The South Dakota Democratic Party will no longer have a physical presence in the state.

The state party is closing its offices in Sioux Falls and Rapid City at the end of September, and party staff will begin working remotely due to the party's dwindling finances, according to SDDP Chair Paula Hawks. The party is also canceling a Black Hills fundraising event scheduled for next month. No layoffs related to the party's financial situation have taken place, Hawks said.

To get itself out of financial straits, Hawks said the party is setting fundraising goals and talking with the party's donors and Founders Club members.

"We are feeling very optimistic that we will be moving forward with strength and financial stability," Hawks said.

More:Audit: S.D. Democratic Party misstated financial activity by millions

The SDDP started the month of July, the most recent reporting period, with $31,267 in the bank and ended the month with $3,181, according to the Federal Elections Commission. The party's finances have been on a downward trend this year from $88,127 in cash on hand at the start of the year. The party also receives at least $10,000 monthly from the Democratic National Party, according to FEC reports.

The party's decreasing funds are due to "extreme mismanagement and lack of oversight," Hawks said.

The SDDP's July expenses included $2,400 on rent and about $14,000 on salaries, according to FEC reports.

Rent for the offices is the party's largest operating expense, and based on the advice of the party's accountant and attorney, the party is making "some difficult decisions to ensure we get back on track," Hawks wrote to party leadership in an email on Thursday. They anticipate the office closures being a temporary move until the party is in a better financial situation.

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South Dakota Republican Party Chair Dan Lederman said he doesn't know why the financial problems are a "shock" to the Democratic Party because SDDP Treasurer Bill Nibbelink still retains his position, which he had held since 2000.

"Chairwoman Hawks is doing her best to try to shift the blame for her party's finances and misreporting to the Federal Elections Commission, but maybe should have spoken to her own leadership team first," Lederman said.

The office closure announcement comes on the heels of a draft audit by the Federal Elections Commission revealing the party understated disbursements by $2.5 million, receive impermissible contributions totaling nearly $24,000 and failed to disclose debts and obligations to vendors totaling nearly $47,000 during the 2015-16 election cycle.

The FEC approved the draft audit audit memorandum on Aug. 22, but the final approval of the audit is now in limbo due to the FEC not having a quorum to take action after Federal Elections Commissioner Matthew Petersen resigned, effective Sept. 1.

More:FEC audit shows South Dakota Democratic Party likely violated fundraising regulations

Hawks has distanced herself from the party's financial woes in recent weeks and said on Friday that there's been "a lack of oversight in the financial management" of the SDDP. She said she's committed to securing the financial health of the party and energizing voters with Democratic candidates going forward.

"Our current financial situation is really unfortunate and truly very unexpected to me and to Stacey Burnette, our new executive director," Hawks said. "We both kind of stumbled into this and discovered some things that we didn't realize were going on so now we're cleaning it up."