When South Dakota's psychology licensing law sunsets on July 1, 1979 and the Board of Examiners of Psychologists ceases to exist, can the Board's leftover funds be used to hold continuing education workshops for licensed psychologists, or must the money revert to the state general fund?
Plain-English summary
South Dakota's Board of Examiners of Psychologists faced a sunset on July 1, 1979: by statute, both the Board and the licensing law would be abolished. Dr. Mohatt, writing on behalf of the Board, raised a thoughtful question. The Board had built a sizeable surplus from licensing fees over the years. With the sunset coming, could the Board use that surplus to hold professional workshops that would help licensed psychologists keep their skills sharp? The licensure rules required continuing education for renewal up to the sunset date, but after July 1, 1979, there would be no licensure rules at all. The Board's motivation was professional service to the field, not bureaucratic self-preservation.
AG Mark Meierhenry's answer was no. The reasoning was driven by the limited-powers doctrine for state licensing boards. SDCL 36-27-2 stated the Board's purpose: protect the public by setting standards for those who seek to practice and promote high standards for those who do. SDCL 36-27-33 gave the Board authority to maintain CE records and to require CE as a condition of renewal. SDCL chapter 36-27 read together contemplated implementation through examination, licensing, standard-setting, and CE requirements.
Nothing in the statute authorized the Board to provide free CE programs or sponsor workshops directly. Implied powers reach what is necessary to carry out express authority. Requiring CE for renewal does not necessarily require the Board to provide CE. The Board could (and did) require licensees to obtain CE from other sources. After sunset, with no licensure regime, the original motivation for state-funded CE evaporated.
Meierhenry then pointed to SDCL 4-9-17, the statute governing what happens to funds when an account becomes nonexistent or is transferred. The state auditor notifies the state treasurer to retain enough money to pay outstanding liabilities (as determined by the commissioner of finance and management) and to honor any outstanding warrants until they expire. After that wind-up period, the remaining balance goes to the general fund (or to whatever fund the original was transferred into, if any). For the Psychologists Board, the wind-up process under SDCL 4-9-17 would resolve any remaining obligations, and the surplus would land in the general fund.
The opinion captures a recurring sunset-period question: can a board going out of existence spend its surplus on something useful? The answer is usually no, unless the spending fits within the board's express or implied authority. Surplus funds belong to the state, not to the board's constituency.
Currency note
This opinion was issued in 1979. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. Psychology in South Dakota was eventually re-regulated; the 1979 sunset did not stand permanently. Modern continuing education and licensing rules are very different. SDCL 4-9-17 has been amended (the commissioner of finance and management's role has been reorganized into the Bureau of Finance and Management). Anyone administering a current licensing board sunset should rely on current SDCL provisions.
What the opinion meant at the time
For the Board of Examiners of Psychologists in 1979, the opinion ended a generous-spirited but legally problematic plan. The Board could not spend down its surplus on workshops for current licensees. The surplus would go to the general fund after the wind-up.
For licensed psychologists in 1979, the opinion meant that any CE in the run-up to or just after sunset would have to come from professional associations (SDPA, APA chapters), university extension programs, or other private providers. The state was not going to underwrite a transitional program.
For other licensing boards facing or contemplating sunset, the opinion was a precedent. A board cannot redirect its surplus to a service the statute did not authorize, even if the service would benefit the regulated profession.
For the Bureau of Finance and Management (predecessor to today's Bureau), the opinion confirmed its central role in the wind-up. The commissioner of finance and management determined what outstanding liabilities had to be paid before the surplus reverted to the general fund. That position became the natural choke point for any creative spending the Board might propose.
For state legislators considering sunset of regulatory programs more generally, the opinion is a reminder that surplus funds in board-administered accounts will revert. If the legislature wants the surplus to be used for a specific purpose related to the regulated profession, the legislature has to say so in the sunset legislation itself. Silence means reversion.
Background and statutory framework
The 1979 South Dakota sunset of psychology licensing was one of many state-level deregulation moves in the late 1970s. Sunset legislation was popular as a check on regulatory drift; the basic premise was that every regulatory program should justify its continued existence every few years or be abolished. The psychology law's failure to be reauthorized in 1979 reflected the political climate of the moment.
SDCL chapter 36-27 was a typical licensing chapter for its era: it created the Board, defined the regulated profession, set licensure standards, authorized rulemaking on CE, and funded operations from license fees. The statute did not (as licensing statutes of that era usually did not) authorize the Board to operate its own training programs.
