More than two months behind schedule, the Kansas City Council has approved $31.5 million in contracts for funds from the city’s decades-old health levy.

After a sometimes controversial procurement process, the council voted unanimously on July 9 to award one-year contracts to six safety-net healthcare providers — University Health, Children’s Mercy, Swope Health, Samuel U. Rodgers Health Center, KC CARE Health Center and Northland Health Care Access.

Under the contracts, the providers receive subsidies from city property tax dollars for treating the city’s poorest residents. The health levy, which brings in about $70 million in annual revenue, also funds the health department and other city programs.

Each of the providers took a funding cut this year compared to their previous contracts, which expired April 30. The city’s 2027 budget awarded a total of $31.5 million in health levy funds to the safety-net providers, compared to $33 million last year.

But, as the health levy fund faces dwindling reserves and an expected decline in property tax revenue, the cuts could have been far worse. And initially they were. 

The city’s proposed 2026-27 budget called for a $2.5 million decrease in allocations to safety-net providers. But the final budget was amended to restore $1 million of that funding. 

Just not to everyone. And that was part of the controversy.

Only five of the six providers were given a portion of that extra share. Swope Health was left out because some said the organization had already been given enough from the health levy fund. Last year, the City Council awarded Swope $9 million from the health levy reserve for the development of Swope Health Village, a senior housing development at 5900 Swope Parkway.

That meant five providers were facing a 4.35% cut in safety-net funding this year, while Swope was looking at a 7.569% cut.

But that changed, too. On June 9, the council passed a resolution introduced by 3rd District Councilwoman Melissa Robinson restoring $140,000 to Swope’s allocation, although that amount is not included in the contract the City Council just adopted. 

Robinson’s resolution said Swope should not be punished for being awarded $9 million for Swope Health Village, which was “independent of any health levy funds towards indigent care.” It directs the city manager to add the funds to Swope’s allocation at the first quarter review or, if funds aren’t available then, to add them when the money becomes available.

The health levy fund had an ending balance of $1.2 million at the conclusion of the current year’’s budget process. That’s below the 8% reserve — $4.9 million — required by city code. Three years ago the ending balance was $18.4 million. 

Only 2nd District Councilman Wes Rogers and 6th District Councilman Johnathan Duncan voted against Robinson’s resolution.

Calls to Robinson and Duncan were not returned.

Rethinking the process

The saga about how health levy funds are distributed still isn’t over. A movement is underway to evaluate the process and open it to other organizations next spring.

The two hospitals and four community health clinics that received health levy contracts this year are the same organizations that have gotten them year after year. 

In November, the health department started to look at whether that should change. It issued a request for supplier qualifications, which invited any health provider in the city to make a case for being included as a safety net provider. But the City Council rescinded it before bids were submitted amid vehement opposition from the current safety-net contractors.

Department officials said the proposals would help them understand whether health levy dollars are being spent where they are most needed. It has been more than 35 years, the city said, since levy distributions were “comprehensively revisited.” And the city’s population and demographics have changed.

Health levy dollars can only be used for Kansas City residents who are members of a household whose income falls within 400% of the federal poverty guidelines. And people only qualify if they don’t have any other payment source, including insurance, or lack the financial resources to cover their share of the benefit. Providers are required to document that for every patient cared for using health levy funds.

The health levy, which first came about in 1955, was originally intended to support the public health department and help pay for indigent care at its city-owned hospitals, which became Truman Medical Center, an independent nonprofit now known as University Health.

The city later extended the levy’s size and scope to include other safety-net providers. But no specific providers were named as intended recipients of the funding. Then in 2005, about the time the Missouri legislature strained the safety-net providers by slashing Medicaid spending, an additional, temporary health levy went before voters and was added to the tax rolls. 

Unlike the original health levy, the temporary levy must be renewed every nine years. The last time it came before voters in 2022, 75% voted in favor. Ballot language specified that 15 cents of the maximum assessment — 22 cents per $100 assessed valuation — go to University Health, while the rest is divided between the ambulance service and “non-for-profit neighborhood health centers.”

That has long been interpreted to mean two hospitals — University Health and Children’s Mercy, and four clinics — KC CARE, Sam Rodgers, Swope and Northland Health Access. But under the proposed bidding process that could change.

State law limits how much the city can levy in practice. In 2024, the actual rate was 38 cents per $100 in assessed valuation for the original health levy and 17 cents per $100 in assessed valuation for the temporary levy. 

Moving forward

The four clinics responded to the city’s first request for proposals by launching a public appeal to stop the process. The clinics, which already face federal and state funding cuts and threats of major disruption from changes to the federal Medicaid program, said they couldn’t afford to lose city funding, too.

But other Kansas City organizations that care for the city’s uninsured residents but weren’t getting help from the health levy said they needed a hand, too.

Mattie Rhodes, a community organization that provides services to many Spanish-speaking Kansas Citians, is one of them. La Clinica, a one-day-a-week health clinic Mattie Rhodes opened two years ago, could be forced to close if it doesn’t get some of the city funding, said John Fierro, president and CEO.

“The demand is still there,” Fierro said, “and our ability to continue will rely on us being a recipient of that health levy funding.”

The council resolution rescinding the original bidding process in January also directed the city manager “to evaluate promulgation of a future Health Levy procurement process.”

Duncan, a member of the health commission, has been holding listening sessions to help develop that process. Fierro praised Duncan for making the effort. So did ​Jennifer Hibbs Ward, the interim CEO at Northland Health Care Access, one of the current contractors.

“Everybody’s taking a cut this year and they’re projecting there’s going to be less money and more people wanting to try to receive health levy funding,” Hibbs Ward said. “That’s why I think it’s important that he has the listening sessions and that they have a thoughtful process about how to move forward.”

But to make changes next year, a new request for proposals can’t be put off much longer, said Marvia Jones, director of the Kansas City Health Department.

“There’s not an infinite amount of time for this,” Jones said. “In order to not run into the same problem we ran into last time, which is, ‘Oh well, the legacy providers didn’t have enough time to consider their budgets and we need to just go ahead with the status quo,’ we know we have to have something posted still in July.”