Kansas’ foster care system is administered by the Department for Children and Families (DCF) and is designed to protect children who are victims of abuse or neglect. The system has been privatized since 1997 with two contractors—KVC Behavioral Healthcare and Saint Francis Community Services—currently providing placement and case management services statewide. As part of this audit, we reviewed the privatized system’s capacity and performance over time, as well as how the costs would compare to a state-run system. We found the state’s foster care system may not have sufficient capacity to provide necessary foster care services, but insufficient data prevented a clear determination. First, the information we reviewed showed both of the state’s case management contractors had challenges employing enough case management staff. Second, while the children in foster care received most of the physical and mental health services they needed, there were exceptions. Third, our analysis showed many Kansas counties and cities appeared to lack enough licensed foster homes. We also found that DCF could be more proactive in monitoring and collecting management information about the foster care system. For example, the information DCF maintained was not adequate to ensure children were placed in appropriate foster homes.
Additionally, we reviewed 11 federal outcomes for children and families and found Kansas’ overall performance did not change significantly during federal fiscal years 2000-2013. While these measures may provide useful insights into Kansas’ performance, they are self-reported and cannot be compared to other states.
Finally, we estimate the state would incur up to $8 million more in on-going costs as well as significant start-up costs for DCF to provide foster care and adoption services instead of private contractors. Specifically, we estimated DCF would have spent between $164 million and $169 million in on-going costs in fiscal year 2016, compared to the $161 million reported by the contractors. We also found there may be other factors to consider when comparing privatization to a state-run system.
The Kansas 911 Act: Reviewing Implementation of the 2012 Act
The Kansas 911 Act requires this triennial audit of the 911 System. Bauknight Pietras & Stormer, P.A., under contract with Legislative Post Audit, conducted this audit. The audit is to determine: (1) the status of 911 service implementation; (2) whether the moneys received by PSAPs pursuant to this act are being used appropriately; and (3) whether the amount of moneys collected pursuant to this act is adequate.
The auditors determined that migration to NG911 is in progress. Some PSAPs joined or will join the state-hosted platform, some joined other platforms, some implemented standalone systems, and some are undecided. The auditors found adequate documentation to support 123 of 128 the expenditures tested. Of the five transactions that the auditors questioned, the 911 Coordinating Council had already determined that two were not allowable or not adequately supported and are in the process of recouping the funds. The three transactions determined to be exceptions included $1,458 in expenditures that were determined to be unallowable. Finally, the auditors determined that about half of the PSAPs that responded to a survey believed that current funding is adequate, while the other half did not. PSAP funding increased only marginally since the last audit three years ago. Costs are expected to rise, and PSAPs expressed concerns about adequate funding.
Foster Care and Adoption in Kansas: Reviewing Various Issues Related to The State’s Foster Care and Adoption System, Part 2
We assessed DCF’s compliance with applicable state and federal laws governing the foster care system. We found that DCF has to meet many state and federal requirements for the foster care program. However, DCF had not followed some of the safety and living condition requirements we reviewed in Part 1 of the audit. Additionally, according to the 2014 and 2015 statewide single audits, DCF materially complied with most, but not all federal requirements. Further, DCF self-reported data shows Kansas met or exceeded about half of the federal outcome requirements for fiscal year 2016, but did not meet the others. Finally, we found DCF must implement a program improvement plan to address issues identified by a 2015 federal review.
KanCare: Reviewing the Timeliness of Medicaid Eligibility Determinations
In July 2015, the state launched the Kansas Eligibility Enforcement System (KEES)—a web-based application intended to help streamline eligibility determination for state medical and social service benefits, including Medicaid. As of June 2016, the state of Kansas had a backlog of 14,000 Medicaid applications. KDHE officials told us implementing the new KEES system and an influx of applications related to the federal Affordable Care Act contributed to the backlog. KDHE has tried to address the backlog by increasing staffing resources and modifying KEES to fix technical glitches. According to KEES’ reports, KDHE has reduced the backlog by thousands in recent months and hopes to have it resolved by October 2016. In its efforts to address the backlog, KDHE has stopped reviewing renewal applications. Further, Kansas is not in compliance with federal law related to timely eligibility determinations.
Kansas Department of Revenue KanDrive IT Project Quarter Ending June 30, 2016
As of June 30, 2016, we consider the KanDrive IT project within the Kansas Department of Revenue (KDOR) to be in caution status. The purpose of the KanDrive project is to replace KDOR’s old mainframe driver’s license system. The KanDrive project started as another project almost 10 years ago, as the DMV project. Phase one of the DMV project, which included the new motor vehicle titling and registration system, was deployed in May 2012. However, the department stopped the project in November 2016, before completing the driver’s license system in phase two. The KanDrive project was created to complete that project phase at an estimate $6 million and with a scheduled completion date of December 2017. We selected the KanDrive project for continuous monitoring due to its prior problems, criticality, and cost. During this quarter, we found the project scope is satisfactory, based on a clearly defined scope and controls to handle additional major improvements ideas in a separate project. However, we considered the project schedule to be in caution status because certain work segments are behind schedule and other work has been delayed. The KanDrive project has a designated project manager to oversee successful integration with the existing driver’s license information and issuance system which we considered satisfactory. We found the project cost to be in caution status. That’s because internal project management has approved a cumulative cost increase of $1 million thus far, but those revised cost baselines were not properly disclosed outside the agency. Lastly, the project quality received a caution status because it does not include sufficient consideration for IT security, and because the periodic independent verification and validation assessments, which were part of the project’s quality plan, were eliminated.
Osawatomie State Hospital: Reviewing the Hospital’s Recent Loss of Federal Funding
Osawatomie State Hospital’s Medicare funding was terminated in December 2015 because it failed to comply with federal regulations related to staff and patient safety. The Kansas Department on Aging and Disability Services (KDADS), which oversees the facility, plans to seek recertification for 60 of the facility’s 206 beds. However, officials from the Centers for Medicare and Medicaid Services (CMS) and KDADS offered significantly different estimates of the time it will take to recertify the 60 beds (9-15 months versus 2-4 months). As of June 2016, the loss of Medicare funding and additional expenses to address the deficiencies have cost an estimated $15 million. Finally, even if the 60 beds are recertified, the hospital will continue to lose significant Medicare funding until the entire facility is recertified.
Foster Care and Adoption in Kansas: Reviewing Various Issues Related to the State’s Foster Care and Adoption System, Part 1
We reviewed components of the foster care system, including safety of children during the removal and placement process. We found that DCF does not always follow adequate policies to ensure the safety of children during the removal and placement process. DCF has not yet implemented several recommendations from a 2013 evaluation of its child protective services function and has not responded to all report center calls in a timely manner. We also found that DCF does not ensure that required background checks of individuals in foster homes happen as often or as thoroughly as they should. In addition, DCF does not always take steps to ensure that monthly in-person visits happen for children in foster care, adoptive homes, or for children reintegrated with their family. Results from our survey of case-management staff and guardians ad litem also indicate that monthly in-person visits do not always happen. Finally, survey respondents also expressed concerns with staff turnover, morale and training.
As for placement of children, we found DCF’s child placement process does not ensure that children are placed in foster care homes with sufficient living and sleeping space and financial resources. That is because DCF allows nearly all requests for exceptions, which results in inadequate sleeping space for some foster children. Our review showed that DCF does not have an adequate process to ensure that licensed foster homes have sufficient financial resources. We also found that despite the lack of DCF requirements related to capacity, living space or financial sources for adoptive placements, few stakeholders had concerns. Finally, we found that child placing agencies both sponsor and regulate foster homes which may create a conflict of interest.
We also found several aspects of the foster care and adoption system are designed to keep family members together. Federal law requires that states’ foster care and adoption programs have a formal preference to keep families together. The majority of stakeholders responding to our survey indicated there was appropriate emphasis placed on keeping families together, with a small portion responding that there was too much emphasis.
Kansas Corporation Commission: Evaluating Savings Achieved through the Facility Conservation Improvement Program
In 2000, the Kansas Legislature enacted legislation establishing the Facility Conservation Improvement Program (FCIP). Public entities can use the program to streamline the process for energy-efficient and deferred-maintenance projects such as installing new lighting or replacing boilers or chillers. The program is designed for project costs to be paid for with energy savings within a set period of time. We reviewed three FCIP projects and were unable to determine whether the public entity achieved the energy savings guaranteed under the terms of the contract with an energy service company because follow-up verification reports either were not required, were missing, or were based on faulty analysis. We made a number of recommendations to address issues with the program, and identified issues for further study.
Statewide Single Audit--Fiscal Year Part 2
Report on Federal Awards in Accordance with OMB Circular A-133
State law calls for an annual financial-compliance audit of the general purpose financial statements and “the financial affairs and transactions of a state agency required to comply with federal government audit requirements…” CliftonLarsonAllen, under contract with Legislative Post Audit, conducted this two-part audit. The first part was the report on the state’s Comprehensive Annual Financial Report (report R-15-018, released in December 2015). This second part, the Report on Federal Awards in Accordance with OMB Circular A-133, reports on compliance with laws, regulations, and provisions of contracts and grant agreements.
The auditors concluded that the state complied, in all material respects, with the requirements applicable to each of the federal programs audited. The auditors reported 21 deficiencies in internal control, including one material weakness. The auditors also identified questioned costs for a number of programs. Eleven of the findings were repeated from prior years.
Kansas Department of Wildlife, Parks and Tourism: Evaluating a Jefferson County Land Purchase
In 2014 , the Department of Wildlife, Parks and Tourism (KDWPT) purchased several tracts of land in Jefferson County for recreation and conservation purposes. KDWPT needed to comply with several state and federal requirments in order to purchase the Jefferson County land. We found that KDWPT demonstrated compliance with most, but not all of those state and federal requirements. Additionally, KDWPT paid about $20,000 for a 14-acre tract of land as part of the acquisition, but never actually acquired legal ownership of the property. Finally, KDWPT’s land purchase procedures lacked guidance on how to comply with state legal requirements.
State law requires an annual financial audit of the Kansas Lottery. RubinBrown, a certified public accounting firm under contract with Legislative Post Audit, conducted this audit. The auditors expressed an unmodified opinion on the financial statements, meaning that the financial statements present the Kansas Lottery’s financial position fairly and in conformity with generally accepted accounting principles in all material respects.
Federal Funds: Evaluating State Spending Required by Federally Funded Programs
In recent years, Kansas agencies spent about $5 billion annually in monetary and nonmonetary support from federally funded programs. Federally funded programs will require Kansas agencies to spend an estimated $2 billion on cost-sharing obligations in fiscal year 2016. Beyond that, we did not identify any significant unfunded mandates, although there are restrictions tied to the use of federal funds. Federally funded programs typically impose administrative requirements on state agencies, although most of these costs can be paid for with program funds. They also often include conditions on how state agencies can spend federal funds. Most programs have penalty or repayment clauses if state agencies fail to meet these conditions or program requirements. In addition, we found examples where the federal government has tied some national policy objectives to federal funds and states’ efforts to challenge those policies have had mixed results.
Statewide Financial Compliance Audit--Fiscal Year 2015
Part 1, Office of the Chief Financial Officer Comprehensive Annual Financial Report
State law calls for an annual audit of the general purpose financial statements and “the financial affairs and transactions of a state agency required to comply with federal government audit requirements…” CliftonLarsonAllen, under contract with Legislative Post Audit, conducted this two-part audit. This first part is the report on the state’s Comprehensive Annual Financial Report (CAFR). The second part, the Report on Federal Awards in Accordance with OMB Circular A-133, will be issued as a separate report.
The auditors expressed an unmodified opinion on the financial statements, meaning that, financial statements present the state’s financial position fairly and in conformity with generally accepted accounting principles in all material respects. However, the auditors did emphasize two matters with regard to the financial statements. First, at the end of fiscal year 2015, the state had a deficit in its general fund of $285 million which raises concerns about the state’s ability to meet its future financial obligations. Second, the financial statements reflect the state having adopted new accounting guidance in accordance with changes to generally accepted accounting principles (GAAP).
The audit disclosed no instances of noncompliance with applicable legal requirements that were material to the state’s financial statements. However, the auditors reported five material weaknesses in the state’s internal control over financial reporting. The material weaknesses included various issues related to errors in journal entries, identification of errors that occurred in prior years, and some universities not having a comprehensive general ledger system. The auditors identified the need for several material adjusting entries as a result of these deficiencies, and several previous fund balances were found to be misstated.
Larned State Hospital: Reviewing the Operations of the Sexual Predator Treatment Program
In 1994 the Legislature created an involuntary civil commitment program for sexual predators at Larned State Hospital. The goal of the Sexual Predator Treatment Program is to prevent sexual predators from reoffending after their release. The recommended practices for sexual predator programs emphasize individualized treatment. However, Kansas’ program generally did not adhere to the recommended practices, while other states programs we reviewed generally did. The Kansas’ program met many legal requirements, although there were several exceptions related to education and rehabilitation. In addition, residents may not have necessarily arrived at the reintegration facilities with the skills to be successful. Further, we found that program officials had not maintained appropriate records and documentation to effectively manage the program and policies and program guidance were outdated and not adhered to. Until recently, KDADS had not filed annual reports with the legislature as required by statute.
Unless changes are made, the Sexual Predator Treatment Program will exceed capacity at Larned in the next few years and will continue to grow for the foreseeable future. We evaluated the impact of six different options to potentially reduce the program’s resident population.
• Treat low-risk residents in a community setting, which would reduce the resident population at Larned State Hospital and reduce program costs.
• Treat medically infirm residents in a secured nursing facility, which would reduce the resident population at Larned but would not significantly affect program costs.
• Treat residents on the “parallel track” in a separate secured facility, which would reduce the resident population at the Larned facility, but potentially increase costs.
• Expand the number of reintegration slots at Osawatomie and Parsons State Hospitals from 16 to 32, which would not reduce the resident population at Larned.
• Limit the time a resident can occupy a slot in a reintegration facility, which would not significantly reduce the resident population at Larned.
• Begin sexual predator treatment before the offender is released from prison, which would not significantly impact resident population and could increase costs.
Finally, we found that statutory housing restrictions make it difficult for residents to leave the program.
State of Kansas: OMB Circular A-133 Audit of Fiscal Year 2013
State law calls for an annual financial-compliance audit of the general purpose financial statements and “the financial affairs and transactions of a state agency required to comply with federal government audit requirements…” RubinBrown, under contract with Legislative Post Audit, conducted this two-part audit. The first part was the report on the state’s Comprehensive Annual Financial Report (report R-13-016, released in December 2013). This second part, the Report on Federal Awards in Accordance with OMB Circular A-133, reports on compliance with laws, regulations, and provisions of contracts and grant agreements.
