Budget Summary: Children's Initiatives Fund

Karuva Kaseke | May 11, 2023

The Kansas Endowment for Youth (KEY) Fund and the Children’s Initiatives Fund (CIF) were created as the result of a legislative task force and legislation to provide oversight and guidance over the use of the proceeds of a nationwide tobacco litigation against four major tobacco companies. The ensuing settlement promised to provide perpetual annual payments proportional to the state’s smoking-related health care costs.

Per the legislation, tobacco dollars received by the state go directly to the KEY Fund, which was 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 as a result of limited funding. In FY 2023, the CIF supported 11 programs, as well a major competitive grant for community-directed programs and services, providing a total of $52.5 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 5th birthday.  

Funding History and Complications 

Kansas has received more than $1.3 billion from the tobacco settlement since the creation of the two funds more than 20 years ago. Unfortunately, the KEY Fund has not served as the endowment fund that was envisioned for a couple of reasons.  

First, tobacco sales overall have decreased, and tobacco companies outside of the four 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 CIF and KEY Fund to cover shortfalls in the State General Fund (SGF). This continual misuse of the funds affected programmatic funding in those particular years and hindered the effort to create a self-sustaining endowment that would grow with time.  

Recent revenue estimates project the state will end FY 2023 and FY 2024 with combined surpluses of almost $5 billion. A small portion of that invested into the KEY Fund could repay some of the funds siphoned away over the years, and enable the Fund to be utilized as an endowment as originally intended, making it self-sustaining.

  

 

 

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 evidence-based recommendations to address early childhood care and education needs in Kansas. Permanently allocate State General Fund dollars to support CIF-funded programs and offset ongoing reliance on decreasing tobacco dollars. Invest significant one-time funding to the KEY Fund to allow its transition to a self-supporting endowment fund as originally intended by legislation. Utilize State General Funds instead of CIF dollars to meet matching requirements for federal programs.

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