What's going on with TANF?

A brief primer on proposed Temporary Assistance for Needy Families (TANF) benefit cuts in South Dakota

Jun 22, 2025

This week, you may have read headlines about proposed 10% cuts to Temporary Assistance for Needy Families (TANF) benefits in South Dakota. If you're like most South Dakotans, your first question might be, “Wait—what is TANF again?”

Upon reading more about what’s going on, I’ve then received a common question: “Why are we cutting support for vulnerable families?”

As your neighbor and legislator, I believe it’s essential to break this down so you understand what’s happening right now.

Let’s take a look.

1) What is Temporary Assistance for Needy Families (TANF), and how does it work in South Dakota?

TANF is a federal block grant program designed to help low-income families with children achieve self-sufficiency. It provides short-term financial assistance and supportive services—child care, job training, and transportation—to help families stabilize and eventually thrive.

TANF funds are directed to focus on four things, per a TANF issue memo provided by South Dakota Legislative Research Council:

Providing assistance to needy families so that children can be cared for in their own homes or in the homes of relatives. This is the primary use of TANF funds in South Dakota. Eligibility is managed by the South Dakota Department of Social Services and is temporarily provided.
Ending the dependence of needy parents on government benefits by promoting job preparation, work, and marriage. This is the secondary use of TANF funds in South Dakota, focused on job training, employment assistance, the Jobs for American Graduates (JAG) program, and other assistance for parents to find and keep employment.
Preventing and reducing the incidence of out-of-wedlock pregnancies. South Dakota does not currently use TANF dollars for this purpose.
Encouraging the formation and maintenance of two-parent families. South Dakota does not currently spend any TANF dollars for this purpose, but some states do, subject to the limits of federal law.

Funds may also be used to ensure that proper administrative functions are in place to fulfill these four purposes.

In South Dakota, TANF served approximately 2,487 families in April 2025. These are not just numbers—they are single mothers working two jobs, grandparents raising their grandchildren, and parents returning to school to build a better life.

TANF is administered by the South Dakota Department of Social Services (DSS). While the funding comes from federal sources, South Dakota has the authority to determine benefit levels and spending priorities. South Dakota receives $21,204,402 per year from the federal government for TANF, with a minimum maintenance of effort (MOE) of $8,540,000 of general funds per year to receive the federal support. If federal funds are underspent, South Dakota will accumulate funds in a federally held TANF carryover fund that we can access to support the program. Because we typically come in below our budgeted expenses, South Dakota has accumulated a $24 million TANF reserve—the equivalent of one full year’s worth of federal TANF funds.

TANF, to this stage, has gone untouched by Pres. Trump’s recent One Big Beautiful Bill. However, other funding cuts for programs administered by the DSS may impact TANF, such as the proposed cuts to the Supplemental Nutrition Assistance Program (SNAP). States can use their TANF carryover funds for any activity that meets the four purposes of TANF, but the intent of the carryover?

To ensure states maintain TANF benefits despite changes in the economic environment.

2) What’s up with the proposed TANF benefit cuts?

Earlier this month, DSS released a rules package proposing a 10% reduction in TANF monthly cash assistance for low-income families. The package also proposes a 10% reduction in the annual clothing allowance for children receiving TANF support—from $100 to $90.

This means a family of three currently receiving $696 per month would instead receive $626. A family of four would see monthly support reduced from $781 to $703. These amounts, already modest, fall far short of covering rent, food, and basic living expenses. To be specific, this would fall at 32% of the federal poverty line.

This proposed reduction would save the state only about $1.5 million annually—less than 7% of the $24 million in TANF reserves South Dakota is currently sitting on. This means that South Dakota would still need to use TANF carryover funds while looking ahead to understand whether funds can be shifted to TANF.

To be clear, there is no immediate TANF funding crisis, and current general funds could be made available to support the program if needed. In fact, just two weeks ago, the Joint Committee on Appropriations approved a $4 million budget transfer DSS to the Department of Human Services, given that DSS experienced a budget surplus in its behavioral health services.

That isn’t to mention we continue to hold significant TANF carryover reserves that could be used to cover these expenses. On average, South Dakota increased its TANF carryover balance annually by ~$89,777 between FY2018 and FY2023.

It’s true that South Dakota is now contending with lower-than-expected sales tax revenues and anticipating several reductions in federal funding. I’ve written about those painful realities, and they will affect budget planning going forward. However, we currently have the funds to meet our obligations to families in need—and we didn’t intend to reduce those obligations without discussion.

During their budget briefing in the 2025 legislative session, DSS described the shift in TANF funding as a temporary measure—a "swap" to draw down the TANF carryover while reducing the use of general funds to the federally required minimum Maintenance of Effort (MOE). The plan was to use TANF reserves in the short term to give the state time to consider longer-term funding options.

You can listen to the DSS presentation on TANF below in Joint Committee on Appropriations on January 21, 2025, starting at the 49-minute mark.

In writing and verbally, it was made clear that the reduction of general funds for TANF, proposed by former Governor Noem, was to be replaced with federal TANF carryover funds as a “fund swap.”

In documents provided to us, you can find the presentation here that outlines the swap on Page 20. In our internal budget briefs using information provided by DSS, TANF is brought up as a line item for consideration under the General Appropriations Act (also known as the “G-Bill”). In that brief, the TANF item is described as a fund swap, with no mention of cuts to benefits.

