Legislator resigns and agrees to repay nearly $500,000, plus interest, in pandemic relief funds

State Sen. Jessica Castleberry, R-Rapid City, will make $2,400 monthly payments over a span of 20 to 30 years to repay state government, with interest, for pandemic relief money she accepted in alleged violation of state law.

Attorney General Marty Jackley announced details of the agreement Thursday at a press conference in Pierre. At about the same time, Castleberry announced her resignation from the Legislature in an email to the media.

“I was humbled to be appointed and honored to be elected. Thank you for the opportunity to serve the people of the state of South Dakota,” Castleberry’s release said.

Gov. Kristi Noem, who appointed Castleberry to the Legislature to fill a previous vacancy, publicly exposed the situation last month. Noem said Castleberry’s business, Little Nest Preschool, received about $603,000 in federal pandemic relief funds passed through the state.

Noem and Jackley have said Castleberry violated a state law that prohibits legislators from having a direct or indirect interest in any contract with the state during their terms in office and for one year after.

“Our state constitution prohibits a state legislator from receiving funds he or she is responsible for overseeing,” Jackley said Thursday in a news release.

Jackley said $104,100 of the $603,229 the business received was shown to have directly benefited families – lowering the cost of day care for parents that qualified. The remaining $499,129 was used for day care-related expenditures such as food, employee pay and mortgage payments, and it’s that amount Castleberry will pay back at “the applicable federal interest rate,” according to the terms of the agreement. 

Jackley said the applicable rate was 4.03% as of Aug. 16. 

Noem has since issued an executive order related to the matter. It requires state offices under her control to include language in contracts requiring signers to acknowledge they’re aware of the law Castleberry allegedly violated.