The auditors concluded that the state complied, in all material respects, with the requirements applicable to each of the federal programs audited. However, the auditors reported 26 deficiencies in internal control. The auditors also identified questioned costs for a number of programs. Six of the findings were repeated from prior years.
Office of Information Technology Services: Reviewing the Office’s Service Rates and Viable Alternatives for Its Services
OITS’ rates for many individual services do not reflect the actual costs of providing them. The rates agencies pay for some OITS services are inflated because they include costs for other underfunded, discounted or waived services. Although OITS has developed a complex rate model to help ensure rates reflect actual costs, it does not use the model to set most rates and instead relies on staff to manually set them. That is because instead of setting rates to reflect actual service costs, OITS sets its rates to ensure budget and funding stability. Further, OITS operates and sets rates with almost no oversight or accountability. Due to the absence of good cost information for OITS and the differences in the way services are typically tracked and delivered we were unable to make valid private sector comparisons for the rates OITS charges for its largest services. We also identified problems with the way OITS has reported profits for individual services to the federal government that appear to violate several federal reporting requirements. Finally, we identified two issues that are indicative of an unstable fiscal situation at OITS. Many of these issues appear to be longstanding issues, some of which current management is trying to address.
Potential options for reducing the state’s IT costs include outsourcing, cloud computing, and consolidation. Outsourcing can provide many benefits including better service and cost savings, but requires strong contracts and vendor oversight. While cloud computing is a specialized form of outsourcing that typically involves web-based services and offers many opportunities for savings it carries significant security risks. Although the state has already consolidated some IT services, consolidating others may achieve further savings. However, OITS does not have a process to ensure that costs are minimized and its rates are competitive.
State of Kansas: Financial Audit of Fiscal Year 2013
State law calls for an annual audit of the general purpose financial statements and “the financial affairs and transactions of a state agency required to comply with federal government audit requirements…” RubinBrown, under contract with Legislative Post Audit, conducted this two-part audit. This first part is the report on the state’s Comprehensive Annual Financial Report (CAFR). The second part, the Report on Federal Awards in Accordance with OMB Circular A-133, will be issued as a separate report.
The auditors expressed an unqualified opinion on the financial statements, meaning that the financial statements present the state’s financial position fairly and in conformity with generally accepted accounting principles in all material respects. The auditors did not report any deficiencies in the state’s internal control over financial reporting and disclosed no instances of noncompliance with applicable legal requirements that were material to the state’s financial statements.
Larned State Hospital: Reviewing the Operations of the Sexual Predator Treatment Program
The Sexual Predator Treatment Program at Larned State Hospital provides treatment for sex offenders who have completed their prison sentence but who have been determined by the courts to be sexual predators. Overall, the Sexual Predator Treatment Program appears to have done a good job of addressing staff and resident safety and security, although we did identify a few safety and security issues that could affect staff and resident safety. Specifically, the program did not have adequate policies or controls to ensure keys and doors were secure and to prevent and detect prohibited items. Also, despite participating in conflict avoidance training, some staff did not feel adequately prepared for resident altercations. In addition, a significant number of staff positions responsible for ensuring safety, security, and treatment of residents were vacant. Even though program staff worked a significant amount of overtime, the program often failed to meet its internal minimum staffing levels needed to provide safety, security, and treatment.
Kansas Commission on Veterans’ Affairs: Evaluating Selected Financial Controls at the Kansas Soldiers Home and the Kansas Veterans Home
Overall, we identified a number of problems with the financial controls at the Kansas Soldiers Home and the Kansas Veterans Home. Controls were mostly adequate for the funds that had the largest amounts of revenues and expenditures—the resident fee fund and resident trust fund. However, the financial controls were inadequate for the following areas: credit cards, canteen funds, benefit funds, and employee travel reimbursements. Common problems included a lack of supporting documentation, not obtaining supervisory approval before making purchases and inadequate policies. We also found that KCVA’s central office has not provided adequate oversight and management of the two facilities’ business operations, in part because officials were not aware they had authority over the two facilities.
State of Kansas: OMB Circular A-133 Audit of Fiscal Year 2012
State law calls for an annual financial-compliance audit of the general purpose financial statements and “the financial affairs and transactions of a state agency required to comply with federal government audit requirements…” RubinBrown, under contract with Legislative Post Audit, conducted this two-part audit. The first part was the report on the state’s Comprehensive Annual Financial Report (report R-13-005, released in March 2013). This second part, the Report on Federal Awards in Accordance with OMB Circular A-133, reports on compliance with laws, regulations, and provisions of contracts and grant agreements.
The auditors concluded that, except for the Unemployment Insurance program, the state complied, in all material respects, with the requirements applicable to each of the federal programs audited. However, the auditors reported 28 deficiencies in internal control, two of which were material weaknesses. The auditors also projected up to $73.4 million in questioned costs ($65,000 in known questioned costs). Six of the findings were repeated from prior years.
State of Kansas: Financial Audit of Fiscal Year 2012
State law calls for an annual audit of the general purpose financial statements and “the financial affairs and transactions of a state agency required to comply with federal government audit requirements…” RubinBrown, under contract with Legislative Post Audit, conducted this two-part audit. This first part is the report on the state’s Comprehensive Annual Financial Report (CAFR). The second part, the Report on Federal Awards in Accordance with OMB Circular A-133, will be issued as a separate report.
The auditors concluded that the basic financial statements present the state’s financial position fairly and in conformity with generally accepted accounting principles and disclosed no instances of noncompliance with applicable legal requirements that were material to the state’s financial statements. However, the auditors did report four material weaknesses in internal control over financial reporting. The material weaknesses included not having sufficient controls to identify and correct potential misstatements and incomplete disclosures, not being able to accurately and completely reconcile the pooled cash account in a timely manner, not capturing and properly depreciating many capital assets, and not preparing an accurate Schedule of Expenditures of Federal Awards. The auditors identified the need for several material adjusting entries as a result of these deficiencies, and several prior year balances had to be restated.
Department of Revenue: Evaluating the Revenue Impact of Machinery and Equipment Classification and Valuation
County appraisers are responsible for classifying assets as real or personal property and appraising and maintaining records of those properties. The Division of Property Valuation within the Kansas Department of Revenue is responsible for providing oversight and guidance to county appraisers. Complex manufacturing plants represent a small portion of appraised property in Kansas and were the focus of our audit work because of a recent lawsuit. A targeted review of three ethanol manufacturing plants identified problems with county appraisers’ inconsistent classifications and valuation errors. We found Kansas’ computer assisted mass appraisal system does not work well for appraising these complex manufacturing plants. Further, we noted the division does not provide sufficient oversight and guidance for appraising these plants. These problems likely are limited to a small number of complex manufacturing properties. Lastly, we found some neighboring states also struggle with appraising complex properties, but the tax ramifications are different.
In 2012, the Legislature considered two bills to amend property tax laws. Senate Bill 317 would have changed how some commercial property was classified. Specifically, certain commercial fixtures (formerly real property) would be classified as personal property. We estimate this change would reduce statewide property tax revenues between $170 million and $500 million annually, over the long term. SB 317 would have had several other consequences in addition to its financial effects. The 2012 Legislature also introduced Senate Bill 59 which would have prevented appraisers from reclassifying certain personal property. We could not analyze the fiscal impact of the bill due to a lack of available data.
Examining Selected Financial Management Practices of the Pooled Money Investment Board, Fiscal Year 2012
The Legislative Post Audit Act requires this audit of the Pooled Money Investment Board. RubinBrown, a certified public accounting firm under contract with Legislative Post Audit, conducted this examination. The examination addresses five selected financial management responsibilities of the Pooled Money Investment Board, mainly those involving the board's fiscal accountability for moneys. The auditors identified no deficiencies in the board’s practices and found that the fiscal year 2012 average yield on investments was within 0.5% of the benchmark.
Examining Selected Financial Management Practices of the State Treasurer’s Office, Fiscal Year 2012
The Legislative Post Audit Act requires this audit of the State Treasurer’s Office. RubinBrown, a certified public accounting firm under contract with Legislative Post Audit, conducted this examination. The examination addresses 10 selected financial management responsibilities of the State Treasurer’s Office. The auditors found that the management’s assertions were fairly stated in all material respects, meaning that, for the areas examined, the Office complied with the applicable statute. The auditors noted some minor issues with delivery of the daily cash sheet and with a late distribution of highway equalization funds.
State Asset Management: Evaluating the Possibility of Cost Savings and Revenue Enhancements through Property Sales.
Our targeted review identified eight surplus properties that could be sold for an estimated $1.5 million to $2.2 million. We found that identifying surplus real property is a subjective, lengthy, and sometimes difficult process. That is because property use must be periodically evaluated, the owner and boundaries of land are not always clear, and lease agreements can make it more difficult to determine whether land or buildings are surplus. Additionally, the Department of Administration has not proactively identified surplus real property as required by law and lacks the authority to independently designate what properties are surplus. Moreover, the process for selling surplus real property includes several disincentives for state agencies. Finally, delays in selling the Atchison Juvenile Correctional Facility highlight problems with the surplus real property disposal process. We also found that the State Surplus Property program is not an efficient way of disposing of surplus personal property. In each of the past two years, the program operated at a net loss of approximately $50,000. Further, the state’s contractor for online auctions is better equipped to maximize agencies’ revenues from selling surplus items and several state agencies prefer to use the state’s contractor instead of the state’s program. Finally, agencies do not want to sell surplus vehicles because they are hard to replace once sold, and agencies have few negative consequences for holding onto surplus personal property.
JJA: Evaluating the Kansas Juvenile Correctional Complex, Part 2
This audit of the Kansas Juvenile Correctional Complex was issued in two parts. Part 1 evaluated safety and security at the facility and was released in July 2012. Part 2 focuses on education and substance abuse programs at the facility.
The Kansas Juvenile Correctional Complex (KJCC) provides adequate basic academic programs to help juvenile offenders earn a high school diploma or equivalent, and those programs are generally equitable for male and female offenders, although there are some exceptions. On the other hand, the technical education and work study programs are not adequate to prepare juveniles for future work opportunities and are not equitable because female offenders do not have access to comparable programs. In addition, KJCC does not currently offer any postsecondary programs to juvenile offenders. Overall, Juvenile Justice Authority (JJA) and KJCC officials have taken a hands-off approach to education programs. For example, they have not formulated plans or established partnerships for appropriate education programs at the facility, nor have they regularly or systematically assessed the effectiveness of the programs.
Under current state law, juvenile correctional facilities are allowed to provide substance abuse services without being licensed as a treatment facility. However, providing unlicensed substance abuse treatment could affect the quality of services and limit some funding opportunities. Although most offenders in Kansas’ juvenile correctional facilities need substance abuse services to reduce the likelihood they will reoffend, the substance abuse services at KJCC are not properly designed to meet the individual needs of offenders. In addition, JJA officials suspended all substance abuse services at KJCC for nearly six months in 2011. Finally, JJA and KJCC officials lack sufficient management information to ensure that juveniles receive adequate and appropriate substance abuse services.
The Board of Veterinary Examiners: Evaluating Issues Related to the Board’s Management
In fiscal year 2011, the board authorized two unconventional personnel actions; one was appropriate and one was not. The first was an almost 1,000 hour furlough of the director, which was not appropriate because it was not expressly allowed by law, was not submitted to the Department of Administration for approval, and did not appear to be necessary for budgetary reasons. It also coincided with a period when the director worked a second job in the veterinary field. However, the impact of the furlough on the state was relatively small because the director’s pay was reduced during the furlough and his other benefits remained largely unaffected. The second action was the board’s decision to reduce the director’s pay to give the other two agency staff pay raises. This action appeared to have been approved appropriately.
The director’s general lack of proper oversight resulted in poor management of board activities and staff. While the director was on furlough in 2010 and 2011, the other two agency staff were inadequately managed. In addition, we found problems with the agency’s cash handling process which is poorly designed and inadequately supervised, putting the agency at risk for fraud or abuse. The agency’s inspection process also has a number of deficiencies and appears superficial. Finally, the agency lacks written policies and procedures and does not maintain appropriate management data.
JJA: Evaluating the Kansas Juvenile Correctional Complex, Part I
The Kansas Juvenile Correctional Complex (KJCC) has not taken adequate steps to ensure the safety of juvenile offenders and staff. We identified numerous safety and security problems at the facility, including that staff have not adequately supervised juvenile offenders, which has led to offender injuries and misconduct. In addition, staff routinely have allowed doors to be propped open or unlocked, allowing offenders to freely roam living units and have access to unauthorized areas. Also, KJCC officials and staff have done a poor job of keeping prohibited items out of the facility and have not tracked, inventoried, or secured keys and tools.
Safety and security problems at the facility have been compounded by poor personnel management. KJCC officials have employed staff with felony or drug convictions because the background check process was inadequate. Also, juvenile corrections officers have not received sufficient and appropriate training in recent years. In addition, KJCC officials have done a poor job of disciplining staff for policy violations, and there is some evidence that shifts at KJCC have not been staffed and supervised properly to ensure safety and security.
Overall, the environment at KJCC has not been conducive to ensuring the safety and security of juvenile offenders and staff. KJCC’s management has been disorganized and has done a poor job of communicating safety and security policies. In addition, severe problems with turnover have increased safety and security risks. Finally, JJA and KJCC officials appear to have favored convenience and expedience over safety and security, and have done a poor job of addressing safety and security problems once they have become aware of them.
Kansas Lottery: Funding of Scholarships for Veterans
We looked to see whether the state’s National Guard Educational Assistance Program duplicates available federal benefits for members of the National Guard. We found that there is some limited duplication between the state’s program and federal Post 9-11 GI Bill (GI Bill), but eliminating the state’s program would significantly affect members of the Air National Guard. Specifically, state and GI Bill funding cover two different National Guard populations, although there is some overlap. Further, for veterans who are eligible for both the state and federal programs, it is rare that federal dollars could fully replace state benefits. Finally, eliminating the state’s National Guard Educational Assistance Program would have little impact on members of the Army National Guard, but would significantly affect members of the Air Guard. We also noted that while the National Guard Educational Assistance Program is supposed to be funded through the Lottery’s Veteran game, State General Fund monies have made up a significant portion of the program’s funding. Further, we noticed that language in the National Guard Educational Assistance Act may be outdated.
