ImageA combination of federal, state, and local funding is being used for this project with a breakdown of 80% federal, 10% states and 10% local members.  One exception is the City of Sioux Falls, which was found by the General Accounting Office to have a greater ability to pay.  In layman's terms, the City paid a local cost share of 15% with federal funding of 75%. 
Federal grant funds for construction of the project were authorized in the Lewis & Clark Rural Water System Act that became law in July 2000 (P.L. 106-246 can be viewed under the Technical Information link). The Act authorized federal grant funds in the amount of $213,887,700, indexed for inflation from FY93 to FY00 the approved funding ceiling at the time of authorization was $270,106,000. Each year the Bureau of Reclamation adjusts the remaining federal funding ceiling for inflation and other cost factors. After authorization, the System was expanded from 23.5 million gallons a day (MGD) to 45, with the local members covering 100% of the incremental cost to upsize the System.  
The three states and 20 local members have pre-paid 100% of the non-federal cost share -- a combined amount close to $154 million.  Unfortunately, recent federal funding has not been enough to even cover the inflation let alone allow the project to make any meaningful construction progress.