The Rundown with Kansas Legislative Division of Post Audit: Recent Episodes
Legislative Post Audit
The Rundown is your source for news and updates from the Kansas Legislative Division of Post Audit including conversations with staff discussing the findings of performance audits released to the Kansas Legislature.
The Legislature created the Industrial Revenue Bond (IRB) program in 1961 to promote economic development. Local governments issue IRBs to fund business facilities with the goals of growing the local economy and increasing property tax revenue. Businesses that use IRBs can get a 10-year property tax exemption (IRBX). During 2010-2024, local governments issued about $18.3 billion in industrial revenue bonds and exempted about $1.1 billion in related property taxes, most of which would’ve likely gone to school districts and local governments.
Statute requires local governments to prepare cost-benefit analyses (CBAs) if they want to offer IRBXs but provides limited guidance on their quality. We compared foregone property tax revenue estimates in 23 CBAs to the actual foregone property taxes reported by county appraisers. The CBA estimates differed greatly from county appraiser amounts (between 94% lower and 6,065% higher). Some CBAs underestimated completed project values, some overestimated how much investment would translate into appraised value, and some used erroneous figures and assumptions when estimating property taxes.
Finally, we identified 3 subsidiaries of foreign businesses that received $282 million in IRB funds in 2024.
KSHSAA and 19 of the 20 school districts we reviewed had written policies that aligned with state law, and 16 of 20 districts said they would also allow participation in non-KSHSAA-regulated activities. The Kansas State High School Activities Association (KSHSAA) regulates 21 activities for 7th – 12th grades. State law requires school districts to allow eligible virtual and nonpublic-school students to participate in KSHSAA-regulated activities and directly related events. To participate in a KSHSAA-regulated activity, virtual and nonpublic-school students apply online to KSHSAA. KSHSAA officials decide whether a virtual or nonpublic-school student is eligible to participate in KSHSAA-regulated activities. During the last 3 school years, KSHSAA officials approved 88% of the 3,200 applications they received from virtual and nonpublic-school students. By contrast, school districts have discretion over whether virtual and nonpublic-school students can participate in non-KSHSAA-regulated activities. We reviewed KSHSAA’s and a selection of 20 school districts’ policies for the 2025-2026 school year to determine whether they align with state law. KSHSAA’s 2025-2026 policy for KSHSAA-regulated activities and directly related events aligns with state law. 19 of the 20 school districts (95%) we reviewed had adopted written policies that align with state law, although 3 adopted their policies after the 2025-2026 school year started. Further, 4 districts hadn’t updated their student handbooks or other guidance documents to align with state law. School district officials we talked to had varying views on the requirements in state law. And although it's not required, 16 of the 20 school districts (80%) we reviewed said they would allow virtual and nonpublic-school student participation in non-KSHSAA-regulated activities. Finally, while reviewing KSHSAA’s data, we saw 4 instances in which school districts told KSHSAA to deny students’ applications for reasons other than residency.
The Kansas State Fire Marshal's Office (KSFM) is responsible for creating and enforcing regulations related to fire safety. KSFM's regulations adopt the 2006 edition of the International Code Council's International Fire Code, the 2006 edition of the National Fire Protection Association's Life Safety Code, and other similar standards. KSFM inspects residential facilities, including nursing homes and assisted living facilities, for compliance with the Life Safety Code. KSFM inspects childcare facilities for compliance with the International Fire Code. We found KSFM does inconsistent inspections of residential and childcare facilities. For example, not all inspectors check the same things, and some inspectors don't cite facilities for certain violations. We also found inspectors don't adequately support the violations they cite with references to applicable requirements. These issues were due to the vast number of requirements inspectors are responsible for and inadequately designed controls.
Local fire departments may also inspect residential and childcare facilities for fire safety, either under an agreement with KSFM or independently. We found KSFM and 3 local fire departments (Hays, Olathe, and Newton) had similar processes for inspecting residential and childcare facilities. However, the 3 local departments inspect according to more recent editions of the International Fire Code than KSFM does. KSFM used the 2006 edition, while the 3 departments used editions from between 2015 and 2024. Differences between the editions likely contributed to inspection inconsistencies and stakeholder frustration.
Data limitations and federal laws prevented us from evaluating the accuracy of TANF benefit payments. The federal government does not require states to assess the accuracy of their TANF benefit payments. DCF has an employee performance review process that includes reviewing TANF payments for process and accuracy errors. However, the data DCF provided to us from that process is not sufficient or reliable for determining the department's accuracy in making TANF benefit payments. Federal law prohibits us from looking at the application data that would allow us to assess the accuracy of TANF benefit payments.
Temporary assistance for needy families (TANF) is a federal program that provides states with funding to serve low-income families. TANF cash assistance provides monthly funds to low-income families to pay for a variety of needs. To be eligible for TANF cash assistance applicants must meet several criteria. TANF applicants must complete multiple forms that include over 250 pieces of information. DCF staff process each application by taking several steeps including verifying certain information and conducting and interview. It took DCF an average of 22 days to approve or deny TANF applications in fiscal years 2023 and 2024, but staff reported only spending about 1 hour actively verifying applications. On average, we estimated it took applicants who completed an online application in one sitting about 1 hour to complete a TANF application in fiscal year 2025. Stakeholders we talked to estimated it takes 15 minutes to 2 hours for individuals to complete the application. Federal and state law require DCF to take several steps to identify and prevent fraud and other misuse in the TANF program. Generally, DCF appeared to comply with the requirements we reviewed but we identified 1 state law DCF has not implemented. Last, we identified transactions at impermissible locations totaling about $23,000 in fiscal years 2023 and 2024, but this number is likely understated.
Based on the limited information we could review, we identified an estimated $700,000 to $1.2 million in Supplemental Nutrition Assistance Program (SNAP) benefits paid to recipients who may not live in Kansas in fiscal years 2023 and 2024. SNAP is a federal program that provides monthly funds to low-income families to buy food. There are a few common types of fraud schemes in the SNAP program including skimming, cash-for-card schemes, and imposter fraud. Federal and state law require DCF to take several steps to identify and prevent fraud in the SNAP program. DCF has policies that appear to comply with most of the federal and state requirements we reviewed, but we identified 1 state law DCF has not implemented. We did several tests to identify SNAP benefits that were potentially being misuses, but our analyses were limited by a federal law that prevents DCF from sharing certain SNAP recipient data with us. Based on the data we could review, we estimated that in fiscal years 2023 and 2024 DCF distributed about $700,000 to $1.2 million in SNAP benefits to recipients who may not have lived in Kansas. DCF told us that Kansas's simplified reporting requirements prevent them from quickly identifying when a recipient moves out of state. Making payments to individuals who have potentially left the state could have a small fiscal impact on Kansas.
Unintended preferences didn't appear to ultimately influence who was admitted to either the KSU College of Veterinary Medicine or the KU School of Medicine, but control weaknesses may have allowed preferences at certain points in the process. We looked for certain controls in CVM and SOM's admission processes to determine whether there were significant opportunities for preferential treatment. We also used regression models to analyze CVM and SOM's 2023-2025 admission data to determine whether certain factors might have affected applicants' outcomes.
CVM policy is to invite all academically qualified Kansas residents for an interview. We didn’t find any unintended preferences in how the CVM selected applicants for an interview. However, we found several weaknesses in CVM’s process that could allow unintended preference in how applicants are scored at the interview stage. Our models showed some possibility of preferential treatment at the application material scoring stage, but this didn’t appear to have a large effect on who received admission offers. Our models also showed some possibility of preferential treatment at the interview scoring phase, but this also didn’t appear to have a large effect on who received admission offers. After the interview stage, the CVM calculates applicants’ final scores and rankings, which help decide which applicants will be offered admission. CVM does not have controls over the “not recommended for admission” designation, which can impact some candidates. Although there were small indicators of preferential scoring along the way, we did not find evidence of unintended preferences in which applicants ultimately were offered admission to the DVM program.
SOM policy is to offer an interview to all applicants with Kansas ties who meet certain GPA and MCAT standards. We found several weaknesses in SOM’s file review process that could allow unintended preference in who is invited for an interview. Our models showed some possibility of preferential treatment at the interview invitation stage. We also found weaknesses in SOM’s process that could allow unintended preferences in how applicants are scored at the interview stage. Our models showed some possibility of preferential treatment in how interviews were scored, but this didn’t appear to have a large effect on who received admission offers. Our models also showed some possibility of preferential treatment in how applicants’ overall suitability was scored, but this also didn’t appear to have a large effect on who received admission offers. After the interview stage, SOM uses a standardized rubric to determine applicants’ final rankings for admission. Although there were small indicators of preference along the way, we did not find evidence of unintended preferences in which applicants ultimately were offered admission to the MD program.
We completed 15 audits on 13 state agencies, 1 school district, and 1 city between CY 2024 and CY 2025. This summary report shows 7 of the 15 entities did not substantially comply with applicable IT security standards and best practices. Entities struggled with properly scanning and patching their computers. Entities also had compliance problems because they did not create, maintain, or test continuity of operations and disaster recovery plans, as well as incident response plans. Other significant issues included poor security awareness training or failed social engineering tests. More than half the entities had significant management process weaknesses, including inadequate asset inventories, contract issues, or lacking a designated information security officer. Additional security weaknesses included inadequate network, boundary, and data protection processes. We also noted some entities did not adequately protect their electronic backup data. Some entities had poor access or environmental controls for their data centers, and a few entities had inadequate account security control. Lastly, we identified significant security issues within entities' specific IT systems. The findings in this report are similar to those in previous summary IT reports. The main reasons for compliance problems across the 15 entities included insufficient top management attention, inadequate resources, and poor contractor administration.
DCF’s payment error rate exceeded federal standards in fiscal years 2023 and 2024 for multiple reasons including high staff turnover, the complexity of the SNAP eligibility rules, and inconsistent verification efforts. The Supplemental Nutrition Assistance Program (SNAP) is a federal program that provides monthly funds to low-income families to buy food. Individuals must submit an application and provide extensive financial and other information to the Department for Children and Families (DCF) to qualify for SNAP benefits. DCF takes several steps to process and verify each application. The SNAP benefit eligibility determination is complex, and errors can occur at many points. The federal government monitors states’ SNAP benefit payments to ensure accuracy. DCF’s SNAP payment error rate has exceeded the federal payment error rate threshold of 6% since 2019. In the 2 years we reviewed, most of the nearly 300 errors that contributed to the payment error rate were related to miscalculating an applicant’s income and resources. Staff turnover, the complexity of SNAP eligibility rules, and inconsistent verification efforts appear to be significant factors in the department’s SNAP payment errors. DCF told us modifications to KEES might reduce SNAP payment errors but it’s unclear how much impact additional actions might have. Across the 2 years we reviewed, we identified several hundred additional errors that were not included in the federal payment error rate because the dollar value of the error was less than the federal reporting threshold. Last, changes in federal law could result in the state paying for a larger share of SNAP costs.
Real property taxes are taxes paid on land, minerals, and buildings. They're used to fund state and local governments. Most of the real property taxes collected fund local governments (99%) while the remainder fund state government (1%). However, state law exempts some real property, such as government owned property and property owned by non-profits from real property taxes. This means these properties aren't taxed and governments don't receive tax revenue for these properties. We estimated that in 2024 local governments didn't collect about $1 billion in revenue from exempt real properties. We also estimated that in 2024 the state didn't collect about $12 million in revenue from exempt properties.
