Although Kansas has several agencies involved in water management, the organizational structure isnít out of line compared to other western states. In addition, we found very few problems with the current structure, and State and local officials told us the system doesnít need significant changes. State officials went on to cite the Natural Resources Sub-Cabinet as a major reason for better coordination among water-related agencies. We estimated that creating a single State water agency may yield between $300,000 and $7 million in administrative savings, with the actual savings likely to be on the lower end of that estimate. We also identified a few opportunities for State agencies to improve their coordination and make their programs more efficient without consolidating. Those opportunities include having field staff from different agencies collaborate, improve the monitoring of Watershed Restoration and Protection Strategies (WRAPS) projects and taking steps to share water data more efficiently among themselves and with the public.
Agricultural-Related Agencies: A K-GOAL Audit Determining Whether Cost Savings Could Be Achieved By Making the Animal Health Department and the Conservation Commission Part of the Department of Agriculture
Kansas is one of six states that doesnít place any of its animal health oversight or conservation grant functions within its Department of Agriculture. The remaining 44 states have varying degrees of those functions placed under their Department of Agriculture. Kansas could save about $710,000 a year by merging the two agencies with the Department of Agriculture. About $630,000 of the savings comes from eliminating or restructuring staff positions, while about $80,000 comes from other operating costs reductions. Although agency officials expressed concerns about restructuring, we found those issues could be overcome. During this audit, we identified other issues regarding the operations of the Animal Health Department and the Conservation Commission. For example, the Animal Health Department hasnít fully developed and implemented policy manuals and criteria for assessing the results of inspections--these items were recommended in a previous audit issued in 2002. Other issues related to the efficient use of staff and technology need to be studied by management at both agencies.
Property Valuation in Kansas: Reviewing the Valuation of Agricultural and Commercial Properties
State law requires all real property subject to taxation to be appraised uniformly and equally as to class, and at its fair market value, except agricultural land, which is valued at ďuseĒ value. All the differences in value in our within-county comparisons of 18 pairs of commercial buildings and eight pairs of agricultural structures seemed justified. Differences in property values across counties reflect appraisersí decisions about market conditions; some seemed justified, but others were questionable. Land classified as agricultural receives a significant tax break, and getting land reclassified to agricultural is relatively easy because of Kansasí broad definition of agriculture. Tax receipts in Johnson and Butler Counties were reduced by at least $204,000 for 2004 after 64 plots of vacant land were reclassified as agricultural. Kansas may want to consider implementing a tax roll-back policy to recoup property taxes when agricultural land is reclassified. Concerns about agricultural land being purchased for recreation, yet continuing to be classified as agricultural, is an issue in southeast Kansas. But because the uses arenít mutually exclusive (that is, land purchased for hunting can be used during most of the year for growing hay or grazing cattle) itís unlikely this situation will change unless the Legislature chooses to significantly narrow the Stateís definition of agriculture.
Department of Agriculture: Reviewing the Grain Warehouse Inspection Program
The Grain Warehouse Inspection Program follows a number of good practices in licensing and monitoring grain warehouses, but other weaknesses impair the Program's ability to adequately protect farmers who store grain in State-licensed warehouses. (None of the Program's protections apply to farmers who participate in sale contracts; several other states provide some protections under their grain dealer laws for these transactions.) Kansas' financial requirements, such as bonding, aren't as stringent as those of other states, and some states do more analysis of warehouses' financial solvency. Program staff perform very limited evaluations of the quality of grain stored in warehouses, examiners don't consistently write up all the problems they identify during examinations, and oversight of examiners is inadequate to ensure they carry out all Program responsibilities appropriately and consistently. Further, Program staff allowed at least two warehouses' grain quality problems to continue without taking appropriate enforcement action. Part of the problem stems from the Department's belief that staff don't have the statutory authority to force warehouses to correct problems with grain that is infested or otherwise in poor condition. We think the statute is general enough to give them this authority. We also note that Kansas is the only one of six programs we reviewed that doesn't have authority to impose fines. Finally, the reserve funds that have helped support the Program will be exhausted in fiscal year 2005, requiring the Legislature to adopt a different funding structure for the Program.