State of Kansas: Financial Audit of Fiscal Year 2011 (Reissued)
State law calls for an annual audit of the general purpose financial statements and “the financial affairs and transactions of a state agency required to comply with federal government audit requirements…” RubinBrown, under contract with Legislative Post Audit, conducted this two-part audit. This first part is the report on the state’s Comprehensive Annual Financial Report (CAFR). The second part, the Report on Federal Awards in Accordance with OMB Circular A-133, will be issued as a separate report.
The auditors concluded that the basic financial statements present the state’s financial position fairly and in conformity with generally accepted accounting principles and disclosed no instances of noncompliance with applicable legal requirements that were material to the state’s financial statements. However, the auditors did report four material weaknesses and one significant deficiency in internal control over financial reporting. The material weaknesses included not having sufficient controls to identify and correct potential misstatements, not reconciling the pooled cash account until after the fiscal year closed, not properly recording certain revenues, receivables, and payables, and not capturing and properly depreciating all capital assets. The auditors identified the need for several material adjusting entries as a result of these deficiencies, and several previous fund balances had to be restated.
Department on Aging: Evaluating the Effect of Increasing Minimum Nursing Hours on Resident Care and State Costs
Although the results are mixed, the most thorough research generally shows a positive relationship between staffing levels and quality of care outcomes in nursing facilities. Further, according to the federal Centers for Medicare and Medicaid Services (CMS), increasing staffing levels up to 4.1 hours of nursing care per resident day improved health outcomes. In addition to staffing levels, researchers also identified a number of other staff-related factors that are important in improving quality of care, such as staffing levels on different shifts or units and staff training. We were unable to detect a clear relationship between nursing hours and quality of care outcomes for Kansas’ nursing facilities, though this may be due to limitations in the data we were able to use.
Senate Bill 184, which was introduced but not passed during the 2011 legislative session, would have increased minimum nursing staff requirements in Kansas nursing facilities over a three-year period. However, the bill’s third year staff level requirements of 4.44 nursing hours per resident day are beyond the level the Centers for Medicare and Medicaid Services identified as leading to improved quality of care. We estimated it would cost the state up to $43 million annually to fully implement Senate Bill 184’s requirements. Although increasing staffing levels may improve health outcomes, better outcomes are unlikely to result in meaningful savings for the state. This is because the most significant costs associated with negative health outcomes are paid for with federal funds. As a result, most savings achieved through better outcomes will benefit the federal government, but not the state.
State of Kansas: OMB Circular A-133 Audit of Fiscal Year 2011 (Reissued)
State law calls for an annual financial-compliance audit of the general purpose financial statements and “the financial affairs and transactions of a state agency required to comply with federal government audit requirements…” RubinBrown, under contract with Legislative Post Audit, conducted this two-part audit. The first part was the report on the Office of Management Analysis and Standards Comprehensive Annual Financial Report. This second part, the Report on Federal Awards in Accordance with OMB Circular A-133, reports on compliance with laws, regulations, and provisions of contracts and grant agreements.
The auditors concluded that, except for the Special Education Cluster, the state complied, in all material respects, with the requirements applicable to each of the federal programs audited. However, the auditors reported seventeen deficiencies in internal control, one of which was a material weakness, and identified a total of $34.2 million in questioned costs. Six of the findings were repeated from prior years.
State Employee Residence: Assessing Potential Increases in Revenues by Requiring State Employees to Reside in Kansas
We estimate that about 3,600 state and school district employees live outside Kansas. Imposing a residency requirement for state employees would only generate new tax revenues if out-of-state employees move to Kansas. If 25% of all out-of-state employees move to Kansas, a residency requirement could generate approximately $2 million a year in state and local tax revenues. This includes $1.4 million in new taxes paid by the employees, and another $650,000 in indirect tax revenues from increased economic activity. However, in order to generate meaningful revenues, a residency requirement would need to be implemented aggressively, which would significantly affect out-of-state employees. If the requirement was put into effect in the near term, employees would have to move or seek new employment. Grandfathering in current out-of-state employees would remove the impact on them, but would essentially eliminate the new tax revenue. Finally, adopting a residency requirement would limit the labor pool for state agencies and could be expensive to administer.
Kansas Board of Regents: Evaluating the Effects of Eliminating the Kan-ed Program
The Kan-ed program provides access to a network to which schools, libraries and hospitals can connect for broadband Internet, video conferencing, and distance learning. Access is free for those entities, but Kan-ed pays about $690 per month for each connection. The network was designed to support high-quality video conferencing and distance learning, and although the network can be used to access the Internet, it is a very slow and expensive way of providing Internet access. Further, most members connected to the network don’t need the network—they need only commercial Internet access (for about $70 per month) or no Internet connection at all. By disconnecting members that do not need the network for video conferencing and using commercial Internet connections instead, Kansas could save as much as $2 million a year, although some one-time penalties may apply. In addition, we found that about one-third of connected members used the network for video conferencing or distance learning. Most of those members were K-12 schools and higher education institutions. Hospitals and libraries rarely used the network for video conferencing. While we identified a number of less costly alternatives that could support video conferencing and distance learning, the costs and quality would vary. Next, although Kan-ed has routinely funded databases and software services, it is not part of their mission and it is not clear if the Kansas Universal Service Fund can be used for this purpose. Further, the Kan-ed program has focused on connecting new members and has not been managed to control costs. Related to that, Kan-ed has not formally assessed each member’s needs before connecting them and has done a poor job of monitoring network connections to ensure that members actually need them and has rarely disconnected unneeded connections. Finally, the program has provided almost $1 million in grants and subsidies since 2009 to entities who are not eligible for membership.
Reviewing the Operations of the State Treasurer's Office - FY 2011
The Legislative Post Audit Act requires this audit of the State Treasurer’s Office. RubinBrown, an audit firm under contract with Legislative Post Audit, conducted this audit. The audit addresses 10 questions about selected financial management responsibilities of the State Treasurer’s Office. The auditors identified one deficiency: the Office distributed certain other taxes and State aid moneys after the due date. The State Treasurer’s Office generally agreed with the audit findings. He indicated that the Office did not distribute the other taxes and State aid moneys by the due date because the Office did not receive the information until the day the payment was due.
Kansas Commission on Veterans’ Affairs: A K-GOAL Audit Reviewing Issues Related to Veterans’ Benefits
The Veterans’ Claim Assistance Program (VCAP), created in 2006, has not increased the services provided to veterans. Because neither the Commission on Veterans’ Affairs nor the veteran service organizations have added significant resources or changed how veterans are served, this is not surprising. In addition, we discovered the Commission does not collect reliable management information about the services provided to veterans, through both VCAP and Commission staff. This severely limits the Commission’s ability to make good management decisions. In an effort to reduce Medicaid costs, several states have started initiatives to transition Medicaid-eligible veterans to U.S. Department of Veterans Affairs health care benefits. We estimate Kansas could save between $1 million to $2 million a year in State funds from a similar initiative. The State may need to add or reprioritize resources to achieve these savings, but these resources may decrease over time. To be successful, the State will also need to establish a structure to better coordinate efforts between several State agencies.
Accounts Receivable: Reviewing Agencies' Efforts To Collect Amounts Owed to the State (A K-GOAL Audit)
For the State, accounts receivable represent moneys expected to be collected for unpaid taxes, overpayments, fines, or goods and services provided. Our survey of 53 State agencies with significant accounts receivable found that many State agencies could improve their debt collection efforts if they strengthened their collection policies and adopted other collection best practices. Four of the six programs we reviewed in detail failed to meet many of the collection best practices applicable to their operations; three of those four also had inadequate collection policies. Overall, the four poor-performing programs had deficiencies in some or all of the following areas: monitoring receivables, aggressively pursuing debts, using enforcement tools, and using outside collection options, including the State’s Setoff Program. If those four programs improve their collection efforts, they might be able to collect a significant amount of additional revenue: collecting just 5% more of those programs’ delinquent receivables would generate almost $3 million in one-time revenues. We also noted that not all of the $2 billion accounts receivable shown in the State’s financial report is collectible because it includes aged, and therefore doubtful, receivables for a number of agencies.
American Recovery and Reinvestment Act: A Review of Reporting
The State has implemented ARRA reporting requirements fairly well. Agencies generally have done a good job of filing their Section 1512 reports timely, and all agencies required to report have done so. All but two of 74 reports flagged by federal reviewers were satisfactorily resolved. The methodology agencies used to calculate jobs created and retained was consistent with federal guidance. However, two of the four programs we reviewed inaccurately calculated and reported the number of jobs created. We were able to reconcile expenditures listed on the Section 1512 report to the State’s accounting system for 16 of 18 programs we reviewed. However, the differences were relatively minor.
Reviewing Operations of the State Treasurer’s Office, Fiscal Year 2010
The Legislative Post Audit Act requires this audit of the State Treasurer’s Office. Allen, Gibbs & Houlik, L.C., an audit firm under contract with Legislative Post Audit, conducted this audit. The audit addresses 10 questions about selected financial-management responsibilities of the State Treasurer’s Office. The auditors found two deficiencies: some abandoned property had not been sold within the required period, and the wrong data sets were used to calculate the Highway Equalization Distribution amounts to the individual counties. The State Treasurer’s Office continues to address the abandoned property issue and has already implemented a corrective action plan for the Highway Equalization Distribution issue.
Reviewing the Operations of the Pooled Money Investment Board - FY 2010
The Legislative Post Audit Act requires this audit of the Pooled Money Investment. Allen, Gibbs & Houlik, L.C., an audit firm under contract with Legislative Post Audit, conducted this audit. The audit addresses five questions about selected financial-management responsibilities of the Pooled Money Investment Board, mainly those involving the Board's fiscal accountability for moneys. The auditors found no deficiencies.
Division of Purchases: Reviewing Issues Related To Its Acquisition of Goods and Services
We identified a number of areas where the Division of Purchases didn’t adequately document its actions during contract negotiations, increasing the risk for errors, noncompliance, and fraud. We also found two areas where the Division didn’t comply with statute or best practices by not requiring appropriate documents. Because of legislative concerns, we reviewed the negotiation process for a Statewide copier contract that was mistakenly awarded to the wrong vendor, primarily because the Division didn’t follow its usual process for awarding contracts. However, because of a compromise between the Division and the two vendors, this mistake likely didn’t cost the State much money. Finally, we identified at least $27 million in goods and services that the State purchased through multi-state consortiums in 2009, and estimate that the State paid $122,000 in consortium fees associated with those purchases. While Division appears to conduct some informal analysis to determine if these consortiums are in the best financial interest of the State, it is not systematic. However, for the consortium contracts the State currently uses, it appears that the consortium fees are less than the resources the Division would need to negotiate similar contracts on its own.
Fiscal Notes: Determining Whether the Process for Preparing Fiscal Estimates in Kansas Could Be Improved
Fiscal note estimates we reviewed often were significantly different from the actual fiscal effect, but for different reasons. For the eight fiscal notes we reviewed for bills that passed, the dollar estimates were off from relatively small amounts to nearly $15.3 million. Most differences we saw were because the Legislature, Governor, or agency significantly changed the scope or funding for the program or participation in the program was significantly different than projected . We also reviewed 56 fiscal notes and found they didn’t always meet statutory requirements and didn’t always meet best practices in terms of including assumptions, providing details on the methodology used, and estimating all costs and revenues. Five other states we contacted also operate under short timeframes; however, they tend to have standardized forms for preparing fiscal note estimates, update their estimates as bills progress, solicit input from more entities when generating estimates, and include more information in fiscal notes. Like Kansas, other states generally don’t include estimates of economic benefits in fiscal notes related to economic development bills. Although economic models are available, they often are costly, take too much time to meet deadlines, and depend on the assumptions analysts use and data available.
Sole-Source Contracts: Determining Whether Sole Sourcing Is Being Used When Other Vendors Could Supply the Goods or Services
Division of Purchases’ records show that, over the last five calendar years, it has authorized more than $900 million in sole-source purchases. However, we have reservations about the accuracy of the Division’s sole-source reports. In all, 14 of 18 non-emergency sole-source purchases we reviewed appeared to be reasonable, but two were not and two were questionable because of lack of documentation. The Division authorized all 12 emergency sole-source purchases we reviewed appropriately, but in three instances the agency created problems. The Division of Purchases doesn’t follow some best practices related to sole-source purchases, including having written policies and procedures. The Division Director reported only two sole-source purchases greater than $100,000 have been challenged in the last eight years. We reviewed both challenges and found they appeared to be reasonable as sole-source purchases.
American Recovery and Reinvestment Act: A Preliminary Assessment of the Risk That Recovery Act Moneys Won’t Be Appropriately Accounted for or Spent
The $787 billion American Recovery and Reinvestment Act of 2009 (ARRA) requires unprecedented accountability and oversight of federal moneys being spent at the State and local levels. State agencies in Kansas will receive more than $2 billion in formula grants under the Act through 2011. The 2008 Statewide Single Audit had identified procedural or control weaknesses in four State programs that will be receiving ARRA moneys. Correction of those weaknesses, which related to things like reconciling records, improving eligibility determinations, and implementing computer edits to prevent improper payments, will be checked during the 2009 Single Audit. In eight other programs reviewed for this audit, the risk that agencies won’t comply with the requirements of ARRA appears to be relatively small. We found no weaknesses in the way that agencies are accounting for the ARRA moneys. However, in areas of monitoring and quarterly reporting, we found that officials from several of the programs needed to commit their procedures to writing to ensure consistency and, in a few cases, needed to further develop procedures or hire additional staff to ensure that monitoring or reporting functions could be carried out effectively. In separate work, we found that the Department of Transportation’s process for selecting highway projects to fund appears to comply with Recovery Act requirements.
Reviewing Operations of the Pooled Money Investment Board, Fiscal Year 2009
This audit of the Pooled Money Investment Board is required by the Legislative Post Audit Act. It was conducted by Allen Gibbs & Houlik, an audit firm under contract with Legislative Post Audit. The audit addresses five questions about selected financial-management responsibilities of the Pooled Money Investment Board, mainly those involving the Board’s fiscal accountability for moneys. The audit found no deficiencies.
Reviewing Operations of the State Treasurer’s Office, Fiscal Year 2009
This audit of the State Treasurer’s Office is required by the Legislative Post Audit Act. It was conducted by Allen Gibbs & Houlik, an audit firm under contract with Legislative Post Audit. The audit addresses 10 questions about selected financial management responsibilities of the Treasurer’s Office, mainly those involving that Office’s custodial responsibilities for State moneys. The audit found three deficiencies:• The Pooled Money Investment Board does not have procedures in place to ensure the depository and custodial banks do not share common controlling shareholders, a common majority of the board of directors, or common directors with the ability to control or influence as required by statute and, therefore, should develop procedures to address this.• Some unclaimed property items received had not been recorded on the inventory listing and, therefore, procedures should be re-evaluated in this area.• Some abandoned property received had not been sold within the statutorily required time frame and, therefore, procedures should be re-evaluated in this area.The Treasurer’s Office has taken steps to prevent future occurrences.
