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South Dakota DSS makes child care payment policy changes

The Department of Social Services is changing payment policies in hopes that more daycare providers will accept children who receive government assistance.

With South Dakota facing child care crisis, state officials say they have been seeking ways to improve care. One way they are doing this is by changing provider payment policies.

The DSS is now basing payments for children enrolled in the Child Care Assistance Program on hours enrolled, rather than hours attended.

Under the old system, if a child attended daycare only four hours, the provider received reimbursement for four hours. But the provider still had to pay employees a full eight hours – meaning the child care business loses money.

Advocates said this resulted in some providers not wanting to accept children enrolled in the CCA program.

Kayla Klein is the Director of Early Leaner South Dakota. She said the updates will financially benefit and help sustain child care providers.

“A child care business relied only on income they were getting from parents. And when you have an unstable source of revenue, like when child care assistance was based on hours, it makes it harder to run your business - which does not incentivize child care businesses to take children who qualify for child care assistance,” said Klein.

With the upcoming legislative session, Klein said she hopes lawmakers will craft subsidy bills based on the true cost of care.

“That would allow us to understand the difference between what providers are charging and what it truly costs. And that may sound silly, but for the most part, child care providers are not charging what it actually costs them to provide care - simply because their parents cannot afford it,” said Klein.

She said there are over 29,000 children who qualify for the CCA program in the state and only around seven percent of them actually receive the assistance.

Klein said she hopes with this policy change, more daycare providers will accept children in the CCA program.

Evan Walton is an SDPB reporter based in Sioux Falls. Evan holds a Master’s in English Literature from Southern New Hampshire University and was honorably discharged from the United States Army in 2015, where he served for five years as an infantryman.