Taking Aim at Workforce Shortage

South Dakota, Denny Sanford team up to provide free college for skilled workers

BY ROB SWENSON

Greg Von Wald, president of Mitchell Technical Institute, was among the South Dakotans pleasantly surprised when Gov. Dennis Daugaard and the state’s leading philanthropist, T. Denny Sanford, unveiled a new scholarship program.

The $50 million Build Dakota scholarship program announced in December is designed to combat the state’s chronic shortage of skilled workers. The program will provide full-ride scholarships to students who pursue technical degrees at MTI in Mitchell and at three other technical schools in South Dakota.

Sanford and the state are contributing $25 million to a special fund that will pay for approximately 300 full-ride scholarships each of the program’s first five years. After that, an endowment fund will support about 50 scholarships a year.

“It was kind of a stunning announcement for us as well as the general public. It’s good news,” Von Wald says. “It’s a good start, without a doubt.”

Von Wald oversees a technical school that had an enrollment last spring of 1,259 students. The other three schools that will benefit from the scholarship program are Western Dakota Technical Institute in Rapid City, Lake Area Technical Institute in Watertown and Southeast Technical Institute in Sioux Falls. The schools offer a variety of one- and twoyear degrees in technical fields.

“The real boldness in this is the insight, that of Denny Sanford,” Von Wald says. “It is a bold move. There will be more ideas that come out of this.”

Sanford Steps Up

Sanford is a wealthy U.S. businessman and well-known philanthropist. He owns First PREMIER Bank and PREMIER Bankcard, which are based in Sioux Falls and do business nationally. Since buying the parent company of the financial service businesses in 1986, Sanford has donated more than $1 billion to charitable organizations and causes across the United States. Among the biggest recipients has been Sanford Health, a regional health care system based in Sioux Falls and Fargo. The health care system carries Sanford’s name.

“He wants to die broke, and we’re all trying to help him,” Dana Dykhouse says, jokingly. As the CEO of First PREMIER Bank, Dykhouse is close to Sanford.

Dykhouse is also a prominent civic leader, especially on economic development matters. He had heard repeatedly from other business leaders in South Dakota that a shortage of skilled workers was the biggest obstacle holding back business growth the state. After a fall meeting in Sioux Falls at which workforce issues were discussed, Dykhouse approached Daugaard. They discussed the possibility of the state supporting a possible donation from Sanford to address workforce issues.

Dykhouse also suggested to Sanford that workforce development would be a good target for a transformational gift. “They both said yes so fast that we have work to do yet,” Dykhouse says.

Daugaard says officials signed off on final terms of the agreement on Dec. 17, the same day that the initiative was announced.

Daugaard praises Sanford for again stepping up to help make South Dakota a better place. In addition to Dykhouse, the governor credits Miles Beacom for putting the program together. Beacom is the CEO of PREMIER Bankcard and, like Dykhouse, is close to Sanford.

Daugaard says he had not previously planned to devote $25 million from a special state economic development fund for workforce scholarships. But the dollar-for-dollar match opportunity was too good to pass up. The state’s share of the money will come from a development fund controlled by the governor. The fund receives an annual portion of unemployment insurance premiums paid by South Dakota employers. The fund was created during the administration of the late Gov. George Mickelson.

So, nothing in the Build Dakota program needs legislative consent, says Daugaard, who has appointed a seven-member board to oversee the program. Dykhouse is one of the members of the recently created Build Dakota Scholarship Board.

The other six members are:

• Wayne Baumberger, engineering manager at Caterpillar in Rapid City, and the chairman of the new board;

• Greg Carmon, owner of Midwest Railcar Repair Inc. in Brandon;

• Mark Leddy, CEO of Valley Queen Cheese Factory in Milbank;

• Terry Sabers, vice president of finance for Muth Electric in Mitchell;

• Deb Shephard, retired president of Lake Area Technical Institute in Watertown;

• Diane Vanderwoude, vice president of academic affairs at Sanford Health in Sioux Falls.

“All of these individuals know firsthand about the workforce challenges we’re experiencing in South Dakota,” Daugaard says.

Attracting Applicants

The Build Dakota Scholarship Board will be assisted by one full-time and one part-time employee. Among other duties, the new board will identify areas of study that will be eligible for scholarships. Education officials also will have to determine the current enrollment capacities at technical institutes for high-demand fields of study.

The South Dakota Department of Labor has some existing projections for high-demand, specialty-trade jobs in South Dakota. For example, the department previously estimated that the need for electricians would grow 11.2 percent from 2010 to 2020. The department projects the average annual demand for electricians to be 66.

The department also has projected that 30 mechanics, installers and repairers will be needed each year until 2020. Fifty plumbers, pipefitters and steamfitters also are expected to be needed each year.

Applications for scholarships for the school year that will begin in the fall of 2015 are expected to become available this month, according to the South Dakota Department of Education. Scholarships will cover the cost of tuition, fees and other required program expenses.

“Our hope is to accept applications and select initial scholarship recipients before the end of May, so we’re going to work pretty hard,” Daugaard says. “We know some students are making decisions already.”

The new scholarship program will be available to out-of-state as well as in-state students. Recipients must agree to work in their field of study full-time for three years in South Dakota.

“It’s our hope to bring people in across the region for training or retraining,” Dykhouse says. “We’re putting almost all South Dakotans to work now. We need kids not only from other states, but I think from other countries. I think we’ll have opportunities for more immigrants.”

The scholarship program is bigger but similar to the Dakota Corps scholarship program the state created under former Gov. Mike Rounds to assist students in high-demand fields such as teaching, nursing and engineering. Build Dakota is different in that it puts more focus on workers rather than businesses, says Mary Medema, director of workforce development for the Sioux Falls Development Foundation.

“Affordability is the major reason people don’t pursue or complete training programs. This literally removes a huge barrier,” she says. “Time is the other major barrier. But affordability certainly is number one.”

Medema points out that growing cities such as Sioux Falls have not been ignoring workforce challenges. Hundreds of efforts are ongoing across the state and region, she says. Many companies offer internships and scholarships to develop their own workers, too.

Daugaard recently awarded $1 million in state matching funds to communities and organizations across the state to supplement local programs.

Regional Issue

The workforce challenge extends well beyond the borders of South Dakota. North Dakota, an economically booming state, also faces a severe shortage. So do growing cities in other parts of the Northern Plains.

Future challenges on the workforce front in South Dakota will include encouraging communities and organizations to raise additional funding to address workforce challenges, officials say. Development programs such as Forward Sioux Falls have addressed workforce development in the past with efforts to recruit workers. Forward Sioux Falls is a joint venture of Sioux Falls Area Chamber of Commerce and the Sioux Falls Development Foundation. Its focus on workforce issues is expected to expand in the future.

David Owen, president of the Pierre-based South Dakota Chamber of Commerce & Industry, says the rising sophistication of the U.S. economy has added to workforce challenges. Workers have been able to get good jobs with a high school education, he says. But when jobs are eliminated because of an economic downturn or some other factor, training or retaining becomes necessary.

Owen and other business officials acknowledge that offering 300 scholarships a year to technical workers will not solve the South Dakota’s labor shortage.

“It brings to mind the old line ‘don’t let perfect get in the way of good.’ It’s a hell of a good start,” Owen says. “This goes a long way to addressing areas of need,” he says, adding that the program will monitor where shortages are and try to move workers to fill the gaps. “Count that as a win-win.” PB

Rob Swenson Contributing writer RobSwensonMediaServices@gmail.com

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