The Trump Administration recently halted federal child care assistance until states provide further verification on their programs. The freeze came in response to fraud allegations in Minnesota.
After some uncertainty, the South Dakota Department of Social Services does not expect local providers to feel an impact.
The federal child care assistance program subsidizes costs for low-income families who meet certain requirements. The Trump Administration initially announced a nationwide freeze last week, leading to some local concern.
Department of Social Services Secretary Matt Althoff provided the following statement in an email to SDPB on Wednesday:
"The Department has received communication from our federal partners that DSS will be required to provide verification when submitting Child Care Assistance Program drawdowns. State verification is to include attestations of controls being in place and specification around how the funds are to be used. This is the same process that was in place during the federal government’s “Defend the Spend” period in early 2025. South Dakota was found by its federal partners to be compliant during that same period. Given our recent experience, DSS expects no impact will be felt by providers."
According to a 2025 report from South Dakota Kids Count, more than three thousand South Dakota children participated in the program in fiscal year 2024. That’s just five percent of children ages birth to 12 who qualify.
Kayla Klein is the policy specialist for the South Dakota Association for the Education of Young Children. She says participation rates are low in part because few child care providers are eligible to receive the funds in the first place.
“You do have to be regulated through the Department of Social Services in South Dakota in order to receive child care assistance subsidies," she says, "And there are a large majority of individuals who are not regulated in South Dakota. Our most recent estimates show that about 60% of the market is unregulated.”
Klein says eligible providers may refuse clients with child care assistance because the subsidy doesn’t cover real costs of care.
Despite the low participation, Klein says a funding freeze would have a “drastic” impact on local child care providers.
On Tuesday, the U.S. Department of Health and Human Services froze access to federal child care assistance funds for five Democrat-controlled states citing “serious concerns” of fraud.
