South Dakota Adjusts Child Care Payments After Outcry

A recent overhaul of South Dakota's Child Care Assistance program has led to significant financial distress for families, with some experiencing payment reductions of over 80%. An after-school coordinator reported parents considering quitting jobs due to the severity of the cuts. The program, a federal-state partnership, assists low-income working families with childcare costs.

The state's Department of Social Services implemented a new payment model at the beginning of the month, transitioning from attendance-based payments to tiered weekly rates. This change was intended to provide more predictable income for childcare providers.

However, the new rates, particularly for full-time reimbursement at $185 weekly for after-school programs in Sioux Falls and Rapid City, caused substantial monthly deficits for families. One family faced a reduction from $950 to $185 monthly. Following complaints from affected families and providers, the department readjusted payments for urban after-school programs, raising part-time and limited rates to $101.25.

State Representative Brian Mulder advocated for the readjustment, expressing relief that families could now approach the school year with confidence in funding. However, concerns remain about the long-term viability of the tiered model, as providers argue that it does not adequately cover operational costs outside of direct child attendance.

Governor Larry Rhoden stated that the department addressed immediate concerns, while Democratic nominee Dan Ahlers criticized the initial fallout, emphasizing the need for sustainable solutions for childcare affordability and provider viability. The Department of Social Services plans to conduct another market rate survey in the fall, with potential rate updates in fiscal year 2028, and remains open to further feedback.