As part of this audit, we also were asked to estimate how much exempt real property was donated to the state's public universities and their foundations. Public universities in Kansas and their foundations owned about $4.4 billion in appraised value of exempt real property in 2024 that they used for things like classrooms, sports, student housing, and research. This was about 98% of the total appraised value of all real property they owned. However, we don't know how much of that real property was donated because most universities don't maintain that information.
We estimate the 3 counties we reviewed spent $28.8 million providing a selection of 3 services in fiscal year 2024, which was partially offset by $9.7 million in state, federal, and user fee funding. State law requires counties to provide a variety of core services, such as election administration, law enforcement, and motor vehicle registration. Counties are primarily funded by local tax revenue, and they generally use this revenue to cover the costs of providing the services state law requires. We selected 3 core services and 3 counties to review. The services included criminal prosecution, motor vehicle registration, and ad valorem tax collection. The counties included Gove, Johnson, and Labette counties. We worked closely with county officials to determine how much the 3 counties spent to provide the 3 core services during fiscal year 2024. In total, we estimate the 3 counties we reviewed spent $17.3 million on criminal prosecution in fiscal year 2024, which was slightly offset with $846,000 in grants and user fees. In total, we estimate the 3 counties we reviewed spent $8.3 million providing motor vehicle registration services in 2024, which was partially offset by $5.0 million in user fees. In total, we estimate the 3 counties spent $3.2 million collecting ad valorem taxes in fiscal year 2024, which was fully offset by $3.9 million in user fees and fines. The 3 counties’ costs for the 3 services we reviewed were generally related to meeting requirements in state law. We estimate it would cost the state $19.1 million to cover the 3 counties’ fiscal year 2024 costs for the services we reviewed, but this likely isn’t consistent each year. Officials from the 3 counties we reviewed told us state process improvements would be more helpful than additional state funding. Other estimates for counties’ motor vehicle registration service costs used reasonable methods but differed from ours because we had more detailed and updated data.
This audit evaluated whether entities implemented 9 previous audit recommendations. We determined that 4 of the 9 recommendations have been implemented. The 5 Groundwater Managmeent Districts implemented 1 recommendation from our 2023 audit. of them? The Departments of Revenue and Commerce implemented the recommendation from our 2023 audit of the Rural Opportunity Zones Program. The Secretary of State's Office implemented 1 recommendation, partially implemented 1 recommendation, and didn't implement the third recommendation from our 2023 audit of election security (part 2). The Department of Revenue implemented 1 recommendation and partially implemented 3 recommendations from our 2024 audit of motor vehicle sales taxes.
Of the 20 districts we reviewed, only some had adequate access controls for their accounting systems, and very few had adequate written policies. School districts use accounting systems to manage their expenses and report on their financial information. It’s critical that school districts protect their accounting systems against unauthorized access. School districts are not required to follow the state’s IT security policies. We compiled a set of IT security and accounting best practices to evaluate school districts’ access controls for accounting systems. We reviewed accounting system access control policies and practices for 20 judgmentally selected school districts across Kansas. None of the 20 districts we reviewed had adequate IT security access control practices in all 3 categories we evaluated. Almost all school districts we reviewed (19 of 20) lacked all expected account management control practices within their accounting systems. Most school districts we reviewed (16 of 20) also did not have all expected identity management practices in place within their accounting systems. About half of the school districts we reviewed (11 of 20) had all expected controls in place to limit user access to their accounting systems, and most school districts had at least 4 of the 5 controls we reviewed. Finally, very few of the 20 districts we reviewed had adequate written policies related to any access controls for their accounting systems. Smaller school districts tended to lack more access controls for their accounting systems, but all districts could benefit from formalized policies. KSDE told us that districts have been moving to computerized systems quickly, and it was not surprising that districts have very few policies.
The High Performance Incentive Program (HPIP) allows qualifying businesses to earn state income tax credits based on their expenditures on employee training and education and on qualifying capital investments. We couldn't report how much HPIP credit businesses earned and used in recent years because of reliability issues with KDOR's HPIP data. We identified inconsistencies in the data that KDOR officials told us they were trying to resolve.
The Kansas Affordable Housing Tax Credit (KAHTC) is a state income tax credit that matches the federal low-income housing tax credit. Both credits help subsidize the creation of affordable rental housing. The Kansas Housing Resources Corporation (KHRC) administers both credits. Since 2023, when the KAHTC was first allowed, KHRC has awarded rental housing development projects about $73 million in KAHTC credits. It may award an additional $34 million in tax credits by the time the KAHTC ends in 2028. At the time of our audit, no taxpayers had used the KAHTC to reduce their income tax liabilities. However, they will likely begin doing so soon. Over the next approximately 15 years, taxpayers' use of KAHTC credit awards may result in the state forgoing about $1 billion in income tax revenues.
The Building a Stronger Economy 1.0 and 2.0 grant programs (or BASE grant programs) awarded almost $150 million in federal funds to Kansas businesses for infrastructure development. The Department of Commerce selected which program applicants would be awarded funding. It required BASE grant recipients to provide matching funds equal to at least 25% of the project cost. We reviewed the planned matching expenditures in all 72 BASE grant award agreements. Commerce approved planned matching expenditures in 3 main categories, with construction costs (including materials, labor, and site work) being the largest. Commerce approved almost half of planned matching expenditures for costs recipients incurred prior to signing a BASE grant agreement. Department officials told us they allowed pre-award matching expenditures to give recipients credit for project expenses incurred prior to the BASE grant award. Finally, we identified several issues with the accuracy and completeness of the BASE grant award agreements that could not be reconciled by the department.
3 state agencies are responsible for taking and investigating allegations of abuse, neglect, and exploitation. Those agencies are the Department for Aging and Disability Services (KDADS), the Department of Health and Environment (KDHE), and the Department of Children and Families (DCF). These agencies may refer alleged perpetrators to 3 state licensure boards: the Board of Healing Arts, the Board of Nursing, and the Behavioral Sciences Regulatory Board. The state's process for investigating allegations and identifying perpetrators is complicated and fragmented. State law is also unclear about agencies' responsibilities. We found KDADS and DCF keep registries of perpetrators, but KDHE does not. KDHE doesn't investigate allegations of ANE because KDHE officials believe they lack the authority to do so. We also identified issues with how agencies refer allegations to each other. These issues suggest not all suspected perpetrators get investigated and that agencies' registries may be incomplete.
The federal government reimburses school districts for meals they serve to students through the National School Lunch Program. Students receive a free or reduced-price lunch through the National School Lunch Program if they meet 1 of several criteria including participating in certain federal programs, being a migrant student, and having household income of 130% or less than the federal poverty line. In Kansas, the state provides at-risk funding to school districts based on the number of students who are eligible for a free lunch and meet a few other criteria.
We chose a random and projectable sample of students who qualified for a free lunch in the 2023-24 school year to verify their eligibility for the free lunch program. We estimated that 54% to 72% of all Kansas students who qualified for free lunches because they submitted a National School Lunch Program application were likely ineligible in the 2023-24 school year. However, only about 16% of all students who qualified for a free lunch qualified by submitting an application. For most of the remainder of students we were not able to verify their eligibility because their eligibility was determined by the Department for Children and Families, the Kansas Department of Health and Environment, or by their school district. Because of time and data constraints, we could not determine whether those agencies and districts correctly determine student eligibility. As a result, we could not assess the overall accuracy of the free lunch count.
Federal rules significantly limit school districts' and KSDE's ability to verify the eligibility of students who receive a free lunch. As a result, the free lunch program is at high risk of fraud, waste, and abuse.
The Kansas Department for Aging and Disability Services (KDADS) oversees Aging and Disability Resource Center (ADRC) services to help older adults and people with disabilities. Until 2024, KDADS contracted with Area Agencies on Aging (AAAs) to provide ADRC services. In 2024, KDADS split the one AAA contract for ADRC services into 2 contracts, one for the Home and Community Based Services (HCBS) assessments and one for the remaining ADRC services. KDADS officials told us they changed the ADRC services contract to mitigate the appearance of a conflict-of-interest and to address longstanding performance issues with HCBS waiver assessments.
From 2021 – 2023, Manhattan, Overland Park, and Wichita appeared to use most of their transient guest tax revenue appropriately, but a small portion was inappropriate or unclear. Kansas statute allows cities and counties to charge guests at hotels or other short-term lodgings a tax (called a transient guest tax), which local governments can then use to fund tourism-related expenditures. Most cities with a transient guest tax charge more than the 2% rate in statute because they use the home rule provision in the Kansas Constitution to exempt themselves. The 3 cities we reviewed spent transient guest revenues differently from 2021 to 2023 but most of their spending appeared to be appropriate. All 3 cities used transient guest tax revenues to pay the local convention and visitors bureaus to promote tourism. All 3 cities appeared to use transient guest tax revenues to finance tourism and convention related bonds. Wichita appeared to use transient guest tax revenues to maintain and operate existing tourism facilities. Manhattan and Wichita used transient guest tax revenues on direct grants or sponsorships for tourism. In 2023, Manhattan transferred $100,000 of its transient guest tax revenue to the general fund, but we could not determine if it was used appropriately because of a lack of documentation. Wichita spent $16,000 of guest tax revenue from 2021 – 2023 to cover city administrative and audit fees, which is inappropriate because the expenses are not related to tourism and conventions. Finally, we also found a difference between certain definitions in Wichita's transient guest tax ordinances and state law. As a result, since 1992, KDOR may have collected and Wichita may have received transient guest tax revenues from guests at some hotels and other lodging entities that aren’t authorized in Wichita’s charter ordinance.
This limited-scope audit evaluated the outcomes of the Kansas Office of the Inspector General’s (OIG) investigations and audits from calendar years 2021 through 2024, with a focus on financial recoveries and prosecutorial results. The OIG is an independent entity within the Kansas Attorney General’s Office and is tasked with increasing accountability and oversight of Kansas medical (and other) assistance programs through audits, reviews, and investigations. To assess the impact of OIG’s work, we examined summary data on 280 investigations initiated during the review period, consulted relevant district court records, and conducted follow-up interviews with OIG officials. Our analysis found that 2 of the 280 investigations have led to prosecutions, which have resulted in the recovery of less than $1,000 to date. Additional legal actions may be possible given the number of still open investigations. We also reviewed all 9 audits and reviews OIG published between 2021 and 2024. Of these, we confirmed the recovery of $1.3 million documented in 1 report.
The Department of Commerce evaluated BASE 1.0 grant program applicants using a standardized scoring rubric, but it didn’t consistently follow its process or document the Secretary’s final award decisions. The Building a Stronger Economy 1.0 grant program (or BASE 1.0) awarded almost $100 million in federal funds to Kansas entities for infrastructure development. Commerce received 445 BASE 1.0 grant applications requesting a total of about $1.7 billion. Of the $99 million Commerce awarded to 35 recipients, about half went to 10 projects in Butler and Johnson counties. Commerce reviewed applications to the BASE 1.0 grant program and determined which applicants would receive funding using 3 main steps: eligibility review, application scoring, and final selection. Commerce completed an eligibility review for all 10 applications we reviewed and eliminated 1 that wasn’t eligible. Commerce didn’t consistently follow its application scoring process for the 9 eligible applications we reviewed. We couldn’t review the Secretary of Commerce’s final award decisions because this process wasn’t documented.
