Release: South Dakota Circuit Court Grants Preliminary Injunction in Favor of Taxpayers Against Oldham-Ramona-Rutland School District

From my mailbox (-pp):

Huron, SD – August 4, 2025 – The Third Judicial Circuit Court of South Dakota, presided over by the Honorable Kent A. Shelton, has granted a preliminary injunction in the case of *Overskei Family Land LLLP, et al., v. School Board of Oldham-Ramona-Rutland School District 36-6, et al.* (39CIV25-71), halting the School District’s plans to issue further debt and proceed with construction activities. The ruling, issued on August 4, 2025, finds that the plaintiffs, a group of taxpayers, have a strong likelihood of success on the merits of their claims and meet all four legal criteria for injunctive relief.

The plaintiffs challenged the Oldham-Ramona-Rutland (ORR) School Board’s decision to finance a new school facility through capital outlay certificates and an opt-out election, alleging violations of South Dakota law. Judge Shelton’s memorandum opinion details four key legal points where the plaintiffs demonstrated a substantial likelihood of success:

1. Violation of Capital Outlay Certificate Statutes (SDCL 13-16-6.3):

The Court found that the School District’s two-phase issuance of capital outlay certificates, totaling approximately $14.7 million, appears to circumvent public notice and referendum requirements. By splitting the financing into multiple transactions, the School Board likely exceeded the legal threshold for procedural safeguards, frustrating the statute’s intent to limit substantial debt without voter approval.

2. Deficient Ballot Language and Inability to Lawfully Repay Debt:

The plaintiffs successfully argued that the September 17, 2024, opt-out election ballot failed to disclose the 21-year duration of the $700,000 annual tax levy, rendering it potentially invalid for authorizing long-term debt repayment. The Court noted that the omission of the duration in the ballot language, despite its inclusion in the School Board’s resolution, likely violates SDCL 10-12-43. Furthermore, this deficiency undermines the School District’s ability to generate sufficient revenue to repay the proposed $14.7 million in capital outlay certificates over 21 years, as required by SDCL 13-16-6 and SDCL 13-16-6.2, leaving taxpayers at risk of funding an unsustainable project.

3. Non-Compliance with Procurement and Contract Laws:

4. Violations of Public Contracting Requirements:

The plaintiffs demonstrated that the School District failed to comply with statutory requirements for selecting a construction manager at risk (CMaR) under SDCL 5-18A-29. The School District did not determine that CMaR services were in the public interest, failed to assess whether such services were duplicative of architectural or engineering work, and neglected to publish procedures for soliciting, evaluating, and awarding proposals before issuing the request for proposals. Additionally, the School Board approved significant guaranteed maximum price amendments, some worth millions, without public discussion, violating SDCL 13-20-1’s transparency requirements. These failures support the plaintiffs’ likelihood of success in proving the School District’s procurement process was unlawful.

In granting the preliminary injunction, Judge Shelton emphasized that the plaintiffs face irreparable harm, including the deprivation of their right to a public hearing and potential referendum, as well as the risk of financial liability for an incomplete project. The Court further found that halting the School District’s actions would not cause significant harm to the defendants, as any delays result from their failure to comply with statutory procedures. Finally, the ruling underscores the public interest in ensuring transparency, voter participation, and adherence to laws governing public funds.

Statement from Lead Plaintiff, Overskei Family Land LLLP:

“We greatly appreciate the courts ruling and timely response to our alleged violations. As landowners, all we ask is that South Dakota laws are followed and that we are granted our judicial rights to be informed and have input on a project of this magnitude. This ruling protects our community’s voice and ensures accountability in how public funds are managed.”

The preliminary injunction pauses further debt issuance and construction activities pending a full hearing on the merits. The Court denied the School District’s motion for summary judgment, affirming the plaintiffs’ standing and the strength of their legal arguments.