South Dakota Counties Slow to Spend Opioid Settlement Funds as Crisis Continues

In Potter County, South Dakota, population 2,400, officials have received nearly $18,000 in opioid settlement funds since 2022. They have not spent a dollar.

"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?" said County Auditor Tye Vander Vorst. "You do not want to be the guy who spends it all on something and then it is like, 'No, that was wrong.'"

Potter County is not alone. Across South Dakota, counties and cities that received the first $9.6 million of national opioid settlement money have spent less than half of it, according to Department of Social Services spending reports through the end of 2025. While 41 South Dakotans died from opioid overdoses last year, up from 39 in 2024, some officials from the 53 counties and 13 towns and cities that received distributions said they have not yet made plans on how to use the money.

The slow pace of local spending contrasts sharply with state-level efforts. In April, the state Department of Social Services announced $7.82 million in grants to organizations across South Dakota, leaving just $2.9 million of the state's $23 million share unspent.

The Settlement Landscape

In 2021, a combined nearly $50 billion in settlements from opioid manufacturers, distributors, and pharmaceutical companies began distributing funds to all 50 states as part of national settlement agreements. South Dakota was allocated just under $99 million to be distributed through 2038. Funding to each state was determined based on a formula including the number of overdose deaths, opioids shipped to the state, and people with opioid use disorder in the state.

The vast majority of South Dakota's settlement funds will come from the distributor settlement, which includes major drug distributors McKesson, Cardinal Health, and Amerisource Bergen. Of South Dakota's funding, 70% is directed to the state through the Department of Social Services. The other 30%, or around $29 million, is divided among local governments.

The national settlement agreement dictates that at least 70% of spending must be directed toward opioid remediation efforts. But how that money gets spent varies dramatically not just from state to state, but from county to county within the same state.

The Challenge of Rural Implementation

The sporadic nature of settlement funds, often coming unpredictably with low dollar amounts, makes implementing ongoing programming difficult for smaller counties, Vander Vorst explained. His county hopes to make more concrete plans when more funding comes in and opens up spending possibilities.

Resource gaps present significant challenges for rural governments. Megan Colwell, CEO of Face It Together, a nonprofit that provides addiction recovery services and recently received $750,000 in statewide opioid settlement funds, noted that in low-population and large-geographical-area counties, there is often a lack of understanding about where addiction resources are needed, and the visibility of programs that do exist can be low.

"Some of these counties do not 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."

Divergent Approaches, Same Goal

Even for local governments in the same geographic areas with many of the same leaders, residents, and affected communities, spending strategies differ greatly.

Codington County in eastern South Dakota has so far received $87,329 and has not yet reported any spending to the Department of Social Services. Representatives from the county said that grants related to recidivism, as well as a recent $50,000 grant from the statewide fund for an opioid awareness campaign, mean that the county will be conserving its own share for a while to determine the best strategy.

Meanwhile, Watertown, Codington County's biggest city, has taken a very different approach. The city has spent the entirety of its $161,544 share on the Watertown Police Department. With those dollars, the department hired a part-time social worker who assists the department's full-time mental health officer on mental health, overdose, and other drug-related calls. Some funding has also gone toward education and safe drug disposal boxes.

"We work really closely with the sheriff's office, but with something like this, we really never met with each other," said Police Chief Tim Toomey. "We probably could have pooled our funds, but we had some needs at the time."

Because of an already-robust resource network in Codington County that includes programs like Codington Connects and Brothers and Sisters Behind Bars, the city was able to be more ambitious with its funding, Toomey explained.

Law Enforcement Focus

Much of South Dakota's local government spending has been directed to law enforcement, correctional, and emergency services provided by the counties themselves. Ziebach County directed all of its opioid settlement fund money to the sheriff's office for drug tests and other prevention initiatives. Sanborn County, which has spent nearly all of its current $13,000 allocation, said the dollars have funded existing programs like law enforcement and first responder drug training to free up space in the general fund.

That type of spending is a natural pathway for counties that may not already have existing resource networks. It provides a logical outlet for the dollars, which have specific spending guidelines set by the state's memorandum of agreement.

Ken Shatzkes, program director of the national Foundation for Opioid Response Efforts, said that while such spending can be effective, he also recommends that local government officials employ those with knowledge about substance abuse in the area. He cited a county in North Carolina that hired its local emergency medical services responder as the county's opioid settlement coordinator as a successful example of harnessing local expertise.

A National Pattern

The low spending trend in South Dakota's local governments is not unique. Karen Scott, president of the Foundation for Opioid Response Efforts, said the organization has seen local governments nationwide struggle with effective spending programs, especially when funding amounts are low and substance abuse issues may not be as visible.

"There is 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 is one area that people can think about, even if they do not have a large number of overdoses and a direct overdose response."

States have taken vastly different approaches to localized share amounts. In Louisiana, 80% of the state's projected $600 million settlement will go directly to local governments and the other 20% to county sheriff's departments, leaving the dollars entirely out of state hands. In Montana, counties and cities will see 15% of a projected $75 million.

Shatzkes said South Dakota's approach is relatively similar to many states' distribution models, which see allocations anywhere from 15-50% of funds for local government based on the state's individualized experience with the opioid crisis.

"We know it is a crisis now, but the crisis may look different 10 years from now," Shatzkes said. "The crisis looks different in different areas across the country."

Looking Ahead

For smaller counties receiving lower settlement amounts, drawing knowledge and resources from statewide networks like Face It Together and the charity Emily's Hope, which provides naloxone boxes and substance abuse support across the state, could make all the difference, Colwell suggested.

"What is out there? What can be brought in? What is an easy lift? What is low hanging fruit?" she asked. "Just understanding the addiction programs that are out there. We are getting better at being less siloed in South Dakota, but the silos are still there."

The Department of Social Services does not dictate how or when local governments choose to spend dollars. "The Department of Social Services does not have oversight or regulatory authority over how local governments spend their share of the funds," said Secretary Matt Althoff in a statement. "Use of the local share is governed by the South Dakota Opioid Settlement Memorandum of Agreement, which all participating local governments joined in 2022."

With nearly $90 million still flowing to the state over the next decade, the question remains whether local governments will find ways to deploy these resources effectively before the crisis claims more lives.