The Kansas Department of Transportation created the Cost Share Program in 2019 to help fund transportation projects in local communities. In Fall 2019, KDOT awarded $1.19 million in Cost Share Project funds to the City of Great Bend to reconstruct the historic dragstrip and shutdown area (this includes both the track and the portion of the racetrack after the finish line where cars slow down). The dragstrip project was completed in May 2021, but within a couple months, stakeholders raised concerns with the quality of the track such as "high spots" and later reported chipping and flaking of the track's surface. As a result of the dragstrip's quality issues, the track was closed for the 2023 racing season and it has not been reopened since. Under the Cost Share program contract, the city had the responsibility of overseeing the dragstrip project. KDOT was authorized to enforce penalties if the city didn't use the project as it was intended by contract. KDOT was authorized to recapture up to 90% of the Cost Share project funds based on the track closure in 2023, but they did not enforce this penalty. KDOT officials told us this was because they wanted the city to get the dragstrip back into racing condition, and they were satisfied with the city's efforts to do so. KDOT officials told us that moving forward, they would consider enforcing the claw-back penalty if Great Bend didn't get the dragstrip reconstructed in a reasonable time, but KDOT didn't set a specific timeframe for this possibility.
The Kansas Office of Veterans Services allowed participating Veteran Service Organizations to take fundamentally different approaches in reporting VCAP matching obligations, which may or may not comply with state law. The state’s Veterans Claims Assistance Program (VCAP) is meant to provide claims assistance to veterans in Kansas through congressionally chartered veteran service organizations. The Legislature appropriates annual funds for VCAP which is administered by the Kansas Office of Veterans Services. The VCAP grant program operates under a reimbursement model that’s overseen by KOVS. To participate in VCAP, veteran service organizations must also meet annual matching obligations. The veteran service organizations reported using VCAP funds primarily for VCAP-related salaries and wages for fiscal years 2022 to 2024. During this time, the American Legion reported between 28% and 34% in matching support related to the VCAP program. Most (76%) of the matching support we reviewed in more detail for the American Legion appeared to be related to VCAP, but we couldn’t verify the rest. The VFW reported that it greatly exceeded its matching obligations between fiscal year 2022 and 2024. More than half (55%) of our sample of VFW matching support was not related to the VCAP program, and we couldn’t verify the rest.
We found that KOVS hasn’t provided sufficient guidance to participating veteran service organizations to ensure they understand the requirements related to matching support. KOVS’s oversight may be inadequate to ensure the veteran service organizations are meeting their matching obligations. Lax KOVS oversight in other areas may cause additional misunderstandings between KOVS and the veteran service organizations and their supporters.
It was also unclear whether statute allows veteran service organizations to use the estimated rental values of the offices provided by the U.S. Department of Veterans Affairs as their own in-kind matching support.
The Ford County election office administers elections in Ford County, Kansas. We previously reviewed Ford County’s tabulation machine testing practices during the 2022 general election and found their practices were inadequate because they didn't use pre-audited test ballots with predetermined outcomes that tested for overvote rejection. This audit is a follow up to that review. For this audit, we reviewed Ford County’s tabulation machine testing process for the 2024 general election and found it was generally adequate to ensure the accuracy of tabulation machines before and after the 2024 general election. However, it wasn’t completed within statutory timelines. Ford County performed 3 separate tests on their voting equipment for the 2024 general election using pre-audited test ballots that tested for overvote rejection. Ford County conducted a limited pre-election public test for the 2024 general election within the statutory timeline but didn’t include all tabulation machines. Ford County also conducted 2 comprehensive tabulation machine tests on all tabulation machines before and after the 2024 general election that included the required elements, but they didn’t conduct either test within statutory timelines. We also identified 1 error during the comprehensive post-election test that wasn’t resolved by the county election officer.
The Ford County election office administers elections in Ford County, Kansas. This audit was a follow up to a 2024 audit that reviewed Ford County’s ballot reconciliation process for the 2024 primary election. In that audit, we found poll workers at 1 polling site did not follow the proper processes by allowing a poll worker to vote without signing the poll book as required by state law. For this audit we reviewed Ford County's ballot reconciliation process for the 2024 general election and found that Ford County’s ballot reconciliation process ensured the number of voted ballots reconciled with the number of voters in the 2024 general election. However, the county did not ensure all poll books were signed and ballots were sealed as state law requires. Ford County’s poll book logs, ballot reconciliation sheets, and result tapes reconciled with each other for regular voters and provisional voters in the 2024 general election, but 2 provisional voters did not sign the provisional poll book before voting as state law requires. We also found a voted provisional ballot that wasn’t sealed as statutorily required. However, we think the ballot was counted in the election results because the ballots cast reconciled with poll book signatures and ballot reconciliation sheets.
The state provides funding to school districts for adult students earning a high school diploma through a virtual program. KSDE established a process for districts to submit adult virtual student credits for funding. We reviewed about 5,900 credits that 9 school districts submitted for funding across 2 years to determine if those credits complied with state statute. Nearly all (99%) the credits the districts submitted appeared to comply with the criteria set in state law, but there were a few exceptions. In total, districts submitted about 55 credits (out of nearly 5,900) that did not comply with statute.
KSDE audits the credits that districts submit for adult virtual school funding each year. For half of the districts we reviewed, KSDE did not approve the number of adult virtual credits that were statutorily compliant. KSDE lacked adequate written policies and procedures to help auditors review adult virtual school credits consistently. The department does not consistently follow some of the written policies they do have. The department also lacks written policies for some important audit best practices such as policies to require supervisory review of audit work.
The Central Plains school district raised concerns with the results of KSDE’s audit of the adult virtual credits they submitted for the 2021-22 school year. We noted a couple problems with how Central Plains creates and monitors transcripts that contributed to some of the issues with the district’s audit. Based on our review of Central Plains 2021-22 credits, we determined there were about 500 credits that appeared statutorily compliant that the department did not fund. The difference in our results and the department’s is largely because we took different approaches.
The Building a Stronger Economy 1.0 grant program (or BASE 1.0 grant program) awarded almost $100 million in federal funds to Kansas businesses for infrastructure development. The Department of Commerce awarded SOFTwarfare a BASE 1.0 grant in April 2022 to build a data center in Great Bend, Kansas. SOFTwarfare’s grant agreement allowed them to use grant funds for construction and equipment costs and matching funds for permitting, inspection, and administrative costs. As of September 30, 2024, SOFTwarfare spent grant funds and matching contributions on the types of items allowed in the award agreement. Some of the expenditures differed from the specifics in the award agreement but Commerce staff accepted the deviations. However, SOFTwarfare didn’t spend all the grant funds by July 6, 2024 as the contract required and Commerce officials did not proactively adjust the deadline.
In Kansas, state law requires that all water supply systems and wastewater treatment facilities are supervised by a certified water operator. Kansas Department of Health and Environment is responsible for administering Water Supply and Wastewater Treatment Operator certifications, which include certifying examinations. Within both certification programs, operators can be certified at five different classes: Small Systems (“base level”), Class 1, Class 2, Class 3, and Class 4. Kansas regulations require that KDHE administers certification exams at least twice annually, which it does. Between calendar years 2022 and 2024, only about half of individuals passed their Water Supply or Wastewater Treatment Operator examinations. Those taking the Small Systems exams in either program had higher pass rates. KDHE officials think low pass rates are largely due to examinees not adequately preparing for the exam, but don’t indicate poor exam quality. Although the contents of the exams have not changed much over time, KDHE does look for ways to improve them.
The alternative fuel tax credit has rarely been used since 2007 because of statutory changes that limited its usefulness. The credit provides credits to corporations for 40% of the incremental cost of alternative fuel vehicles or 40% of fueling stations’ installation cost. The most notable amendments made to the credit since 1995 eliminated both electricity as an eligible fuel and individuals as eligible recipients. The credit’s goal appears to be to encourage alternative fuel vehicle use for economic and environmental purposes. Taxpayers have claimed the credit 612 total times for $2.2 million since 1996, but fewer than 5 total corporations have claimed it since 2014. Eliminating electricity as an eligible alternative fuel in 2007 limited the credit’s usefulness as the alternative fuel vehicle market evolved in the following years. Further, eliminating individual taxpayers’ eligibility in 2012 significantly reduced the pool of potential claimants. No other state has a credit designed as restrictively as the alternative fuel tax credit, and no literature about it exists.
Commerce awarded $8.2 million in community service tax credits during 2023 and 2024 but didn’t fully document their selection decisions. The credit provides credits to individuals, corporations, banks, and insurance companies for donating to certain community service projects. Each year, Commerce awards credits to non-profit and governmental entities to distribute to project donors. The credit’s goal appears to be to encourage donations to certain types of community service projects. Since 1994, Commerce has awarded $130 million in total credits to support 811 projects. Since 2010, 10,523 total donors to selected projects have received $48 million in credits. During 2023 and 2024, Commerce awarded $8.2 million in total credits to 62 projects in 33 counties. During these years, Commerce reviewed proposed projects based on a scoring process including application materials and reviewers’ professional judgment. Commerce followed its process for scoring applications but didn’t document its eligibility checks for the 6 proposed projects from 2023 and 2024 we reviewed. We identified a few risk areas in Commerce’s application review process, but they wouldn’t have changed the award outcomes we reviewed. However, we couldn’t review how Commerce decided which of the 6 proposed projects to award credits because it didn’t document these decisions. 12 states have credits similar to the community service tax credit. Some studies we reviewed said community service tax credits increase donations and allow states to target specific needs.
Osawatomie State Hospital does not adequately ensure the safety and security of its staff. In terms of physical security, OSH does not have adequate processes to ensure physical security. Security staff patrols of the OSH campus are incomplete and inadequate and there are not enough fire-trained security staff to respond to campus fires. OSH doesn’t ensure staff carry required personal safety alarms and doesn’t check if staff respond to alarms timely. Facilities’ staff key tracking does not include a complete and accurate accounting of all keys. OSH does not follow their process to monitor for safety risks and noncompliance with policies. Management lacks effective policies over these physical security measures, and staff have allowed issues to persist. In terms of personnel, OSH and AAC had enough nursing staff on patient units to meet their minimum staffing requirements on the sample of shifts we reviewed, and a sample of OSH and AAC staff generally received training on the select topics we reviewed. However, the facility depends on large numbers of contract nursing staff and overtime to meet minimum staffing requirements due to high turnover and vacancy rates. High reliance on contract staff and overtime result in increased state costs and risks for staff safety. In terms of working culture and environment, OSH management has not promoted a culture that prioritizes professional boundaries, following guidelines, or ensuring a safe workplace. OSH management has not set clear expectations for how safety and security processes should work and hasn’t collected and used data to proactively identify and fix safety and security problems.
We reviewed Department of Commerce's hiring policies and procedures to determine if they were adequate for staff overseeing financial matters. This was because Commerce hired a staff member in 2020 who pleaded guilty to felonies in Pennsylvania before being hired by Commerce. Commerce officials told us they were not aware of the staff member's crimnal history. We found that Commerce’s hiring policies and procedures were not adequate to mitigate the risks associated with hiring applicants with a criminal history. This is because Commerce’s hiring policies and procedures don’t include any type of criminal history check for any jobs other than the 1 in statute. Commerce officials told us they don’t perform state-level criminal history checks on applicants because they don’t think they have the authority to perform them through the KBI. However, an alternative to KBI would be to use a Consumer Reporting Agency to perform criminal history checks. These companies may provide employment screening services that include credit checks, license verification, and criminal history information from state and federal databases. We also found that Commerce didn’t adequately document their hiring procedures for 3 of the 5 staff we reviewed. reference check summaries weren’t available for 3 of the 5 employees we reviewed, and interview notes were missing for 1 of the 5 employees we reviewed. This means we can’t determine if Commerce is following their processes consistently. State retention policies require agencies to retain hiring documentation in the full personnel file for the length of the employee’s tenure plus 3 years. However, Commerce officials told us that they don’t retain some hiring records past 3 years from the date of hire.
