State Budget

THE STATE BUDGET IS MORE THAN DOLLARS AND CENTS. It reflects the values of Kansas voters and the lawmakers elected to represent them. Decisions to spend taxpayer dollars on programs and services vital to children, families, and communities matter because the budget determines our state’s quality of life, including economic security, education, and health care. 

This can only be achieved by creating a stable revenue stream through a fair tax system, elevating policies that recognize and correct systemic disparities and barriers faced by marginalized groups, and understanding the impact budget decisions will have now and in the future.

KAC works to demystify budget issues and the process so more Kansans can engage in this area. Our goal is to increase transparency and participation in the discussions happening within communities and at the Statehouse to advance policies that ensure that families and children have the resources they need to grow up healthy and successful.

Changes to the Budget Process

The 2025 session brought significant changes to the state budget process. Most notably, the Legislature shifted from an executive-initiated budget process to one created by the Legislature. 

Prior to 2025, the budget process began with the Governor working alongside state agencies to create a budget recommendation that would be submitted to the Legislature the first week of the legislative session. This budget recommendation was used as the base for the Legislature to work from. During that traditional process, the Legislature could still accept or reject any recommendations within the Governor’s budget proposal.  

READ: How does the budget work? 

During the 2024 and 2025 interims (and again planned for 2026), however, the Legislature diverted from this traditional budget process by creating a Special Committee on Legislative Budget. This committee met for several days over the interim to create a budget bill that essentially replaced the Governor’s budget as the template from which the budget would be crafted.

By doing this, the Legislature requires any budget items recommended by the Governor be added to the budget by a legislative budget or subcommittee. During a Governor-led process, the Legislature would use the Governor’s recommendations as a base; those items would be retained unless they were specifically removed by the Legislature.

As with any legislation, it’s more difficult to have items added to a bill. With this new process, the Legislature can more easily ignore any of the Governor’s recommendations for the state’s budget priorities. 

Overall Budget

After several years of higher-than-forecasted revenue, the Kansas budget achieved historic surpluses. Tax cuts in the past few years, however, have reduced revenues, and in FY 2026, Kansas spent approximately $504.7 million more from the State General Fund than it collected in revenue.  

This gap between revenue and expenditures is anticipated to widen in FY 2027, when the legislative approved expenditures are anticipated to exceed revenue by nearly $689.1 million.  While Kansas continues to maintain its Budget Stabilization Fund that currently holds just over $2.0 billion, we anticipate that lawmakers will look for ways to cut down on spending as they strive to maintain a balanced budget. 

Despite these challenges, the Legislature made some notable investments during the 2026 Session:

• Increased Medicaid payments for nursing facilities.

• Increased Medicaid reimbursement rates for providers serving individuals on the Intellectual/Developmental Disability, Frail Elderly, and Physical Disability HCBS waivers.  

• Increased funding for the Children’s Health Insurance Program to accommodate growing membership.
• Funded the first year of operations at the South Central Regional Mental Health Hospital in Wichita. 

Office of Early Childhood

A highlight in the FY 2027 budget is the implementation of the new Office of Early Childhood (OEC). The OEC was formed when the 2025 Legislature passed HB 2045. The goal of the new agency was to improve transparency and coordination across the state’s early childhood system. The creation of the agency does not represent a shift in services or program make-up; it is purely a reorganization that moves current home visiting and child care programs into a new early childhood-focused agency. The new agency will also house the Kansas Children’s Cabinet and Trust Fund and associated programs. 

The budget for the new agency was presented to the Legislature by the Governor’s transition team and was ultimately passed with very few adjustments. This coordination between the Governor and the Legislature allowed the agency to get started on the right foot and paved the way for a smooth transition – a definite win for Kansas kids! The agency became fully operational on July 1, 2026. 

Children’s Initiatives Fund 

The Children’s Initiatives Fund (CIF), administered by the Kansas Children’s Cabinet, is one of the largest and the only dedicated sources of funding for programs serving children and families in Kansas. In FY 2026, the CIF supported 11 evidence-based and data-driven programs. However, with the reorganization associated with the new Office of Early Childhood and several programs being funded via agency budgets, only six programs will be funded by the CIF in FY 2027. The slate of programs funded by the CIF focus on early childhood care and education, health screening, home visiting, and parent education. 

The CIF relies on money the state receives from the Tobacco Master Settlement Agreement ($44.7 million in FY 2026). CIF dollars are used to fund direct services as well as a match to draw down additional federal funding for several programs serving Kansas children and families.   

LEARN MORE about the past decade of CIF funding and current challenges. 

Policy Solutions

Building a state where all children and families have the resources they need to thrive requires constant and careful management of the budget. To create a solid budget policy Kansas lawmakers must:  

• Design a state tax system that reliably and adequately funds the budget without disproportionately impacting low- and middle-income households.   

• Protect rainy day funds for emergency uses to avoid budget cuts to essential programs and services during economic recessions.  

• Ensure the state meets matching and maintenance of effort requirements to draw down all possible federal funds.  

• Better invest in early childhood programs by supplementing the Kansas Endowment for Youth (KEY) Fund with State General Fund dollars.  

• Mobilize state, federal, local, and private investments to support critical needs in vital services like health, education, and child care.  

• Improve transparency and impact analysis on budget and tax expenditures to ensure that tax dollars are best used in ways that benefit all Kansans and lift up the most vulnerable