Food Safety Programs in Kansas: Evaluating Possible Costs and Efficiencies of Combining Them
Primary responsibility for ensuring food safety in Kansas is divided between the Departments of Agriculture (in the meat and poultry, dairy, and egg inspection programs) and Health and Environment (in the food protection program); together, they spend about $3.2 million for inspection staff. This system is inefficient in some ways, because inspectors from more than one agency or program inspect the same businesses, some businesses are inspected more frequently than they need to be, and similar businesses are regulated inconsistently. In addition, coordination can be improved in situations where the agencies' regulatory authority overlaps. Combining food safety inspection programs could make it more likely similar food businesses and processes would be regulated consistently and that communications would improve. We estimate Kansas can generate about $680,000 in annual savings and improve food safety if certain inspections are combined and if inspections are changed to a risk-based approach. In addition to restructuring the routine food safety inspection system, Kansas needs to continue taking steps to become prepared for intentional threats to food safety.
Meat Processing Plants: Determining What Factors May Have Contributed to a Decline in the Number of Small Plants and What Impact That Has Had on the Stateís Economy
The number of state-inspected meat plants in Kansas dropped from 151 in 1996 to 88 in September 2002, a decline of 63 plants. Of those 63 plants, 44 went out of business and the rest generally switched to federally inspected or custom-exempt plants. Nearly all other states with state inspection programs saw declines in the number of plants. Many plant owners in Kansas who'd gone out of business cited the lack of profitability and changes they'd have to make to meet federal regulations as the primary causes. The economic impact of these closings would largely be felt only in the small, rural communities, not on a Statewide basis. Finally, while Kansas' efforts to help small meat processors stay in business appear to be similar to those of other states, current plant owners said being able to participate in interstate commerce would help them most.To avoid duplicating the effort of an ongoing federal review by USDA Food Safety Inspection officials, we limited the work we did to assess adequacy of staffing levels, training, and consistency of inspections. Our audit and the results of the federal review (expected by early Spring 2003) should be read in conjunction to get a complete picture of the inspection program's performance. Based on our limited work, Kansas' inspection staff levels don't appear to be out of line when compared to other states. Most inspection staff think they've received adequate training in how to recognize problems in plants, although many plant owners and some inspectors don't think regulations and policies are applied consistently across the State. Inspectors also cited lack of consistency with enforcement efforts across the State.
Animal Breeders and Sellers in Kansas: Determining Whether Improvements Have Been Made In the Regulation of This Industry
Both Kansas breeders and those who buy their animals agree that conditions in the animal breeding industry have improved significantly since 1990. Those improvements can be attributed in large part to efforts the Animal Health Department has undertaken, such as adopting comprehensive standards and regulations, implementing inspection schedules and procedures, and improving the staffing levels for the Program. However, several improvements such as a standard inspection manual, adherence to the inspection schedules, a uniform system for classifying violations, and a standardized system of sanctions still are needed to ensure the Program operates efficiently and effectively. Also, the Legislature needs to consider options for recouping costs associated with caring for animals that are seized by the Department. Two options we identified were requiring animal owners to post a cash bond when animals are seized, or establishing a fund financed by animal breeders that could be used to cover these costs.
Department of Agriculture: Reviewing the Water Structures Program
Timeliness was a problem with nearly 60% of water structure permits and 60% of safety inspections of hazardous dams. In addition, all complaints about water structures we reviewed either weren't responded to at all, or took far too long to process. These problems were brought about by a number of factors, including high staff turnover, a lack of accurate and complete information needed to manage the Program, and poor management oversight of the Program. Examples of poor management included incomplete checklists for reviewing permit applications, no schedules for dam inspections, and poor follow-up procedures to ensure that problems were corrected. In addition, Kansas' water structures program was responsible for nearly 3 times as many dams as any of the surrounding statesĖin large part because Kansas' statutory definition of a dam is more broad. Issues were raised about whether water structures were being built in Kansas without permits, and whether such unpermitted bridges were contributing to localized flooding in Sedgwick county. We identified at least 34 water structures in 11 counties that were built without permits in the past 3 years. Recent flooding in Sedgwick County probably wouldn't have been avoided even if permits had been obtained. Another issue concerns whether Program regulations required a sufficient examination to assess the impact a new bridge might have on downstream property owners. This could be a significant issue because the Kansas Supreme Court has held at least 1 county liable for downstream damage caused by a bridge it replaced.