In 2019, state law mandated the creation of an online "transparency database" for the purpose of providing the public with information about economic development programs and recipients. The law also requires the transparency database to have certain functional features. The Department of Commerce is responsible for developing and maintaining the transparency database. The Department of Commerce’s transparency database does not contain some required economic development programs and is missing certain program and recipient-level information. 13 of 60 incentive programs we expected to find were missing from the transparency database. The transparency database also lacked about half of the 11 statutorily required program-level pieces of information for 5 incentive programs we reviewed. Further, the transparency database contained most statutory information for 24 recipient records we reviewed, but benchmark information was inadequate. The transparency database contained all 3 statutorily required functionalities.
State law requires that poll book check-ins balance with cast ballot totals when the polls close on election night. The supervising poll worker at the polling site is responsible for ensuring these totals balance. If they don’t, the discrepancy must be explained to the election office in writing. We reviewed Ford County’s election records from the 2024 primary election to evaluate Ford County’s ballot reconciliation process. We determined that at 4 of the 5 polling sites, poll book check-ins and the number of votes cast balanced. However, at 1 polling site, voted ballots exceeded poll book check-ins by 1 ballot. This was because poll workers at that polling site did not follow the proper processes. We were also asked to check if Ford County’s poll books contained a declaration on each signature page as required by state law. We found that Ford County’s poll books had a declaration on the signature page, but they did not have the specific language required by state law.
This audit includes information about Ford County’s policies and practices to ensure the security of storage units, ballots, and devices used to tabulate votes in the 2022 general election. It is a follow up to an election security audit that we completed in 2023 of 15 Kansas counties' election offices. We evaluated Ford County's security practices using 55 best practices from the US. Election Assistance Commission and state law. Ford County generally had adequate practices in the area of overall process security which was like the other counties we reviewed in the 2023 audit. Ford County had a mix of adequate and inadequate practices in the areas of ballot security and voting and tabulation machine security. This was also like other counties we reviewed. But Ford County’s election management computer security and transfer and movement security practices were generally inadequate and were Ford County’s weakest areas. This is different than other counties we reviewed because most of the other counties we reviewed in 2023 had adequate election management computer security practices. Additionally, most of the other counties we reviewed had a mix of adequate and inadequate transfer and movement security practices. Ford County also didn’t have adequate written security policies during the 2022 general election, but this was like the other counties we reviewed in 2023. Overall, Ford County’s results don’t change our overarching conclusions from the 2023 audit.
Tax Increment Financing (TIF) districts are a type of economic development tool in which cities use a property tax increment to help finance development projects. A property tax increment is the amount of property tax generated above a base level, which is established when the city creates the district. We contacted the 10 largest cities in Kansas to generate a list of past and present TIF districts. From this list, we selected 6 districts to evaluate their economic costs and benefits. We selected 2 districts from Wichita, and 1 district each from Kansas City, Olathe, Topeka, and Salina. For each of these districts, we estimated the impacts they had on property values, taxes, development, employment, and crime. We also evaluated whether the costs to the city were recovered timely for these districts. We found that 3 of 6 districts did not recover their costs timely. Further, we found that most of these TIF districts likely experienced economic benefits from increased property values and taxes, increased development, or increased jobs. However, we were unable to directly compare these benefits to the costs because they could not be readily quantified. Whether a TIF district was worth its financial costs is often subjective and project-dependent. We also evaluated the school districts where these 6 TIF districts were located to determine what financial costs they may have imposed on those school districts. We found that all 6 TIF districts were too small in scale to have a significant negative impact on school district funding.
The STAR bonds program allows local governments to use future sales tax revenue for development or redevelopment projects. Commerce officials expect STAR bond districts to improve local quality of life, but they haven’t defined or measured this. We gathered the data to evaluate districts' affects on local quality of life and found that the 6 districts we reviewed grew in quality-of-life industries survey respondents said they value. However, the numbers and types of industries varied by district. To evaluate the program’s effects, we first determined how 6 districts changed over time in 109 quality-of-life industries. We then compared the 6 districts’ industry changes in these 109 quality-of-life industries to what college graduates told us affected their quality of life. Survey respondents said social and economic factors other than amenities have more influence on where they want to live. However, about half of respondents or more said amenities in all 10 quality-of-life industry groups we asked them about were important to their quality of life. All 6 districts we reviewed added jobs in quality-of-life industries from the time the district was approved to 2023. The 6 districts grew most often in industries that most survey respondents (81%-85%) said were important to their quality of life. They grew similarly in industries that only about half of respondents said were important. However, the 6 districts grew in few of the industries that the largest percentages of survey respondents (86%+) said were important. Finally, they grew very little in a few industries that most respondents (68%-80%) said were important. The 6 districts varied widely in the numbers and types of industries with job density growth. We don’t know for sure how the STAR bonds program affected these districts, but the infrastructure it financed likely contributed to the patterns we observed.
The Kansas Housing Resources Corporation (KHRC) administers state and federal housing programs in Kansas, including the Low-Income Housing Tax Credit. The Low-Income Housing Tax Credit (LIHTC) is a federal program meant to encourage the development of rental housing for low-income individuals. The federal government requires KHRC to monitor housing developments that have been awarded LIHTC to ensure they comply with applicable rules. KHRC has a detailed compliance monitoring process to ensure that development owners comply with federal and state rules and meet all of the requirements they agreed to when they received LIHTC. Although KHRC's compliance monitoring process is extensive, most of the process is required by federal rules or is otherwise necessary for them to appropriately oversee the program. However, we did find two minor areas where KHRC's requirements are not necessary to meet a state or federal rules, a best practice, or an internal control. Additionally, developers who responded to our survey generally reported that KHRC's compliance monitoring process was easy to complete. Last, we found that KHRC's reserve amounts and land use restrictive covenant terms were applied consistently across the 16 projects we reviewed.
Kansas Department for Children and Families (DCF) administers the Temporary Assistance for Needy Families (TANF) program in Kansas. Kansas receives about $102 million in federal TANF block grants annually. This amount has generally remained stable since 1996, but that means this amount has lost an estimated 49% of its purchasing power since 1996 because of inflation. One of the programs DCF funds with the TANF block grant is cash assistance. TANF cash assistance serves Kansas families with very low incomes. In Kansas, a family is eligible for TANF cash assistance if they have insufficient income or resources to support themselves. Funds must be granted to families that live in Kansas. The family must include a child or expectant mother who is a U.S. citizen, legal immigrant, or qualified immigrant. The state’s 2015 Hope, Opportunity, and Prosperity for Everyone (HOPE) Act changed eligibility requirements for TANF cash assistance in Kansas. This included things like capping lifetime assistance to a total of 24 months and reducing the amount of time single caregivers could be exempt from work activity to 3 months. TANF cash assistance benefit amounts in Kansas haven't been updated since 1997. Spending on TANF cash assistance in Kansas has decreased from about 15% of block grant spending (about $15.2 million) to about 9% ($9.4 million) of block grant spending from FY 2009 through FY 2023, while spending on other TANF programs has increased. The purchasing power of TANF cash assistance also decreased by about 30% from FY 2009 to FY 2023 because of inflation. One reason for the decrease in cash assistance spending in Kansas is the decreasing caseloads. All cash assistance caseloads in Kansas decreased from about 12,600 average monthly cases in FY 2009 to about 2,900 average monthly cases in FY 2023; about a 77% decrease. Other reasons may include eligibility changes, wage increases, and inflation. The research we reviewed suggested TANF rules like those in Kansas lead to mostly negative program outcomes for TANF families, while stakeholders held mixed opinions about the impacts of Kansas’s TANF rule changes.
In Kansas, individuals must pay a 6.5% sales or use tax when purchasing any vehicle that is primarily stored or used in the state. This is paid either at the dealership or at a county treasurer’s office. Ultimately, KDOR is responsible for collecting motor vehicle sales and use tax from dealerships and counties. The Kansas Department of Revenue had procedures to help ensure dealerships remit vehicle tax but was missing several key procedures related to county tax remittance. We saw evidence that KDOR had several procedures related to training and guidance for counties and dealerships as well as procedures related to the monitoring and enforcement of dealerships. However, KDOR was missing several procedures related to the monitoring and enforcement of counties. One county didn't remit taxes for 15 months, resulting in about $11 million in delinquent taxes. Additionally, KDOR's lack of written procedures means efforts to ensure that individual buyers and dealerships are remitting aren't as effective as they could be. And KDOR's MOVRS database had significant errors, preventing us or them from doing a state-wide analysis.
In the 2022-23 school year, the Louisburg school district spent a little more than $31 million. Generally, state law allows districts broad discretion in how they spend their state and local funding, but there are some exceptions. We selected 57 expenditures (representing $1.2 million) across 6 funds to determine whether the district spent them in accordance with state law. We selected funds that have a mix of broad and specific spending rules sets in state law. We chose expenditures that represented a good cross-section of different types of expenditures. Because we did not choose the sample randomly, we cannot project the results to all expenditures. Of the 57 expenditures we reviewed, we identified 12 (about $63,000) related to at-risk and capital outlay that did not comply with state laws related to those funds. This included expenditures such as seating, salaries for interpreters, and a contract to operate light and sound equipment.
The Angel Investor Tax Credit (AITC) program incents investors to invest in Kansas start-up businesses. In exchange for investing in a participating start-up businesses, an investor can receive a tax credit equal to up to 50% of their investment. As part of this audit, we surveyed investors and businesses that participated in the AITC program. The purpose of the surveys was to learn how the program influenced investors' and businesses' behaviors. Investors who responded to our survey told us the program caused them to invest more or sooner in participating businesses. Businesses who responded to our survey told us the program helped them do more than they otherwise would have been able to (e.g., hiring more staff or offering more products). As part of this audit, we also evaluated whether Commerce implemented a process to make sure participating businesses stayed in Kansas as required by state law. We determined Commerce had implemented a process, but the process has room for improvement.
The 6 state universities did not have a shared definition of what diversity, equity, and inclusion activities are, but there were some common themes. The universities provide a variety of DEI-related services and activities such as food pantries, support groups, and tutoring services to a wide range of students. To determine how much universities spent on DEI-related activities, we asked the universities to report expenditures related to common DEI themes shared across the universities. In the 2022-23 school year, universities reported spending about $45 million in DEI-related activities, of which, about $9 million was paid for with state funding. Nearly all of the $9 million universities reported spending in state funding was spent on salary and benefits for faculty and staff who engaged in DEI-related activities. Universities reported spending a small amount of state funding on DEI-related training and other non-personnel expenses like travel, software, and outreach programs. The universities DEI-related expenditures are self-reported and we have a limited ability to determine if they are accurate and complete. Last, the universities do not have consistent measures for determining whether DEI-related activities are effective for achieving their DEI goals.
Universities receive money from foreign sources for a few reasons including tuition and fees, gifts, and contractual services. In 2022-23, state universities reported receiving about $116 million in foreign contributions, but most ($111 million) was for tuition and fees. In the 2022-23 school year, universities reported receiving contributions from 170 countries but about half was from India and China. The universities foreign contributions are self-reported and we have a limited ability to determine if they are accurate and complete.
