SIOUX FALLS, S.D. (KELO) – The South Dakota State Employees Organization says the futures for some state workers may be in jeopardy after hearing Gov. Kristi Noem’s budget proposal Tuesday.
Noem suggested a 1.25% increase for state government employees, which is less than the 4% lawmakers approved for the year and almost 2% below the projected inflation rate for 2026.
The recommendation is making the SDSEO “terribly worried” for state employees’ careers and compensation.
SDSEO Executive Director Eric Ollila says a wage increase that doesn’t match the inflation rate is a “slap in the face” to state employees.
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“If you do not value your employees enough to compensate them so that they can make a living, so that they could pay the bills year over year, if you’re going to be complaining about inflation, you need to be reflective in how you’re going to treat your employees and giving them compensation under inflation is not how you do it,” Ollila said.
The governor’s proposal also included eliminating over 60 FTEs across various departments, as well as adding 69 FTEs in others.
An FTE, or full-time equivalence, is an accounting term used for the expected number of employees or full-time hours needed to complete a certain job. This usually correlates with the number of employees, but not always.
“Sometimes, agencies have FTEs they don’t fill for whatever reason,” Ollila explained. “What’s unclear is, are people going to be losing their jobs? It certainly seems to be that at least at the state library.”
The state library has over 12 FTEs up for consideration in the budget, as well as a cut of over $1 million from state funding and almost $1.4 million from federal funds. Twenty-seven FTEs who help with Medicaid expansion would be cut under the budget proposal, as well as $1 million from state and $1 million from federal funds.
“It would be really nice for clarity for any employees that are going to be losing their jobs, not only for them, but for the state. What are these jobs that they are cutting? Why are they cutting them? Why were they unfilled,” Ollila asked.
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State departments will present their budgets based on Noem’s recommendations during the upcoming legislative session from January to March. The appropriations committee will then vote on a budget for the entire state for Fiscal Year 2026.
Ollila said the SDSEO is also concerned about changes to state employees health insurance. The governor proposed increasing the state’s health insurance pool by $3.1 million from the state, $1.3 million in federal funds and $2.7 million in other funds.
“We don’t know if employees are gonna be asked to pay more for their health insurance based on (Tuesday’s) presentation,” he said. “Typically, the state has asked the employees to pay more, but you know, the state has typically given raises to inflation.”
