‘I don't trust the federal government’: Kansas legislators split on plans to spend COVID-19 relief

Andrew Bahl
Topeka Capital-Journal
Rep. Sean Tarwater, R-Stilwell, listens to a report on unemployment fraud last week. Tarwater has pushed to use federal COVID-19 aid to shore up a fund that pays out unemployment benefits.

Thomas Jefferson once wrote that you should never spend money before you have it.

But as Kansas awaits a final verdict from Congress on a COVID-19 relief package that could bring $1.6 billion to the state, legislators have shrugged off Jefferson's advice as they formalize potential ways to use the funds.

It is widely expected that some sort of aid will be flowing to states after the U.S. House passed a sweeping $1.9 trillion stimulus package early Saturday morning.

But what form that will take is unclear.

Currently, the $350 billion flowing to state and local governments does not have any strings attached — a key distinction from the CARES Act last spring, which restricted how the funding could be used. With the bill awaiting consideration in the U.S. Senate, however, it is possible restrictions could yet be attached.

Republicans at both the state and national level are skeptical this kind of aid is needed at all. But that hasn't stopped them from plotting how those dollars will be used.

Republicans aim to shore up key unemployment fund

The most ambitious plan would plow $450 million of the federal funds into a fund that bankrolls the state's unemployment insurance program.

That provision was added to a sweeping bill set for debate in the Kansas House Wednesday to shore up the ailing Kansas Department of Labor and provide relief to employers who are concerned about the impacts of a rash of fraudulent unemployment benefits applications.

It was touted as an efficient way of using the federal money — one which had already been blessed by top members of the Kansas House.

"I could see that being a high priority," House Speaker Ron Ryckman, R-Olathe, told The Topeka Capital-Journal last week.

But critics of the move, particularly Democrats, view it as risky to begin committing federal funds that have not yet actually been appropriated by Congress.

Rep. Stephanie Clayton, D-Overland Park, wondered aloud during a committee hearing last week if the move was even allowed.

"It wouldn’t be here if we couldn’t," responded Rep. Sean Tarwater, R-Stilwell, who chairs the House Commerce Committee.

More:Gov. Laura Kelly announces KDOL changes as sweeping modernization effort moves on

Tarwater underscored after the hearing that the funds would be only used to cover the amount of money paid out in fraudulent unemployment claims.

It is unclear how much that figure might be. A report last week from KDOL pegged the payouts at $290 million, although only half of that involved state money. But data released a day later by the Legislature's nonpartisan auditing arm estimated the total could be twice as high.

If the extent of the fraud winds up being more than $450 million, general fund dollars could be used to make up the difference.

But Tarwater said that using the federal money should be a top priority. If the trust fund is allowed to dwindle it could require employers pay higher taxes to replenish it — something he believed should be avoided at all costs.

"A lot of the prudent states already used their CARES Act dollars to reimburse the trust fund," he told reporters.  

Democrats raised concerns that committing the money could pull funds away from other needed programs, like helping businesses secure protective equipment and providing relief to low-income residents impacted by the pandemic.

Tarwater brushed away those worries, saying the $1.6 billion can go a long way.

"We're going to be receiving quite a bit more money than we did last time," he said. "$450 million, we've got to find it somewhere."

A rash of fraudulent unemployment claims has prompted calls to use $450 million in potential federal COVID-19 relief money into shoring up the state's unemployment trust fund.

To be sure, Kansas is not the only state making plans for what to do for its potential windfall. In fact, legislators in Michigan have pushed to plow money into that state's trust fund and Florida is also weighing whether federal money could be used to improve its aging unemployment technology. 

But few, if any, other states have required in legislation how the money should be spent. Clayton said in an interview Monday that this was the element that gave her the most pause, saying it was tantamount to "writing a check that you can't really cash."

She also noted that it would be a sharp departure from how the state spent funds from the CARES Act, where a panel was formed by Gov. Laura Kelly's administration, along with legislators, to make the decisions.

"To me, this seems like a power grab from the (Kelly) administration, at least in regards to where the federal funds go," Clayton said.

Federal funds also aimed towards education programs

It isn't just unemployment where Republicans are looking to use the federal funds.

A gargantuan education bill approved by the House K-12 Budget Committee last week includes a controversial expansion of school choice, as well as provisions effectively slashing funding for schools that have their students learn remotely.

But tucked in the bill is a measure, also proposed by Tarwater, that would use federal monies, likely from the CARES Act, to bankroll a mental health pilot program, as well as to shore up funding for a school safety unit within the Kansas Department of Education.

Republicans pointed to the fact that Kelly cut funding for these programs in her 2020 budget, meaning the funds were much needed.

More:Kansas lawmakers rush to help cities slammed by sky-high energy bills

Critics did not object to the need to direct money towards the popular programs, which also included some funding for the Kansas School for the Death.

But there is concern that the federal money will only amount to a stop-gap, with worries that state funds would need to be added in next year or the programs will not be continued.

"Those are simply temporary monies that are great for one-time purchases but are set to expire," said Rep. Stephanie Byers, D-Wichita. "Are we setting districts up for something that we don't have the funding for?"

Rep. Kristey Williams, R-Augusta, who chairs the K-12 budget committee, said that it was not an uncommon move — Gov. Kathleen Sebelius used stimulus funds in a similar way in the wake of the Great Recession, she said.

"We felt these were very valuable programs and worth us including them," Williams said.

She said after the hearing that there had not been discussions about using the federal funding in other parts of the education budget, including funds targeted at low-income students.

Mark Desetti, a lobbyist for the Kansas National Education Association, warned legislators of plugging any further education funding holes with federal money, saying it is likely it would violate a Kansas Supreme Court decision requiring more investment in the state's schools.

"The more of this they do, the more likely it is we wind up back in court which is not where anyone should want to be," Desetti said. "We certainly don't want to be in court again — that was resolved. Let's fund our schools and move on."

Uncertainty remains as legislators wait for Congress

That is not the only funding maneuver Desetti found questionable in the bill. He pointed to a decision to rope in the budget recommendation for the entire Department of Education — a move that could force lawmakers skeptical of the more controversial elements of the bill to support it.

Williams defended the move. She argued, accurately, that the Kansas Supreme Court upheld a similar combination of budget and policy in 2017 after a legal challenge by none other than the KNEA.

Desetti still found both elements, as well as the overall bill, to be objectionable.

"It is the wrong way to do the people's business," he said.

Live stimulus updates:Senate no longer expected to begin debate on COVID-19 bill Wednesday

It is unclear when the U.S. Senate will pass the stimulus, giving legislators some level of certainty once and for all.

The Washington Post reported Tuesday that some U.S. Senate Democrats, who control the chamber, have expressed interest in repurposing some of the state aid for infrastructure projects, meaning the issue is not yet settled in D.C.

Until it is clear how much money is heading to Kansas, as well as what conditions might be attached, Clayton said she would remain skeptical.

"I guess I'm a good Kansan," she said. "I don't trust the feds. I don't find them to be a reliable source of funds. And so when we make these sorts of appropriations using an unreliable, politically volatile funding source, that is going to give me cause for concern."