Division of the Budget
Landon State Office Building Phone: (785) 296-2436
900 SW Jackson Street, Room 504 adam.c.proffitt@ks.gov
Topeka, KS 66612 Division of the Budget http://budget.kansas.gov
Adam C. Proffitt, Director Laura Kelly, Governor


February 23, 2024


The Honorable Sean Tarwater, Chairperson
House Committee on Commerce, Labor and Economic Development
300 SW 10th Avenue, Room 346-S
Topeka, Kansas 66612
Dear Representative Tarwater:
SUBJECT: Fiscal Note for HB 2569 by House Committee on Commerce, Labor and
Economic Development
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2569 is
respectfully submitted to your committee.
HB 2569 would prohibit the Secretary of Health and Environment from renewing any
contracts related to childcare licensing with cities, counties, or any other entity on and after July
1, 2025. The services would be required to be replaced and provided by full-time equivalent state
employees in the unclassified service. The Secretary would be required to utilize the funds
previously allocated to the contracted entities and would seek reimbursement for excess costs from
the Department for Children and Families as allowed pursuant to the agreement for reimbursement
of costs between the agencies or any other available funds. The Secretary would be required to
conduct an annual survey of all licensed child care providers and report a summary of the survey
to Legislature beginning in 2026.
According to the Kansas Department of Health and Environment (KDHE), enactment of
HB 2569 would require additional expenditures of at least $1.6 million, including $289,280 from
the State General Fund, in FY 2026 and $636,241, including $289,280 from the State General
Fund, in FY 2027 and beyond. The agency states they currently implement a hybrid model for
facility inspections and services. Some of the local licensing specialists are KDHE employees and
others are contracted through local agencies, depending on what is determined to be best for the
community. As of September 30, 2023, 45 of 105 Kansas counties were being serviced by a KDHE
specialist and 60 counties being serviced by a contracted local agency inspector. There are
currently 46 contracted licensing specialists working through local health departments. The
agency indicates they would need 46.00 FTE Licensing Specialist positions to comply with the
The Honorable Sean Tarwater, Chairperson
Page 2—HB 2569

requirements of HB 2569. KDHE states the average salary of current KDHE Licensing Specialists
(including fringe benefits) is $62,284 and the total cost for 46.00 Licensing Specialists would be
$2,865,057. The agency would also need fleet vehicles for each position beginning in FY 2026.
An average cost of $20,000 was used for a total cost of $920,000. The total for salaries and the
vehicles would be $3,785,057.
Currently, KDHE distributes $2,518,096 to local health departments for licensing services.
These funds are provided to KDHE from the Department for Children and Families (DCF) via
federal Child Care Development Fund (CCDF) as part of Aid to Local (ATL) funding. This
includes funding for salaries, equipment, gas, mileage, and other supplies to operate licensing
programs. If KDHE were to eliminate the ATL funding that is dispersed to the local counties with
a contracted licensing specialist and retain those funds, the need to convert all contracted staff
would be reduced to approximately $1,266,961 for FY 2026. For FY 2027 and beyond, the
additional funding would be $346,961 as the initial expense of vehicles would not be needed.
KDHE reports that eliminating contracted local health departments would affect the
amount of match funds the program is required to have each year through the CCDF. KDHE is
currently under contract with DCF which obligates the program to match approximately $1.0
million in funds. Currently, the program can meet this obligation by receiving State General Fund
in an amount of $290,720, funds collected from program fees (average of $420,000 per year since
2021), and the match funds local health departments provide to the Child Care Licensing program.
Currently, local health departments provide a funding match totaling $1,323,943. With the
elimination of contracted health departments, this would leave the program with approximately
$710,720 from the current State General Fund and fee fund amounts. The program would need an
additional $289,280 outside of CCDF funding to meet the contract obligation of $1.0 million each
year.
The reported estimates assume the conversion of 46.00 contracted inspectors to state
employees and do not reflect the actual costs that will be incurred. The agency is unable to estimate
an exact fiscal effect. KDHE notes the estimate provided does not account for the issuance of
supplies, gas mileage, phones, and other equipment needed to function as a KDHE licensing
specialist, which would cause an increase in the fiscal effect. It also does not account for streams
of revenue that would be lost for communities where contracted licensing specialists are based.
Many local health departments collect local fees to support their program and department as
KDHE does not typically fully fund child care licensing contracts. In addition, there is also the
potential for local health departments to cancel their contractual obligations prior to the effect of
this bill. KDHE states that additional CCDF funding requests made by KDHE to DCF are not
guaranteed.
DCF states that depending on the calculated impact by KDHE, DCF may be obligated to
provide additional CCDF funding if available. Additional CCDF funds would be subject to
required earmarks and spending limits. DCF reports that enactment of HB 2569 would not have a
fiscal effect on agency revenues. Any fiscal effect associated with HB 2569 is not reflected in The
FY 2025 Governor’s Budget Report.
The Honorable Sean Tarwater, Chairperson
Page 3—HB 2569

According to the Kansas Association of Counties, enactment of the bill would have a fiscal
effect on counties. While there is some potential for savings, the total could not be estimated.
Loss of funding to local health departments could result in less services locally. The League of
Kansas Municipalities notes that the bill could impact cities with contracts for the services, but a
total fiscal effect could not be estimated.

Sincerely,

Adam C. Proffitt
Director of the Budget


cc: Amy Penrod, Department of Health & Environment
Kim Holter, Department for Children & Families
Jay Hall, Kansas Association of Counties
Wendi Stark, League of Kansas Municipalities