South Dakota state senator resigns and agrees to repay $500,000 in pandemic aid

A South Dakota state lawmaker stepped down Thursday after agreeing to repay $500,000 in federal COVID-19 relief she received for her day care business in violation of the state constitution.

Republican Sen. Jessica Castleberry, of Rapid City, announced her resignation the same day she signed a settlement with the attorney general’s office in which she promised to return the money.

“Today I formally resign from my position in the South Dakota Senate,” Castleberry said in a Thursday statement. “I was humbled to be appointed and honored to be elected.”

A 2020 South Dakota Supreme Court advisory warned state lawmakers that it is unconstitutional for them to accept federal pandemic funding.

Attorney General Marty Jackley began investigating Castleberry upon the urging of fellow Republican Gov. Kristi Noem. A state Social Services Department staffer had recognized Castleberry’s name on a recent $4,000 grant request, which was denied.

A review by the agency turned up more than a dozen other payments to a business belonging to Castleberry, Little Nest Preschool.

In total, Jackley’s office found Castleberry received about $600,000 for her Rapid City day care centers. About $100,000 was passed on to low-income families who used the day care centers, and the settlement does not require her to repay that money.

Castleberry has said she believed her company was eligible for funding after speaking with a lawyer.

She previously said she “communicated directly and transparently” with Social Services staff regarding her grant applications.

Jackley said Thursday that his investigation “did not reveal any abuse” in Castleberry’s spending of the funds, which he said were used for government-approved expenses.

“I am glad speculation from other state departments and the executive branch regarding my ethics and intentions can be laid to rest,” Castleberry said.

The settlement allows Castleberry to continue her work in child care. She can reapply for government funding after a yearslong cooling-off period.