1970 Senate Bill 219 added a new section to SDCL chapter 3-5 letting the Director of Purchasing and Printing buy a blanket bond covering many state officials, with the approval of the Attorney General and the Insurance Commissioner. Does this mean blanket bonds are now mandatory, can only one bond be issued, and what role do the AG and Insurance Commissioner actually play?
Plain-English summary
Public officials handling public funds traditionally post bonds to protect against malfeasance. South Dakota in 1970 required bonds for state officers ranging from the State Auditor ($10,000) to the State Treasurer ($500,000), and many lower-tier officials had separate bond requirements too. The administrative burden of separately posting and tracking dozens of individual official bonds was significant.
The 1970 Legislature passed Senate Bill 219 to give the Director of Purchasing and Printing discretionary authority to buy a blanket bond (or bonds) covering all state employees, officers, members of state boards and commissions, and gubernatorial appointees required by law to give bonds and whose bond premiums were paid from the state general fund. The blanket bond could have a term of up to five years. The Director's purchase required the "approval and advice of the attorney general and state insurance commissioner."
Miss Larson asked AG Gordon Mydland to clarify how the new statute worked. Mydland made four points.
First, the blanket bond was permissive, not mandatory. The Director "may provide" for the purchase. He could equally choose not to, in which case the prior individual-bond system continued.
Second, both the Attorney General and the Insurance Commissioner had to give independent approval. The conjunction "and" made each approval a separate prerequisite. Neither alone could authorize the purchase.
Third, the statute allowed but did not require a single blanket bond. The phrase "blanket bond or bonds" was deliberately plural-friendly. The Director could purchase one bond covering everyone, or multiple bonds covering different groups, depending on what made operational sense.
Fourth, the AG's role in advising on form, number, and procedure was itself discretionary. Each of the AG and Insurance Commissioner exercised judgment when advising. Their "approval and advice" went beyond a thumbs-up; it involved substantive input on the form of bond, the number of bonds, and the procedure for obtaining them.
Mydland declined to opine in detail on whether a single blanket bond was preferable to multiple bonds. Because SB 219 imposed that decision on him as a future "approval and advice" duty, opining in the abstract before the Director actually requested approval would prejudge his future discretionary role. The opinion's substantive content stopped at the structural points listed above.
The bill did not become effective until July 1, 1970, so as of the opinion's date, no actual bond purchase had been proposed and no concrete approval-and-advice request had landed on the AG's desk.
Currency note
This opinion was issued in 1970 during AG Gordon Mydland's tenure. Subsequent statutory amendments, court decisions, or later AG opinions have substantially changed the state-employee bonding system. Treat this page as historical context, not current legal advice. The specific bond amounts mentioned (Treasurer $500,000, Auditor $10,000, etc.) are no longer current. The blanket bond authority has been re-codified and the institutional arrangements (Department of Administration, State Risk Management, etc.) have evolved. Modern questions about state employee bonding should be verified against current SDCL chapter 3-5 and any applicable risk-management policies.
What the opinion meant at the time
For the Director of Purchasing and Printing, the opinion confirmed wide discretion. He could choose to consolidate state-official bonds into a blanket structure or stay with the existing individual-bond system. If he proceeded, he would need to convince both the AG and the Insurance Commissioner.
For state officials individually required to bond, the opinion did not change their existing obligations. Until and unless a blanket bond was actually purchased, the individual-bond requirements stayed in force.
For the AG and Insurance Commissioner, the opinion structured their future approval role. They were partners with the Director in deciding whether and how to consolidate. Their judgment on form, number, and procedure was substantive, not ceremonial.
For state legislators, the opinion was a useful interpretation of a freshly passed statute. By laying out the permissive nature and the cooperative approval framework early, the opinion forestalled later disputes about who could do what.
Common questions
Q: What is a blanket bond?
A: A single bond that covers multiple persons (or all employees of an organization) rather than a separate bond per person. Blanket bonds are common in commercial settings (banks, securities firms) where many employees handle valuable assets. The 1970 SB 219 extended that mechanism to state government.
Q: Why did the bonds need premium payment from the state general fund?
A: SDCL 3-5-5 authorized the state (or its departments) to pay the corporate-surety bond premium for officials. The general fund was the source. SB 219's scope was limited to bonds paid from the general fund, not bonds paid from other funds.
Q: Why did both the AG and Insurance Commissioner need to approve?
