South Dakota Gov. Larry Rhoden has vetoed a bill offering financial assistance to a broader swath of child care workers.

Rhoden’s Wednesday veto of House Bill 1132 closes the book, for now, on all three child care bills drawn up by a task force convened to study ways out of the state’s affordability and access woes — and the resultant difficulties for workplace recruiters. Lawmakers could override Rhoden’s action with a two-thirds vote of each chamber when they gather on March 31 to consider his vetoes.

HB 1132 would open up child care tuition assistance to full-time child care workers if their household incomes are 300% of the federal poverty line or less. The subsidy is currently available to any households at 209% of the poverty level or below.

In a letter to lawmakers explaining his veto, Rhoden said he didn’t feel an expansion of the subsidy program was fair to all South Dakotans.

“This would be the first time in South Dakota that our state safety net programs would give enhanced benefits to people working one type of job or occupation,” the governor wrote.

He also cited the lack of an appropriation to cover additional costs for what would have been an expanded program.

Supporters had urged their fellow lawmakers to think less in terms of fairness to all occupations and more about the practical impact of this particular flavor of preferential treatment: More day care openings for parents all across the state.

Laws similar to HB 1132 have been used in states like Kentucky and North Dakota to help child caregivers afford their own child care, thereby allowing them to stay at work and care for the children of others.

“We had hoped that our state could think about things differently,” said Sen. Tim Reed, R-Brookings, who carried HB 1132 in the Senate and was co-lead of the task force.

Kayla Klein, of the nonprofit group Early Learner South Dakota, called HB 1132 “a solution” that had proven its worth.

“I am disheartened by the decision, but want all of those providers, families and children out there to know that we will continue to search for solutions to make meaningful and impactful change,” Klein said Wednesday.

The Senate’s 20-14 passage of HB 1132 had stood as a bright spot for the advocates who’ve spent years looking for ways to open up more day care slots and hold the line on prices – sometimes high enough to make staying home with kids a wiser financial move for parents than working. Klein said after the Senate vote she was “thrilled that the legislative body has taken the child care crisis and words from their constituents to heart.”

“This brings us one step closer to stabilizing the child care industry — the workforce behind the workforce,” Klein said at the time.

Senate had sided with help for child care workers

Reed had carried that message on the Senate floor, and the message carried the day in spite of opposition that sounded much like Rhoden’s reasoning for the veto.

Sen. Kevin Jensen, R-Canton, argued that it’s unfair to give a “carve out” to day care workers and not workers in other fields. 

“The one group that I think should be included in this are our teachers,” he said, referring to K-12 teachers. “Why don’t our teachers get a break on their child care?”

Some lawmakers in the House had similar reservations.

“We in the Legislature, and most certainly those of us serving on appropriations, know full well that child care is not the only sector of our economy that is struggling to build and maintain the workforce,” Rep. Jack Kolbeck, R-Sioux Falls, said on Feb. 19. 

Subsidy hike, grad student plans fail

The other planks of advocates’ hoped-for child care platform had less success.

On Feb. 20, the state Senate’s budget committee voted 5-3 against pitching in more state dollars to the subsidy program.

The subsidy bill would have upped payments to families who get child care assistance. In South Dakota, the federal grant funds that support the subsidy pay up to 75% of the market rate cost – a rate calculated biennially – for child care.

The task force had hoped to bump that up to 90% of the market rate, getting closer to covering the cost of care.

“If we’re going to provide assistance, we should do it at the market rate,” Reed told the Senate Appropriations Committee.

There’s a delicate dance to setting child care rates, according to Kerri Tietgen of EmBe, a nonprofit with two large centers in Sioux Falls. 

“The true cost of child care continues to rise, driven by increasing wages for child care, teachers, higher food prices and the need to maintain a safe and enriching environment for children,” she said. “Our organization continuously looks for ways to offset costs, but like many providers, we’re stuck between rising expenses and the ceiling of affordable rates for families.”

But South Dakota can’t afford to spend more on child care subsidies, said Jason Simmons of the state Department of Social Services.

The state can only get $32 million in federal money for the subsidy, Simmons said, and already has to chip in an $800,000 match to receive that. Because of the cap on federal dollars, the state would need to come up with $8.25 million to cover everyone who’s eligible at the higher rate.

Since the state can’t afford to make up the difference, Simmons said, the subsidy change “would greatly reduce the number of people that are eligible for the program.”

South Dakota already does a better-than-average job with reimbursements, he said. Federal guidelines suggest that a state reimburse at 75% of the market rate, and South Dakota is one of just 17 states to “reimburse that high.”

“South Dakota isn’t often mentioned as one of the top states in the nation for reimbursement rates, and we are in this area,” Simmons said.

Sen. Taffy Howard moved to defeat Reed’s bill. The Rapid City Republican said she’s suspicious of subsidies and questions whether the state ought to have a role in child care. “We have to admit this is a welfare program, and our nation is broke,” Howard said.

No help for graduate students

Before using his carve-outs argument on the Senate floor against HB 1132, Jensen voiced it during panel discussion of the proposal to extend child care help to graduate students, Senate Bill 118.

“I’m concerned that it’s another carve out where we expect the entire state to pay for a few people’s needs,” Jensen said Feb. 5, when the bill had a hearing with the Senate Health and Human Services Committee.

SB 118 aimed to adjust an existing “carve-out” within the child care subsidy program. Undergraduate students who have children and fit income guidelines can access the subsidy under current law, regardless of how many hours they may work between classes. Income-eligible graduate students with kids can’t, however, unless they work 80 hours or more a month.

SB 118 would have changed that by opening the subsidy up to income-eligible grad students with a combined total of 80 monthly hours at work or in class.

Sen. Sydney Davis, its prime sponsor, told the Senate Education Committee on Feb. 2 that the state ought to encourage grad students with kids to better themselves. People with master’s degrees contribute to the state’s economy and fill important roles that South Dakotans with less education cannot, she said.

But Department of Social Services Secretary Matt Althoff called SB 118 “a boutique tweak” to the law. He told the committee he understands that graduate student parents might have difficulties, but said they’re also in a more privileged position than undergraduates.

“But we do say no, an awful lot, and that is an ongoing thing in our stewardship of the safety net,” Althoff said. “We have set clear, bright lines.”

The committee sided with Althoff and defeated SB 112 on a 5-3 vote.