How South Dakotans are making child care affordable and available

South Dakota has a tight labor market. It’s even tighter as parents struggle to find available and affordable child care.

To bolster recruitment and retention among parents, some employers and organizations are taking matters into their own hands.

One major employer in Rapid City has a day care center in-house, and a contract with a local nonprofit to operate it. Another Black Hills employer issues $5,000 checks annually to help pay the child care costs of workers. And an East River economic development corporation is leading a drive to start a day care center in a county that lacks one.

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Those are a few of the many ways people in South Dakota are trying to close the gap between South Dakota’s overwhelmed child care infrastructure and the growing demand for child care services. The latest statewide effort to address the issue is the South Dakota Business Child Care Collaborative, which is hosting its first meetings this month.

The collaborative’s mission is to gather child care providers, businesses, nonprofits, foundations, local governments and state government to partner on solutions. 

One member of the collaborative says those solutions will have to go beyond support for private day care providers, some of which are unable to pay enough to attract workers, even while charging more than some parents can afford.

“I think that’s why all these businesses are starting to meet and talk about child care, because there aren’t any good answers now about how to fix the business model,” said Shelly Rose, human resources and community relations manager for the Coeur Wharf mine in the Black Hills. “The most successful models involve another organization — either faith or business or government-based. There’s some other piece that helps support child care.”

Some solutions can already be found across the state, from Madison to Rapid City.

Child care: an economic development issue

Lake County doesn’t have a day care center. That’s with a population around 11,000 — about 6,000 alone in Madison.

Relying solely on in-home day cares, which are decreasing statewide, limits growth in industries with work hours outside normal business hours. A day care center with multiple workers to help cover parents’ 12-hour shifts is necessary for growth in industries such as health care and entertainment.

That makes child care an economic issue, said Brooke Rollag, with Lake Area Improvement Corporation, an economic development agency in Madison. 

Several businesses are expanding in the eastern South Dakota city, with some planning to add 100 to 200 jobs in the next couple of years.

The organization is spearheading an effort to create a day care center in the city. As the economic development agency in Madison, the improvement corporation represents and gathers several businesses in the area to accomplish shared needs in the community. 

The organization hasn’t identified a building for the center yet, but Rollag has a plan in place to quickly partner with a child care provider after the organization buys or leases the space. Even then, it’ll be another 18 to 24 months until the day care center is running.

“We’re working closely with the school system and the city and county on this too,” Rollag said. “I think it’s a private-public partnership — it can’t be one entity that can take on the child care crisis alone.”

Rollag hopes that by partnering with organizations and local governments, the community will recognize the need for child care from “diapers to diplomas.”

“The lack of child care is costing us money every month that goes by,” Rollag said.

Child care stipends help employee retention, recruitment

Pioneer Bank & Trust in the Black Hills offers each of its employees $5,000 to pay for licensed child care.

With 27 employees taking advantage of the stipend, that cost can be $135,000 annually — about the same as four or five entry level employee salaries.

But the success in retaining 27 staff because of the program outweighs the cost, said Lyndsay Schreiber, director of human resources at the bank.

“The cost of turnover and the timeframe it takes to replace people these days is insane,” Schreiber said. “Just in job postings alone last month we spent $3,800 for a few postings. That’s not including the employee time it takes to interview people and the preliminary work before proposing a job offer.”

The company pays up to $5,000 a year directly to the employee’s child care provider. The program has been in place since January 2020.

For many employees, the $5,000 covers a significant portion of the annual cost of child care — which can include after-school care, preschool or child care for infants.

The program was put in place after Schreiber spent a year researching ways to retain employees and parents.

Pioneer Bank isn’t the only company to offer such a stipend. First Interstate Bank in Sioux Falls offers a similar program with a pre-tax children’s account. The bank contributes $1,500 annually for each child up to $4,500 a year. Parents can contribute to the account as well until it maxes out at $5,000.

Making donations, building fences

It’s the small things that can make a difference, according to Shelly Rose at Coeur Wharf, the only remaining large-scale gold mine in the Black Hills and South Dakota.

There is only one licensed day care in the Lead-Deadwood area, where the mine is based. An estimated 20% of the mine’s employees have children ages 0 through 5, with some relying on the day care for child care.

While it may not be much, the mining operation helps the day care in “sustainable projects,” Rose said, such as building a fence for the day care’s playground or handing out dozens of holiday food baskets to supply the day care’s 60 families with meals.