A: The AG provided legal review (does the bond meet statutory requirements, cover the right officials, satisfy fidelity standards). The Insurance Commissioner provided industry review (is the surety company sound, is the rate reasonable, is the policy form standard). Both perspectives mattered, so SB 219 required both approvals.
Q: What was the 5-year term about?
A: SB 219 explicitly allowed terms up to five years. Individual official bonds were typically annual. Multi-year blanket bonds would lock in a rate and reduce annual administrative work. Five years was the legislative cap.
Q: Could the Director buy a blanket bond covering only some officials?
A: Yes, by Mydland's reading. The "blanket bond or bonds" language allowed multiple bonds covering subsets of officials. The Director could, for example, buy one bond covering all gubernatorial appointees and a separate one covering all members of state boards.
Q: Did the AG ever actually approve a blanket bond?
A: That's outside the scope of this opinion. It was issued before SB 219 took effect. Subsequent practice would need to be checked against later records.
Background and statutory framework
Public official bonds were a long-standing fidelity mechanism. Bonded officials handled public money or signed documents committing the state. The bonds gave the public a recovery vehicle if the official defaulted, embezzled, or otherwise failed to perform.
The pre-1970 South Dakota system was a patchwork. SDCL 3-1-5 and 3-5-1 set the general requirement. SDCL 3-5-3 specified amounts for named officers. Various other statutes set amounts for lower-tier officials (deputies, secretaries, members of named boards). Each official posted his or her own bond. The administrative work of tracking dozens of separate bonds, with separate premiums and renewal cycles, was non-trivial.
SB 219 added a consolidation tool. The Director of Purchasing and Printing was the central-services official with the institutional knowledge to manage a blanket bond. The AG and Insurance Commissioner approval requirements ensured the consolidation was structurally sound.
Mydland's reading kept the system flexible. The legislature had not mandated consolidation; the Director could phase in the change at his pace, with concurrence from the AG and Insurance Commissioner. The form, number, and procedure questions were left open for future case-by-case decisions.
The opinion's procedural posture (declining to opine on substantive issues that would later require AG discretion) is a recurring pattern in AG opinion practice. AGs often decline to prejudge their own future discretionary role, preferring to address concrete questions when they arise.
Citations and references
Statutes:
- SDCL 3-1-5 (state officer bond requirement)
- SDCL 3-5-1 (state officer bond requirement)
- SDCL 3-5-3 (specific bond amounts: Treasurer $500,000, etc.)
- SDCL 3-5-4 (personal-surety bond requirements)
- SDCL 3-5-5 (corporate-surety premium paid by state)
- SDCL 3-2-4 (deputy bond requirements)
Legislation:
- 1970 SB 219 (new section added to SDCL ch. 3-5; blanket bond discretion)
Source
Original opinion text
Interpretation of Senate Bill No. 219, enacted in 1970, is improper at this time, as such provides the Attorney General perform certain discretionary duties
Dear Miss Larson:
Much interest has been expressed to this office in regard to the purpose and application of Senate Bill No. 219 enacted by the 1970 Legislature, that I am issuing this official opinion to you, for clarification of this enactment. Senate Bill 219, of the 1970 Legislature, approved on February 16, 1970 by the Governor, adds a new section to SDCL 3-5 which reads as follows:
The director of the division of purchasing and printing, with the approval and advice of the attorney general and state insurance commissioner, may provide for the purchase of a blanket bond or bonds, covering all state employees, officers, members of state boards and commissions, and appointees of the governor, required by law to give bonds and whose bonds are required by law to be paid from the state general fund. The terms of bonds authorized under this Act may be up to five years.
Before considering this 1970 enactment, we must look at the status of the law as it existed prior to such enactment, in order to determine what, if any, evil or vice the Legislature was concerned with when it enacted Senate Bill No. 219 in order to add a new section to Chapter 3-5 of our present code.