State Agency Information Systems: Reviewing Selected Security Controls in State Agencies
Each of the five agencies we reviewed could do a better job of controlling passwords. Three of the five agencies had weak password policies. Although most of the agencies had good password settings on their servers, we still were able to crack 23% to 58% of their passwords--primarily because many users create passwords that meet the network’s requirements for strong passwords, but still are relatively easy to crack. In general, the agencies did a good job of installing security patches on server and workstation operating systems (such as Microsoft Windows), but 30 of 133 servers (23%) were significantly behind on application patches (such as Adobe Reader and Java).
Vehicle Travel: Determining Whether the State Is Becoming More Cost Efficient With Its Vehicle Fleet
Overall, State employees have increased the number of miles they drive for work by 2% since 2003. Fuel expenditures have increased by $6.8 million since 2003, which represents a 3.5% increase adjusted for inflation. The use of ethanol has gone from 11% of fuel purchases to about 35% during that period. The Governor and the Department of Administration have taken steps to improve the average gasoline fuel efficiency (as measured by M.P.G. ratings) of vehicles available through the State's vehicle contract since 2007. However, the State has more “flexible-fuel” vehicles that can use either ethanol or gasoline available on the contract now, which likely will reduce the State fleet's overall fuel efficiency. That's because ethanol is much less fuel efficient than gasoline. For the 140 vehicles we reviewed in which flexible-fuel vehicles replaced gasoline-only vehicles, we estimate that fuel efficiency could decrease by as much as 5.3 M.P.G., or 25.5%, if agencies use only ethanol fuel. Finally, 6.4% of the State's vehicle purchases in fiscal year 2008 were used vehicles. Our review of 251 commonly purchased new vehicles in fiscal year 2008 showed the State potentially could save up to $112,000 a year (9%) by purchasing those vehicles used instead of new. However, this level of savings assumes agencies would buy a used 2007 vehicle instead of a 2009 vehicle of the same make and model, and that they could buy the used vehicle at 20% below market value. If they couldn't achieve that level of discount, bought different or better-equipped used vehicles, or bought used vehicles that needed significant maintenance, any or all potential savings could evaporate.
Business Procurement Cards: Expanding Their Use To Increase Cash Rebates to the State
For fiscal year 2008, we estimated that $27 million of the non-procurement-card purchases agencies made from the 37 highest-volume vendors potentially could have been charged to a procurement card. Charging all those purchases would have generated more than $380,000 in cash-back rebates. Agencies also made $327 million of similar non-procurement-card purchases from the thousands of other vendors we didn’t analyze. If just 20% of these purchases could have been charged, agencies would have generated $940,000 in additional cash-back rebates, for a total of $1.3 million. Among other things, agency officials told us they didn’t always use their procurement cards when they could because of concerns about the complexity of tracking such purchases, and the perceived lack of thorough controls over procurement card purchases.
State Inspection Functions: A K-GOAL Audit Determining the Cost Savings or Efficiencies from Automating Inspection Processes
In general, automating an agency’s processes for preparing, storing, sharing, and retrieving inspection reports can increase an agency’s efficiency levels through both cost and time savings. Only two of the seven inspection programs we reviewed within the Department of Health and Environment--Confined Animal Feeding Operations and Drinking Water--were fully automated. By fully automating the other programs in our sample, KDHE could achieve annual net savings of about $28,600 in staff and postage costs. About $6,800 of the savings would be State General Fund moneys. In addition to being able to eliminate a half-time position within the Wastewater Program, KDHE also could eliminate an estimated 1,770 hours of staff work currently performed in other unautomated programs. Once those inspection programs are automated, that time could be spent on other needed work. Even greater efficiencies--and cost and time savings--could be gained by fully automating the entire regulatory processes for these programs. Finally, automating KDHE’s inspection processes also could improve its data integrity and use of management information.
State Contracts: Determining Whether the State’s Office-Supply Vendor Is Providing Products to State Agencies at Agreed-Upon Prices
Corporate Express is the State’s office-supply vendor. State agencies spent $3.6 million on Corporate Express purchases during the last six months of 2007. We tested a sample of purchases and found a significant number of items for which prices couldn’t be verified on any price list. Without a complete price list, there’s no way agency officials can tell whether they are paying the correct prices. For items that were on price lists, we projected State agencies were undercharged 2% or $65,000 for the six-month period. Most of the agencies we contacted didn’t report encountering pricing issues with either the State office-supply contract or any other State contract. Agencies reporting pricing issues told us vendors generally resolved them, and problems tended to be infrequent.
Low-Priority Programs in Kansas: Identifying Them and the Costs Associated With Operating Them
To help identify programs that had the lowest priority in relation to their agencies’ core missions and objectives, staff asked officials representing 47 State entities to prioritize the programs and subprograms they administer into “buy first,” “buy next,” “buy last,” and “don’t buy” categories. This approach was intended to provide a different look at reducing State spending – through potential elimination of programs, rather than more traditional expenditure reductions such as across-the-board staff cuts. Agencies placed programs and subprograms accounting for about $500 million in State spending into the “buy last” category. About $11.5 million of that program spending already had been slated to be eliminated in its entirety, and parts of another $77.4 million had been proposed for elimination in agencies’ reduced budgets for fiscal years 2009 or 2010. Included in the “buy last” category were such diverse programs and subprograms as correctional facilities or other program sites, substantial highway maintenance projects, and grants for various services. Many agency officials cautioned that the programs and subprograms they put into the “buy last” category were critical to their missions or to the people of Kansas, but that they had categorized them there to fulfill the audit instructions. Agencies also pointed out about $23 million in State spending for items they wouldn’t fund even if money were available. Included in that amount were payment inefficiencies within the Medicaid Program and the costs associated with a juvenile correctional facility. These items had already been factored into agencies’ FY 2009 or FY 2010 budgets.
Statewide Medical Expenditures: Reviewing Medicaid Expenditures for Fraud and Abuse
Using data-mining techniques we found almost $13 million in suspicious Medicaid claims for federal fiscal year 2006 (the most recent year for which complete data were available to analyze). The suspicious claims included: more than $10 million in claims for more than 10,000 clients whose income appeared to exceed program limits; almost $700,000 in claims for clients who didn’t provide a valid Social Security number, almost $600,000 in potential “upcoding” by doctors for office and emergency room visits, and almost $500,000 in other suspicious claims such as claims filed for deceased individuals and charges for non-hospital services when a client was hospitalized. In addition, we identified 519 clients who received prescriptions for controlled substances, such as heavy painkillers and powerful stimulants, from five or more doctors in one year, which may be indicative of potential abuse.
Reviewing the Operations of the Pooled Money Investment Board, Fiscal Year 2008
This audit of the Pooled Money Investment Board is required by the Legislative Post Audit Act. It was conducted by Allen Gibbs & Houlik, an audit firm under contract with Legislative Post Audit. The audit addresses five questions about selected financial-management responsibilities of the Pooled Money Investment Board, mainly those involving the Board’s fiscal accountability for moneys. The audit found no deficiencies.
Reviewing Operations of the State Treasurer’s Office, Fiscal Year 2008
This audit of the State Treasurer’s Office is required by the Legislative Post Audit Act. It was conducted by Allen Gibbs & Houlik, an audit firm under contract with Legislative Post Audit. The audit addresses nine questions about selected financial-management responsibilities of the Treasurer’s Office, mainly those involving that Office’s custodial responsibilities for State moneys. The audit found two deficiencies in the unclaimed property area. First, some items received had not been recorded on the inventory listing. Second, some abandoned property received had not been sold within the statutorily-required time frame. The audit also discusses an error found by the Treasurer’s Office in earlier highway equalization distributions.
Illegal Immigrants: Reviewing Studies That Have Assessed Their Economic Impact
Researchers generally agree that the main areas where illegal immigrants increase governmental costs are education, healthcare, and criminal justice, but that illegal immigrants also pay property, sales, and some income taxes to offset governmental costs. It appears that most of the financial burden of illegal immigration is borne at the state and local level because illegal immigrants qualify for few federally funded benefits. The two most comprehensive studies reviewed concluded that the costs of illegal immigrants outweighed the revenues at the state and local level. Several less-comprehensive studies showed more mixed results because they focus on different levels of government or don’t consider all major costs or revenues attributable to illegal immigrants. Illegal immigrants tend to be concentrated in low-skill, low-education industries such as farming, cleaning, and construction. National job market studies we reviewed showed that illegal immigrants have a negative impact on wages and job opportunities of low-skilled, least-educated native-born workers. Overall, Kansas-specific information is sparse: State agencies generally haven’t tried to identify specific costs or revenues attributable to illegal immigrants for Kansas. Similarly, neither the Kansas Department of Labor, nor any of the Kansas universities have tried to study the economic effect of illegal immigration on this State.
Department of Health and Environment: Reviewing Issues Related to the Permitting Process in the Bureau of Air and Radiation
Entities that emit specified levels of pollutants into the air must obtain an air-quality permit from the Kansas Department of Health and Environment. The only significant change the Department has made to the air-quality construction permit process in the last year has been the addition of a carbon dioxide emission estimate for every application. This addition has not lengthened the time it takes to approve a construction permit. In recent years, the Department has implemented a number of streamlining activities to reduce permit processing times. These changes have resulted in a decrease in construction permit approval time by 51% (from an average of 63 days in fiscal year 2003 to an average of 31 days in fiscal year 2008). The basic construction permitting process Kansas uses is similar to the process five other states use, although there are a few differences. For example, most of the other states don’t calculate a carbon dioxide estimate for every construction permit application.Calendar year 2008 had more upper-management turnover than any of the past 10 years. As of July 2008, five upper-management positions had turned over in 2008; the next highest number of positions that turned over in any year was four, back in 1999 and 2000. This increase is agency-wide, and much of the increase can be attributed to retirements.
Commission on Veterans’ Affairs: Reviewing How Well It Is Spending Its Money and Serving Veterans
The Kansas Commission on Veterans’ Affairs appears to be taking reasonable steps to identify veterans through its field offices and their outreach efforts and, although other State agencies have varied methods for identifying veterans, they seem to be referring veterans on to federal officials to determine their eligibility for federal benefits. The Commission and other veteran service organizations take steps to coordinate certain activities, but coordination is being deterred by long-standing rivalries between the leadership of the veteran entities. In recent years, there have been two significant vacancies in the Commission’s veteran service representative positions; other positions the Commission has referred to as “vacant” primarily included positions whose job responsibilities had been transferred to a State-funded grant program. The Soldiers’ Home had 12 more direct-care staff positions filled in July 2008 than it did in July 2007, and its corrective action plan apparently has brought it back into good standing with both the State and federal inspectors. However, Home officials cited huge challenges in attracting and keeping qualified nursing staff because of location and competition factors. Finally, we concluded that the Commission’s goal of holding its monthly meetings outside Topeka to attract more veterans hadn’t been successful, and didn’t justify the additional costs incurred. Those meetings cost almost four times as much as Topeka-based meetings.
Kansas Use Law: Reviewing Issues Related to the Quality and Price of Goods and the Compensation of Executives
The State Use law requires State agencies and school districts to purchase goods and services from certain non-profit companies benefiting people who are blind or disabled. Between fiscal years 2006 and 2007, State Use Program sales increased from $5.7 million to $6.3 million, or by about $632,000 according to data reported by qualified vendors. Sales attributed to school districts increased by 85% during the same period from $553,000 to $1.0 million. About a third of those who responded to our survey rated the quality of State Use products as fair or poor, and about a third rated the price as more expensive than other options. Most concerns were related to toner cartridges, pens/pencils, and binders. The Division of Purchases staff take little action in tracking or handling complaints. The State Use Law Committee recently formed a subcommittee to look at pricing. We found some State Use products and services were more expensive, while others were the same or less than State contract prices. Finally, most top-ranking executives of companies who are State Use vendors are paid a higher salary than comparable State agency heads are paid.
Statewide Expenditures: Reviewing Transactions in the STARS Accounting System for Fraud and Abuse
We used data mining techniques to identify potential problems with State purchases in the STARS accounting system. We found one instance where professors at the University of Kansas Medical Center were involved in self-dealing--they had purchased more than $14,000 worth of medical research supplies from their own outside company. We also identified several other issues that weren’t fraud or abuse, but may represent missed opportunities to save money, including several vendors who did a lot of business with State agencies but who weren’t on a Statewide contract, and several instances where specific agencies did a lot of business with certain vendors but didn’t seek competitive bids.
Kansas Corporation Commission: Reviewing Issues Related to Consumer Complaints
The KCC’s Office of Public Affairs and Consumer Protection has 8.5 FTE staff who spend about two-thirds of their time handling customer inquiries and facilitating the resolution of customers’ informal complaints. Our review of 30 informal complaints showed that consumers received at least some relief 73% of the time--even when the utility wasn’t in the wrong--and the utilities appeared to take reasonable action in response to each complaint. Utility customers also can file formal complaints with the KCC, which are handled by KCC legal staff. We reviewed eight formal complaints; complainants received at least some relief in half those cases. Kansas is similar to surrounding states’ utility regulators in terms of how informal complaints are handled. We didn’t identify any strong reasons for moving the KCC’s informal complaint function to either the Citizens’ Utility Ratepayer Board (CURB) or the Attorney General’s Consumer Protection Division.
State Treasurer’s Office: Reviewing Operations of the State Treasurer’s Office, Fiscal Year 2007
This audit of the State Treasurer’s Office is required by the Legislative Post Audit Act. It was conducted by the joint venture of Allen Gibbs & Houlik and Berberich Trahan & Co., audit firms under contract with Legislative Post Audit. The audit addresses 11 questions about selected financial-management responsibilities of the Treasurer’s Office, mainly those involving that Office’s custodial responsibilities for State moneys. The audit found two deficiencies. First, in the unclaimed property area, the Office’s inventory list of items in three safe deposit boxes didn’t match the items actually in the boxes. Second, in the Kansas Investments Developing Scholars Program, the Office didn’t distribute State matching dollars to participants until the month after the deadline.
