South Dakota
Gov. Rhoden vetoes bill expanding state child care assistance threshold
PIERRE — South Dakota Gov. Larry Rhoden shot down a bill which would have expanded the state’s child care assistance program for certain child care employees.
Rhoden vetoed an amended House Bill 1132, a proposed child care law that would have raised the federal poverty line for child care eligibility from 209% to 300% explicitly for people who work at least 30 hours per week at a licensed school daycare program, center or family home providing child care.
The South Dakota governor wrote in a Wednesday statement provided by his office that his reasoning for torpedoing the legislation was because it would “shift South Dakota’s child care assistance program away from its core mission.”
“Currently, the program is designed as a safety net to help low-income families cover child care costs while they work toward self-sufficiency,” Rhoden stated. “This bill would give child care workers preferential treatment, by allowing them to receive this aid at a higher income level.”
This is the first bill Rhoden has vetoed as governor of South Dakota.
In a letter to Speaker Jon Hansen and House members, Rhoden critiqued the bill further, saying it would “transform” the state’s child care program into a “long-term workforce subsidy.” He also explained he killed the bill over its fiscal aspects, since it lacked an appropriation to cover the cost of the program’s expansion.
“If just 5% of South Dakota’s current child care workforce applies, the program will require an additional $3.8 million in state general funds. If half of the current workforce applies, the program grows by $38 million,” Rhoden wrote. “The lack of new funding creates a zero-sum game, and this expansion would force reductions in benefits or waiting lists for the low-income families the program was originally designed to support.”
Others who voiced their opposition during this year’s legislative session included Rep. John Hughes, R-Sioux Falls, who stated during last month’s House hearing that HB 1132B would “create winners and losers” by giving special treatment to child care workers and not other areas such as health care, education and service industries, all of which are also experiencing workforce shortages.
The South Dakota Department of Social Services also opposed the bill, with Deputy Secretary and Chief of Operations Brenda Tidball-Zeltinger stating that the current 209% South Dakota federal poverty level for child care assistance equals about $67,000 per year for a family of four and $44,000 for a family of two. If the federal poverty line is raised to 300%, a family of four can earn up to $93,000 per year and $61,000 per year for a family of two.
The South Dakota Legislature funds the state’s child care assistance program each year through DSS, Tidball-Zeltinger relayed. Part of the funding comes from a federal block grant, but that grant is capped. To receive federal funds, the state must also contribute matching funds from its own budget.
One of the bill’s prime sponsors, Democrat Rep. Erin Healy of Sioux Falls, criticized the governor’s decision in an interview with the Argus Leader Wednesday.
Healy, House Minority Leader, called Rhoden’s argument that the state would have to increase its budget “premature,” as the state does not have a waiting list for child care assistance.
“This veto sends a clear message … that we are willing to allow families to struggle, and that is unacceptable,” Healy said in a phone call. “It’s disappointing that these people who are taking care of children can’t afford child care themselves. That’s the true problem there.”
Healy has previously pointed to Kentucky, which passed a similar bill offering child care assistance to child care workers. This ultimately cost less than expected, she said, as many child care workers were already eligible but unaware of the assistance available.
Rhoden also lauded the state Department of Social Services’ ongoing work to address the child care shortage in the state by pointing to “industry standard” weekly payments for child care assistance, raised reimbursement rates for providers and the state’s ChildCare605 Campaign, among other things.
Healy contends the state hasn’t done enough to address the child care shortage.
“I’m looking at the solutions that they’ve addressed, and it’s great that they’re working on that, but it’s not enough to address the child care shortage in South Dakota, specifically that child care is not accessible and … businesses can not afford to keep their facilities open.”
Both Healy and Republican Sen. Tim Reed of Brookings are members of the South Dakota Child Care Task Force, which formed in 2023. A report was released in January, stating that South Dakota’s child care model is unsustainable, with providers closing due to financial strain. HB 1132 was just one of many moving parts in addressing child care in the state, by allowing “the workers behind the workers” or those who are employed at early child care centers to be eligible for child care assistance.
Child care costs range from $7,000 to $14,000 per year, making it unattainable for low-income families. Additionally, child care workers earn an average of $12.67 per hour — far below the $19.58 living wage. This shortage further limits available child care spots, exacerbating the crisis.
“So how is somebody who is making that wage supposed to afford child care? These people are taking care of our children, but they can’t even afford to have their children taken care of,” Healy said during the House session last month.
When that happens, Healy said, child care workers leave the industry.
The legislation will now require a two-thirds majority in both the state’s House and the Senate chambers to be overturned. HB 1132 was one of the first bills expanding the state’s child care assistance program to pass the House and Senate in a decade. But the bill received less than two-thirds of votes from members of both chambers, which means it is unlikely the legislature will vote to overturn the governor’s veto.