The governor’s budget proposal calls for eliminating $1.7 million from a general fund that supports residency programs in the state, as well as $1.86 million in match funding from federal Medicaid funds, according to a Jan. 23 report from the South Dakota Searchlight.
The state general medical education funding supports 78 residency programs between Avera Health and Sanford Health, both based in Sioux Falls, as well as Monument Health in Rapid City. In 2025, 154 residents are participating in the programs.
“If those funds aren’t continuously appropriated … we’ll have some hard questions to answer about the ability to continue to support medical students who are training in our space,” Kim Malsam-Rysdon, vice president of public policy at Avera, told the news outlet.
South Dakota lawmakers on the Appropriations Committee will determine whether residency program funds will remain in the budget that will be presented to the full legislature and governor, according to the report.
Residency programs are funded by Medicare, health systems and state Medicaid funds. They are seen as a critical recruitment tool, as data has consistently shown physicians tend to practice in the same area where they completed residency training. Hosting residency programs is a significant expense for teaching hospitals. In 2024, many hospitals and health systems shared plans to launch new programs, though several announced closures or cuts in part due to rising costs and funding challenges.
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