Department of Agriculture: A K-GOAL Audit of the Kansas Pesticide and Fertilizer Program
Most Kansas laws and regulations for pesticides and fertilizers are in line with those in Iowa, Nebraska, and Oklahoma. Kansas has 4 requirements these other states don't have: government agencies that apply restricted-use pesticides to the property of others must be registered, certified pesticide applicators must be at least 18 years old, mobile fertilizer containers must be made from the same materials and have the same equipment as stationary containers, and people who violate chemigation laws must cease chemigation immediately. However, Kansas doesn't require some types of safety equipment for anhydrous ammonia facilities that are required in Iowa and Nebraska. It also doesn't require signs on fields that are being chemigated with restricted-use pesticides or that chemigation equipment be inspected before initial use, as Nebraska does. Most fees Kansas charges are similar to those in the other states. Kansas isn't consistently more lenient or more harsh than other states in its criminal or civil penalties. However, officials told us that having civil penalties for violations of fertilizer law would help them enforce that law.
Assessing Whether State Regulation of Meat Processing Plants is More Stringent and Costly than Federal Regulations Require
New federal regulations adopted in July 1996 are less stringent on meat and poultry plant operators than the draft regulations initially proposed in 1995, and appeared to take small plantsí concerns into account. These new regulations, which the Department of Agriculture incorporated by reference into the Kansas Administrative Regulations, required plant owners to implement sanitary operating procedures and testing requirements by September 1997, and will require them to develop food safety systems by January 2000. A number of factors contributed to the anxiety and uncertainty about these new requirements, including inaccurate and conflicting information about the impact of those new requirements on Kansasí small plants, uncertainty about implementation dates, and meat inspectorsí inability to answer plant ownersí basic questions about some of the new requirements. Itís still difficult to know how these new requirements will affect Kansasí small meat plants. Plant owners will incur some additional costs, and some may choose to go out of business, but the nature and number of such changes is likely to be less significant than the Legislature initially was led to believe. Finally, most plant owners we surveyed said they generally were satisfied with the fairness of their inspectors, but some expressed concerns about inspections being inconsistent across State regions or between inspectors.
Reviewing the Department of Health and Environmentís Efforts To Protect Water from Pollution Caused by Confined Livestock Feeding Operations
The Departmentís actions havenít been sufficient to minimize the risk of water pollution. The standards it adopted for the design and location of sewage lagoons are less stringent than comparison states in two key areas. Although the Department has adopted many good regulatory practices, its staff didnít follow all those practices or other Department requirements in 93% of the 41 cases we reviewed. It often issued permits to facilities that didnít meet all the requirements, let facilities operate for years with expired permits, didnít perform the required inspections, and rarely followed up to make sure violations were corrected. It appears the Department needs additional staff to carry out all the activities it should be doing to adequately protect the Stateís water. Finally, the Departmentís regulatory authority generally is adequate, but regulation of dust and odors is difficult without some objective way to measure odors or to isolate the amount of dust caused by a certain source.
Reviewing the Conservation Commissionís Effectiveness at Meeting the Goals Established Under the State Water Plan: A K-GOAL Audit
The Conservation Commission has done a good job of awarding program moneys for the types of projects and in the areas of the State that were targeted as priorities in the State Water Plan. However, the ways in which the Annual Implementation Plan is developed and projects are approved may not ensure that compliance with Water Plan goals will always be as high in the future for Commission-funded programs. This is primarily because the people who are setting the priorities are different from the people who are deciding where the moneys actually are spent. In addition, no one at the State level systematically reviews program spending after the fact to see how well it addresses needs identified by the State Water Plan. We also found that, although the Commission collects some information about whether moneys being spent are effective at meeting Water Plan goals, part of that information may not be reliable. Finally, the Commissionís programs could be transferred to other State agencies and the Commission abolished, but there didnít appear to be a compelling reason to do so, and the savings that could be achieved are unclear.
