Panel hears bill to reinvest civil penalties for adult care homes and disability providers into grant funds

House Bill 23-16 directs civil monetary penalties assessed after correction-order reinspections for adult care homes and certain disability community service providers into two newly created reinvestment funds, rather than sending those penalties to the state general fund, witnesses told the House Committee on House Health and Human Services.

Jenna Moyer of the Revisor’s Office summarized the measure as amending KSA 39-9-49 and KSA 39-20-16 to establish the adult care homes civil monetary penalty reinvestment fund and the disability community services providers civil monetary penalty reinvestment fund. The bill would allow KDADS to award grants from those funds to licensees under each statute for projects approved by the department that benefit the health, safety and welfare of residents or program participants.

KDADS survey, certification and credentialing commissioner Lacey Hunter told the committee the bill would not increase the number of citations KDADS issues; rather it would redirect monies that are already collected as civil penalties. She said the department envisions the funds as a pool that licensed providers could apply to for projects such as training, technology upgrades or major physical‑plant repairs. Hunter said KDADS would work with stakeholders to design grant‑making policy and procedure.

Emergency use example and enforcement process: Hunter described a recent incident in which an owner of two Home Plus facilities told KDADS the provider was financially insolvent with staff leaving and 16 residents needing relocation two days before the Christmas holiday. KDADS said it had no emergency fund to hire a third‑party manager to maintain operations and allow the statutorily required 30‑day resident notice. Witnesses said a reinvestment fund could be used in similar emergencies to stabilize operations and protect residents, subject to department policy and approval. KDADS also explained that civil penalties are subject to administrative due process, including informal independent review, mediation and appeal.

Data, revenue and sustainability concerns: KDADS provided historical data on civil monetary penalties assessed for adult care homes: 2021 — six penalties, average $6,333; 2022 — 15 penalties, average $6,300; 2023 — 44 penalties, average $7,096.14; 2024 — 47 penalties, average $4,935.96 and an annual total for 2024 of $231,999. Witnesses acknowledged that assessed penalties alone may not reliably sustain a grant program.

Leading Age Kansas, a trade association for nonprofit aging services providers, supported creation of the fund but recommended two changes: (1) specify the fund as exclusive to state‑licensed adult care homes (excluding CMS‑certified nursing facilities and nursing facilities for mental health) so those CMS facilities would not be double‑eligible; and (2) redirect adult care home licensing fees into the reinvestment fund to improve sustainability. KDADS estimated current annual adult care home licensing revenue at approximately $1,085,380 (709 licensed adult care homes, 33,806 total beds, fee structure described as $100 flat fee plus $30 per bed).

Concerns from lawmakers: Some committee members raised a possible perverse incentive — that facilities repeatedly cited could later apply for grants — and asked whether KDADS could use policy guardrails to prevent funds from directly subsidizing recurring violators. KDADS said the department's intent is that the fund be a pooled grant resource administered with policy and stakeholder input and that chronic violators could be screened out during application review; KDADS also noted that license revocation remains a sanction if conditions warrant.

Next steps: Committee members heard a mix of proponent testimony and questions but did not record a committee vote on the bill during the hearing. KDADS and stakeholders said they will continue work on grant policy, sustainability options (including possible redirection of licensure fees) and eligibility criteria if the bill advances.

Ending: Supporters said the proposal would create a tool to reinvest penalty revenue into facility improvements and emergency stabilization; critics and some legislators urged additional guardrails and sustainable revenue sources before implementation.