Bonding for Employees

Along with the oath, a bond is required of certain elective and appointive municipal officers in order to qualify for their office.  (SDCL 3-1-5

The following information on bonding is from the SDML Handbook, Chapter 5.  

The governing body may purchase a blanket bond, blanket crime coverage, an insurance policy, or an individual bond.  If the blanket bond or blanket coverage exceeds the individual bond requirements, no individual bond is required.  Blanket coverage may not be less than the total coverage of all individual bonds purchased for the year prior to January 1, 2015.  (SDCL 3-5-14) 

The amount of the bond for the municipal finance officer shall be set at an amount equal to the maximum monetary total estimated to be on hand at any one time, but the amount of the bond may not exceed $250,000 in first class municipalities or $150,000 in second and third class municipalities. (SDCL 9-14-6.1)

In municipalities using the Commissioner form of government, the amount of the bonds for the mayor and commissioners shall be $2,000 for second class municipalities and $5,000 for first class municipalities. (SDCL 9-9-5) The amounts of all other bonds shall be established by the governing body. (SDCL 9-14-7) All bonds are required to be filed with the governing body. (SDCL 9-14-9)

In third class municipalities the finance officer within ten days after notice of their appointment shall take and subscribe an oath or affirmation of office in the form required by the Constitution and furnish an undertaking to be approved by the board of trustees in such sum as it shall direct. (SDCL 9-14-7; Cn. XXI, sec. 3)

Coverage of Bonds
The bonds and oaths of all civil officers are to be construed to cover the duties required by law subsequent to giving them. Bonds are not declared void for want of compliance with this requirement, but the bond is valid in law for the matter contained in the bond. (SDCL 3-5-11)

Sureties on Bonds
Statute requires every official bond to have at least two sureties. In lieu of a bond with personal sureties, a bond executed by a surety company authorized to transmit business in this state may be approved. (SDCL 3-5-4) When official bonds are made, the governing bodies are authorized and required to pay the premium of the bond, out of the general fund. (SDCL 3-5-5)

The surety is authorized to limit its liability in two ways. The first is by inserting after the surety's name the words "not to exceed" and naming the amount to which the surety wishes to limit its liability. The second statutory limitation a surety can impose is its liability as to time. This is done by inserting in the bond a provision to the effect that the surety is not liable for any acts of the principal prior to the date of the bond. (SDCL 3-5-6)

Bonds of Incumbents
The law requires that when the incumbent of an office is re-elected, his bond cannot be approved until he has produced and accounted for all public funds and property in his control during his term. (SDCL 3-5-7)

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