Reviewing the Department of Agricultureís Weights and Measures Enforcement Program: A K-GOAL Audit of the Department of Agriculture
The Department of Agricultureís Weights and Measures Program hasnít been effective at ensuring the accuracy of the Stateís measuring devices. The Departmentís own recent tests found a significant number of inaccurate devices. With literally billions of dollars worth of products sold every year using these devices, the economic impact of such inaccuracies can be significant. Factors that have contributed include inadequate oversight by the Department of private companies doing inspections, and lack of sufficient enforcement actions when the Department found problems. In the past, some Department officials overstated the effectiveness of the Program and the extent of its regulatory activities. That could have helped hide the problems that existed, and contributed to their continuation. In a related area, the Department has done very limited testing for octane levels, which probably is the most financially significant risk area of gasoline quality. Further, the Department hasnít always responded effectively to address problems it found in this area--either by enforcement action or by expanding its regulatory activities in this area. Based on current gasoline prices, the report notes that a gas station owner might collect an extra $17,000 a year from just one pump by selling regular grade gasoline at premium gasoline prices.
Reviewing Potential Duplication of Water Regulation Activities--A K-GOAL Audit of the Kansas Water Office, the Kansas Water Authority, and the Division of Water Resources
Although State law gives the agencies shared responsibility for three water-related programs, we found no significant duplication of effort. In a few areas where the agenciesí activities overlap, they have entered into agreements to help minimize the possibility of duplication. Both agencies have been working on issues related to the Republican River. The Division of Water Resources is focusing on water use in Nebraska to determine whether Nebraska has violated it compact with Kansas. The Water Office is assessing how lowered streamflows on the Republican River may affect water levels in Milford Reservoir. Our contacts with 12 other states showed that Kansas had a more decentralized organizational structure for regulating water and Kansas was the only state where the water permitting process is placed within an agricultural agency.
Reviewing the Division of Water Resources Process For Approving Water Permits (100-hour audit)
The audit showed that over the past five years, the backlog of unprocessed applications for new water permits has tripled, and the average time taken to approve permits has doubled. The reasons for growth of the backlog included an unusually high number of permit applications received in 1989, and a sharp drop in the number of applications resolved in 1992. Until very recently, the Division had not placed a high priority on reducing the backlog of new water permit applications. In February 1993, the Division created a temporary task force of 11 existing employees to work on the backlog of applications for new water permits. In addition, the Governor has recommended transferring two positions to the Division of Water Resources to help reduce the backlog of applications in fiscal year 1994. Whether or not the Divisionís staff is increased, the Division needs to improve the information available to actively manage its review and approval of water permits.
Examining Selected Activities of the Board of Agricultureís Marketing Division (100-hour audit)
No specific statute authorizes the Division to conduct international marketing, but such activities are not prohibited under the broad authority given the Division. The Divisionís travel expenditures generally conformed to State travel regulations, and travel appeared to be done in a reasonable manner. Hospitality expenses also generally conformed to State policies, and given the type of work the Division does, none of these expenditures appeared to be inappropriate. The Division estimates that since the beginning of fiscal year 1990, its international marketing activities have benefited Kansas companies and producers by a total of $14.7 million or about 67 times the amount the Division spent on international marketing. But the Division has not systematically documented those benefits, and we were unable to verify all the amounts claimed as benefits.
Review of Selected Expenditures Under the Contract Between the Rural Assistance Corporation and the Board of Agriculture (100-hour audit)
Under its contract with the Board of Agriculture, Rural Assistance Corporation billed the Board for the cost of providing a Statewide mediation service for Kansas farmers and ranchers. Of the $45,233 in billings reviewed during this audit, $4,972 was unallowable under the contract, and an additional $8,777 was questionable. If the Board had more clearly addressed allowability of costs in the contract and had exercised better oversight of the contract, some of the problem areas noted could have been either prevented or discovered earlier in the contract period.
Reviewing State Regulation Over Animal Breeders and Sellers in Kansas
The Companion Animal Program has not been administered, managed, funded or staffed to the extent needed to efficiently and effectively carry out its responsibilities to regulate the companion animal industry. The Animal Health Department has neither established procedures for operating the Program nor provided oversight of the staff responsible for implementing it. The Department has not adequately identified the people it should be regulating, inspected regulated animal breeders and dealers, taken appropriate enforcement actions, or responded to complaints. Fees were not sufficient to support the Program in fiscal years 1989 and 1990, and are not likely to be sufficient to operate the Program in fiscal year 1991, even at very reduced staffing levels.
