Budget Summary: Children's Initiatives Fund

Megan Leopold | November 12, 2025

The Kansas Endowment for Youth (KEY) Fund and the Children’s Initiatives Fund (CIF) were created in 1999 in response to a nationwide tobacco litigation against four major tobacco companies. The ensuing settlement, known as the Master Tobacco Settlement Agreement (MSA), provides perpetual annual payments proportional to the state’s smoking-related health care costs.

Per current law, tobacco dollars received by the state go directly to the KEY Fund, which is intended to serve as an endowment for the long-term benefit of funding children’s programs. Each year, a transfer is made from the KEY Fund to the CIF to support these programs. Kansas received its first tobacco revenues in fiscal year (FY) 2000, and these resources now provide a significant portion of the state’s public investment in early childhood education programs. 

Current Funding and Programming 

Programs and services funded through the CIF have changed over the years due to shifting priorities and limited funding. In the FY 2025 approved budget, the CIF supports 13 programs, including a major competitive grant for community-directed programs and services, providing a total of $64.1 million.

These programs include child care assistance; home visits for parents and their newborns; parent/ caregiver education and resources to support their child’s development; and the recently added Dolly Parton’s Imagination Library, which provides free, age-appropriate books to children from birth to their fifth birthday.

Funding History and Complications 

Kansas has received more than $1.5 billion from the MSA since the creation of the two funds 25 years ago. Unfortunately, the KEY Fund has not served as the endowment fund that was envisioned for a few reasons.

First, tobacco sales have decreased overall, and tobacco companies outside of the four included in the settlement have grown their shares of the market. As consumption of tobacco products continues to decrease through public education and market regulations, revenues to the funds will keep declining.

Second, between 2001 and 2018, more than $235 million was transferred out of the KEY Fund and CIF to cover shortfalls in the State General Fund (SGF). This misuse affected programmatic funding in those particular years and hindered the effort to create a self-sustaining endowment that would grow with time.

  

 

 

RECOMMENDATIONS To ensure that programs and services providing vital early childhood education and care are protected, improved, and able to serve more of the state’s population, there are several measures lawmakers could take to strengthen the CIF. Adopt the Kansas Children’s Cabinet budget recommendations to ensure CIF funds are responsibly allocated to evidence-based programs. Offset reliance on tobacco dollars by shifting identified CIF-funded programs to be funded by the State General Fund. Invest significant one-time revenue to the KEY Fund to create a self-supporting endowment fund as was originally intended by legislation. Utilize State General Funds instead of CIF dollars to meet matching requirements for federal programs.

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