The KPERS 3 retirement plan was created by the Legislature to help improve the long-term sustainability of the KPERS trust fund. KPERS 3 is a cash balance plan. There are other types of retirement plans, including defined benefit, defined contribution, and hybrid plans. We compared KPERS 3 to other plans on key plan metrics. These plans included KPERS 2, Thrift Savings, Nebraska's cash balance plan, Oklahoma's defined contribution plan, Indiana's hybrid plan, and Utah's hybrid plan. We found that KPERS 3 gives employees less flexibility, requires them to share some financial risk, and generally provides lower benefits than other plans we evaluated. Further, we found that employees of defined benefit plans (such as KPERS 1 and 2) are generally more satisfied and more likely to remain at their job compared to employees of other plan types (such as KPERS 3).
The 3 community colleges we reviewed (Butler, Garden City, and Hutchinson) spent an average of $2.8 million annually in college funds such as student tuition, fees, public sources of funding, and other income on athletic departments from fiscal years 2018 to 2022. Most athletic department spending was for coaching salaries and the sports of football and basketball. The 3 community colleges also spent an average of $1.2 million annually in student fees and private funds on athletic scholarships during these 5 years. The total athletic department and athletic scholarship spending was similar to expenditures at the other colleges competing in the Kansas Jayhawk Community College Conference in fiscal year 2021.
We also reviewed student-level data for 8 sports at the same 3 community colleges from fiscal years 2018 to 2022 and found that most student athletes are from outside of Kansas. Further, most athletic scholarships are awarded to student athletes from outside of Kansas. Other colleges participating in the Kansas Jayhawk Community College Conference also generally drew in athletes from outside of Kansas in fiscal year 2022.
Overall, we found that changes made to bills after fiscal notes were submitted resulted in most of the inaccuracies we saw. But a few fiscal notes were unreasonable because of agencies' methods. Statute requires the Division of the Budget (Budget) to provide fiscal notes for original bills but outlines only a few requirements for them. Budget works with agencies to create estimates for all original bills, but not amendments. We reviewed 10 fiscal notes from enacted bills to determine fiscal notes' accuracy and 10 fiscal notes from bills that died to determine the reasonableness of agencies' methods and estimates. 7 of 10 fiscal notes for enacted bills differed significantly from their actual fiscal effects, mostly due to bill amendments or other changes made after the fiscal notes were submitted. Most other states update fiscal notes after bill amendments to account for this, but Kansas doesn't. 3 of 10 fiscal notes for bills that died appeared to be unreasonable because they didn't include complete or correct information. Of these, 2 were unreasonable because agencies used questionable data and assumptions, and 1 was unreasonable because Budget left out a potentially large cost to the state. Finally, we didn't see evidence Budget coordinated with agencies on fiscal notes like we would've expected.
In 2022, Kansas school districts received $7.9 billion in funding from state, local, and federal sources, up 12% from 2017. Since 2017, public school enrollment has decreased while staffing and spending have increased. Only about 1/3 of students met state standards in the 3 subjects we evaluated, and the numbers have been declining since 2017.
It is unlikely that any amount of additional spending will result in all students meeting state standards. We used a logistic regression model to predict how increases in regular education spending might affect student outcomes. Across-the-board spending increases were associated with almost no increase in the percentage of students who met state standards. Targeted increases in spending were associated with improvements in the number of students who met state standards, but significant numbers of students would still be unlikely to meet state standards. Targeted increases in spending were associated with improvements in the number of students who met state standards, but significant numbers of students would still be unlikely to meet state standards. We identified several factors, such as teacher pay and administrative spending, that were also associated with whether students met state standards. Much like our own model, the research we reviewed found a positive relationship between spending and outcomes but it was not strong in all circumstances. Research also suggests spending on teacher pay, books, and time in class may improve student outcomes.
We estimated how much it would cost to provide special education services in Kansas. In the 2021-22 school year, Kansas school districts provided special education services to nearly 89,000 children. We estimated it would cost between $1.2 billion and $1.5 billion to provide special education services that would allow students to meet their IEP goals. Our special education estimate has a few important caveats related to staffing and efficiency.
The Kansas African American Affairs Commission is a liaison office within the Governor’s Office and its fiscal year 2022 expenditures were about $130,000. It is comprised of 7 commissioners and an executive director. In this audit, we reviewed the commission and executive director's statutory compliance and expenditure approvals.
The commission and its executive director are required to meet various statutory requirements and bylaws to accomplish their mission. The commission did not comply with 2 of 6 meeting-related duties and 1 of 3 staff-related duties outlined in law or bylaws in the timeframe we reviewed. The executive director complied with her statutory duties to serve the commission in 2022 and the first half of 2023. The commissioners who responded to our survey generally had positive reviews of the executive director’s performance, but some thought she wasn’t as effective or responsive as she should be.
With regard to its expenditures, the commission’s fiscal year 2023 expenditures seemed reasonable to accomplishing its duties at a high level. However, about half of the 11 individual expenditures we reviewed in detail did not receive written approval to ensure they were appropriate. Commissioners told us they had insufficient financial awareness and oversight, in part because the executive director has not shared relevant information.
The Rural Opportunity Zones (ROZ) program incents individuals to move to rural Kansas counties. Currently, 95 of the state's 105 counties qualify as rural opportunity zones. The program incents individuals to move by providing up to 2 benefits: up to $15,000 in student loan repayment assistance over 5 years and, for individuals who relocate from out-of-state, a 100% state income tax credit for up to 5 years.
As part of this audit, we used program data to estimate how often the ROZ program incented program participants to move to rural counties. We also used data from the U.S. Census Bureau to help estimate to extent to which the ROZ program counteracted rural depopulation. Based on our estimates, the ROZ program had limited effects on rural depopulation on a statewide basis. However, the program had more significant effects on the extent to which 19 counties gained or lost population.
As of Spring 2023, the State of Kansas currently employs about 18,000 employees across 81 state executive branch agencies, boards, or commissions. State agencies have discretion to create their own work-from-home policies. State agencies reported about 30% of state employees currently work from home all or part of the time. They also estimated that an additional 15% of state employees could also work from home going forward. Some state jobs are better suited for working from home than others. Permanent work-from-home options could help the state hire and retain staff, have limited impact on productivity, and have a mixed impact on costs. Cost increases could be offset by reducing office space, but this has yet to occur in Kansas.
This audit reviewed a selection of county election offices' policies and practices to ensure the accuracy and security of voting machines, ballots, storage units, and tabulators.
State law gives county election officials discretion over how to run elections in their counties, so election processes vary across counties. We identified and reviewed election security best practices from the U.S. Election Assistance Commission, the federal election agency. They fall into 5 general security categories: overall process, election management computer, ballot, voting and tabulation, and transfer and movement security. Kansas only has a few high-level election security-related laws and regulations related to these 5 best practice categories.
We reviewed whether 13 counties had policies and practices that aligned with 55 best practices and state laws during the 2022 primary or general elections. These counties generally had adequate overall process and election management computer security practices. Ballot security practices were weaker overall, but county results varied. Most of the 13 counties we reviewed had inadequate voting and tabulation machine security practices except for physical security practices. And the 13 counties we reviewed had some adeqate transfer and movement security practices, but others that were generally inadequate. Overall, larger counties generally had stronger security practices than smaller counties because of their greater security needs and resources. But these results don't necessarily mean elections aren't secure.
Finally, none of the counties we reviewed had adequate written election security policies or guidance.
This audit determined whether selected state agencies and school districts adequately complied with certain IT security standards and best practices. State agencies must follow state IT security standards to protect sensitive information against data loss and theft. Local entities are not required to follow the state's policies.
9 of 15 entities we audited did not substantively comply with IT standards and best practices in at least 2 of 3 subject areas we evaluated. Specifically, 8 of 15 entities did not substantively comply with selected security awareness training controls. 10 of 15 entities did not substantively comply with selected account security controls. Lastly, 8 of 15 did not substantively comply with selected incident response controls. The findings demonstrate a poor "tone at the top" at many entities--meaning lack of top management oversight and supervision.
In 2021-22, the state provided $406.3 million in dedicated funding for school districts to deliver additional services to students at-risk of academic failure. State law requires that district spend money from their at-risk fund only on programs approved by the State Board of Education. Kansas Department of Education (KSDE) officials told us the State Board has delegated the task of approving at-risk programs to the department. None of the KSDE-approved programs we reviewed met the statutory criteria necessary to be included on the list. Further, most of the approved programs we reviewed had little to no evidence of effectiveness. Additionally, many KSDE-approved programs did not appear to meet the purpose of at-risk programs, which is to provide above and beyond opportunities to at-risk students. The problems we identified with KSDE's approved at-risk list are the result of several factors. This includes things such as, KSDE's process for approving at-risk programs does not include some statutorily required criteria, the department does not follow it's own process, and the board does not provide any oversight to the department. This audit showed the same problems as in our 2019 at-risk audit, and none of our recommendations have been adequately implemented.
Most of the $176 million in at-risk expenditures we reviewed for 20 districts was spent on salaries and benefits. About 30% of the $5.2 million in expenditures we reviewed did not adhere to statutory spending rules. Further, it is unclear how much of the districts' at-risk spending targets at-risk students or provides them an "above and beyond" opportunity. Problems with the at-risk spending guidance KSDE provided to school districts may contribute to some of the unallowable spending we found.
Over the last 6 years, students eligible for free lunch have consistently performed worse on state assessments than students who are not eligible for free lunches. All 3 cohort groups we evaluated performed worse over time, but this trend was more pronounced for students eligible for free lunch. Additionally, the graduation rates and ACT scores of students eligible for free lunch were also lower than other students.
We couldn’t determine how effective or timely the state’s child support services system is due to data limitations, but we saw several signs it’s not working as well as it could. Federal law requires states to assist parents in collecting monthly childcare payments. In Kansas, the Department for Children and Families is the primary state agency responsible for administering the state’s child support program. Kansas court trustees also can provide child support services, but they generally only provide enforcement services. A small number of parents we talked to expressed frustration and a lack of communication, regardless of whether they were served through DCF or court trustees. Kansas’s dual track child support system may create unequal costs for some Kansas parents. It also prevented us from evaluating the state’s child support system as a whole. DCF’s outdated computer system prevented us from determining how timely and effective its services are. We relied on 4 federal performance benchmarks as indicators of DCF’s child support performance. In recent years, DCF performed well on federal requirements to establish child support cases, but not on requirements to enforce those cases. DCF officials told us the difficult nature of their cases and certain administrative hurdles make it difficult to enforce child support payments. DCF and its contractors don’t have the tools to quickly identify and address delinquent payments. DCF’s use of federal performance measures to monitor contractors’ performance is too simplistic to identify poor performance.
Kansas’s low national rankings in child support enforcement may be due to the state’s unique system and outdated technology. Kansas’s child support services through DCF and its contractors performed worse on federal enforcement benchmarks than most other states. Kansas’s trustee option appears to be unique compared to other states, which may skew its national performance metrics. Kansas’s DCF child support services did not have key computer system features and collection tools that some other states had.
This audit evaluated whether 3 agencies and the Board of Education had implemented 7 previous audit recommendations. The Kansas Department of Education (KSDE) fully implemented 1 of 3 recommendations from our 2019 audit evaluating at-risk student counts, weights and expenditures. KSDE partially implemented the other recommendation, and the Board of Education did not implement the third recommendation. The Kansas Department of Agriculture partially implemented all 3 recommendations from our 2020 audit evaluating the agency's price verification inspection process. We could not evaluate whether the Kansas Department of Commerce implemented a recommendation from our 2020 Angel Investor Tax Credit Program audit.