Pooled Money Investment Board: Reviewing Operations of the Pooled Money Investment Board, Fiscal Year 2007
This audit of the Pooled Money Investment Board is required by the Legislative Post Audit Act. It was conducted by the joint venture of Allen Gibbs & Houlik and Berberich Trahan & Co., audit firms under contract with Legislative Post Audit. The audit addresses four questions about selected financial-management responsibilities of the Pooled Money Investment Board, mainly those involving the Board’s fiscal accountability for moneys. The audit found no deficiencies.
Lottery Security: Performance Audit of Security in the Operation of the Kansas Lottery
This audit, conducted by Delehanty Consulting under contract with Legislative Post Audit, looked at 14 different aspects of security at the Kansas Lottery. The areas assessed ranged from online ticket vendor operations to validation and payment of winning tickets. The Lottery’s overall security is very satisfactory, but the audit did identify several areas where improvements are needed. The audit resulted in a public report that identifies areas with audit findings and, as provided for under the Kansas Open Records Act, a confidential report that provides detailed findings and recommendations.
Business Procurement Card Program: Reviewing for Fraud and Abuse
The Division of Accounts and Reports offers a business procurement card program to State agencies. In fiscal year 2006, the program had about 5,500 cards and total expenditures of more than $36 million. While the State’s adopted policies and procedures for the program are generally in-line with best practices, we identified several problem areas in the program’s implementation. In three instances, fraudulent charges were made on cards, but were later caught by the agency and not paid. In another instance, a cardholder was allowed to finance her personal computer with a loan from State funds. We also identified numerous instances where cardholders didn’t follow program guidelines, including: 141 cases where cardholders split purchases to avoid transaction limits, four cases where cardholders made purchases from blocked vendors, and 50 cases where cardholders didn’t get prior approval for their purchases as required. Finally, sometimes cards were not cancelled in a timely manner when cardholders left State employment, which contributed to about $30,000 in purchases being made on cards of former employees, mostly by their successors.
Providing Vehicles for Official State Travel: Reviewing the Impact of Decisions To Disband the State’s Motor Pool
In late 2003, the Department of Administration eliminated the Central Motor Pool, placed a moratorium on vehicle purchases for two years, and identified and sold unneeded or underused vehicles in the State fleet. These policy changes resulted in one-time savings of about $24.5 million (during 2004 and 2005), mainly from buying fewer cars during the moratorium. On an ongoing basis, the State’s overall cost of providing vehicles (adjusted for inflation) isn’t much different than it was before the vehicle policies were changed. Cost reductions from having a smaller fleet and eliminating the Motor Pool offset increased costs in private car mileage and costs for renting vehicles. Because State employees are driving more miles, the average cost per mile has declined by about 1.4 cents. Other issues: agencies were renting cars from Enterprise on a long-term basis at a cost that far exceeds the cost of leasing or owning a car, Enterprise hasn’t always adhered to the terms of the contract with the State, and the Department hasn’t adequately monitored the contract. Some agencies said they’ve had to hire or use more staff to handle fleet management activities since the vehicle policy changes. They also pointed out issues with inaccurate billings from Enterprise and difficulties reconciling charges with the invoices Enterprise provides. Overall, State employees who’ve used Enterprise rated it favorably in many areas. But a significant number said they had to make other arrangements because the car they reserved wasn’t available.
Kansas Technology Enterprise Corporation: Reviewing Bonuses Paid to Employees of KTEC and Its Subsidiaries (limited-scope audit)
KTEC will have paid its employees more than $550,000 in additional compensation from 2004 to 2006, including nearly $333,000 in annual bonuses and up to $224,000 in supplemental payments for work done for the Kansas Bioscience Authority. All additional compensation was paid from KTEC Holdings, Inc., a wholly owned subsidiary of KTEC. Parts of the 2006 bonuses paid to three KTEC employees–about $3,000 in total–appear to be contrary to State law because the bonuses were based on work done for a subsidiary of KTEC, which is prohibited. KTEC pays bonuses for achieving performance goals and to make compensation more competitive with the private sector. Although records aren’t routinely kept, the 2006 records show that employees who received bonuses achieved 93% or more of the performance goals established for them. KTEC also provided two studies which officials said show the need for enhanced salaries to be competitive. The Mid-America Manufacturing Technology Center, a KTEC subsidiary, also paid about $437,500 in bonuses to its employees. None of those bonuses were prohibited by law. MAMTC pays bonuses to reward employees for achieving corporate and individual performance goals. Because those goals were not met, only minimal bonuses were paid to four employees.
Office of the Attorney General: Reviewing Its Role in Overseeing Enforcement of State Architectural Accessibility Laws (limited-scope audit)
The State aligned its accessibility law with the Americans with Disabilities Act in 1994. Various State and local agencies are assigned to enforce the Act; the role of the Attorney General’s Office is to oversee enforcement. Our work focused on the Attorney General’s handling of written complaints, which are referred to State and local enforcement agencies for investigation. Our review of the 12 written accessibility complaints the Office received from July 2004 to December 2005 found that the Office’s actions weren’t always timely or thorough. Three-fourths of the complaints weren’t referred to the enforcement agency for more than 30 days after they were received. For three complaints, the Office didn’t take appropriate action when the enforcement agency failed to report back to it. Most complaints reportedly resulted in some changes to facilities’ accessibility, but the Attorney General’s Office can’t always tell from the information the enforcement agencies send back whether complaints were resolved in accordance with State law.
Regulation of Credit Unions: Reviewing the Department of Credit Unions’ Procedures for Ensuring Institutions’ Safety, Soundness, and Compliance with the Law
Since 1995, financial institutions operating in Kansas have dropped by 20% – from 648 to 517. Credit unions were about one-fourth of those institutions. These credit unions’ assets, deposits, and loans have remained at about 5%-6% of the total held by all Kansas-based financial institutions. Over the years, more credit unions have begun offering more of the services they historically have been authorized to provide, including checking accounts, mortgage loans, and credit cards. Some smaller credit unions have accomplished this by merging with larger credit unions. The Department of Credit Unions also has allowed some credit unions to expand their fields of membership beyond what Kansas law appears to allow. For the most part, the Department has and follows adequate procedures to ensure credit unions’ safety and soundness. However, improvements are needed to strengthen its monitoring efforts and the follow-up procedures it takes to ensure that credit unions comply with laws and regulations. Between 1998 and 2005, eight Kansas-chartered credit unions merged with six out-of-State credit unions; the surviving credit unions are regulated by either the regulatory agency of the chartering state or the National Credit Union Association. We didn’t identify a significant competitive advantage for out-of-State credit unions that operate in Kansas, and 97% of credit union officials responding to our survey agreed the Department does enough to ensure that they don’t operate at a competitive disadvantage.
The Regents Institutions: Reviewing Proposals for Increased Maintenance Funding at the State’s Colleges and Universities (limited-scope audit)
The 1996 Legislature authorized bonds that funded nearly $179 million for construction and renovation projects for the State’s six universities known as the “Crumbling Classrooms Initiative.” In 2004, a new Board of Regents study showed that $584 million would be needed to cover deferred maintenance needs at the six State universities. Based on information in the study, about $95 million would be needed to address maintenance and repair issues for buildings and utilities and infrastructure components rated as “critical.” Most buildings that had projects funded under the crumbling classrooms initiative are shown in the current study as needing additional work. Because the study doesn’t list specific projects, staff couldn’t do a project-by project comparison between moneys spent with crumbling classrooms initiative and the proposed spending. Of the 138 buildings that received funding under the crumbling classrooms initiative, 134 are identified in the 2004 study as needing funds to fix maintenance backlogs.
Kansas’ Central Motor Pool: Determining Whether All Significant Costs and Savings Were Considered In Decisions To Change This Function (limited-scope audit)
Changes the Governor announced to the Central Motor Pool will free up an estimated $9.3 million for other uses. But that decision wasn't based on a cost-benefit analysis. Rather it was based on policy and budgetary considerations that involved such things as eliminating redundancy in the way the State owned and issued vehicles, identifying and eliminating underused vehicles, and freeing up moneys set aside or requested to buy replacement vehicles to be used for other purposes. Actual costs or cost savings aren't known because reducing vehicles might not actually reduce travel costs, agencies may incur additional costs because of the changes, and most agencies still are going to need to replace their aged vehicles that normally would have been replaced during the moratorium. Finally, the Department's decision to terminate the Van Pool Program because it wasn't self-supporting was based on revised assumptions about what costs should have been allocated to the program over the years. The cost impact of those revised assumptions was applied retroactively, and Pool participants were never given an opportunity to cover those costs.
Kansas Sentencing Commission: Reviewing Organizational and Funding Issues (100-hour audit)
The Kansas Sentencing Commission is responsible for developing and monitoring the implementation of sentencing guidelines, researching how changes to those guidelines could impact prison populations, and projecting prison populations. It has recently been given additional duties related to treatment for drug offenders, called for in Senate Bill 123. Its structure appears to be appropriate for those duties. The membership of the Commission is similar to commissions in other states. Of 18 states that have ongoing sentencing commissions, 13 have established them as free-standing agencies. Kansas' Commission compared favorably with 8 other states contacted in terms of number of employees, budgeted expenditures per employee, office space per employee, and the percent of expenditures going for employee salaries and fringe benefits. States that don't have ongoing sentencing commissions tend to convene commissions on an "as needed" basis, and then disband them when their work was complete.
Governmental Ethics Commission: Reviewing Organizational and Funding Issues (100-hour audit)
The Governmental Ethics Commission is the main ethics enforcement agency in Kansas. The Commission's structure appears to be appropriate for its mission and is similar to the structures established by 4 of 6 other states in the region. Compared to 4 other nearby states, Kansas ranked in the middle to low end for expenditures per employee, office space per employee, and percent of total expenditures spent on salaries. Although Kansas relies more heavily on fees for its funding than the 4 states we contacted, it's unlikely that the Commission can become entirely fee-funded. That would require a four-fold increase in the level of registration and filing fees currently being charged to lobbyists, candidates for office, and others.
Information Network of Kansas: Reviewing Its Revenues, Expenditures, and Administrative Structure (100-hour audit)
In the past 5 years, the INK Board has received about $1.3 million from State website operations, generated $128,000 in interest income, and spent about $480,000. Almost half of those expenditures occurred in the most recent year, and included expenses related to the hiring of an Executive Director and consulting and legal costs associated with re-bidding the contract to operate the State's web portal. All expenditures reviewed conformed to the Board's broad statutory charge. As of March 2003, the INK Board had about $1.1 million in available cash, approximately $740,000 of which it had earmarked for contingencies or special projects. Some of the Board's practices related to executive sessions don't appear to conform to the Open Meetings Act. While there is no best structure for overseeing a state's website, the most common approach among the states reviewed was to have an independent single-purpose board that is staffed part-time by an existing state agency. Each of the 4 options reviewed had both positive and negative aspects. If change is desired, the Legislature will need to review the pros and cons, and pick the structure that is most likely to accomplish the Legislature's goals.
Firefighters Relief Fund: Reviewing the Use of Fire Insurance Premium Taxes Distributed to Local Firefighters Relief Associations (100-hour audit)
A 2% tax collected on fire and lightning insurance premiums in Kansas goes to the Firefighters Relief Fund and is distributed to local firefighter relief associations for benefits to firefighters. In July 2002, about $6.3 million was available for distribution to the associations. That was 22% more money than in the previous year, primarily because of increased insurance rates. Most of the money the associations receive was spent on life insurance premiums, relief payments to firemen who were injured on the job, pensions and annuities. All of those uses are allowed by law. In a few cases, there was insufficient documentation of expenditures or money was used to pay for unallowable things like equipment or conference registration fees. Usually, but not always, the Insurance Department's procedures caught those items and, if necessary, recoupments were being sought. Also, there were a number of payments for salaries to relief association treasurers or for computer equipment that didn't have required approvals. The Department needs to update its firefighters relief handbook to provide clearer guidance on the approval process for salaries and computers, to include some statutory changes, and to give examples of the types of documentation it wants for expenditures.
Diversion Agreements: Reviewing Their Impact on State Revenues (100-hour audit)
When traffic fines were raised by the 2001 Legislature, revenues were expected to increase by about $15.5 million in fiscal year 2002. Instead, revenues only increased by a little over $5 million. Although there's been a significant increase in the number of diversions Statewide in recent years, the increase that occurred in fiscal year 2002 (the first year after traffic fines were increased) likely only accounted for about $73,000 of the $10 million revenue shortfall. Problems with projections used in the fiscal note may have made those projections too high by millions of dollars. Other factors such as an increase in dismissed traffic cases and prosecutors allowing defendants to plead to lesser charges also appear to have had more of an impact than diversions.
Financing Local Governments: Determining How to Avoid Future Problems Caused by State Revenue Shortfalls (100-hour audit)
Proposals to withhold State transfers to cities and counties from 3 revenue-sharing funds for the second half of fiscal year 2003 and all of fiscal year 2004 would amount to about 2% of their calendar year 2003 total budgets and about 5% of their general fund budgets. Even before these proposals, transfers from these 3 funds weren't entirely predictable--the Legislature hadn't appropriated the full amounts called for by statute for more than a decade. Options legislators may wish to consider to help cities and counties reduce their dependence on payments from the State fall into 4 broad categories: removing or raising caps on existing taxes or fees, allowing local units to redirect the use of taxes currently dedicated to specific purposes, allowing local units to institute new taxes, or repealing statutory requirements that result in increased expenses for local units. The audit lists pros and cons of these actions for a variety of taxes and fees.
Private-Sector Input: Ways to Foster Such Input If the Kansas Performance Review Board Is Abolished
If the Kansas Performance Review Board is abolished, as proposed by Senate Bill 180, options for fostering private-sector input into improving the efficiency and cost-effectiveness of State agency operations include contracting directly with private-sector consulting firms, requiring agency heads to identify activities that the private sector could do better and at lower cost, developing specific goals for each agency for improving efficiency and cost-effectiveness, or incorporating some of the Board's functions into the Legislative Division of Post Audit. To be successful, any initiative would require political backing, independence of function, and sufficient funding. If the Performance Review Board isn't abolished, the Legislature may wish to have the Board report directly to the Governor or expand the Board's membership to include stakeholders from the legislative and executive branches.
The Kansas Real Estate Commission: Determining Its Sources of Funding, and How Those Moneys Are Being Spent
The Real Estate Commission is entirely funded from the licensing fees and fines it collects from the salespeople and brokers it regulates. As with all fee-funded agencies, 20% of that money goes into the State General Fund to cover the cost of central services such as purchasing and accounting. The vast majority of the Commission's expenditures for fiscal year 2000 were for the salaries of its 13 staff. Other large expenditures were for travel costs, central service charges such as printing and telecommunications, building and equipment rental, and attorney fees. The Commission needs to deposit all moneys it collects on a more timely basis to be in compliance with State requirements. Also, it needs to recoup about $85 the former executive director inappropriately spent on a pizza lunch.
