How Much Do Foster Parents Get Paid in South Dakota?

South Dakota foster parents receive a monthly maintenance reimbursement from DSS — but it's not a salary, and it's not designed to be. The payments are intended to cover the actual cost of caring for a child who is a ward of the state: food, shelter, daily supervision, and personal items. Understanding what you'll receive, what it covers, and what falls outside that number helps you plan realistically before your first placement.

Monthly Maintenance Rates (2024-2025)

South Dakota uses a tiered daily rate based on the child's age. These rates are adjusted periodically based on the state budget and federal matching percentages.

Monthly totals vary slightly based on the number of days in the month. The daily rate is multiplied by the actual number of days the child is in your care.

These rates apply to a standard licensed foster home. Children with more intensive needs qualify for higher payments under the Level of Care (LOC) system.

What the Maintenance Payment Is Supposed to Cover

DSS calculates maintenance rates to cover:

• Food
• Clothing (day-to-day, not the initial allowance — see below)
• Shelter costs attributable to the child
• School supplies and transportation
• Daily supervision and personal incidentals

The rates are based on federal USDA food cost guidelines and average child-rearing expenditures. They are explicitly not intended as payment for the foster parent's time and labor. That distinction matters both practically and for tax purposes.

The Initial Clothing Allowance

When a child enters foster care, they often arrive with little more than the clothes they're wearing. DSS provides a separate initial clothing stipend — approximately $400 — specifically for this moment. This is a one-time payment per placement, separate from the ongoing monthly maintenance rate, and is meant to cover immediate necessities: underwear, socks, shoes, age-appropriate clothing for school and daily wear.

Enhanced / Level of Care Rates

Children with complex medical conditions, significant developmental disabilities, or severe behavioral health needs may qualify for Level of Care (LOC) rates, which substantially exceed the basic maintenance schedule. LOC payments are determined case-by-case based on the child's documented needs.

Children who are placed in specialized or therapeutic foster homes — homes that receive additional training and supervision from agencies like Lutheran Social Services — typically fall under LOC rates. These placements are more demanding, and the financial support reflects that.

If you are fostering a child with significant needs and believe their placement should qualify for enhanced rates, the conversation happens with your caseworker and the supervising agency, not through a standard application process.

Medicaid Coverage

Every child placed in South Dakota foster care is automatically enrolled in South Dakota Medicaid from the moment of placement. You do not apply for this — it happens as part of the placement process.

What this means practically: you pay nothing out of pocket for the child's medical, dental, or vision care, as long as you use Medicaid-enrolled providers. The child will have a Medicaid ID (sometimes called the "Green Card") that you present at all appointments. If a Medicaid card doesn't arrive within the first days of placement, your caseworker can provide a temporary authorization number.

Medicaid covers routine pediatric visits, dental cleanings, vision exams, prescription medications, specialist referrals, mental health therapy, and behavioral health services. For children who enter care with unmet medical needs — which is common — this is often the most substantial financial benefit of the foster placement.

Child Care Assistance

If both foster parents in the household work outside the home, DSS may cover child care costs through the Child Care Assistance (CCA) program. For foster children specifically, the standard family copayment that applies to biological families is typically waived. This means qualifying families may receive free child care through a licensed provider while they work.

Tax Treatment of Foster Care Payments

Under federal IRS guidelines, foster care maintenance payments are classified as reimbursements for the cost of care — not as wages or taxable income. This means:

• You do not report monthly DSS maintenance payments as income on your federal or state tax return
• Foster care payments do not count toward your adjusted gross income
• They do not affect your eligibility for other tax credits or benefits that are income-dependent

Keep records of the payments you receive and consult a tax professional if you have questions about your specific situation — particularly if you foster multiple children or have a child in care who qualifies for adoption assistance.

The initial clothing allowance and other one-time reimbursements are also generally non-taxable under the same IRS guidance.

How Payments Are Made

DSS issues maintenance payments directly to the licensed foster parent, typically on a monthly cycle. Private child-placing agencies may have different payment schedules — Lutheran Social Services, for example, may process payments through their own billing cycle. Your licensing worker will clarify the specific payment mechanics for your placement type.

What Foster Care Payments Are Not

The maintenance rates are not designed to generate profit. Families who enter foster care expecting the monthly payment to cover all costs beyond what they currently spend often find themselves financially stretched, particularly with teenage placements or children with complex needs.

Real costs that families absorb include transportation beyond what DSS authorizes, school supplies and extracurricular activities above the basic allowance, and emotional support costs for the family system that aren't reimbursable at all.

This is not a reason not to foster. It is a reason to be clear-eyed going in. Foster parenting is a service, and the financial support is structured as cost-offset rather than compensation.

A Note on Kinship Care Payments

Relatives who provide care for a child through a kinship arrangement but do not hold a full foster care license typically receive kinship care subsidies rather than the full maintenance rate — and these subsidies are generally lower. Relatives who complete the full licensing process receive the same maintenance rates as non-relative foster parents.

This distinction is a frequent source of confusion and frustration in South Dakota's Native American communities, where relatives who are informally caring for tribal children — often at significant personal cost — may not receive the same financial support as licensed homes.

The South Dakota Foster Care Licensing Guide covers the full financial picture: Medicaid enrollment steps, how LOC rate requests work, the child care assistance process, and what to document for tax purposes — alongside the step-by-step licensing guide.

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