Simplified: Gov. Larry Rhoden this week vetoed a bill that would've made childcare providers eligible to receive state-backed childcare assistance for their own children. It's a huge blow for an industry that's been "treading water" for some time, as one provider said.

Why it matters

• Rhoden said in a press conference his reasoning for vetoing HB 1132 was that it would "dilute" the childcare assistance program intended to help low-income families by extending that program to the kids of people who provide childcare.
  • The bill was one of three that came out of a year-long, statewide task force committed to addressing the ongoing childcare crisis. The others failed to pass out of both chambers.
  • The House of Representatives failed to overturn the veto Thursday morning.
• Several childcare providers told Sioux Falls Simplified that they were disappointed with the governor's decision. Travis Haddix, owner of childcare centers in Harrisburg and Canton, described the feeling as "treading water, waiting for some sort of help."
• The lack of state support means childcare centers will likely continue to have to raise rates for parents while maintaining stagnant wages for their staff, a message echoed by multiple providers.

"It doesn't change the pressures that we're under," Embe CEO Kerri Tietgen said. "It just highlights that there's no relief in sight."

Wait, back up. What's the childcare crisis?

Oh yeah, it's a whole thing. Hang on. rummages through notes This story has a real quick primer on what the childcare crisis is and how we got here.

Tell me more

HB 1132 was one of several solutions presented to lawmakers, and, as Tietgen noted, all of these solutions are proven to work because other states are using them.

The bill would have let childcare workers qualify for assistance for their own children if their household income was less than 300% of the poverty line, which is about $96,000 per year for a family of four.

• For context, the average childcare worker in South Dakotamakes less than $13 per hour. It's one of the lowest paid professions in the state.
• On top of that, the average cost of childcare in the state is close to $8,000 per child per year (in Sioux Falls, that average cost jumps to about $11,400, per a 2023 report from the Sioux Falls Childcare Collaborative).

Rep. Erin Healy, one of the bill's prime sponsors, said in a statement that the "cruel reality" of the veto is that providers aren't able to afford the care they're providing.

"Childcare is not a luxury—it is a necessity for working families and a strong economy," Healy said in a statement. "This veto sends a clear message: rather than take meaningful action to address this crisis, South Dakota’s leadership is willing to let families and businesses continue to struggle. That is unacceptable."

Healy's co-sponsor and partner in leading a statewide task force looking at childcare solutions, Sen. Tim Reed, said finding adequate staffing was the number one problem the statewide task force was trying to solve.

• He also told Sioux Falls Simplified the governor's office hasn't offered an alternative to the solutions that have been proposed.

"We’re going to keep working on this," Reed said. "We’ve got a task force formed. We’re just not sure how we’re going to accomplish making sure that we have the capacity here in the near future."

Ok, so it failed. What does that mean for parents and providers?

For parents, your childcare costs probably aren't going to go down.

For providers, your wages probably aren't going to go up.

Bri McCarty, owner of Cultivate Childcare in Sioux Falls, said she had calculated the bill could've saved her business as much as $300,000 per year.

"We could've increased wages by $3 or $4 per hour," McCarty said. "I could've potentially decreased tuition by $35 to $40 per week ... I could even consider potentially adding another program and creating more childcare spots."

Haddix, a self-described "staunch conservative," said he sees childcare as a rare exception for him where the government should get involved because it allows more people to enter the workforce.

"It’s one of those situations where we could lose 50% of our workforce if I have to take childcare for an infant to $500 per week," Haddix said. "One parent will just stay home."

I'm not a parent of a young child or a childcare provider. Why should I care?

McCarty shared an analogy with the farming industry. Farmers receive subsidies from the government because the work they do to produce food benefits the broader community.

• She said she sees childcare similarly, saying that the state's investment in childcare is essentially a way to ultimately support the economy by helping parents of young children stay in the workforce.

"It's not like we’re sitting here asking for a handout," McCarty said.

What happens next?

For McCarty, it's all about advocating for the childcare industry.

"I'm going to get a lot louder about it," she said.

Meanwhile, the Sioux Falls City Council is likely going to pick back up on conversations about potential solutions that could be pursued locally, Councilor Jennifer Sigette said.

• The city has been working with a consultant to explore options for a tri-share pilot program and looking for ways to remove barriers for people looking to start in-home daycares. Those conversations were paused during the legislative session, but Sigette said they'll likely resume next month.

The big obstacle to the city helping more, she added, is that the business community has not come forward to say the lack of childcare availability or high cost of care has affected them.

• Without that piece, it's unlikely the city will get behind any solutions.

"Whether anything happens is, I don't know, it's just going to be a heavy lift," Sigette said. "We’re just not getting a lot of support from people who aren't in the industry or parents."

Sioux Falls Simplified has also reached out to Mayor Paul TenHaken's office, which did not respond to requests for comment.

For providers, the mantra right now is to keep moving forward, according to Kayla Klein, director of Early Learner South Dakota.

"Having a setback like this can feel defeating," she said, "but I want to make sure that I’m encouraging providers to continue to raise up their voices."