State-Held-Lands: Reviewing the Management and Use of Those Lands in Kansas
Kansas lacked a good centralized system for inventorying and managing State-owned and leased land. Through direct surveys of all State agencies we learned that they owned more than 335,600 acres and leased another 256,000 acres for State use. Most of that land was used for highway right-of-way and for parks and wildlife habitat. About 4,800 acres worth $6.9 million was potentially surplus. Nothing would prevent the State from selling this land, but conditions, like toxic waste on some parcels, may make it difficult to sell. State agencies will continue to have little incentive to identify surplus lands, despite a new law requiring that guidelines and criteria for identifying and selling surplus land be put into place. The new law didn't set up an independent authority to make the decision about whether potentially surplus land should be sold, and it lacked a financial incentive for agencies to sell land. When agencies lease out State-owned land, they usually do it on a competitive-bid basis; only 4 agencies weren't using competitive bids to let their leases or didn't rebid the leases frequently enough. Finally, we found a few cases where agencies weren't paying property taxes on land when they should have been, and at least one case where an agency was paying taxes it shouldn't have been paying.
Centralized State Purchasing: Determining the Best Way to Fund It (100-hour audit)
Although funding centralized purchasing with General Fund appropriations requires the least amount of cost and record keeping, Division of Budget officials have indicated their desire to substitute user fees for General Fund dollars to fund part of the Division of Purchases' budget. Given that choice, it appears that the most reasonable method of determining and collecting those fees is to estimate agencies' use of Statewide contracts and bill the agencies directly. This method doesn't rely on vendors to collect and remit the fee, and doesn't require major changes to the way the State accounts for and reports expenditures. In developing such an approach, caution will need to be exercised so that fee-funded agencies aren't double-billed for their share of central purchasing costs.
Reviewing State Agencies’ Adherence to State Requirements for Out-of-State Travel
We questioned about $11,800 of the $266,000 spent on the 241 executive and judicial branch trips we reviewed, or about 4%. About $2,500 of that was for things that clearly aren't allowed under the State travel requirements, such as staying extra days at State expense when attending a conference. The remaining $9,300 represented unnecessary expenses or items that could have cost less. For example, using a shuttle service to go from the airport to the hotel usually is less expensive than renting a car. Almost half the reimbursement amounts we questioned were at the Department on Aging. State travel requirements don't address or aren't clear about some of the issues we identified. We recommended the Department of Administration clarify the Travel Reimbursement Handbook in a number of areas, provide guidance on documentation agencies should keep, and consider making the State Travel Agency responsible for providing information about ground transportation at employees' destination cities.
Reviewing State Agencies’ Adherence to State Laws and Policies for Grants and Contracts
State agencies generally are complying with requirements to use a contract instead of a grant when acquiring goods or direct services. Our review of 144 grant payments from 14 different agencies included only one instance in which a grant was used when a contract was appropriate. That was the much-publicized grant between the Department on Aging and its former Deputy Secretary, Terry Glasscock. Most State employees are complying with ethics laws that place restrictions on employees who've been involved in developing or awarding a contract. However, we identified 2 situations that appeared to meet the definition of conduct prohibited by those laws, and we referred those cases to the Ethics Commission for further review. Our review of the circumstances surrounding the grant to Mr. Glasscock raised questions about why the grant didn't go through the Department's normal grant procedures, and also about the amounts of compensation Mr. Glasscock was initially offered and allowed to keep. Finally, we found that the Division of Purchases still had not implemented 2 of 6 major recommendations from our 1996 audit, citing lack of staff as the reason.
Board of Nursing: Assessing Its Efficiency and Effectiveness in Carrying Out Its Administrative Responsibilities
In the past year, nurses have experienced licensing delays and poor customer service from the Board of Nursing. Most of the problems resulted from staffing problems, including vacancies and a lack of training and supervision. However, the Board also lacks written policies and procedures for handling licenses and fees, which increases the risk of misuse or loss of fee moneys. In addition, licensees under investigation for practice violations expressed frustration with the slowness of the investigation process, and confusion about some disciplinary procedures. As with licensing problems, staffing shortages have slowed the investigative process, but also a lack of sound policies and procedures has made the process less efficient than it could be. Because of these problems, there is a potential for inconsistent disciplinary penalties, and limited monitoring of disciplinary requirements. In her first 6 months at the Board, the new Executive Administrator has done a great deal to resolve some of the problems. However, other problems still exist, and it will take time and help from other agencies to get the Board completely back on track.
Assessing the Benefits of Leasing Versus Owning Office Space for State Employees
Whether it's more cost-effective to build new buildings, lease space in existing buildings, or buy existing buildings depends on a number of economic factors in effect at the time a decision is being made. Also, many non-economic factors may influence that decision. Our analysis showed it wouldn't be cost-effective for the State to build another major office building, unless it could be built for less cost than the Signature Building. However, it may be cost-effective to consider buying an existing building. Some agency officials expressed concerns that having a single agency responsible for negotiating all office leases could result in their specialized needs not being met. However, it appears that the potential benefits of centralized leasing, such as getting volume discounts or other lease concessions, outweigh the risks cited by agency officials.
Reviewing the Operations of the Pooled Money Investment Board-Fiscal Year 1999
This audit of the Pooled Money Investment Board is required by law. It was conducted by McBride Lock & Associates, an audit firm under contract with Legislative Post Audit. The audit addresses 4 questions about selected financial management responsibilities of the Pooled Money Investment Board, mainly those involving the Board's fiscal accountability for moneys. The audit found no deficiencies.
Evaluating Certain Personnel and Financial Practices at the Kansas Department of Health and Environment (100-hour audit)
For a sample of bills paid in May 1999, about a fourth were paid late, but in many cases the delays were caused by the vendor, not the Department. Based on the same sample, the Department appeared to be purchasing from State contracts when appropriate. In awarding employee bonuses under three different bonus programs, the Department complied with applicable State laws and regulations. However, in the case of the Kansas Savings Incentive Program it didn't follow good management practices in making the awards. Hires and transfers of classified administrative personnel in the last two years were done in accordance with State laws and regulations. Although unclassified positions aren't required to have formal job descriptions, and although qualifications necessary to hold an unclassified job aren't spelled out in State law, unclassified administrative employees hired in the last two years appeared to be qualified for the positions they held.
Reviewing the Organization and Structure of the State Historical Society
The State Historical Society currently operates as two separate entities housed within a single agency. Each has separate employees, and keeps separate financial records. The majority of funding for the Society comes from State appropriations. Although this structure was similar to structures in two other states, we didn't find any states that operated exactly like Kansas. Potential structural problems we found, or that others pointed out to us, include a lack of clarity in the statutes about whether the Society is officially a State agency, a lack of accountability to anyone in State government by the executive director, the potential for the executive director to have too much influence over the decisions made by both the State and private sides of the agency, a potential conflict in having the executive director designated as the State's Historic Preservation Officer, and the likelihood that the board of directors is too large to be functional. In addition, people we talked to pointed out a number of problems not related to structure such as poor maintenance of historic sites, and poor performance in fund raising.
Examining the Statutory Requirements and Funding Sources for Background Investigations in Kansas
At least 25 new statutory provisions for records checks and background investigations have been enacted in the past decade. Most deal with the racing and gaming industries. These new provisions have had little impact on the number of criminal history records checks performed by the Kansas Bureau of Investigation, but they’ve nearly quadrupled the number of background investigations performed by State agencies. About 29 more people work on records checks and background investigations than five years ago. Most State agencies that request a significant number of records checks or background investigations budget and pay for them—two notable exceptions are the Governor’s Office and the Kansas Department of Health and Environment. As of March 1, 1998, more than 800 requests for background investigations were pending, and about 10,000 requests for criminal history records checks were backlogged. Other than a few optional background investigations which the Governor can request, there doesn’t appear to be much opportunity for scaling back records checks and background investigations.
Determining Whether the State’s Current Motor Pool System Provides for the Use of Cars at the Lowest Cost to the State
Compared with other motor pools we contacted, the Central Motor Pool appears to be operating fairly efficiently. However, the Motor Pool may have more vehicles in its “dispatch” pool than needed, and permanently assigning more of them to State agencies would be cost-effective. The Motor Pool’s costs are lower than those of other public- and private-sector motor pools we contacted, but the State might be able to reduce those costs even further by selling its retired motor pool cars competitively, and reducing the amount of gasoline bought at full market price. In addition, the use of more current technology could help the Motor Pool better track its maintenance needs and costs. Finally, if there’s interest in getting the State out of the vehicle fleet-management business, allowing State agencies with “permanently assigned” Motor Pool vehicles to buy those vehicles directly, and allowing employees who need cars for short-term trips to use their own cars or rent cars may be a cost-effective alternative. However, a more in-depth study would be needed to identify other costs or savings that should be considered before any decisions were made in this area.
Reviewing the Regulatory Activities of the Board of Cosmetology
The Board of Cosmetology waited for about a year before it notified cosmetologists about continuing education requirements passed in 1995, and then didn’t enforce the requirements of law. The Board’s Executive Director allowed some facilities to open that hadn’t met requirements, directed staff to falsify some test documents, and licensed people who hadn’t passed exams. Facilities weren’t inspected as often as required, violations weren’t effectively addressed, and inspection forms don’t reflect current regulations. In addition, the Board hadn’t taken action any on numerous complaints it received in 1996. We also found weak controls over receipts and expenditures that increase the risk of loss or theft of moneys. The Board had an unauthorized bank account, inspectors were collecting payments and depositing them into their own checking accounts before forwarding them to the Board, and checks were being held in the Board’s office for as long as two months. Inappropriate uses of Board moneys or other resources included paying the airfare of a vendor who was trying to sell services to the Board, and payment of the Executive Director’s airfare, personal telephone calls, and salary while she was working for another employer. Finally, we found no evidence of wrongdoing in the way the contract to track continuing education for cosmetologists was awarded.
Reviewing State Agencies’ Use of Cost Savings From the Kansas Quality Program (100-hour audit)
The Legislature first enacted the Kansas Quality Program in 1994, which allowed participating agencies to give employees cash and non-cash awards for improving State operations through specific quality initiatives. A second program was started the following year, which allowed agencies participating in the first program to keep half the money they were appropriated but didn’t spend. Agencies have retained about $5.3 million that they didn’t spend in fiscal years 1995 and 1996. Most of their purchases with those moneys have been for capital outlay items, such as computers or parole office automation technology. In fiscal year 1997 five agencies spent $38,000 for employee bonuses. Most of the expenditures we reviewed were appropriate; however, bonuses paid by two agencies didn’t meet the program requirements, and one of those agencies exceeded the $1,000 limit established by the Legislature. The Governor proposes expanding the program to all agencies and eliminating any tie to the original Kansas Quality Program. Positive aspects to this proposal include increased spending flexibility for agencies and less incentive to spend all moneys at year-end. Examples of risks include possible overbudgeting, the potential for cutting back on needed services to generate savings, and less up-front accountability for expenditures.
Assessing the Extent to Which License Applications and Renewals Are Delayed at the Behavioral Sciences Regulatory Board (100-hour audit)
In fiscal year 1996, it took the Behavioral Sciences Regulatory Board an average of 77-197 days to issue a license. Most of the delays were caused by applicants submitting incomplete applications, failing to show up for exams, not passing the exam, not complying with licensing requirements, and the like. We found five cases in which delays occurred because the Board’s staff didn’t notify applicants of the Board’s actions regarding their applications in a timely manner. Board staff indicated the Board’s review of several cases occurred during a very busy time, and these cases slipped through the cracks. We also found that the Board has taken several steps to speed up the licensing process including more frequent Board meetings and more frequent testing for social workers. Finally, it appears that the Board could speed up the licensing process if it had better computer capabilities.
Reviewing the Effectiveness of the State’s Workplace Health and Safety Program
We couldn’t tell whether the Workplace Health and Safety Program was effective at reducing accidents because not enough time has passed since training was done to see a discernible difference in accident numbers. Nonetheless, agency officials told us the training their agencies got was useful and met their needs. The Program isn’t very effective at providing training to State employees for several reasons: training isn’t targeted to agencies with the greatest needs, agencies can decide not to participate in training, and the Program has only one professional staff. In addition, Program officials haven’t done some things required by State law, such as developing procedures for identifying and controlling workplace hazards. It appears that the Division of Personnel Services is using staff paid with Self-Insurance Fund money to do general work unrelated to accident prevention according to Program staff. However, Division officials disagree with some of Program staff’s estimates.
Assessing the Propriety of Certain Actions Related to the Privatization of Kansas Industries for the Blind (100-hour audit)
Kansas Industries for the Blind was scheduled for privatization on July 1, 1996, but that didn’t happen for a number of reasons. Recent allegations have been made that, to keep the scheduled privatization from going smoothly, certain equipment and records of the operation had been discarded. Our interviews and corroborating testwork generally didn’t substantiate these allegations. We found that employees disposed of some old, broken equipment stored at the workshop, discarded blank State forms, and purged their files of records and documents more than two years old. However, we found nothing to indicate that these actions weren’t logical or well intentioned. Rather, these things seemed to have been done to facilitate the scheduled change to private sector operation. Further, once privatization didn’t take place, we saw no significant adverse impact of these actions on the ongoing operations of Kansas Industries for the Blind.
Reviewing the Efficiency of State Printing Plant Operations (100-hour audit)
With few exceptions, standard jobs (such as letterhead, envelopes, and business cards) being printed at State agencies with their own printing facilities could be done by the State Printing Plant or a private-sector printing firm. For our limited sample of such printing jobs, the State Printer’s estimated charges were less to print most items than commercial printers or other State agencies, even though the other State agencies don’t include all costs of operation in their estimated charges.
Reviewing the Department of Health and Environment’s System for Assessing the Impact of Rules and Regulations Mandated by the Federal Government: A K-GOAL Audit of the Department of Health and Environment
In general, the Department did not always accurately and completely assess the economic impact of new regulations. The sample of economic impact statements we reviewed did not always contain the information required by law. For example, the economic impact statement prepared for underground storage tank regulations excluded about $40 million in costs for the federally mandated portion of the regulations. The economic impact statement related to clean water regulations underestimated the impact on industries by at least $10 million. These problems can be attributed to the agency’s lack of standardized procedures, its policy of excluding certain costs from the impact statements, and its failure to involve all those affected by the regulations in the process.
