State plans to decrease its payments to the needy

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PIERRE, S.D. (KELO) — The South Dakota Department of Social Services has announced its intention to cut by 10% the amount of welfare aid paid to several thousand households receiving public assistance.
DSS will hold a public hearing on Friday, June 20, at 11:00 a.m. CT at state government's new One Stop Center at 1501 S. Highline Avenue in Sioux Falls.
The number of South Dakota families receiving payments from the Temporary Assistance to Needy Families program varies month to month, according to DSS statistics. In April, the most recent month for which data was publicly reported, there were 2,487 families. That was down from a 12-month high of 2,567 in October.
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The department's proposed TANF cuts come at the same time that the Legislature gave state government employees a 1.25% pay raise that takes effect July 1. State aid to K-12 education and for health-care providers will rise 1.25% as well.
DSS officials say the proposed cuts result from the Legislature reducing the department's general funding for the coming year by $5.3 million.
Actually, then-Gov. Kristi Noem had recommended in her December budget proposal a $5,168,200 general-fund reduction for the economic assistance division in DSS that oversees TANF payments. The department, in turn, planned to use a similar additional amount of federal funds as an offset, according to page 20 of a presentation made on January 21 to the Legislature's Joint Committee on Appropriations.
That presentation referred to the maneuver as 'Temporary Assistance to Needy Families Fund Swap.' The document made no mention of any proposed cut to TANF payments. The department's then-chief financial officer, Jason Simmons, didn't speak about it either.
'This year, in working with the governor's office and BFM (Bureau of Finance and Management), with revenues down and having to fund things like FMAP (federal medical assistance percentage) change and different things, our directive is to spend down some of that carryover. So this would be more of a temporary solution,' Simmons told the committee. He continued, 'This is not something that we're going to be able to do for many, many years, but it's something we can do in a pinch for a few years to get us through, to spend down that carryover and continue to deliver these services.'
Five minutes later, DSS Secretary Matt Althoff expanded on those remarks. Responding to a question from Democratic Rep. Erik Muckey, Althoff said, 'We're going to examine our benefits and say, Is there a way we can reduce those as well? So we'll continue to look at that. We've got a preliminary plan that, as recommended, would take effect July first.'
One of the panel's co-chairs, Republican Rep. Mike Derby, asked Simmons to go through the mechanics of the TANF fund swap one more time.
Simmons explained that money left over from the federal block grant that the department receives each year can be placed in a carryover account. Simmons said the department gets $21.2 million of federal funds each year and state government puts in $8.5 million for a total TANF funding of $29.7 million. At the end of fiscal 2024, the department had $23.4 million of carryover funds available.
Simmons said the plan was to tap the federal carryover to offset reductions in state general funds, spending the oldest layer of federal funds first.
Noem's $34,665,498 recommendation of general funds for the new budget year that starts July 1 would have returned the division's general funding to roughly the $34,415,895 actually spent in 2024.
State lawmakers in March ultimately appropriated $34,517,352 of general funds to the economic assistance division for the 2026 budget year. That was slightly more than the amount actually spent in 2024 and slightly less than the amount Noem had recommended.
Asked Monday about the proposed TANF cuts, Republican Sen. Ernie Otten told KELOLAND News that he expects to see the department make reductions in other areas too. Otten and Derby co-chair the Legislature's Joint Committee on Appropriations that assembles state government's budget each year.
DSS never came back to the committee with a detailed plan or a change from what they presented, according to information that Derby received from the Legislature's chief fiscal analyst Jeff Mehlhaff and forwarded on Tuesday to KELOLAND News. Mehlhaff told Derby, 'We have reached out to the Secretary of DSS multiple times with no response.'
An average of 2,460 households per month received TANF payments during the 2024 budget year, according to the DSS fiscal note that was prepared for the proposed 10% cut. The average monthly amount was $518.06. Altogether, those payments totaled $15,293,131.20 in annual TANF costs, the department said, and a reduction of 10% from the current TANF payment standards equals $1,529,313.12.
A statement signed by Secretary Althoff says the proposed financial cuts in TANF payments would have 'no impact' on small businesses.
'TANF is a needs-based program for families with children under age 18 (or under age 19 if the child is in high school) who need financial support because of the death of a parent; a parent is absent from the home; or the physical or mental incapacity or unemployment of a parent.Families with serious financial needs may qualify for TANF monthly payments,' the statement says.
Public comments at the June 20 hearing about the TANF reductions can be made in person at the Sioux Falls One Stop Center or by telephone at 1-605-679-7263 and using conference code 183 579 146 #.
Written public comments can be sent through June 30 to Teresa Schulte, Administrative Rules C219, Department of Social Services, 1501 S. Highline Ave., Sioux Falls, SD 57110 or can be emailed to [e-mail].
Many lawmakers also were upset during the 2025 legislative session after learning about the Noem administration's decisions to enter long-term leases for new One Stop centers in Sioux Falls and Rapid City. Most of state government's local offices including those of DSS in the two communities have since moved to the centers.
Noem resigned as governor in January after she received U.S. Senate confirmation as the new federal Homeland Security secretary. After she left, the Legislature unanimously adopted a new law requiring lawmakers' approval of any lease longer than 15 years and costing more than $5 million in total or more than $50,000 per month.
Leases for One Stop centers in Sioux Falls and Rapid City are for 30 years and will cost an estimated $200 million more during that time than had state government continued with previous leases for locations scattered throughout the communities. The new law however doesn't apply to any past lease agreements.
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