Verbally, you can listen to DSS speak to TANF around the 49-minute mark. At that point, DSS stated that the swap was a temporary solution to deliver services while using TANF carryover dollars. No specific benefit reductions were discussed at that time.

At the 55-minute mark, I directly asked whether services would be reduced due to the fund swap. DSS Secretary Matt Althoff responded that they would be examining benefits and exploring options but emphasized that they had a preliminary plan—a fund swap using carryover funds—but no immediate plan to reduce benefits.

Unfortunately, the committee did not call DSS back for further discussion. To be frank, the lack of any additional questions from our committee probably resulted from the fact that we thought we were swapping funds, not actually cutting anything. That’s what we read and heard, anyway.

The release of this rules package—and its true impact—took lawmakers and advocates by surprise for that reason.

This is not simply a budget adjustment. This is a reduction in benefits that will hit the working poor at the worst possible moment.

We’re facing tough economic times, but will we pass that on to children and families in poverty?

3) Where do I stand on this?

For all those reasons and more, I oppose these benefit reductions as proposed.

I’m one of two legislators who serve on both the Joint Committee on Appropriations and the Interim Rules Review Committee. While the other parts of the rules package address the use of TANF vs. kinship foster care—which I need to review further—the part of the proposed rules that reduce TANF benefits needs to be paused.

Here’s what I've said publicly:

“These are proposed cuts to benefits. There’s no other way to say it. And cutting benefits to low-income families while South Dakota continues to sit on a sizable TANF carryover balance sends the wrong message about our priorities.”

Why do I oppose these reductions?

At no point during session were we told these cuts were necessary for the upcoming fiscal year. We were briefed on a technical funding change, not a policy shift. And certainly not a decision that would further strain the already limited resources for families in poverty, especially during a period of continued inflation.

Secretary Althoff responded to my question during the January 21 hearing by stating that DSS would review benefits, and I want to make sure that is clear. We heard there may be a need to consider reviewing benefit levels due to budgetary concerns. That is true.

At the time, it was unclear what that review would entail, when it would occur, or how it might impact the families currently being served. No concrete proposals were presented during the Legislative Session, and no follow-up was provided to the committee suggesting this benefit reduction would happen.

Simply put, we were approving a funding swap, not a budget cut.

TANF is not facing a financial crisis in South Dakota. We currently hold more than a year's worth of TANF carryover funds—$23 million—as you read this. We do not need to cut TANF benefits at this moment without understanding what our strategy will be to support families and children going forward. In fact, our state is in a uniquely strong position compared to others to invest in our poorest families and children, and that includes using federal TANF dollars as intended.

These proposed rules have generated intense public backlash. Organizations like Early Learner South Dakota, Feeding South Dakota, and the South Dakota Budget & Policy Institute have all come out against the cuts. South Dakota Searchlight and KELOLAND have reported on the overwhelming public opposition—over 80 public comments submitted in under two weeks, nearly all opposed to the rules.

We have the funds. We have the flexibility. What we lack is clarity and communication on our strategy for the future.

And that’s why we need to hit pause on reducing benefits.

4) What’s next?

First: You can still share your feedback.

The Department of Social Services is accepting public comment on the proposed TANF rule changes. If you want to share your thoughts, I encourage you to submit feedback before the comment period closes on June 30. Written comments can be sent to DSSRules@state.sd.us.

Second: The proposed rules will be reviewed by the Legislature’s Rules Review Committee on July 15. This committee has the authority to deems agency rulemaking processes complete or revert the rules to a specific step in the rulemaking process. I believe these rules should not move forward without a full and transparent discussion by the Joint Committee on Appropriations.

I’m fully aware, as an appropriator, of the budget challenges our state faces. Given the multitude of federal funding cuts being thrown to DSS that I find unnecessary, I have a lot of empathy for DSS leadership trying to sort this out.

However, it is still a partnership between DSS and the Joint Committee on Appropriations to navigate questions just like this. The power of the purse belongs to the Legislature, and the intent from JCA was clear:

We approved a fund swap.

My Final Take

The proposed reduction in TANF benefits in South Dakota is the result of a breakdown in communication. It’s really that simple.

But it’s also important to highlight a deeper concern here: Without paying close attention, programs meant to support our most vulnerable families can be quietly eroded.

Proposals like this result from the combined forces of reduced tax revenues at the state level—reflecting tough economic conditions in South Dakota—along with unnecessary reductions to federal programs in the name of handing permanent tax breaks to the wealthiest Americans and large corporations. The national deficit is ballooning in spite of cuts like these at the state and national level.

I will remain a vocal advocate for working families and children, especially those experiencing the kind of poverty that results in eligibility for TANF. We all do better when we all do better, and if South Dakotans are struggling to make ends meet, we’re not doing well as a state.

We currently have the funds to support our most vulnerable families and children. The real work ahead of us is determining a strategy that maintains fiscal strengths while caring for people most impacted by economic hardship. That fiscal strategy must be built on our moral obligation to children—our future—who will make South Dakota stronger.

As a member of the Joint Committee on Appropriations, I know we can accomplish that—and we will. We worked together this session to accomplish extraordinary things to “keep the lights on” in South Dakota. And we did that by not taking it out on the most vulnerable. Kids and families in poverty deserve a hand up, not a push aside.

I will work tirelessly to ensure that TANF families and children receive the help they need. I hope you’ll join me.

—Rep. Muckey