- Associated Press - Friday, October 2, 2015

PIERRE, S.D. (AP) - A Board of Education member involved in administering a Native American college-readiness program under scrutiny after an apparent murder-suicide has resigned from the state panel, Gov. Dennis Daugaard said.

Daugaard, in a letter this week to the chairman of the state’s Government Operations and Audit Committee, said Stacy Phelps of Rapid City departed because of the “many questions” surrounding the administration of the GEAR UP program designed to help students from high-risk populations go to college. The state had contracted with Platte-based Mid-Central Educational Cooperative to administer the program in South Dakota, which received $10.7 million in federal GEAR UP funds over the last four years.

Authorities believe Scott Westerhuis shot his wife and four children last month and then set the family home near Platte ablaze before shooting himself. That was just hours after the state Department of Education informed Mid-Central that it was losing its most recent $4.3 million GEAR UP contract.

The governor said he has asked Attorney General Marty Jackley to look beyond Scott Westerhuis for any evidence of wrongdoing.

“If there has been wrongdoing, I want to find it,” Daugaard said in the letter.

Mid-Central was notified on Sept. 16 that it had lost the GEAR UP contract, and state Secretary of Education Melody Schopp cited financial problems and failures to follow proper accounting procedures as reasons in a follow-up letter sent five days later.

State officials began seeking other partnership options for the GEAR UP grant when “fiscal accountability and management by MCEC continued to be a concern,” Daugaard said in his letter.

The governor said Schopp told her staff to do a risk assessment of all grants and contracts between the department and Mid-Central, and to commission a complete audit and review of the relationships. The cooperative’s board last week voted to hire accounting firm Eide Bailly to audit the cooperative.

“Given Scott Westerhuis’ position as business manager, and the circumstances surrounding his death, this is a prudent decision,” Daugaard said.

Mid-Central’s attorney, Scott Swier, said Friday that he couldn’t comment on the governor’s letter pending the results of Mid-Central’s forensic audit.

Daugaard said in the letter that the Division of Criminal Investigation is looking into Westerhuis’ personal finances and his management of the cooperative, where he served as business manager, as authorities search for a motive in the deaths.

Phelps and Westerhuis were involved together in at least one nonprofit that received at least $1.9 million in GEAR UP funds from the cooperative since 2012, according to Internal Revenue Service Documents. The most recent records say Westerhuis served as chief financial officer and Phelps as chief executive of the nonprofit American Indian Institute for Innovation. Neither reported an income from the organization.

Phelps is also listed as summer program project coordinator on a now-defunct website for South Dakota’s GEAR UP program. His biography for the Board of Education website, before it was removed, said that Phelps in 1992 began what would eventually evolve into the current program.

The governor said that even though the state Board of Education doesn’t award or have oversight over Department of Education contracts, Phelps’ “continued position on that board would be a distraction from the important work the board performs, given his involvement with GEAR UP.”

Tony Venhuizen, chief of staff to the governor, said Phelps also resigned from an advisory panel on Native American student achievement.

Phelps didn’t immediately answer a telephone call for comment about his resignation. He declined to answer a series of questions from an Associated Press reporter Wednesday morning at his Rapid City home.

“I just can’t really talk about anything, you know,” Phelps said. “It’s an ongoing investigation. That’s it.”


Lammers reported from Sioux Falls.

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