April 24, 2016
Having facilitated a desperate budget situation in Kansas, the governor and state legislators now are considering desperate measures to raise new revenue.
One of the most desperate is the possible destruction of the state’s system for receiving and distributing money from the national tobacco settlement to programs that benefit the children of Kansas.
Money from the tobacco settlement — about $58 million each year — is received by the Kansas Endowment for Youth and then flows to the Children’s Initiative Fund. From there, it is distributed by the Kansas Children’s Cabinet to early childhood programs throughout the state. Those programs, including 11 in Douglas County, help detect health or developmental problems, give support to parents and families and provide other services to help children during their critical preschool years.
The Children’s Cabinet carefully screens requests for funding and maintains a full accounting of how the tobacco dollars are spent. It’s a good system that ensures that money from the settlement goes to help Kansas children.
That could all be dismantled by proposals that would use all or part of that money to support the sale of bonds to raise immediate funds to solve a short-term state budget problem. The state would sell bonds in exchange for giving up all or part of its annual tobacco payments for about 30 years.
An initial proposal to securitize all of the tobacco settlement money drew a cool response from state legislators, but, according to state children’s advocates, the governor’s latest proposal to use just a portion of the money to raise short-term cash may be gaining favor. Money left in the children’s fund after programs are funded each year routinely is swept into the state general fund, so securitizing just a portion of the funds seems to make some sense.
The big problem is that, in order for the state to securitize even a small portion of the tobacco settlement money, it must change state statutes in a way that destroys the entire structure that ensures the tobacco money is dedicated for children’s program. Statutes currently require all the tobacco money to go directly to the Kansas Endowment for Youth, but Senate Bill 463 would redirect that money to the state general fund. It also would abolish not only the KEY fund but also the Children’s Initiative Fund. The Children’s Cabinet still would exist but would serve only as an adviser to the governor and the Legislature on spending for children’s programs.
It’s no wonder that groups like Kansas Action for Children are concerned. Even if only a small portion of the tobacco money is securitized, it would be necessary to abolish the entire structure that protects the rest of that money for children’s programs in the state. Without that protection it’s hard to tell how those programs will fare when pitted against all the other demands on the state general fund.
If the state takes this step, the entities formed to manage and be accountable for the tobacco settlement funds could be gone forever. That’s a long-term loss for the state that isn’t justified by any short-term revenue benefits.