The limited-powers doctrine applied to administrative agencies and licensing boards is well-settled. An agency has only what the Legislature granted, expressly or by necessary implication. Activities the agency might think would advance its mission (such as Board-sponsored workshops for licensees) require statutory authorization.
SDCL 4-9-17's reversion rule reflects a basic accountability principle. Public money collected for a specific public purpose does not become the property of the entity that collected it. When the purpose ends, the money returns to general public use through the general fund. The Board's surplus, even if accumulated from licensee-paid fees that the licensees might have preferred to see spent on their behalf, was state money and went where state money goes when its specific purpose ends.
Citations
- SDCL chapter 36-27; 36-27-2; 36-27-33
- SDCL 4-9-17 (then 4-19-17 in the questioner's typo)
- ARSD 20:60:03:11; 20:60:03:12
Source
Original opinion text
Authority of Board of Examiners of Psychologists to sponsor workshops
Dear Dr. Mohatt:
You have requested an official opinion from this office based on the following factual situation:
FACTS:
The Board of Examiners of Psychologists in the past discussed sponsoring workshops to increase the skills of its licensees. Although the Board and Law will be abolished as of July 1, 1979, this desire remains quite important. In many ways the need for such education seems quite important. In many ways the need for such education seems more important given the fact that no regulation of Psychologists by law within our state will exist after July 1. Could you please provide us with a legal opinion concerning the use of funds remaining in the Board of Examiners account for the holding of workshops for continuing education of licensed Psychologists. Obviously this is not being done to meet the renewal requirements for licensure since the licensing law will not exist. The major focus is to insure that Psychologists currently licensed will be helped to build their skills in order competently to serve the citizens of the state.
Based on the above facts you have asked the following question:
QUESTION:
May the Board of Examiners of Psychologists use Board funds for the holding of workshops for continuing education of licensed psychologists?
The answer to your question based upon the facts you stated above is no. The applicable sections of the South Dakota Codified Laws and the Administrative Rules of South Dakota read as follows:
36-27-2. The profession of psychology profoundly affects the lives of the people of this state; therefore, it is the purpose of this chapter to protect the public by setting standards of qualification, education, training and experience for those who seek to engage in the practice of psychology and to promote high standards of professional performance for those engaged in the profession of psychology.
36-27-33. The board shall maintain a record of the continuing education of each licensee. A report of such continuing education shall be a part of the renewal application for licensure. The type and amount of continuing education required shall be set by the board. The board may waive the continuing education requirement in case of illness or undue hardship for a period of time set by the board, but not to exceed three years.
4-9-17. Whenever, by an act of the Legislature or by directive of any state department or institution a fund other than the general fund becomes nonexistent or is transferred to another fund, the state auditor shall notify the state treasurer to retain sufficient money within said fund to pay all outstanding liabilities as determined by the commissioner of finance and management and all outstanding warrants drawn against such fund until such time as the warrants reach their period of expiration by becoming two years old from the date of their issuance and the state treasurer is hereby authorized to transfer any balance remaining in said fund at the end of the expiration period to the fund where the original fund was previously transferred or to the general fund if no other fund was designated.
20:60:03:11. To be eligible for renewal of a license, applicants shall have participated in continuing education programs which will enable them to keep abreast of current clinical and counseling practices. An applicant seeking renewal of a license in 1979, must present evidence that he has completed a minimum of forty clock hours of continuing education in programs approved by the board. The forty clock hours of continuing education must be completed between the date of initial licensure and the date of application for renewal of a license. An applicant seeking renewal of a license in 1980 or the years following must present evidence that he has completed a minimum of fifty clock hours of continuing education in programs approved by the board during the previous two years. No more than ten of the required clock hours of continuing education shall be in programs of a personal experiential nature. All continuing education shall be verified by the applicant seeking renewal of a license.
20:60:03:12. Continuing education may not duplicate material already learned and must be sponsored by reputable institutions or professionally qualified individuals. All continuing education, unless an exception is granted by the board of examiners, must be primarily psychological in nature.
The Board's function as set out in SDCL 36-27-2 is to protect the public and promote high standards for practicing psychologists. A reading of SDCL 36-27 contemplates that the Board implement these functions by examination and licensing of new applicants and by setting standards for continuing education of licensees.
In view of the fact that there is no authorization for the Board to provide free continuing education or seminars to its licensees, it is my opinion that any surplus funds should be placed in the general fund after the Bureau of Finance and Management determines pursuant to SDCL 4-19-17 that no further Board obligations exist after the winding up process.
Respectfully submitted,
Mark V. Meierhenry
Attorney General
MVM:RW:esp