SDCL 3-1-5 and 3-5-1 require that official bonds must be given by all state officers, appointees of the Governor, or employees of the state, required by law to give bonds before entering upon the duties of office. SDCL 3-5-3 specifically requires the following state officers to give bonds in these designated amounts:
State Auditor-Ten Thousand Dollars
State Treasurer-Five Hundred Thousand Dollars
Secretary of State-Five Thousand Dollars
Superintendent of Public Instruction-Two Thousand Dollars
Commissioner of School and Public Lands-Twenty Thousand Dollars
Attorney General-Three Thousand Dollars
As we know the executive branch of state government has a proliferation of commissions, boards, departments and divisions. It is not surprising to discover that if any officer or employee under such legislative created departments in the executive branch of government is entrusted with public funds, the Legislature has wisely required that he post bond for the faithful performance of his duties. Thus, in addition to the listing of the public officers, as above given, we find, without citation of the statutory basis, that the following persons are required to post bonds as a condition of entering into public duties; Auditor General ($10,000) Members of the South Dakota Building Authority ($25,000), Deputy State Auditor (One half of the bond of his principal), State Engineer ($5,000), Deputy State Engineer ($2,500), Secretary of State Fair Board (not less than $5,000), Secretary of State Historical Society ($5,000), Secretary of Finance (not less than $10,000, as fixed by Governor), Directors of Divisions of the Finance Department, including the Assistant Director of Purchasing and Printing, (not less than $5,000 as set by Secretary of Finance). I could continue on with such list, but this seems redundant. SDCL 3-2-4 provides that except when otherwise provided, each officer required to give bonds, may require his deputy or assistant to give bond in a penal sum of not greater than one-half of the bond required of the principal.
It should be also noticed that our statutes do not limit such official bonds as given to corporate surety bonds. Such bonds, if desired, can be given by personal sureties. However, in such case, such must be given with at least two sureties for all state officers, except the state treasurer must give a bond with at least four sureties (SDCL 3-5-4). If corporate surety is given by a surety company legally authorized to transact business in this state, "the state or any of its departments" is authorized to pay the premium on such bond (SDCL 3-5-5).
It must be presumed that the Legislature was well acquainted with the various bonds they require to be given as a condition precedent to assuming public office. They must be presumed to know that such bonds range from two thousand five hundred dollars to five hundred thousand dollars in penal amounts and all other matters heretofore briefly summarized.
With this basic knowledge in mind, it is clear that the Legislature, by Senate Bill No. 219 of the 1970 Legislative Assembly, did not make it the mandatory duty to "purchase a blanket bond or bonds" covering such state employees, officers, members of state boards and commissions, and appointees of the Governor, required by law to give bonds (the premium of which is required by law to be paid from the state general fund)" but rather discretion is granted to the director of purchasing and printing to make such purchase of blanket bond or bonds, if the approval and advice of the Attorney General, and the State Insurance Commissioner to such a purchase is first obtained.
Likewise, it is apparent, that whether or not "approval and advice" of either of such named officers (the Attorney General and the State Insurance Commissioner) will be given depends upon the exercise of discretion by each of them, independent of the discretion of the other. There is no question that the "approval and advice" of one of such officers alone is insufficient. Each must give such "approval and advice," before the Director of Purchasing and Printing may provide for the purchase of a blanket bond or bonds for the listed public officials.
The term "blanket bond" or "blanket bonds," while never interpreted by a court of competent jurisdiction in the United States, insofar as my research has indicated, is nevertheless a term of common understanding in South Dakota. It is a bond that covers more than one person, within the expressed agreement of the parties thereto. Therefore, while a "single" bond, covering all state employees, officers, members of state boards and commissions and appointees of the Governor, required to furnish bond, might be covered by but a single "blanket" bond, the statute does not require such blanket bond to be limited to but a single bond.
The statute, as I have stated, requires the "approval and advice" of the Attorney General and the State Insurance Commissioner, as a condition precedent to the purchase of any such blanket bond. Because this statute places such duty on me, it would seem improper for me to discuss the propriety of a single blanket bond, as distinguished from more than one blanket bond at this time, other than to state that the statutory authorization does not limit such to but one blanket bond, but permits more than one blanket bond to be purchased.
Inasmuch as Senate Bill No. 219 does not become effective until July 1, 1970, and until sometime after that date when, and if, the Director of the Division of Purchasing and Printing, within his discretion, concludes such blanket bond or bonds should be sought, and therefore seeks the approval of myself, and the State Insurance Commissioner, in which event the Insurance Commissioner and the Attorney General, in the exercise of the discretion implied by the term "advice," must determine the form, number and procedure to obtain the blanket bond or bonds. Until this contingency occurs, it would be improper for me to make further comment on this law.
Respectfully submitted,
Gordon Mydland
Attorney General