South Dakota Boosts Funding for Schools, Care Providers, and State Workers

Gov. Rhoden proposes 1% increase amid rosier revenue projections

Published on Feb. 12, 2026

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South Dakota Gov. Larry Rhoden has announced a proposal to increase state funding by 1% for public education, Medicaid, and state employees. The move comes after lawmakers revised revenue projections upwards by nearly $50 million for the current and upcoming fiscal years.

Why it matters

The additional funding is seen as an opportunity to invest in key public services and support working families in South Dakota. However, there are differing views on how to best allocate the new revenue, with some legislators hoping for higher increases while others prefer a more conservative approach.

The details

Rhoden's 1% proposal would use roughly $25 million of the $29.9 million in additional ongoing revenue projected by state appropriators. The governor said across-the-board increases are the fairest way to treat 'the most important aspects of state government equally.' Lawmakers will now work to finalize the budget details, with Democrats pushing for even higher increases for teachers, state workers, and care providers.

  • On February 11, 2026, lawmakers on the Legislature's Joint Committee on Appropriations boosted the state's revenue estimates by nearly $50 million.
  • On February 12, 2026, Gov. Rhoden unveiled the 1% increase proposal for education, Medicaid, and state employees.

The players

Gov. Larry Rhoden

The governor of South Dakota who proposed the 1% funding increase for public education, Medicaid, and state employees.

Marty Overweg

The assistant House Majority Leader, R-New Holland, who signaled he hoped the legislature and governor would use only a portion of the additional ongoing revenue for increases to the 'big three' areas.

Jim Mehlhaff

The Senate Majority Leader, R-Pierre, who said the legislature would need to set priorities and work with the House on how to allocate the new funding.

Erin Healy

The House Minority Leader, D-Sioux Falls, who said she'd like to see all of the additional dollars and more go to teachers, state workers, and community service providers.

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What they’re saying

“When I presented my budget, nearly all of the ongoing dollars were spoken for by mandatory increases from the federal government. So we didn't have anything left for the big three, which are education, health care and state employees.”

— Gov. Larry Rhoden (aberdeeninsider.com)

“Certainly that's something we'll discuss in our caucus. We'll have to set some priorities to see what we'll be working on with the House.”

— Jim Mehlhaff, Senate Majority Leader (aberdeeninsider.com)

“It's a real chance to put people first. We can invest in public schools, protect access to health care, support working families, especially those working families that are state employees. I think it's important because our budget needs to reflect our values.”

— Erin Healy, House Minority Leader (aberdeeninsider.com)

What’s next

The legislature will now work to finalize the budget details and determine the exact allocation of the new revenue, with differing views on how much should go to the 'big three' areas of education, Medicaid, and state employees.

The takeaway

South Dakota's budget process has become more collaborative, with the governor and legislature working together to direct new funding to key public services and support working families. However, there are still debates over the appropriate level of increases, highlighting the ongoing challenge of balancing fiscal responsibility with investments in the state's priorities.