South Dakota Counties Have Spent Less Than Half of First $9.6 Million in Opioid Settlement Funds

South Dakota counties and cities that received the first wave of national opioid settlement money have spent less than half of the $9.6 million distributed to them, according to Department of Social Services spending reports through the end of 2025. The sluggish deployment at the local level stands in sharp contrast to the state's more aggressive approach, which has already allocated millions in grants while leaving just $2.9 million unspent from its $23 million share.

The discrepancy highlights a broader challenge facing rural states as they attempt to translate landmark pharmaceutical settlements into tangible addiction treatment and prevention programs. While some local officials cite uncertainty about funding amounts and strategic priorities, public health advocates warn that delays in deploying these resources could cost lives in a state where opioid overdose deaths ticked upward from 39 in 2024 to 41 last year.

The Settlement Framework

South Dakota is slated to receive just under $99 million through 2038 as part of the national settlement agreements that began distributing funds in 2021. The vast majority comes from major drug distributors including McKesson, Cardinal Health, and Amerisource Bergen, with additional contributions from manufacturers and pharmaceutical companies.

Under the state's distribution model, 70% of funds flow through the Department of Social Services, while the remaining 30%—approximately $29 million—goes directly to local governments. The 53 counties and 13 towns and cities that signed the state's memorandum of agreement receive allocations based on population and overdose impact, but the spending decisions rest entirely with local officials.

State Moves Quickly, Local Governments Lag

In April, DSS Secretary Matt Althoff and Governor Larry Rhoden announced $7.82 million in new grants to organizations across the state, leaving the state's portion of unspent funds at just $2.9 million. State spending has been varied and strategic: nearly $500,000 for statewide naloxone access, $797,000 for a prescription drug monitoring program, and the recent slate of grants supporting treatment and recovery services.

Meanwhile, local governments have been far more cautious. Eleven counties had not reported any spending to DSS by the end of 2025, and several others had spent just fractions of their allocations. The national settlement agreement requires that at least 70% of spending be directed toward opioid remediation efforts, but the agreement does not impose timelines or spending deadlines on local recipients.

Rural Challenges and Uncertainty

For officials in sparsely populated counties, the challenge is both practical and strategic. Potter County, with a population of just 2,400 in north-central South Dakota, has received nearly $18,000 since 2022 but has not begun allocating the funds. County Auditor Tye Vander Vorst explained that the sporadic nature of settlement distributions—often arriving unpredictably and in relatively small amounts—makes implementing ongoing programming difficult.

"What do you do? Do you wait and sit on what you can accumulate or do you try to spend $200 here, $200 there on stuff?" Vander Vorst said. "You don't want to be the guy who spends it all on something and then it's like, 'No, that was wrong.'"

That hesitation reflects a broader tension in rural areas: the need for substantial, sustained investment in addiction services versus the reality of small, intermittent funding streams that make long-term planning nearly impossible.

Contrasting Approaches in the Same County

Even within the same geographic areas, local governments have taken vastly different approaches to spending. Codington County in eastern South Dakota has received $87,329 but has not reported any spending to the state, with officials citing a desire to conserve funds while determining the best strategy. The county did accept a $50,000 grant from the statewide fund for an opioid awareness campaign, suggesting that local officials see value in leveraging state resources before committing their own limited dollars.

But Watertown, Codington County's largest city, took the opposite approach. The city spent its entire $161,544 allocation on the Watertown Police Department, hiring a part-time social worker to assist the department's full-time mental health officer on overdose and drug-related calls. Additional funding went toward education programs and secure drug disposal boxes.

Watertown Police Chief Tim Toomey said the city focused on addressing its own needs with the hope that building robust resources would benefit the entire county. "We work really closely with the sheriff's office, but with something like this, we really never met with each other," Toomey acknowledged. "We probably could have pooled our funds, but we had some needs at the time."

Law Enforcement Dominates Local Spending

Across South Dakota, much of the local government spending that has occurred has flowed to law enforcement, correctional, and emergency services. Ziebach County directed all of its opioid settlement money to the sheriff's office for drug tests and prevention initiatives. Sanborn County, which has spent nearly all of its $13,000 allocation, used the dollars to fund existing law enforcement and first responder training programs—effectively freeing up general fund money for other purposes.

That pattern concerns some addiction specialists, who note that while law enforcement plays a critical role in the crisis response, the settlement funds were intended to expand treatment and prevention capacity, not simply subsidize existing public safety budgets.

Expert Perspectives on Effective Deployment

Karen Scott and Ken Shatzkes of the national Foundation for Opioid Response Efforts said South Dakota's slow local spending is not unique. They have seen similar patterns nationwide, particularly in areas where funding amounts are modest and substance abuse issues may be less visible than in urban centers.

"There's always work that can be done on the upstream, really prevention-oriented in terms of creating stronger and more resilient environments for kids, for families and the community," Scott said. "That's one area that people can think about, even if they don't have a large number of overdoses and a direct overdose response."

Shatzkes recommended that local governments seek outside expertise to guide spending decisions, citing a North Carolina county that successfully hired its local EMS responder as the county's opioid settlement coordinator. "Having outside expertise, away from government, to help make these decisions is probably the right way to go about it," he said.

Innovative Models Emerging

Some organizations are stepping in to bridge the gap between available funding and effective deployment. Face It Together, a nonprofit providing addiction recovery services, received $750,000 from the statewide fund to administer peer-to-peer programming at the state penitentiary in Sioux Falls over the next three years.

CEO Megan Colwell said the organization is seeing nearly equal numbers of alcohol and opioid addiction cases, and emphasized the critical need for services in rural areas as well as the state's two urban centers. Face It Together currently provides peer coaching in rural prisons in Pierre, Springfield, and Yankton, along with remote sessions for people outside the Sioux Falls metro area.

"Some of these counties don't have resources, even with the localized funding," Colwell said. "You want it to make a difference. This is the one time we have funding that is specifically for this issue."

The Path Forward

As South Dakota enters the third year of settlement distributions, the pressure to deploy funds effectively will only intensify. With 41 overdose deaths in 2025—up from 39 the previous year—the state is not experiencing the dramatic mortality declines seen in some other parts of the country. That reality underscores the urgency of moving from planning to action.

For rural counties with limited administrative capacity, collaboration may offer the most viable path forward. Scott suggested that neighboring jurisdictions could pool resources and expertise to achieve greater impact than any single county could manage alone.

The settlement funds represent a historic opportunity—billions of dollars flowing to communities devastated by the opioid crisis over nearly two decades. But as South Dakota's experience illustrates, money alone does not solve the crisis. The challenge lies in building the infrastructure, expertise, and political will to deploy those resources where they can save lives and prevent future addiction.

In a state where 11 counties have yet to spend a single dollar of their settlement allocation, that transformation remains a work in progress.