Simplified: More than 25,000 South Dakota children (birth to age 5) who are eligible for state childcare subsidies aren't receiving them, according to data presented to the Sioux Falls City Council on Tuesday. The question councilors are asking: Can the city be part of breaking down barriers to connect more families with those funds?

Why it matters

• South Dakota has a well-documented childcare crisis, in which parents are unable to afford care, centers are unable to afford paying providers, and at the end of the day, it's all affecting the state's workforce and business community.
• The city has been looking at ways it can be part of a local solution for the past few years, most recently in hiring a consultant to research specific solutions to the barriers families and childcare providers are facing.
• That consultant – Justin Smith, of Woods, Fuller, Schultz & Smith – shared a number of changes both to state law and state regulations that could help connect more folks to the already available resources in the South Dakota Child Care Assistance (SDCCA) program.
• Right now, South Dakota falls well below other states in the percentage of eligible families who receive childcare assistance. About 7% of eligible kids in the state are receiving SDCCA compared to about 23% in other states, Smith shared.

"When you talk about only 7% of eligible families accessing the benefits to which they're entitled, that frustrates me," Councilor David Barranco said.

Tell me more about proposed changes

There are a few that would have to be passed by the state legislature and a few that could be implemented by the state's Department of Social Services without a state law change.

Here's a quick run-down of the proposed state law changes:

• Move SDCCA closer to funding the true cost of childcare services, not the cost charged to parents.
  • This addresses the reality that – though parents are paying more than they can afford in most cases – they're still not covering the true cost of what it takes to care for their kids day in and day out.
  • South Dakota could look to its neighbor to the north for advice here. North Dakota recently invested $15 million to target the true cost of childcare.
• Give a little extra help to childcare providers who also have kids in need of care.
  • The idea here is that the state would help childcare centers offer their employees free or reduced childcare costs for their own kids so they can come to work and help take care of other people's kids.
• Expand the Build Dakota Scholarship to include an associates degree in early childhood education.
  • People who receive the scholarship – covering the entire cost of tuition – would then be required to work at an in-state childcare facility for three years upon graduation.

Here's a look at potential regulatory changes:

• Give families more time to fix application errors/omissions.
  • Right now, parents who send in an application for SDCCA may get a follow up from the state requesting clarification on something. If that happens, the parents only have 10 days to respond, or their entire application is void.
• Make the application online, rather than mailing forms back-and-forth.
• Give leeway for families housed in shelters.
  • Smith's research found some examples in which a parent cannot receive childcare assistance because the requirements of shelter programs they're participating in conflict with the state's SDCCA requirements.
    • For example, Smith said, maybe a parent who's housed at the St. Francis House is working and saving a set amount of money required by that program to get their own place. That money saved is counted as earnings in the state's eyes, but that parent can't spend it on childcare while also going through the shelter program.
• Give leeway for families in other situations.
  • Another barrier Smith encountered in his research is that childcare assistance is only available to parents if they meet income requirements and, when applicable, are pursuing child support from a non-custodial parent.
  • Some parents, though, don't want to pursue child support because they don't want to alert the other parent to their location for fear of their own or their child's safety.
  • Right now, there's no way for the state to make an exception for that parent and offer them assistance.

What other solutions have been discussed?

The city is also looking at a pilot project for a tri-share model – similar to what's happening now in Rapid City.

• Smith said he's yet to reach out to businesses to get a true sense of their willingness to participate.

The city is also looking at potentially putting out a call for a nonprofit to manage shared services for childcare providers in order to ease the burdens they're facing in staying open.

What happens next?

The City Council will determine its legislative priorities in the coming weeks, and it's possible childcare could be high on the list.

That said, the state legislature is likely looking at a tight budget year in 2025, so any bills that carry a cost to the state are going to face an uphill battle, Smith noted.

"I think it's fair to say those are going to be big lifts," he said, "But childcare is a workforce and business issue that must be addressed in South Dakota if we hope to maintain a strong economy."