The Pooled Money Investment Boardsí Loan Program for Farmers and Small Businesses
The Pooled Money Investment Board has offered the low-interest loan Program six times since September 1985, in amounts that ranged from $6 million to $31.5 million and totaled $106.5 million. The Program has cost the State between $1.4 million and $4.9 million in forgone interest, and some of the investments the Board made to fund the Program appear to conflict with the law governing investment of the Freeway Fund. Banks generally used the money to make low interest loans to customers, but four of 17 banks we reviewed did not loan out all the money they received. Most of the loans went to existing customers who refinanced existing debts at lower interest rates. The Program needs well-defined eligibiltiy criteria and effective oversight. Finally, this report presents self-reported data for a sample of economic development programs in Kansas.
Pasture and rangeland were appraised based on the ability of the land to support livestock. This is a use-value method of appraisal. The appraisal processes used by the counties we visited were fairly uniform, but adverse land conditions that could limit the usefulness and value of the land were not always taken into account. In addition, Reno County had a large number of problems resulting from incorrectly classified soil. On average, for the parcels of land we reviewed, valuation of pasture and rangeland decreased as a result of reappraisal. In addition, for another sample of parcels of land reviewed, it appeared that valuations based on use-value were actually lower than if rental rates alone had been used.
Results of the Stateís Program for Reducing Interest Rates on Agricultural Loans
The interest reduction tax credit program has or will cost the State about $859,800. This includes $170, 500 in foregone tax revenues for 1988 and $689,300 in foregone tax revenues for 1989 and beyond. The credit was claimed by 68 banks in 1988 for at least 669 loans. Most farmers who received reduced-rate loans under the program were experiencing financial difficulties. While most of these farmers were able to make the required payments on their reduced-rate loans, the rate reduction was often only one of several steps taken to help restructure debt and increase cash flow. Many bank officials indicated that they would have reduced the interest rates on certain loans even without the tax credit program.
County extension agents spend most of their time on 4-H and youth activities, even though the Legislature has made it clear on several occasions that agriculture should be the main focus of extension programs in Kansas. The agents' priorities are primarily set by local officials. Other states put a greater proportion of state money into their extension programs than Kansas, and have a correspondingly greater amount of State control over those programs.
Construction expenditures for the Milford Fish Hatchery have been about $4.6 million to date, substantially less than the $6 million cost that was projected. Milford Hatchery has not produced as many fish as planning documents projected, or as many as it has been assigned to produce. It also has not been able to reduce fish production costs as projected. Naturally occurring pollutants in the primary source of water chosen by the Department -- an outlet lake below the dam -- have caused most of the problems the Hatchery has had with diseased and dying fish since it opened. Water quality in the outlet lake seems to be improving, but another big concern for the Hatcheryís long-term operations may be the limited amounts of water available. Both improved management techniques and improved recordkeeping are needed to overcome existing problems and minimize future ones.
Noxious Weeds Law: A Review of Countiesí Enforcement Efforts
The Board of Agriculture has not taken an active role in ensuring adequate enforcement, and in many cases the counties are not fully enforcing or complying with the law. Revisions to both the law and the existing program could enhance enforcement, but most options have associated costs for the State.
Promotion and Research Projects Funded by the Kansas Wheat Commission
The Commission enters into contracts it thinks will benefit the marketing of Kansas wheat. Contracts are adequately monitored, but improvements are possible. Several recent studies indicate that the commissionís expenditures on foreign promotion are probably cost effective.
This audit follows up on a 1982 performance audit. Some recommended changes have been made, but improvements are needed in the areas of licensing warehouses and enforcing public warehouse laws. The Department can also improve its personnel practices and documentation.
Grain Inspection Department: Regulation of Grain Elevators in Kansas
This audit examined warehouse bankruptcies for which records were available, and assessed whether the Department effectively enforces the law and protects the public. The grain elevators that had failed showed a number of warning signs before failure actually occurred, including poor financial records, a history of not having enough grain on hand to cover obligations to farmers, insufficient money in net current assets to meet minimum State requirements, and problems in obtaining or renewing bonds. The audit notes that in most of these cases, the Department did little to emphasize the problems and make sure they were corrected.The audit concludes that while the Department shows initiative in some areas of its regulation, it generally needs to be more aggressive in detecting problems and correcting them after they have been discovered.