In Kansas, groundwater is managed by multiple state and local agencies, including the Kansas Water Office, the Department of Agriculture, and groundwater management districts. In 1972, the legislature established the process by which local voters can form groundwater management districts. Local voters have established 5 districts in central and western Kansas. Groundwater management districts provide input but have little independent authority over many important state groundwater policies and actions. State law only requires groundwater management districts to do a few things, including having and reviewing a management program. All 5 groundwater management districts had a management program as required by state law, but we identified a few concerns with how those programs are reviewed and revised. Groundwater management districts currently operate programs related to data collection, research, and public education which appear reasonable for the purposes of groundwater management districts. In 2021, the 5 districts spent a total of $6.1 million, mostly on salaries and benefits and professional services. Overall, an estimated 75% of districts' expenditures were for programs related to an area of concern the district identified. In the last 10 years, 3 of the 5 groundwater management districts experienced overall water level declines but we could not evaluate water quality. Last, we could not determine the impact district programs had on these trends but some research suggest some positive results.
This audit reviewed three aspects of elections in Kansas, including training, electronic vote records, and policies and processes in long-term care facilities.
With regard to training, we couldn't tell whether county election officers received adequate training and we found most counties either didn't or coun't show they had trained all election workers before the 2022 general election. Each of Kansas’s 105 counties has a county election officer responsible for overseeing all elections in the county. This includes appointing election workers who perform frontline election duties. But state law has almost no requirements related to training county election officers and workers, and no one tracks county election officers’ training. However, county election officers we surveyed still reported feeling well prepared to oversee federal elections.
With regard to electronic vote records, we found that 6 Kansas counties we reviewed use scanners to record and tally voters’ paper ballots that are also capable of producing digital copies of those ballots. But nothing requires county election officials in Kansas to create or use digital copies, which meant some counties created and used them and others didn't. None of the counties we reviewed made digital copies public. We compared Kansas to 5 other states. Those states generally used digital copies similar to Kansas. However, some other states made them public.
Finally, with regard to processes for protecting voting in long-term care facilities, facility and county election officials described having a few basic practices. The national literature on this topic is sparse and much of it dated, but it identified a few practices to address fraud and undue influence. Kansas has a few basic laws related to fraud and undue influence, but nothing specifically for long-term care.
The Department of Commerce has 5 major incentive programs that it uses to incent economic development in Kansas. Those programs are the High Performance Incentive Program (HPIP), Job Creation Fund (JCF), Kansas Industrial Training (KIT), Kansas Industrial Retraining (KIR), and Promoting Employment Across Kansas (PEAK).
As part of this audit, we used a research-based model to estimate the economic impacts, tax effects, and total return on investment for 28 projects that we selected. Based on model results from those 28 projects, we estimate all 5 of Commerce’s major economic development incentive programs will generate positive total returns on investment. However, we estimate they won’t cover their own costs to the state through higher tax revenues. For example, all 5 programs appeared to generate economic impacts that are greater than their costs. But none of the programs appear to generate enough tax effects to cover their costs.
We completed 21 audits on 16 agencies and 4 school districts between CY 2020 and 2022 (1 entity was audited twice during this time period). This summary report shows 10 of the 21 entities did not substantially comply with applicable IT security standards and best practices. Entities struggled with properly scanning and patching their computers. Entities also had compliance problems because they did not create, maintain, or test incident response plans or continuity of operations plans. Other significant issues included poor security awareness training or failed social engineering tests. Almost half the entities had significant management, contract, or policy-related weaknesses. Additional security weaknesses included inadequate account security controls, poor encryption, back up, or destruction processes of sensitive data. We also noted several entities had inadequate network boundary protection or had poor access or environmental controls for their data centers. Lastly, we identified significant security issues within agencies’ specific IT systems. The findings in this report are similar to those in previous summary IT reports. The main reasons for compliance problems across the 20 entities included insufficient top management attention and inadequate resources.
In response to the COVID pandemic, the federal government enacted six major relief bills totaling over $5 trillion. The federal government allocated about $34 million to the state of Kansas. Out of that, the state had discretion on how to spend about $2.6 billion. In May 2020, the governor established the Office of Recovery and created a taskforce to distribute and administer certain COVID relief funds. The state distributed CARES Act discretionary funding through a 3 round proess that involved the SPARK taskforce and the State Finance Council. About $1.6 billion in ARPA funds are currently being distributed thorugh legislative appropriation and the SPARK taskforce.
The state's distribution of CARES Act funding appeared appropriate and reasonable. Most of the CARES Act expenditures we reviewed were likey allowable under federal spending rules. However, some expenditures appeared wasteful or raised other concerns even though the expenditure may be allowable under federal rules. Federal rules likely contibuted to the problems we encountered.
Virtual school programs are an alternative to traditional brick-and-mortar schools. Most of the state-run virtual school programs we identified still allowed local districts to operate virtual school programs, but we could not compare student outcomes or expenditures between states. In Kansas, local school districts operate virtual school programs. 105 school districts out of the 286 Kansas school districts spent at least $50 million on virtual school programs in the 2020-21 school year. We reviewed 4 state-run models, 3 of which also offered district operated virtual school programs like Kansas. A lack of data limited our comparison of other states' virtual school program expenditures and outcomes. Data reliability issues prevented us from evaluating outcomes for virtual students in Kansas.
To increase connectivity in unserved and underserved areas in Kansas in response to the COVID-19 pandemic, the Kansas Department of Commerce (Commerce) and other stakeholders developed the Connectivity Emergency Response Grants program in 2020. The program received $50 million in funding from the Coronavirus Aid, Relief, and Economic Security Act. Commerce awarded about $48.5 million of that funding in connectivity grants to the internet service providers and Kansas communities that applied. 66 grants went to 39 entities across seven regions of Kansas. South Central Kansas received about $14 million. Southwest Kansas received about $11 million. Northeast Kansas received about $9 million. Southeast and East Central Kansas received just over $5 million each. North Central and Northwest Kansas received around $550,000 or less. The North Central and Northwest regions also requested the least in CERG funding.
Kansas’s cryptocurrency tax policies generally aligned with federal policies, but some of those policies have been difficult to enforce in recent years. Federal tax policy is set up to tax cryptocurrency in several ways. Kansas’s income tax code mirrors federal tax policy. As a result, the state should receive income tax revenue from cryptocurrency transactions. However, it’s unlikely Kansas receives all income tax revenue from cryptocurrency transactions because of a lack of federal reporting guidelines. Finally, state governments have yet to agree on a set of best practices regarding the taxation of cryptocurrencies.
The 2018 Kansas Cybersecurity Act created the Kansas Information Security Office (KISO) to reduce state agencies’ cybersecurity risk. KISO offers agencies 3 cybersecurity service levels--basic, intermediate, and advanced--that appear to align with the Cybersecurity Act requirements we could review. However, KISO’s services may not have as many effects as the Legislature intended because few agencies use intermediate or advanced services. Agency officials we surveyed had mostly positive opinions about KISO’s services but officials may not always know what their agencies’ needs are or what KISO services they receive. That may be because KISO’s communication with agencies isn’t proactive enough.
KISO is funded through fees it collects from agencies. Its revenues appeared to be less than its costs in fiscal years 2020-2021. But we don't know if KISO’s services are cost-effective because of data limitations and neither do KISO officials or most of the 7 agencies we interviewed. KISO officials described steps they take to limit their costs, some of which may have unintended negative effects.
While some audits are statutorily required, most are requested by legislators and approved by the Legislative Post Audit Committee. A legislator, legislative committee, or representative from the Governor’s Office contacts our staff to let us know they are interested in an audit. In this Rundown episode, Chris Clarke, Legislative Post Auditor, and Kristen Rottinghaus, Deputy Post Auditor, discuss the audit proposal process and summarize the new audit proposals LPA staff will be working on in the coming months.
Overseen by the Kansas Department of Revenue, the Division of Vehicles is responsible for suspending and revoking driver’s licenses. Suspended or revoked drivers must fulfill violation-specific criteria to have their license reinstated, and in some cases, they must also pay a fee. From 2019 to 2021, Kansas drivers paid about $18 million in fees to have their driver’s licenses reinstated. The fee revenue was allocated to several different state agencies and programs. From 2019 to 2021, the Division of Vehicles issued 176,000 driver’s license suspensions or revocations. Some Kansas drivers may have experienced financial or social hardships from their suspension or revocation. Fees and other financial obligations may have limited some drivers’ ability to get their license reinstated for less-severe violations. Most of the academic research we reviewed also suggested that the loss of driving privileges had a negative financial and social impact on people. Stakeholders we spoke to agreed that the loss of driving privileges could have a negative impact on Kansans, but recent changes in state law could help lessen that impact.
The Kansas Legislature created the Mental Health Intervention Team Program in school year 2019 to increase students’ access to mental health care resources. It has reauthorized and expanded the program in the following years. Kansas school districts employ licensed mental health care staff to provide several different services to students. Districts reported a 13% increase in total licensed mental health staff FTE including a 29% increase in social worker staff FTE from school year 2019 to 2022. However, the FTE trends should be interpreted with caution because school districts don’t report social worker FTE consistently to the Kansas State Department of Education (KSDE). The 5 community mental health centers (CMHCs) and 5 school districts we interviewed generally reported positive experiences with the program even though all 5 CMHCs reported losing staff to school districts.
Our January 2020 audit of the juvenile justice reforms (Senate Bill 367) had recommendations related to improving and sharing available juvenile offender data across several agencies and strengthening the Department of Correction's grant approval processes. In this follow up audit, we determined the 2 agencies implemented 4 of the 5 recommendations we made in the 2020 audit. Specifically, as of February 2022, the Kansas Department of Corrections implemented all 3 recommendations. The Office of Judicial Administration has implemented 1 and is currently implementing the other recommendation. We also noted the Office of Judicial Administration's centralized case management system project is significantly behind schedule.
The Tax Credit for Low Income Student Scholarship program helps eligible students to attend private schools of their choice. Kansas law requires that 90% of contributions be disbursed as scholarships within 36 months. During the period from 2015-2021, scholarship granting organizations disbursed just over $9 million in scholarships of the $15.5 million in contributions they received. All but 2 scholarship granting organizations met the 90% distribution requirement during that time. Both organizations mentioned that a lack of eligible students caused them to fall short of the requirement. KSDE monitors scholarship granting organizations' compliance with state law at a high level, but their processes lack information to track the 90% distribution requirement.
In fiscal year 2021, 4 case management providers served about 7,000 children in foster care statewide. DCF monitors the foster care program at a high level, but case management providers determine how best to serve children in foster care. Although DCF generally has adequate written policies, DCF and case management providers’ practices were not adequate to ensure the safety of children in foster care in several areas. DCF’s policies appeared generally adequate to ensure children were placed in appropriate homes, but they could be stronger in one area. However, case management providers did not meet key safety and well-being standards related to appropriate placements. Further, case management providers aren’t always using comprehensive data for making placement decisions. DCF policies were adequate regarding monthly visits between case management staff and children in foster care. However, in practice case management providers did not follow DCF policy related to frequency of in-home visits. Further, case management providers did not sufficiently assess the safety of a child in all cases. DCF had adequate policies and grant requirements for responding to urgent matters. However, foster parents complained about slow responses to urgent situations and poor communication in general. DCF policies on foster parent training were adequate, and most foster parents report they have been provided with appropriate training. DCF had adequate policies to locate missing foster care children, and it appears case management providers and DCF followed took appropriate action for runaway or missing children. High caseloads and data use likely caused many of the issues we found related to child placement and safety. DCF has not taken action to correct systemwide safety issues despite continued concerns about the safety of children in foster care.