Reviewing the Provision of Statute Books to Legislators (100-hour audit)
The State spends about $45,000 annually to provide free law books to legislators, and an additional $100,000 providing free law books to others. If incumbent legislators were only provided with the books needed to update their sets of statutes, the State could have saved about $29,000 in printing costs during fiscal year 1994. The Legislative Coordinating Council has set the current price of statutes books at $405. At that price, the State generates enough money from the sale of statute books to cover the printing costs of books that are sold and distributed for free. The Secretary of State’s Office estimated that it discards about 2,000 law books valued at about $8,400. Closer monitoring of the number of books printed, sold, and discarded could save the State small amounts of printing costs each year.
Reviewing Human Rights Commission Contracts for Case Investigation (100-hour audit)
As of December, 1994, the Commission had not yet entered into any contracts for investigative services, and had not spent any of the $125,000 appropriation it received for fiscal year 1995 for such contracts. The Commission’s current plan to contract with local civil rights agencies, rather than with private vendors, may be hampered by those agencies’ limited ability to take on additional work. To evaluate potential cost savings from contracting, the Commission will need to develop good information on the cost of processing investigations in house. Contracting will not have a significant effect on the amount of federal money the Commission receives in the current year, but could increase federal reimbursement in the future.
Reviewing Economic Development Activities: A K-GOAL Audit of the Kansas Department of Commerce and Housing
The Department of Commerce and Housing has established programs in line with its mission, and it can demonstrate economic results in accord with that mission. However, in many cases the Department has not established specific criteria or gathered the kinds of data it needs to determine whether specific programs are achieving the intended results. Creating the Division of Housing has had little effect on the economic development activities of other divisions. In one case we reviewed, Department officials legally reallocated State General Fund money from the Division of Housing to another division. For the most part, Kansas’ organizational structure for housing programs was similar to the structure in other nearby states. Finally, we found the Department did not give proper notice of a public hearing held to consider possible amendment of the State Community Development Block Grant plan.
Reviewing Personnel Services for Kansas’ State Employees: A K-GOAL Audit of the Department of Administration
To fulfill the requirements of the Kansas Governmental Accountability Law, we reviewed the operations of the Division of Personnel Services to determine whether its activities were carried out in an efficient and effective manner. In general, we found that many personnel functions provided by the Division of Personnel Services and personnel staff in State agencies were carried out efficiently and effectively. However, we found that the hiring process, the performance evaluation system, and the pay plan used by the State were not serving all of the State’s needs. We also found that the Division of Personnel Services approves several fairly routine personnel actions performed by the agencies. This means that such routine actions require more effort and involve more processing than should be necessary. Finally, the State pays its employees more overtime pay than required by law. The Division of Personnel Services estimates that the State spends about $2 million a year more than it needs to on overtime pay. While this estimate may be overstated, the amount involved still is likely to be substantial. We recommended that the State’s personnel practices could be made more efficient by increasing the flexibility and authority of the State agencies to take appropriate actions.
Reviewing the Fire Fighter Recognition Program Operated by the State Fire Marshal’s Office (100-hour audit)
The audit shows that while State law does not specifically address whether the State Fire Marshal could administer the Fire Fighter Recognition Program, it does not appear that the law would prohibit the Fire Marshal from administering the Program, as the Office is currently doing. The Fire Fighter Recognition Program has cost the State less than $500 to-date. Because the Fire Marshal’s role with the Recognition Program is relatively limited, it is not likely to incur substantially greater costs in the future. Finally, enrollments in the University of Kansas’ Fire Service Training courses have declined in recent years, but most of the declines occurred before the Recognition Program was developed. A number of factors, including a loss of federal funding, an increase in fees, and changes in certain certification requirements, contributed to the reduced enrollments.
Reviewing the Effectiveness of the Capitol Area Security Patrol
Although relatively few State employees experienced security-related problems during the past year, we found that there were security weaknesses at the buildings included in this audit. Some of the weaknesses were within the Security Patrol’s control and others were not. The Security Patrol did not have enough staff to carry out its contractual responsibilities, or to provide the level of security coverage wanted by some State employees and officials. In several areas the Security Patrol did not have written policies and procedures that seemed necessary to ensure that adequate security was provided. Finally, we noted that the State Capitol and the Landon and Docking State Office Buildings were potentially unsafe, either because doors were locked after hours or because of inadequate fire alarm and detection systems.
Reviewing Counties’ Procedures for Handling Absentee Ballots and for Updating Voter Registration Lists
None of the four counties we reviewed was in complete compliance with absentee voting laws, and sometimes the laws were unclear, conflicting, or difficult for county election officials to follow. Partly because of unclear statutes and a lack of guidance from the Secretary of State’s Office, counties followed inconsistent procedures and had inadequate controls over absentee ballots. This allowed a few individuals to receive more than one absentee ballot or vote more than once. Two of the four counties we reviewed did not carry out all statutorily required updates of voter registration rolls. However, even if all required updates are performed, an inactive voter could legally remain on the voter registration rolls for up to four years.
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.
Examining the Costs of Providing Staff Resources for the Kansas Silver-Haired Legislature (100-hour audit)
The direct cost to the State for the 1989 session of the Silver-Haired Legislature was about $12,300 in staff time and other expenditures. Of that total, about $11,000 was for time spent by personnel in the Department on Aging, the Legislative Research Department, the Revisor of Statutes' Office, and other legislative staff. The State may also incur some indirect costs related to the Silver-Haired Legislature, but agencies' involvement with the group appears to be declining. Finally, a number of legislative staff said that the November Silver-Haired Legislature session sometimes conflicts with their primary responsibilities.
Reviewing the Diagnostic Study Prepared for the Kansas Lottery
Two accounting firms completed a diagnostic study of the Lottery in April 1988. Based primarily on interviews with management-level Lottery staff, the study concluded that the Lottery could potentially improve three main areas: computer and manual systems, audit and accounting, and organization/management development. The study results were communicated to the Lottery’s Procurement Negotiating Committee and Lottery staff.
Kansas Lottery: Reviewing Vender Contracts and Financial Management and Accounting Practices
The Lottery did not have adequate and consistent internal controls in some key areas, and the agency's purchasing procedures may have allowed it to circumvent some external controls, such as limitations on expenditures for official hospitality. Further, the Lottery's relationships with vendors did not always appear to be at arm's-length. The Lottery has not experienced significant problems with most major contracts, but the agency did have problems obtaining adequate hardware, software, and consulting services for the instant ticket games.
Vendor Discounts to State Agencies (100-hour audit)
State agencies sometimes fail to take advantage of vendor discounts available to them, but the magnitude of the discounts lost does not appear to be significant overall. Out of a sample of 213 purchases totaling approximately $194,000, the auditors found that State agencies failed to take advantage of 12 discounts, representing a cost of $160. Most discounts lost were prompt payment discounts for which the agency failed to meet the payment deadline. If the auditors’ sample were representative of the State as a whole, the auditors estimate that the fiscal year 1987 loss to the State for the types of goods included in the sample would have been about $70,000 out of approximately $53 million in purchases.
On average, it takes about six calendar days from the time the Lottery receives a winning ticket in the mail until a State warrant is mailed to the winner. Lottery processing procedures account for about four of those days and the process of creating the warrant at Accounts and Reports accounts for the other rwo days. Most other States contacted--11 of 17--pay prize money faster than Kansas if a lottery ticket is hand-carried into their lottery offices. However, for tickets which must be mailed in for processing, Kansas pays faster than 10 of the 17 states surveyed. Thirteen of the 17 states have authority to write their own checks, and nine states have some sort of debt set-off program.
Reviewing the Way State Agencies Collect Delinquent Accounts
Statewide requirements for collecting, reporting, and writing off amounts owed to the State have improved somewhat in the past 11 years, but complete information about agencies’ accounts receivable is just beginning to be collected. Most of the six agency programs reviewed are required to follow additional collection procedures that go beyond the State’s minimum requirements, and all of them use the State’s set-off program as part of their collection procedures. Statewide procedures for the management of delinquent accounts and specific agencies’ collection procedures can both be improved.
Reviewing the Health Care Plan for State Employees, Part II: Controls and Use
State employees covered by the traditional plan had higher use rates than all Blue Cross subscribers State wide, but when all State employees were recombined into one group (to include those covered by both the traditional plan and a health maintenance organization), their use rate was about the same as all Blue Cross subscribers Statewide. Blue Cross and Blue Shield’s 1987 controls were adequate to ensure that employee claims were processed and paid accurately.
The State currently employs about 221 classified and unclassified attorneys---55 more than it did five years ago. Most of the additional attorneys were hired to defend indigent clients and to enforce child support laws. Expenditures for contracted legal work have risen from about $4.6 million to slightly more than $7 million in the past five years. In some cases, agencies could have employed a full-time attorney or part-time attorney for the amount they spent for relatively few hours of legal work. The report recommends that the Department of Administration and the Attorney General’s Office jointly review the legal needs of State agencies to ensure that services are obtained in the most cost-effective manner.
KOOD has implemented some of the financial controls that have been recommended in previous audits, but other necessary controls are still not in place. The larger problem appears to be the station’s overall financial condition. It has consistently spent significantly more money than it has taken in, using cash balances to absorb the losses. If budget projections are accurate, those cash balances will be used up in the current fiscal year, requiring the station to drastically cut expenditures for the fiscal year beginning in July 1988.
Reviewing the Health Care Plan for State Employees, Part I
Because Blue Cross and Blue Shield’s initial bid for the State employees’ health care plan would have increased the traditional Blue Cross premiums by 40 percent, the Health Care Commission negotiated a different type of plan with Blue Cross. The new Blue Select plan requires employees to choose a primary care physician to coordinate their health care needs. For the first time, State employees will also be required to pay for a portion of their health care coverage. A monthly smoker’s charge was also instituted. The Blue Select primary care physicians, selected by Blue Cross, were initially required to serve in HMO Kansas, but that requirement has been dropped. They must still meet the same criteria as HMO Kansas doctors, however. Kansas’ State employee health benefits will cost more in 1988 than in 1986, and will cost more than other employers’ health benefits.
Because of the lack of any real benefits from security markings on Kansas license plates, the presence of directional security markings in Kansas’ specifications cannot be justified. As a result of failures by the Department of Revenue, Kansas counties are projected to have a surplus of about 169,000 license plates at the end of 1987; this five-month oversupply of plates cost the State more than $228,000. Kansas’ testing requirements for reflective sheeting used on license plates appear to be reasonably related to the specifications, but past and current testing procedures have not always conformed with the tests called for in the written specifications.
Improving the Efficiency of the Central Motor Pool
Compared with other states, the Motor Pool appears to have a reasonable number of vehicles. The Motor Pool sometimes has more unassigned vehicles on hand than it needs, but it generally buys only as many vehicles each year as it expects to have to replace. Although some permanently assigned vehicles may not meet the requirements for permanent assignment, in some instances their assignnment appeared to be appropriate. Finally, the Motor Pool’s costs are about the same as other states, although some cost savings might result if State employees were encouraged to purchase gasoline from Department of Transportation facilities when possible.
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 Hatchery’s 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.
Although State agencies use the contracts established, more contracts could be established if the information provided by the State’s accounting system allowed the Division of Purchases to determine which goods and services were purchased in larger quantities. Some bid specifications are written more restrictively than necessary, but surveyed vendors indicate that restrictive language in specifications does not deter them from bidding.
The Highway Patrol could save $34,000 a year in operating costs if all non-patrol staff drove fuel-efficient, mid-size cars without police packages. If such cars become available with police packages, the Patrol could save an additional $144,000 a year by purchasing them for its road patrol staff. Additional cost-saving measures include better monitoring of maintenance expenditures, driving vehicles more miles before replacing them, and pooling vehicles in central locations.
Out-of-State political action committees contributed $347,000 of the $7.3 million contributed to winning senators in 1984, winning representatives in 1986, and winning and losing Statewide candidates in 1986. Out-of-State committees that register with the State are required to report detailed information about their campaign finance activities. Those that do not register are required to disclose far less information, and in practice, the Public Disclosure Commission asks for even less information than State laws and regulations require. Some of Kansas’ campaign finance requirements are more stringent than those in surrounding states, but more information about out-of-state political action committees is generally available in those states.
Acquiring Maintenance Services for Computer Equipment
State agencies will spend about $5.2 million for computer maintenance contracts in fiscal year 1987, and about $6.1 million the next year. Such contracts are not cost-effective for microcomputers, and although they may be cost-effective for word processors, such equipment could be effectively replaced with microcomputers. In fiscal year 1987, maintenance contracts on microcomputers and word processors total about $520,000. Maintenance contracts for mainframes and minicomputers, which are considered to be essential, account for the bulk of the contract costs.
Out-of-State Travel Reimbursements for Elected Officials
Statewide elected officials took 30 out-of-State trips in fiscal year 1986 that were reimbursed by organizations other than the State. No inappropriate payments were found; however, controls need to be strengthened to ensure that duplicate payments do not occur. The audit also discusses the legal requirements for signing municipal bonds and the associated trips taken for bond signings.
Estimated Cost for Additional Embellished Parchment Copies of House Resolutions (100-hour audit)
Costs of additional embellished parchment copies of House resolutions are, by House rule, to be recovered from the requesting legislator. These costs include the costs of producing the documents, mailing the documents, and accounting for amounts owed. Total costs depend not only on the number of documents requested but also on the number of places to which they will be sent.
Child Custody Determinations in Kansas Divorce Cases
Mothers were awarded sole child custody or primary residency in 81.7 percent of the cases sampled, while fathers got sole custody or primary residency in 10.7 percent of the cases. The remainder included cases of joint custody with residency equally shared between the divorcing parents, and cases in which custody was granted to other persons or agencies.
Entry Into Retirement Annuity Plans at the Regents’ Institutions
Most employees who were signed up immediately for a retirement annuity plan either had a valid contract or the required experience when they started work. But many of those employees got their contract just before they started; they had not been enrolled in a valid plan at another school. The State incurs a cost of about $250,000 a year to pick up these employee’ retirement contributions. The Legislature will need to determine if it intended for these contibutions to be picked up.
The State’s 19 historic sites were acquired by legislative action between 1901 and 1986. The condition of the five sites reviewed varies from good to abysmal. Current views of the sites’ significance are mixed, and there is no consensus on how their value should be determined. The audit notes that if the five sites are retained, they will need varying capital improvements and improved exhibits, highway signs, and staff. Local communitites may be a potential source for funding assistance.
