Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Childcare Subsidies topic
No spam. Unsubscribe anytime.
Lawmakers hear proposal to raise child‑care subsidy rates; agency warns of major cost
Summary
A task-force-backed bill would raise child-care assistance from 75% to 90% of market rate to help stabilize providers and workforce; Department of Social Services opposed on funding grounds, warning of large general-fund needs or reduced enrollment.
Senate Bill 126, supported by a stakeholder task force, would increase the state’s child-care assistance reimbursement rate for eligible families from 75% of market to 90% of market (sponsor proposed a 90% target, with amendments discussed). Proponents said higher rates are needed to keep providers solvent, boost teacher wages and prevent families from leaving the workforce.
Why it matters: Child-care availability is a workforce and economic-development issue. Low subsidy reimbursement is a common factor providers cite when closing programs or failing to hire enough staff to serve existing capacity.
Sponsor Rep./Sen. Tim Reid (task force chair) told the committee the task force found most licensed child-care operations run with tight or negative margins and that staffing attrition is severe — roughly 40% annually. The proposal would raise state subsidy reimbursement toward market levels to shrink gaps providers face when serving subsidy families.
Proponents included representatives of child-care providers and local economic development organizations. MB (a child-care provider) CEO Carrie Tietjen described families who lost workforce access because subsidy awards left families with large out-of-pocket bills. The Aberdeen and Madison civic and business-backed programs testified that local pooled funding has helped, but that subsidy-rate increases are still needed for a durable solution.
Jason Simmons, Chief Financial Officer for the Department of Social Services, testified in opposition on funding grounds. DSS said the child-care assistance program is financed primarily with a capped federal block grant (roughly $32 million federal plus a statutory state maintenance-of-effort) and that the bill — as presented before an amendment — would require an estimated $8.25 million in additional dollars that cannot be covered within the current capped federal grant without adding general funds or reducing eligibility. DSS also noted the federal guidance that subsidy programs are generally designed as cost-sharing rather than full-market replacement and said South Dakota already reimburses at a relatively high percentile compared with other states.
After proponents’ and opponents’ testimony and committee questions, the committee voted to defer SB 126 to the 41st legislative day for further consideration; the motion to defer carried in committee.
Ending: The bill was deferred for additional study and budget analysis; sponsors urged consideration of braided funding (public, private, philanthropic) to make any eventual rate increase sustainable.