The state does not have the capacity to provide services to all children in foster care, especially those with specialized service needs. Most Kansas counties had enough foster home capacity to meet their demand in fiscal year 2021, but close to 40% of the state’s counties might not have enough foster home capacity. Even when counties have enough licensed foster homes, stakeholders told us the state may not have enough homes to care for children with complex physical, emotional, and behavioral needs. DCF told us they are looking into options to address placements for children with complex physical, emotional, and behavioral needs children. Caseloads for case workers were higher across the state than best practices recommend. Case workers we surveyed told us high caseloads made it difficult for them to do their job. Across the state, children may not have always received services they needed, especially specialized or acute services. Much like safety issues, service delivery and capacity issues are not new to DCF and suggest larger accessibility issues.
Since 2008, state law required state agency officials to complete an economic impact statement for every new or amended Kansas Administrative Regulation. In 2018, amendments to state law significantly changed the economic impact statement process. We found that most economic impact statements (84%) submitted from 2018 to 2020 did not have a cost estimate because agencies either believed there was no cost or did not report one. Additionally, several economic impact statements we reviewed had small errors or inconsistencies. We found the Division of the Budget’s review appeared to have little effect on agencies’ economic impact statements. The division's review process also did not include two requirements in state law. We also reviewed a state law requiring agencies to hold a public hearing for any economic impact statements that had two-year compliance costs exceeding $3 million. From 2018 to 2020, only two economic impact statements had a two-year cost that exceeded the $3 million threshold. However, were unable to fully evaluate the impact of adjusting the $3 million threshold because of how agencies reported costs.
We couldn't determine the effect of taxes or exemptions on competition between government, non-profit, and for-profit businesses because of data limitations. Research on competition between those 3 sectors in the United States is limited and much of it is dated. The 4 research studies we reviewed found that although some businesses may appear similar, slight differences in services or location can affect the level of any competition. Additionally, the research shows government and non-profit businesses have some advantages over for-profit businesses, but the effect on for-profit business is unclear. We also looked at differences in statutory tax rates in 3 industries in Kansas because they operate in close proximity and may offer similar services in many parts of the state. In Kansas, for-profit fitness centers, daycare centers, and mental health centers generally pay taxes that similar government and non-profit businesses do not pay. But we couldn’t determine how these differences in taxes or exemptions effect competition in Kansas because of data issues and time constraints.
Developmental education courses are for college students who are not academically prepared to complete regular college-level work. A little more than 11,000 Kansas high school graduates enrolled in at least one developmental education course in 2020. We surveyed high school and post-secondary teachers and staff to collect their opinions on how significant several factors are in a student's need to take a developmental education course. Nearly two-thirds of post-secondary survey respondents reported that the length of time a student has been out of high school is a significant factor in the need for developmental education courses. Additionally, about two-thirds of high school respondents reported that a lack of educational support at home and a lack of course mastery are significant factors in students not being prepared for college. Other stakeholders we talked with reported that a lack of appropriate coursework in high school is an important factor in the need for developmental courses. Last, survey respondents and stakeholders reported several strategies to reduce the need for developmental education courses including requiring skills mastery in high school and providing additional educational supports.
In 2016, the Legislature passed a law requiring a performance-based budget system. The system was supposed to be implemented in 3 phases--a program inventory (due January 9, 2017), an integrated budget fiscal process (due January 6, 2018), and a performance-based budget system (due January 14, 2019). We reviewed whether the system was adequately implemented as outlined in state law, and whether state agencies provided complete, accurate, and reliable information.
For the first question, we found the Division of the Budget generally met the basic requirements in state law. But the performance-based budget system doesn’t seem to have changed the way the state makes budgeting decisions. That’s partly because statute is very general and allows a lot of discretion.
For the second question, we found that most of the 79 state agencies we reviewed submitted the required information to Budget. We evaluated the quality of the program inventories and performance measures that 7 of those agencies provided. 5 of the 7 agencies’ program inventories didn’t include all required information. 1 agency only had output measures (no outcome measures). And 3 agencies’ performance measures had significant accuracy or reliability issues.
We couldn't determine the effect of taxes or exemptions on competition between government, non-profit, and for-profit businesses because of data limitations. Research on competition between those 3 sectors in the United States is limited and much of it is dated. The 4 research studies we reviewed found that although some businesses may appear similar, slight differences in services or location can affect the level of any competition. Additionally, the research shows government and non-profit businesses have some advantages over for-profit businesses, but the effect on for-profit business is unclear. We also looked at differences in statutory tax rates in 3 industries in Kansas because they operate in close proximity and may offer similar services in many parts of the state. In Kansas, for-profit fitness centers, daycare centers, and mental health centers generally pay taxes that similar government and non-profit businesses do not pay. But we couldn’t determine how these differences in taxes or exemptions effect competition in Kansas because of data issues and time constraints.
School districts maintain sensitive data which makes them attractive targets for cyberattacks. Although school districts maintain sensitive data, Kansas districts are not required to implement any specific IT controls. Many school districts have not implemented several basic It security controls: The majority of survey respondents (147 of 286 school districts - 51% resonse rate) indicated they lacked proper security awareness training and incident response plans, did not require secure confidential data transmission, and did not perform vulnerability scans at all or frequently enough. Districts reported that staffing issues and lack of knowledge about what IT security controls to implement were significant barriers to improving IT security. Finally, districts reported spending an annual average of about $18 per student on IT security in recent years. In comparison, the average total expenditure per student is about $16,200.
The estimated revenues of the Council Grove site of Butler County Community College were about $11,000 less than its estimated expenditures. Butler County Community College (BCCC) operates a site in Council Grove that serves about 200 students. In fiscal year 2019, the estimated revenues for the Council Grove site were about $11,000 less than its estimated expenditures. In fiscal year 2019, the estimated expenditures of the Council Grove site were about $158,000. In fiscal year 2019, the Council Grove site generated about $147,000 in revenues from state aid and student tuition and fees. State Aid has not been paid according to Regents’ formula in recent years, which could explain why the Council Grove site operated at a deficit in fiscal year 2019. Because state aid hasn’t been paid according to Regents’ formula, it’s possible that property tax may have supported the Council Grove site but we couldn’t tell.
Rapid program changes, historically high unemployment claims, and an ill-equipped computer processing system created delays in claims processing during the pandemic in Kansas. The Kansas Department of Labor (KDOL) administers the regular unemployment insurance program and gives financial aid to unemployed individuals. In 2020, the federal government created several temporary unemployment insurance programs to help individuals who lost their jobs due to COVID-19. Kansas and other states across the U.S. experienced claims processing delays during the pandemic. KDOL relied on an outdated, piecemeal, and poorly maintained unemployment computer system during the pandemic. Frequent changes to the state’s unemployment computer system during the pandemic created system errors and processing delays. During the pandemic, a surge in valid and fraudulent claims strained the state’s outdated and piecemeal unemployment system, leading to system failures and claim delays. Prior to the pandemic, KDOL had few staff to answer calls because of low unemployment rates and federal funding structures. Despite additional staff, the number of calls answered did not improve significantly during the pandemic, potentially leading to additional claims delays. States with modern unemployment computer systems appeared better equipped to handle the challenges of the pandemic. KDOL is in the process of modernizing its unemployment computer system. In January 2021 we released a preliminary fraud estimate with the intent of releasing an updated estimate in this report. For this audit, we used an advanced computer model to create a more precise estimate of unemployment fraud in Kansas. We estimate about $700 million in potentially fraudulent payments were made in Kansas during the pandemic. Of the estimated $700 million in fraudulent benefit payments, about half ($343 million) came from federal funds and half ($344 million) from state funds. We estimate about $2 billion in potentially fraudulent payments were prevented in Kansas during the pandemic. KDOL officials reported working with federal organizations and banks to identify and recover fraudulent payments.
25 counties received a total of $2.3 million in grants from the Center for Tech and Civic Life (CTCL) that ranged from $5,000 to $856,000 with no obligations. The Center for Tech and Civic Life is a non-profit organization that provides civic information for voters as well as tools for election officials. 25 Kansas counties applied for and were awarded $2.3 million dollars in CTCL grants. As of January 31, 2021, counties reported using 92% of their grant money on items such as election equipment, staffing, and real estate expenses. There were no obligations associated with the acceptance of the CTCL grant. The grants were the subject of some political concerns, and under a new state law, counties will not be able to accept these type grants in the future.
Substance abuse and mental health treatment in Kansas is provided by a network of providers and overseen by several state agencies. Individuals can seek treatment for a wide variety of conditions. The 23 providers we interviewed reported using many practices and programs to address their clients’ needs. Almost all of the 11 programs and practices most commonly reported by providers had at least some research indicating they were effective. But data limitations kept us from assessing how well they are working in Kansas.
Additionally, Kansas substance abuse and mental health providers use similar practices and programs as five other states we reviewed. We were not able to compare Kansas's outcomes to other states because of data limitations.
This is an economic development incentive evaluation that satisfies the requirements in K.S.A. 46-1137. STAR bonds allow local governments to use future sales tax revenue to help pay for development or redevelopment projects. As of November 2020, about $873 million in mostly state sales tax revenue has gone toward retiring $1.1 billion in STAR bonds.
We used a tourism analysis and a break-even analysis to estimate Sales Tax and Revenue (STAR) bonds' economic and fiscal impact to the state. Tourism is a key component of the STAR bonds program. The Department of Commerce would like each attraction to draw 20% of visitors from outside Kansas and 30% of visitors from at least 100 miles away. Only 3 of the 16 STAR bond attractions we reviewed met those goals in one or both years we reviewed.
We also estimated that it will take the state decades to recoup the sales tax revenue it gave up in 3 STAR bond districts (Hutchinson Underground Salt Mine, Overland Park Prairiefire, and Wichita Sports Forum) based on revenues from out-of-state visitors. We estimate it might take the state 43-118 years after bond repayment to break even on Hutchinson, 13-71 years to break even on Overland Park, and 5-49 years to break even on Wichita.
The Department for Children and Families (DCF) and its private case management providers administer the foster care system in Kansas. The case management providers develop case plans for children in foster care. Those plans document a child's permanency goal and the tasks his or her parents must complete to achieve that goal. We reviewed 48 children's case plans to see if the parents' tasks appeared to be reasonable and relevant to reunification. The tasks we reviewed were generally reasonable and relevant, and parents generally made progress on or completed their tasks.
Additionally, we used regression analyses to help determine how demographic factors affect children’s foster care outcomes (e.g., reunification, adoption, emancipation). Those analyses showed children's permanency outcomes varied based on race, ethnicity, age, and sex. Although children's outcomes were similar overall, being Black, American Indian, or Hispanic had a meaningful effect on children's outcomes when compared to White or non-Hispanic children. Older children also were less likely to reunify or be adopted than younger children. And female children were less likely to be transferred to another agency than male children.
