridges and other projects under the specifically named Federal Aid Highway Program Apportionments and Funding for the Bridge Formula Program, National Electric Infrastructure Formula Program and Appalachian Development Highway System.

Over the past 10 years, health care entities such as West River Area Health Education Center and the South Dakota Department of Health have received federal aid through the federal Health Resources and Services Administration.

One area that the U.S. Department of Transportation helps to pay for is airport, the cities of Parkston and Aberdeen along with the regional airports in Rapid City and Sioux Falls have all received federal money for airport improvements. The city of Parkston was to receive $3.3 million. The timeline for project examples is March 10, 2024, through March 10, 2025.

Federal money is also used to help pay K-12 education in South Dakota. The state ranks 40th in education spending but it receives more federal money than many others states, according to the Education Data Initiative. The Education Data Initiative said in February, that South Dakota K-12 schools receive $433.1 million, or $3,053 per pupil, from the federal government, another $612.0 million from the state or $4,313 per pupil and $953.7 million or $6,721 per pupil in local funding. The total spent per pupil is  $14,087.

The state receives 21.8% or 22%, of its education money from the federal government, according to Axios and Forbes. That places it with Alaska, Montana, Arkansas, Mississippi, Kentucky and several other states. The data follows the 2021-2022 school year.