The business employs 260 people, rotating on five-day shifts at the mine. Given that schedule, any miners with children need someone watching their children. Relying solely on the licensed day care isn’t enough for Coeur Wharf workers, but it’s still important to support the business for the wellbeing of the community, Rose said.

Ideally, the organization would like to find a way to provide child care for industries on a “24/7/365” basis.

“The casinos up here are all on that same 24/7/365 schedule,” Rose said, referencing businesses in nearby Deadwood. “The industries up here need overnight care that’s just not here.”

Swapping office space for child care space

As businesses move from in-office work to hybrid or remote models, office buildings across the country are left empty or half-filled. Several businesses are reevaluating their office space and use, with some considering on-site child care, said Kayla Klein, executive director at Early Learners South Dakota.

Such a benefit can be helpful for worker retention, Klein said.

But businesses are often scared away from the idea by the price tag and the risk involved with operating a child care center. Sanford Health and Citibank both formerly had on-site daycares in Sioux Falls. Monument Health in Rapid City still operates one, and First Bank & Trust’s daycare in Brookings has been operating for over a decade now.

To avoid the risk of operating a child care business itself, Black Hills Energy in Rapid City partnered with the local YMCA to contract out child care for its new headquarters, which opened in 2017. 

Black Hills Energy provides the space, assists with building costs and subsidizes child care fees so employees pay a “significantly reduced rate” for child care, said Lynn Kendall, community affairs manager for Black Hills Energy. Typically, monthly child care costs at a YMCA facility range from $740 to $800.

In turn, the YMCA pays child care workers and covers its own insurance for the operation.

The YMCA has a citywide waitlist of 321 with four locations. The Black Hills Energy site has a waitlist of 21, which strictly serves Black Hills Energy families.

“We know we have to work together to manage the workforce problem,” said Keiz Larson, YMCA executive director. “My biggest concern is the knowledge that parent fees do not cover the cost of child care for children younger than 5.”

Providers don’t typically start making a profit on child care until children are preschool age or in after-school care.

Larson said Black Hills Energy officials are interested in expanding their on-site day care to further meet the needs of their employees and families. But YMCA can’t expand any of its sites until it has enough staff — two classrooms are closed because the organization can’t hire qualified workers at an affordable rate.

Scholarships support children, strengthen classrooms

The John T. Vucurevich Foundation is a philanthropic organization based in Rapid City that gives scholarships for preschool children who are waitlisted or don’t qualify for the Head Start program, but whose parents can’t afford the full cost of preschool tuition.

The Starting Strong program began in 2007. A majority of the program’s cost, which serves 100 children, is covered by the foundation. The city of Rapid City contributes just shy of $50,000 a year to the fund as well, along with contributions from the Gwendolyn Stearns Foundation.

The program works with child care providers who meet Starting Strong standards, which support the scholarship students and the teacher, said Jessica Gromer, program officer for the foundation.

“It’s not just the child affected,” Gromer said. “Parents are learning alongside their child on how to teach when they come home from school. The benefit extends beyond preschool time. … And most of the Starting Strong classrooms only have two to seven scholarship children in the classroom. We’re reaching triple, if not four times, as many children that are awarded scholarships.”

While the program only covers preschool, several families who qualify for the scholarship also qualify for government subsidies and child assistance programs to aid in child care costs outside of preschool.

Gromer said that if more businesses and organizations support changes to the industry, the foundation would be open to other initiatives to address child care problems, especially innovative solutions.

“Child care as an industry prior to the pandemic had a cracked foundation. The pandemic has not only crushed the foundation, but the house is completely moved off that foundation now,” Gromer said. “Do we go back to that cracked foundation, or do we build a new foundation that communities can stand on?”

State efforts aim to improve child care system

Millions of dollars have already been spent on the problem by the government in recent years.

Over $62 million in stabilization grants were awarded to more than 600 child care providers across the state through the American Rescue Plan Act, part of $100 million allocated to the state from the federal government for child care needs in 2020.

The remaining $38 million in funding has not reached South Dakota providers yet. The money is handled by the South Dakota Department of Social Services (DSS), which held listening sessions throughout August to brainstorm ideas on how to use the funds and improve the state’s child care system.

Now, the DSS is reviewing the information and will use the feedback to “guide the priorities of the work as we advance,” according to DSS Secretary Laurie Gill.

Gov. Kristi Noem also plans to address the child care crisis during her second term. She also held listening sessions during her reelection campaign last summer.

“Gov. Noem did commit in her gubernatorial debate to work on a solution to support child care providers in accessing health care benefits,” spokesman Ian Fury said in an emailed statement. “More information on that proposal will be unveiled at a later time.”

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