The leading causes of death didn’t change much from 2019 to 2020, except for additional deaths due to COVID-19. Determining and recording cause of death involves funeral home directors, local medical certifiers, the Kansas Department of Health and Environment, and the National Center for Health Statistics (NCHS). NCHS uses a standardized system to determine the underlying cause of death. The leading causes of death in Kansas for Sept. 1 – December 31 were similar for 2019 and 2020, except for additional deaths due to COVID-19. COVID was the leading cause of death for the period we reviewed in 2020. Otherwise, the leading causes of death in Kansas for that period remained mostly unchanged from 2019 to 2020. In our review of the time period September 1 – December 31, there were 3,331 (36%) more deaths in 2020 than in 2019. The increase in the number of deaths from 2019 to 2020 is largely attributable to COVID-19. Both KDHE and NCHS officials reported adding new review processes when COVID-19 is listed as the cause of death.
The Legislature created the Health Care Access Improvement Program (HCAIP) in 2004 to increase the state’s Medicaid reimbursement rates for health care providers. KDHE combines hospital tax revenues collected under the HCAIP program with federal matching funds to increase reimbursement rates to both hospitals and non-hospital health care providers. They increase rates through an add-on percentage For hospitals it is a standard percentage. For non-hospital providers, the add-on percentage varies by procedure. Out of 900 procedure codes, the audit showed that 20 procedures generated 74% of total non-hospital Medicaid reimbursements in 2019. The add-on percentages for the procedure codes that generated the most Medicaid reimbursements for non-hospital providers ranged from 4.2% to 110.9%.
Kansas’ Medicaid system has made it difficult for KDHE to adequately monitor and report HCAIP expenditures and revenues. State statute requires HCAIP revenues to be disbursed in a specific way and that the program be state general fund neutral. In 2020, HCAIP did not comply with those two provisions in state law. It is unlikely that KDHE can ensure compliance without changes to the HCAIP program. Finally, the HCAIP fund report we reviewed does not capture all HCAIP assessment revenues and expenditures.
County governments purchase a variety of goods and services in multiple ways. Individuals who participate in the purchasing process should avoid conflicts of interest. For the 11 counties we reviewed, larger counties appeared to have adequate policies and procedures to manage conflict of interest for purchases and contracts, but smaller counties did not. State law has two requirements and best practices suggest additional ways counties can identify and manage conflict of interest problems. Although good policies are important, counties must rely on the honesty of their employees to detect most conflicts. The larger counties we evaluated typically had policies that addressed state law and best practices but the smaller counties did not. However, larger counties use a variety of purchasing processes and certain purchases receive little scrutiny for conflict of interests.
The Kansas Department of Labor’s fraud detection process was not designed to detect the large-scale, nationwide fraud campaign that occurred during the COVID-19 pandemic. The Regular Unemployment Insurance program is administered by the Kansas Department of Labor (KDOL) and gives financial aid to unemployed individuals. In 2020, the federal government created six temporary unemployment insurance programs to help individuals who lost their jobs due to COVID-19. There were two main types of unemployment fraud alleged nationally and in Kansas during the pandemic. Nationally, fraudsters targeted the new Pandemic Unemployment Assistance (PUA) program because of weaknesses in its application process. Many of KDOL’s existing processes were manual and not effective to identify PUA fraud. KDOL officials told us they are in the process of upgrading their fraud detection process to better identify PUA and other unemployment fraud. Fraudsters also targeted the state’s Regular Unemployment program beginning in late 2020. The state’s unemployment trust fund balance has declined 75% in one year. Of the roughly $2.6 billion in state and federal unemployment benefits paid in Kansas in 2020, we estimated about $600 million (24%) could have been fraudulent. However, our fraud estimate is subject to some key assumptions and limitations. As far as impacts, if not reported, Kansas employees could owe taxes on benefits they never filed or received because of fraudulent claims. Further, if not appealed, private and public employers could be financially responsible for fraudulent claims filed under the state’s Regular Unemployment program. KDOL has not yet started criminal investigations into the potentially fraudulent claims it identified during the pandemic.
This is a guide to help readers understand the economic development incentive evaluations required by K.S.A. 46-1137. It provides important context to supplement those separate evaluations.
Districts account for the local, state, and federal money they receive using various funds. A fund can have a cash balance if the district transfers more funding into it than it spends. Districts maintain unencumbered cash balances for several reasons but receive little guidance about how much balance to maintain. After adjusting for inflation, total unencumbered cash balances statewide grew 35% from $1.56 billion to $2.11 billion in school years 2009 to 2019. Almost all the growth in unencumbered cash balances over the last 10 years has occurred in just 10 funds. Further, during the 10 years we evaluated, most unencumbered cash balances were in restricted funds which limits districts’ spending flexibility. In school years 2009 to 2019, the 25 districts we reviewed spent most of their unencumbered cash balances on purchases related to construction or maintenance of school buildings. Finally, at the beginning of the 2019 school year, many of the districts we reviewed had cash balances that met or exceeded best practice suggested minimum amounts, but the levels varied significantly. The Government Finance Officers Association (GFOA) recommends districts maintain a total cash balance of at least two months of operating expenditures.
The audit reviewed 10 recommendations from 3 prior LPA audits. It involved the Kansas Department of Agriculture and the Kansas Department of Health and Environment. The 2 agencies implemented 9 of 10 recommendations we reviewed for this audit. In April 2018, we published 2 audits with several recommendations for KDHE related to improving the state’s Medicaid program. As of October 2020, KDHE fully implemented 4 of 5 recommendations we evaluated. We were unable to determine the status of the last recommendation. In December 2018, we published an audit with several recommendations for KDA related to the animal facility inspections program. As of September 2020, KDA fully implemented all 5 recommendations we evaluated.
The Kansas Department of Agriculture (KDA) conducts price verification inspections to check the accuracy of businesses’ pricing systems across the state. Businesses fail inspections when more than 2% of items inspectors check are mispriced. KDA may respond to failed inspections by conducting follow-up inspections or taking legal action. In fiscal years 2018 through 2020, KDA conducted a total of about 1,800 price verification inspections. The inspections covered a small percentage of all Kansas retail businesses and did not cover certain parts of the state. Businesses failed more than half (about 60%) of price verification inspections during that time. KDA didn’t conduct timely follow ups on about 75% of the failed inspections we reviewed and it issued legal orders later than it could have. Finally, it issued only small fines for repeated failed inspections. We interviewed officials in 5 other states and reviewed industry standards to learn how other states determine adequate coverage for price verification inspections. Like Kansas, other states we reviewed don’t make price verification inspections their top priority. Neither those states nor industry standards have specific criteria to determine adequate inspection coverage. Doing more price verification inspections would take additional funding or require KDA to do fewer scale or package inspections.
Kansas Highway Patrol officials followed state law and regulations when dismissing two majors in July 2020. Most KHP staff are classified employees, but senior management (including majors) are unclassified employees. State law and regulations only have a few requirements related to the highway patrol dismissing an unclassified employee. The highway patrol followed applicable requirements.
This is an economic development incentive evaluation that satisfies the requirements in K.S.A. 46-1137. We focused our analysis on the angel investor tax credit program’s general goals rather than economic or fiscal impact because of data limitations and the program's focus on investors instead of businesses.
The angel investor tax credit program gives investors a tax credit for investing in certain Kansas startup businesses. During 2015-2018, investors received $20.2 million in income tax credits for investing $51.5 million in Kansas businesses. The program’s goal is to increase investment in innovative businesses. Department of Commerce officials said they consider how long businesses operate and whether they've created jobs to determine if the program is successful. State law does not define innovative businesses, but we think the businesses that participated in the program from 2015-2018 generally appeared to be in reasonable industries. Further, the participating businesses we reviewed from 2009-2019 stayed in business for 3-to-5 years about as often as non-participants but created fewer average jobs. However, we couldn’t determine whether participating businesses stayed in business or created jobs because of the program or something else.
Hemp is an agricultural crop that farmers grow for its fiber, grain, and flowers. Once processed, hemp can be used in a variety of products such as rope (hemp fiber), flour (hemp grain), and the chemical compound cannabidiol or CBD (hemp flower). Hemp was grown in the United States before being banned in 1970 as part of the Controlled Substances Act. Changes to federal and state law made it legal to grow and distribute hemp in Kansas starting in 2019.
We used a consultant to estimate the potential financial returns on hemp grown in Kansas in 2019 and the next several years. Our estimates show that Kansas' 2019 hemp crop had limited financial returns, likely due to a lack of knowledge on how best to grow hemp in Kansas. However, our estimates also show that hemp has the potential to become a more profitable crop in the future. That will depend on future harvest yields and market factors that are not yet known. For example, hemp's future financial returns will depend on future demand for CBD products and the development of new uses or markets for hemp fiber and grain.
Lobbyists registered in Kansas reported receiving almost $1.3 million in public funds for lobbying in 2019. Registered lobbyists are required to self-report the amount of public funds they receive from state and local governments and governmental associations to the Secretary of State. However, that information is incomplete because some people who lobby do not have to register as lobbyists and some lobbyists did not report in 2019.
Kansas state and local governments that responded to our survey reported spending about $11 million on fees and dues to professional associations in fiscal year 2019. We surveyed almost 3,800 state agencies and local governments to identify their spending on association fees and dues. 936 (25%) governments responded. About half of the 936 respondents reported spending no money on association fees and dues. The other half reported spending about $11 million in fiscal year 2019. Less than half (about $5 million of the $11 million) in fees and dues went to associations that lobby to some extent at the state or federal level and the other about $6 million went to associations that have no or unknown lobbying services. Less than 1% of the associations received almost 45% of the fees and dues reported by state and local governments.
As of June 30, 2020, we consider the Kansas Bureau of Investigation's Automated Biometric Identification System (ABIS) project to be in satisfactory status. The current Automated Fingerprint Identification System cannot be upgraded past 2022. ABIS will collect, store, and compare biometric data such as fingerprints to existing records for criminal justice and non-criminal justice purposes. Through the end of this quarter, the scope for ABIS is satisfactory: KBI completed its planning project to design and refine the requirements for the ABIS project. The Request for Proposal (RFP) and resulting contract award locked in the scope for the project.
The schedule for the main project is satisfactory: The RFP was released later than originally planned, which has delayed the award deadline to early November 2020. This will start the execution phase and allow roughly 2 years to have a new system deployed by December 2022. The project cost for ABIS is satisfactory: The planning project was on track and has been paid, and the cost estimate for the main project has been finalized. The legislature also appropriated necessary funding for the project. Lastly, the project security for ABIS is satisfactory because officials have included appropriate security requirements in the finalized RFP.
KPERS administers the Kansas Police and Firemen’s Retirement System (KP&F), which provides retirement benefits to state and local police and firefighters. The Legislature created the deferred retirement option program (DROP) within KP&F to help retain experienced KHP and KBI staff. DROP participants’ retirement benefits are credited to accounts while they keep working. Only 32% of eligible KHP and KBI employees have participated in DROP so far, but more are likely to join. DROP appears to help agencies keep experienced staff without significantly increasing costs. DROP does not create any new staff expenses, and KHP, KBI, and KPERS officials told us DROP has not significantly affected their administrative expenses. Expanding DROP to other state or local agencies could slightly raise agency contribution rates and increase KPERS’ administrative costs. Finally, Kansas’ DROP includes most of the cost neutral elements of the other programs we reviewed.
We determined the Automated Biometric Identification System (ABIS) project’s status was satisfactory after evaluating its scope, schedule, cost, and security.
We found that salaries and benefits for all program staff we reviewed were funded using the expected federal and state fund ratios.