Kansas KDADS budget hearing focuses on Medicaid-heavy spending, HCBS waivers and reappropriation of federal ARPA funds

Dayton Lamonian, senior fiscal analyst with Legislative Research, told the House Committee on Social Services Budget that Medicaid makes up the bulk of the Kansas Department for Aging and Disability Services budget: “You see the largest slice of that is titled Medicaid. So 89% of this agency's budget are Medicaid dollars.”

The committee heard a detailed review of the KDADS fiscal year 2025 and 2026 budget documents and a line-by-line accounting of reappropriations, enhanced federal Medicaid matches and governor and legislative budget differences. Lamonian said the agency reappropriated roughly $282.6 million carried forward from prior years, including about $150.5 million for home and community based services (HCBS) waivers that the agency expects to lapse; he also identified a remaining $45 million in enhanced FMAP savings connected to ARPA-era HCBS investments.

The agency’s top executive, Secretary Howard, said the $45 million stems from the American Rescue Plan Act provision that temporarily raised the federal Medicaid match for HCBS and that those dollars were required to be reinvested in HCBS projects. “These funds specifically had to then be reinvested by the state,” Secretary Howard said, adding that unspent funds would have to be returned to the federal government if they were not fully expended by the federal deadline.

Why it matters: KDADS is a Medicaid-heavy agency and tiny shifts in federal match rates or one-time reappropriations affect the department’s ability to maintain provider payments, launch new waivers and fund capital work at the state hospitals. Committee members pressed staff on whether the unspent FMAP-related funds could be carried forward without violating federal conditions and on the timing of deadlines to spend those funds.

Key budget elements and committee discussion

- Enhanced FMAP and ARPA HCBS funds: Dayton Lamonian and Secretary Howard confirmed Kansas received more than $93 million in ARPA-related HCBS funding overall and that about $45 million remained unspent and encumbered for projects such as workforce initiatives, technology pilots, autism and behavioral supports, career ladders for direct support workers and mobile crisis services for people with developmental disabilities. Secretary Howard warned that unspent ARPA HCBS money must be spent for HCBS projects or be returned to CMS.

- Reappropriations and legislative deletions: Lamonian walked committee members through reappropriations carried into fiscal year 2025 — including $150.5 million tied to HCBS waivers and $9.9 million from the State Institutions Building Fund — and noted the Legislative Budget Committee deleted certain agency requests (for example, some operations and enhancement items). Lamonian said the $150.5 million reappropriation was lapsed in the agency’s revised estimate and concurred by the legislative budget committee.

- Fiscal year 2026 enhancements and waiver growth: The governor recommended several one-time and ongoing enhancements for FY 2026 to address growth in several HCBS waivers and to launch a new “community support waiver” to serve up to 500 individuals. Secretary Howard described three categories the governor proposed: (1) a $2.5 million partial-year launch of the community support waiver; (2) funding to accommodate projected growth in the frail elderly, technology-assisted (children requiring life-sustaining medical technology) and brain injury waivers; and (3) provider compliance and expansion grants tied to federal HCBS settings and conflict-of-interest requirements. Dayton and the secretary said the Legislative Budget Committee deleted many of the enhancement requests while the governor recommended partial or full funding for several.

- Capital projects and state hospitals: KDADS requested State Institutions Building Fund money for rehabilitation and repair projects at the four state hospitals, including medium-voltage electrical system work and remodels at the Osawatomie campus (Adair Acute Care, Cottonwood Resource Center and MICA House). The governor recommended funding some projects; the LBC deleted others. Secretary Howard emphasized that some EHR (electronic health record) implementation costs are already encumbered and urged the committee to allow reappropriation to complete that work.

- Nutrition services incentive cut: KDADS briefed the committee on an unexpected federal reduction in the Nutrition Services Incentive Program (a federal nutrition grant that supports elderly nutrition sites). The agency reported a roughly $650,000 federal cut and the governor recommended a $1,000,000 state appropriation to backfill the loss and reduce waiting lists for senior nutrition sites.

Committee follow-up and outstanding questions

Committee members asked for more data and clarifications the agency said it would provide: the deadline to spend enhanced FMAP HCBS funds (confirmed as Dec. 31, 2025 by Dayton Lamonian), the number of seniors served by nutrition programs (KDADS documents show roughly 32,000 people served by senior nutrition funding in FY 2024 and the Nutrition Services Incentive Program accounted for about 13% of that funding), and reconciliation of differing frail-elderly waiver dollar figures between agency and governor documents (the discrepancy is timing: the governor’s November estimate incorporated more recent months of data). Dayton said he would provide written follow-ups.

What the committee did (and did not) decide

No formal committee votes on budget line items were recorded in this hearing. Members received the budget presentation, asked clarifying questions and directed staff and agency leaders to provide additional detail (for example, IT spending breakdowns and provider compliance plans). Secretary Howard asked the committee to restore reappropriation authority for roughly $45 million in ARPA-related HCBS funds and for $3.7 million in state operations reappropriation (primarily to complete electronic health record and related projects); those requests were presented for committee consideration but no formal action was taken at the hearing.

Ending

KDADS officials and legislative staff agreed to provide follow-up documentation requested by members (detailed ARPA/HCBS spend plans, senior nutrition funding detail, IT spending breakout and reconciliation of waiver estimates). The committee recessed at the close of the hearing with plans to continue budget deliberations at subsequent meetings.