South Dakota has apologized and will pay $300,000 under a settlement with a transgender advocacy group that sued Gov. Kristi Noem and her health secretary last year after the state terminated a contract with it.

Attorneys for the Transformation Project announced the settlement Monday. The nonprofit sued last year after the state canceled the contract for a community health worker in December 2022. The contract included a roughly $136,000 state-administered federal grant, about $39,000 of which the group received, according to its attorneys.

The organization alleged the state’s decision “was based purely on national politics,” citing Noem’s statement to conservative media outlet The Daily Signal that the state government shouldn’t participate in the group’s efforts. The outlet had asked Noem about the group and one of its events.

“This settlement marks a significant milestone in our ongoing commitment to civil rights advocacy,” lead attorney Brendan Johnson said. “We commend the resiliency of the LGBTQ community and remain committed to vigorously upholding their rights.”

The apology, in a letter dated Jan. 18 and signed by South Dakota Secretary of Health Melissa Magstadt, reads: “On behalf of the State of South Dakota, I apologize that the Transformation Project’s contract was terminated and for treating the Transformation Project differently than other organizations awarded Community Health Worker contracts.

“I want to emphasize that all South Dakotans are entitled to equal treatment under the law — regardless of their race, color, national origin, religion, disability, age, or sex. South Dakota is committed to ensuring that no person is excluded from participation in, denied the benefits of, or subject to discrimination under any program, activity, or service that it provides,” she wrote.

Transformation Project Executive Director Susan Williams said she is glad the lawsuit is over and “it feels good to know that we won.”

“I would say that we settled with the apology. It would have been nice to have the apology come from our governor,” she said.

Magstadt was not health secretary at the time the contract was terminated. Her predecessor announced her retirement days after the state terminated the contract. The Transformation Project had hired a community health worker before the state ended the contract.

The state alleged contract violations in a letter from the deputy secretary noticing the termination. The group said it had complied.

Spokespersons for Noem and the state Department of Health did not immediately respond to email requests for comment on the settlement.

Transformation Project Community Health Worker/Project Coordinator Jack Fonder said in a statement: “I assumed the role of CHW with the intention of providing trans people in our community with the resources they require to succeed in this state, little realizing that doing so would result in my own outing as a trans man for standing up for what is right. We promise to keep up the battle for transgender rights and to make sure they have access to the resources they require.”

Fundraising helped continue Fonder’s position, Williams said. Fonder helps transgender people find shelter, housing and employment, as well as support with legal paperwork and driving people to appointments, among other needs.

Williams said the organization would apply for future grants from the state, and she hopes similar groups “will feel more confident” to apply, too.

The nonprofit offers help for LGBTQ people and their families, such as suicide prevention and guiding people through health care and social services, and educates about gender identity.

South Dakota and other Republican-led states have passed laws in recent years that have raised complaints about discrimination against transgender people, such as restricting school sports participation and banning gender-affirming care for kids.