Nikki Gronli, former USDA Rural Development state director, speaks at a state Department of Social Services public hearing regarding cuts to TANF benefits at the Sioux Falls One Stop on June 20, 2025. (Makenzie Huber/South Dakota Searchlight)
Makenzie Huber/South Dakota Searchlight
SIOUX FALLS — Some needy South Dakota families could soon lose up to $136 a month less to spend on gas, groceries, clothing, utilities, house repairs or rent.
The average South Dakota family in the Temporary Assistance for Needy Families (TANF) program receives $515.55 a month, according to the state Department of Social Services. An average of just under 2,500 families get TANF benefits each month.
Those families would lose anywhere from $32 to $136 a month in benefits under a proposed 10% reduction by the department, depending on the size of their family. The state would save about $1.5 million for the year.
Dozens of South Dakotans stood up to speak out against the cut Friday, using words like “asinine,” “appalling” and “ludicrous” to describe it during a public hearing in eastern Sioux Falls. No one spoke in support of the cut.
TANF is a federal-state program most commonly used to provide financial assistance to low-income families with children, on the condition that the caregiver searches or trains for a job. Non-parent relatives — grandparents or aunts or uncles — who take children into their home when a parent is not able to care for them are among the eligible.
Former Gov. Kristi Noem put $5.3 million in TANF cuts into her proposed budget last year in light of a tight revenue year. Lawmakers approved the $5.3 million cuts in March. In Noem’s recommended budget, leftover federal funds reserved for the program were meant to cover the shortfall.
Public hearing: ‘This is not an expense, this is an investment’
Colleen Werner, a former educator and school administrator in Sioux Falls, said at the public hearing she was shocked the state would start cuts “with the lowest and most in need” to save money. Families are paying more for rent, utilities, food and other living expenses than they did last year, she added.
“Imagine if you’re at your financial end and you still step up,” Werner said, a reference to relatives stepping in to care for children who are not their own. “And what does our state do? It just steps on you and cuts your funds when you’ve taken a bold and brave and loving measure to take care of those you love.”
Lisa Sanderson, who said she formerly worked with Child Protective Services, said the proposal runs counter to the department’s mission to support and uplift South Dakota families in need.
Participants, including Sanderson and others, called for more funding and increased benefits, citing inflation and a higher increased cost of living in recent years.
“This is not an expense,” Sanderson said. “This is an investment.”
Department representatives did not recommend any changes to the policy based on the public testimony, but will take written public comment through the end of the month. After that, they’ll present their proposal to the legislative Rules Review Committee. If approved, the reduction would be implemented by Aug. 1.
DSS explains its proposal
The state distributed $15.3 million in TANF benefits last fiscal year.
The 10% benefit cut is part of the department’s plan to deal with having $5.3 million less to spend on TANF this year. The department also intends to use $3.8 million from a TANF carryover fund to cover some of the cost of benefits for families.
The carryover fund currently holds about $23 million – more than enough to fully cover the $5.3 million budget cut.
The fund has been reserved as a “rainy day fund,” said Department of Social Services Secretary Matt Althoff. He added that some of the unused funds are intended to upgrade the TANF computer system. He said he didn’t know how much the upgrades would cost.
The department could use another $1.5 million from the carryover balance to avoid the benefit cuts. But Althoff called the reduction a “strategic approach” to managing the carryover fund.
He described the fund as a piggy bank that “is not going to last forever.” Without knowing what the financial landscape looks like in the coming years, reducing TANF benefits by 10% means the department can “keep the piggy bank there” for a longer period of time.
If state revenues continue to worsen and more cuts are necessary, the department could propose in the coming years to cut TANF benefits more.
The proposed rule change would also remove TANF eligibility for families who take in child relatives who are removed from their homes by the state’s child welfare system.
The change would incentivize caregivers to become licensed kinship caregivers with the state. The current foster and kinship subsidy rate for a child in SD is between $22.85 and $27.43 a day, depending on their age. That would be roughly $685.50 to $822.90 a month, per child.
Lawmakers approved rule changes in May to create the licensed kinship foster care pathway, as required by the federal government. Caregivers must meet training requirements to become a licensed kinship home, similar though less intensive than traditional foster care requirements.
According to the department, 184 cases per month managed by the department involving families eligible for TANF would be eligible for kinship subsidies.
Families who take in kin and apply for TANF use the “side door” to receive state and federal support, Althoff said. Eliminating eligibility encourages families to “come in through the front door.”
Proposal’s future depends on legislative committee interpretation
Several participants said they were blindsided by the proposal. They said they understood from lawmakers during the state’s legislative session this winter that the $5.8 million cut to TANF would be fully — not partially — offset by money from the carryover fund.
Althoff briefly mentioned that his department planned to review TANF benefits during a conversation with lawmakers on the state’s budget committee in January, but admitted Friday that “a conversation wasn’t held in earnest with lawmakers.”
Rep. Erik Muckey, D-Sioux Falls, said Friday that he didn’t expect TANF benefit cuts this fiscal year. Muckey is a member of the Joint Appropriations Committee. Because of a “significant miscommunication” between lawmakers on the committee and the department, Muckey said it wouldn’t be prudent to advance the TANF cuts.
“If the appropriations committee didn’t intend to do this, we need to have more conversations before we reduce benefits,” said Muckey, who’s also a member of the rules review committee.
“I can appreciate the gravity of our state’s financial situation. What is important is those conversations, as far as our budgetary decisions, are not under the purview of the rules review committee,” Muckey said. “I think the public understands this is a case where the Legislature did not give its permission.”
Sen. Taffy Howard, R-Rapid City, is also a member of the appropriations and rules review committees. She disagreed, saying there isn’t a way for the rules review committee to determine the Legislature’s intent, since the body did not take any votes specifically concerning the TANF changes. Lawmakers only passed a budget with a $5.3 million reduction in TANF spending, she said.
Howard doesn’t remember discussions about TANF carryover funds during the session, but said she supports the 10% cut.
“Why aren’t we cutting all of it? Why are we even using carryover funds?” Howard told South Dakota Searchlight. Howard has been critical about welfare program spending in the state.
The legislative rules review committee will take up the proposal at its July 15 meeting in Pierre.