PIERRE, S.D. (SDBA) — A bill requiring South Dakota state employees to report misconduct is heading to Gov. Larry Rhoden’s desk.

Senate Bill 62 passed 20-14 Wednesday. It mandates that state workers report suspected fraud, theft and conflicts of interest.

The legislation stems from a series of thefts committed by state employees discovered over the past year. Those cases have been and are being prosecuted by the attorney general’s office.

Passage of the bill ends a back-and-forth among legislators, the governor’s office and the attorney general about the appropriate penalty for failure to comply with the law.

The original version of Senate Bill 62 classified the failure to report misconduct as a Class 6 felony.

The House amended the bill to reduce the penalty to a Class 1 misdemeanor.

This change became a central point of debate. Some senators argued the original felony penalty was too harsh, while others contended that weakening the penalty could undermine accountability.

Senate Majority Leader Jim Mehlhaff, R-Pierre, moved to form a conference committee to resolve differences between the House and Senate. He said the parties needed more time for compromise.

Sen. David Wheeler, R-Huron, moved instead to accept the House’s changes.

“It puts in new guidelines for supervisors and we can be done with the bill at this point,” Wheeler said. “We don’t need further negotiations or further discussion on it. The form it’s in that came from the House, it’s a win for South Dakota.”

Sen. Amber Hulse, R-Hot Springs, agreed.

“These two different parties have been kind of at an impasse for the last several weeks,” Hulse said. “I’m unsure if a conference committee will resolve that impasse. I’d like to be done with this today.”

The bill requires any state employee with supervisory duties to report suspected misconduct to a higher-level supervisor. That supervisor must then submit a report to the attorney general and auditor general, along with any relevant records. Failing to do so could result in a Class 1 misdemeanor.

The attorney general will provide annual updates to the Government Operations and Audit Committee on reports received and their outcomes.

SB 62 has undergone several revisions throughout the legislative process. The House approved amendments March 3.

State agencies must create internal policies to ensure employees understand the new reporting requirements.

If signed into law, the bill would establish a formal process for handling allegations of misconduct within state government.

SB 62 is part of a package of bills submitted by Attorney General Marty Jackley to strengthen the state’s laws against fraud, waste and abuse.

Senate Bill 60: Expands the access and investigatory authority of the state auditor. It was signed by Gov. Rhoden.

Senate Bill 61: Modifies the authority of the Board of Internal Controls. It was signed by Gov. Rhoden.

Senate Bill 62: Establishes mandatory reporting requirements related to improper governmental conduct and crime and provides penalties for non-compliance. Passed by both chambers, it heads to Gov. Rhoden.

Senate Bill 63: Establishes protections for state employees who report improper governmental conduct and crime. It is currently in the Senate Judiciary Committee.