Kansas lawmakers ponder elimination of college savings plan for the poor

03/07/2013 5:38 PM

08/08/2014 10:15 AM

Kansas lawmakers eager to find cost savings began looking Thursday at whether to eliminate a program intended to help the poor save money for college.

The program on the chopping block benefits nearly 1,000 Kansans who receive up to a $600 yearly match from the state for contributions they make to the state’s 529 college savings plan — a way to shelter college savings accounts from taxes.

Matching contributions benefit households at 200 percent or below the federal poverty level, or incomes roughly below $47,100 a year for a family of four.

“The real question is: Is it a core function of government?” asked Rep. Pete DeGraaf, a Mulvane Republican and chairman of the House General Government Budget Committee.

A move to cut the program comes as lawmakers search to pay for massive income tax cuts enacted last year and even more cuts in the coming years.

Gov. Sam Brownback has already asked legislators to keep a penny sales tax increase that many of them opposed when it was passed in 2010.

Still, lawmakers are looking to trim the budget to lower income taxes even more.

Some argue a program aimed at helping poorer families afford higher education is the wrong place to cut.

“I just think it’s quite unfortunate there are some that believe that stealing people’s dreams is the way to get to zero,” said Rep. Tom Burroughs, a Kansas City, Kan., Democrat.

The matching program for college savings is capped at 1,200 participants a year — up to 300 from each of the state’s four congressional districts.

Officials at the state treasurer’s office, which runs the program, say all the slots have never been taken. This year, there are 988 participating households. Their average income is $33,718 a year. The cost to the state is about $500,000 this year. Overall, the program has cost the state about $2.1 million since 2007.

Several social service groups, including the United Way of Greater Kansas City and United Community Services of Johnson County, went to bat for the program at a hearing Thursday.

“By rewarding families with a dollar-to-dollar match for savings toward a post-secondary education, (the program) creates an incentive for lower-income families to save,” said April Holman, policy and research director for the Kansas Action for Children.

Some lawmakers expressed concern that some families might be gaming the program by enrolling in college, quickly dropping out and then collecting a refund that would include the state’s match.

The general counsel for the state treasurer said the state doesn’t suspect that such a situation is common.

“The goal of the program is, obviously, to encourage saving. That is a good goal,” said Rep. Craig McPherson, an Overland Park Republican on the budget committee. “Whether or not the program is effectively accomplishing that goal, or if it’s the proper role of government, is still something I’m considering.”

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