The center’s purchases generally complied with all purchasing and bidding requirements, but compliance problems occurred in two of the 20 purchases reviewed. It took an average of nine weeks to order equipment for the Centers of Excellence, but the centers were not significantly hampered by any delays caused by the Department of Administration in Topeka. Most concerns raised by the Centers of Excellence could be addressed within current State laws and regulations.
Postage Costs for State Agencies That Do Not Use Central Mail Services (100-hour audit)
Within Shawnee County, 19 agencies and divisions within agencies do not use the central mail services provided by the Department of Administration, as required. These groups pay from $26,000 to $52,000 in equipment costs. The audit recommends that each agency and division be evaluated for possible inclusion in the Central Mail Services system.
The Commission on Civil Rights has made numerous improvements in its handling of cases, including increasing the productivity of its investigators and reducing the time it takes to resolve complaints. Nonetheless, the Commission can improve the complaint handling process by improving its procedures for assigning and handling cases, evaluating the role and performance of its preliminary investigation unit, and monitoring its overall caseload.
Four State agencies lease space in the Wichita State Offie Building. A large percentage of employees are dissatisfied with the building’s overcrowding, noisiness, temperature, and parking lot. In a related issue, the Department of Human Resources’ acquisition of office space in Wichita was consistent with the permitted uses of the funds spent. That acquistion consolidated most of the Department’s employment security programs in one central location in Wichita.
The theft of at least 1,500 items from various buildings was apparently due more to problems with the Hospital’s security procedures than its property procedures. Steps are being taken to address problems with those procedures. Several former members of the Hospital’s security force were implicated in the thefts, and the Shawnee County District Attorney has taken actions against these individuals.
Contracting with a travel agency to make all official out-of-State travel arrangements may be the most cost-effective way to obtain the lowest available rates. Based on one estimate, this option could have cut State travel costs by 14 percent in fiscal year 1985, or as much as $655,000. Other options discussed in the report are less cost effective.
Reorganization had a significant effect on the staffing and organization of the bureaus within the Division. The Department generally tried to minimize any negative impact on persons displaced from their positions, and most actions were handled according to applicable personnel requirements. Although management thinks the reorganization goals have largely been achieved, most employees do not share this perception.
More than half the 131 advisory bodies discussed in this report were created by agency heads within the last five years. These groups spent $772,000 in fiscal year 1985. Nearly 90 percent of this amount was incurred by just 14 groups. However, all but one of these groups are required by State or federal law.
Based on volume of calls, many WATS lines are not cost justified. But State and federal laws mandating their use, the emergence of “hotlines,” and other factors dictate that alternatives be evaluated on a case-by-case basis. The audit examines some of these alternatives.
Personal use of the KANS-A-N telephone system is significant and widespread. Based on random samples of calls, the auditors estimate that the State pays at least $158,000 annually for unauthorized personal calls. No regulations governing KANS-A-N have ever been adopted and no criminal statutes prohibit personal use of the system. Abuse could be minimized by adopting rules and regulations specifying sanctions against personal use, and by setting up central audit procedures to monitor the system.
Operations at the State Printng Plant, Part II: Production Management
A review of the production management procedures in place at the Division showed that there were problems which resulted in missed deadlines as well as substantial idle time. Recommendations were made to improve efficiency through better scheduling and monitoring procedures.
Several functions within the State Treasurer’s Office are examined in this audit. The report recommends improved procedures for administering the State’s Unclaimed Property Act. Also, it suggests further study before State moneys are invested in out-of-state banks.
Operations at the State Printing Plant, Part I: Financial Management
Because of problems with the Division’s cost accountng system, at least $70,000 in costs were not recovered during the first six months of fiscal year 1985. The report makes several recommendations to the Division to address these problems and to bring the accounting system into line with generally accepted accounting principles.
Alternatives to State Ownership of the Santa Fe Office Building
This audit reviews the costs to the State of owning and operating the building, and the possible advantages of allowing a private developer to buy and renovate the building and lease it back to the State. It appears the lease option could be a less costly alternative and is worth investigating further.
KANS-A-N Telephone Calls at Winfield State Hospital (100-hour audit)
Allegations that the Superintendent of Winfield State Hospital made improper long distance telephone calls on the KANS-A-N system were substantiated by this audit. The report recommends procedures to ensure proper usage of KANS-A-N lines in the future.
Personnel Policies and Practices of the Department of Human Resources
Some department actions--particularly those related to filling positions--were either not in compliance with State and federal requirements or there was insufficient documentation to tell. In addition, such actions as non-competitive appointments, reclassifications, and employee grievances are not consistently handled or help create employee dissatisfaction. The report recommends needed change in the Department’s personnel practices.
Developing Recreational Facilities at Hillsdale Reservoir
More information is needed from the Park and Resources Authority and the private developer from Spring Hill about their specific proposals for developing public-use recreastional facilities at Hillsdale. Whether that development is provided with State or private funds, options now being considered envision a $3 million initial development, with half being supplied by federal cost-share funds.
Northwest Kansas Planning and Development Commission’s Weatherization Program
The agency did not have basic inventory and purchasing controls, causing higher materials costs than necessary and opening the program to abuse. In addition, the agency did not check applicants’ eligibility, and much of the work that was done was substandard. Checkpoints at the local, State, and federal levels to monitor quality control and compliance did not catch the problems. Corrective actions have begun; the report makes recommendations to help ensure these actions are carried out.
Financing Grandstand Renovations at the State Fair
This report examines several alternatives to using $1.9 million in outright General Fund appropriations for renovating the grandstand. If the State Fair has to pay for part or all of the project, it could generate revenues through increased gate receipts, grandstand admissions, exhibit space rental fees, or parking fees.
Analyzing the Performance Evaluation System in Kansas
The system is well designed, but performance standards often are not written so they can be objectively measured, ratings often are not adequately justified, performance improvement goals are rarely used, and the system is not always uniformaly applied. The evaluation system is addressing problems of poor performers , but without the merit pay incentive, its effectiveness at reinforcing good performers has deminished.
Declassifying Management Positions in the Civil Service
Agency officials indicate a reluctance to dismiss poor-performing professional or managerial employees in the classified service because of the difficulities involved. At the management level, there are inconsistencies between agencies as to whether positions are classified or unclassified.
Some improvements are needed in the State’s administration of the weatherization program, and some local agencies need to press for better quality work. Changes in the program might also expand it to cover more homes.
This Post Audit report conducted a performance audit of Kansas program for weatherizing the homes of low income people. The audit examined operations at both the State and Local level, and it addressed two main questions: Do State and local agencies have the ability to effectively use the additional money available? And given the large number of homes yet to be weatherized, what type of weatherization work will porvide the highest benefit and result in weatherizing the greatest number of homes?
Examining Selected Areas of the Veterans Commissions Operations
This limited scope performance audit addressed specific questions relating to veterans service representatives job qualificaitons and training, the requirements for Power of attorney in obtaining veterans benefits of Commsiions services, preferential treatment of some veterans who belong to improving the efficiency of the Commissions operations.
The audit shows that a number of administrative practices and procedures prevent the Bureau from identifying and disciplining many “repeat offenders.” These are drivers who could have their licenses suspended under current law for committing three or more traffic violations within one year.When disciplinary actions are taken, their effectivenss is limited. Some problems are outside the Bureau’s control. For example, many drivers simply ignore their license restrictions, and police officers who catch them driving and violating traffic laws during that time seldom charge these drivers with violating their license restrictions as well. The Bureau appears to have the statutory authority to administratively extend these drivers’ license suspensions or revocations, but it has never used this authority.The audit found that the Bureau’s lax monitoring and enforcement efforts for drivers who are placed on probation or required to attend driving clinics has undermined the effectiveness of those remedial actions.
The Financial Viability of the Smoky Hills Public Television Corporation
The audit conducted a limited scope of the Smoky Hills Public Television Corporation, and answered specific questions regarding the budgeting practices used by KOOD Channel 9 in Bunker Hill, Kansas, the stations ability to generate adequate income to cover expenses, and the amount of original programming generated in the stations studio facility.
Kansas Corporation Commission Public Utility Regulatory Program
The report concludes that regulation over public utilities should be continued. The Commission and its staff in the Utilities Division appear to be doing a good job of controlling utility rates and protecting consumers while helping ensure that the regulated utilities remain economically viable. The auditors did find, however, that some aspects of the public utility regulatory program aren’t being sufficiently addressed.
Kansas Corporation Commission: Motor Carrier Regulatory Program
This sunset audit concludes that economic regulation over the trucking industry (covering such factors as entry into the industry, rates charged, and routes or services granted) should not be continued. The auditors found that certain aspects of economic regulation have limited competition without ensuring adequate service to some communities, and have allowed motor carriers to charge higher rates than they would charge in a competitive environment. The report also concludes that safety regulations over the trucking industry (covering standards for driver qualifications and work hours, and vehicle operations, equipment, and maintenance) should continue. Even with regulation of safety factors, Kansans can suffer injuries and other financial losses as a result of accidents caused by vehicle defects, driver fatigue, and drivers using alcohol. The report recommends that the Commission’s motor carrier regulatory program be abolished, and that safety regulation be continued under the jurisdiction of the Departments of Revenue and Transportation and the Highway Patrol.
Kansas Corporation Commission: Office of the Securities Commissioner
Because of the high potential for fraud, unethical sales tactics, misleading advertisements, and other problems with land and securities sales, the report concludes that State regulation over securities issuers and land sellers should be continued. Despite this need, the auditors found that the regulatory program administered by the Office’s Securities Division is not as effective as it could be and that some aspects of regulation favor the industry rather than the public. The audit disclosed delays and inadequacies in the process for handling securities-related complaints, and failure by the Division to follow up on violations discovered during on-site financial audits of broker-dealers. The report makes recommendations in each area to improve the regulatory program’s effectiveness and to increase the level of protection afforded to investors.
The sunset audit of the Commission concludes that a program which protects civil rights is necessary to safeguard the rights and privileges of Kansas citizens. Discrimination does occur in Kansas, even with regulation. Yet that review also showed that performance problems have severely curtailed the Commission’s effectiveness.In reviewing how well the Commission’s complaint investigation activities serve to protect the public, the auditors found significant delays in resolving complaints, administrative oversights in handling complaints, inadequate or incomplete investigations, substandard productivity by Commission investigators, and a cumbersome, largely ineffective public hearing process.
This Sunset audit report concludes that regulation over real estate brokers should be continued. The auditors found instances in which brokers had mishandled earnest moneys, misrepresented real estate facts, or made contractual errors--problems which can and have led to significant economic losses to home buyers. However, the report concludes that the State need not license and regulate real estate salespeople. By law, all salespeople must work for a licensed broker. Thus, brokers are already liable for any actions of their sales employees.The report presents several options for the Legislature to consider in re-establishing regulation of real estate brokers. The Commission could be re-established, the regulatory duties could be handled by a new board that would oversee related professions, or the duties could be handled by a new occupational licensing agency that would cover all State-regulated professions.
This Sunset audit concludes that State regulation of embalmers and funeral directors should be continued, though not in its current form. In their review, the auditors found that the potential for economic harm to the public can be significant. Persons who pay for funerals are especially vulnerable to unnecessary and excessive expenditures for services and merchandise.The auditors determined that the regulation provided by the Board has been substandard. They found that the Board has sometimes acted to protect the very practitioners it’s supposed to regulate. For example, the Board reinstated a funeral director’s license, even though it knew he had earlier obtained an embalmer’s license by forgery. Other areas of concern raised during the audit were inadequate inspections, unnecessary prohibitions on soliciting, inconsistent education requirements for those seeking licensing, a requirement that funeral directors not be in charge of more than one funeral establishment, and a requirement that all funeral establishments have a preparation room. The report recommends that the regulatory authority be transferred to the Department of Health and Environment. An alternative is to create a new licensing agency that would cover all State-regulated professions. The report recommends revisions in the laws, regulations, and policies that benefit the funeral industry, that are excessively restrictive, or that don’t protect the public.
Board of Accountancy and the Accountancy Advisory Council
This Sunset audit addresses the question of whether the State should continue to regulate certified public accountants. The report concludes that State regulation is needed. Complaints of incompetence against certified public accountants disclosed the potential for economic loss to the public. Effective regulation can help temper such problems. In recommending that regulation be re-established, the report presents options for the Legislature to consider for consolidating or restructuring that function.To ensure that regulation of certified public accountants is no more restrictive than necessary, the report concludes that more flexible experience requirements should be adopted. Kansas is one of only seven states where experience in areas other than public accounting is not acceptable for certification. The American Institute of Certified Public Accountants has also recommended that all experience requirements be eliminated and substitued by post-graduate study with a concentration in accounting. The report recommends that passage of the written certified public accountant exam be the only criteria for certification, and that to obtain a permit to practice, certified individuals be required to have either 30 hours of post-graduate study or two years of public accounting or related experience.Other restrictive areas discovered by the auditors include minimum age requirements, prohibitions against soliciting clients, and a lack of public representation on the Board. The report recommends changes in the laws, rules, and regulations in these areas.
The Kansas Sunset Law abolishes the Board of Barber Examiners and the Board of Cosmetology on July 1, 1981, unless the legislature acts to re-establish them. The sunset audit of these two boards concludes that State regulation is not needed and that both boards should be abolished. The auditors found no evidence that the public has been or would be significantly harmed without regulation. Neither complaints filed against practitioners nor inspections conducted by the boards signaled that the public’s health or safety is in jeopardy. This report recommends that licensing could be substituted by a one-time certification of training by the Department of Education.The recommendation to abolish State regulation also rests on the fact that both boards have adopted regulations benefiting the industry, artificially restricting entry into the field, or limiting competition. Both boards have a number of requirements that have no apparent bearing on the skills needed to become competent practitioners, and neither boards’ inspectors received formal guidelines for conducting inspections or formal training in public health or sanitation.The auditors also examined options for retaining or consolidating the existing boards. The report concludes that, if the Legislature chooses to continue State regulation through boards, such regulation can be provided more effectively and efficiently through a single, consolidated board.
Comparing Division of Printing and Commercial Printers’ Charges, A Special Audit Report
In June 1980, legislative concern was expressed that the charges for printing by the Division of Printing were not competitive with charges for printing by the private sector. As a printing establishment in the public sector, the Division of Printing has several cost advantages which should make its charges for printing lower than commercial printer’s pricces. These include: no profit margin, no taces, no rent or mortgage payments on the State Printing Plant, no sales and marketing expenses, and no interest on capital equipment purchases. The Division is not reaching the expected cost advantage.The reason the Division does not enjoy the expected cost advantage is because it is not competitive with the private sector primarily in the areas of forms and publications, which account for over half of the Division’s workload. The main reason the Division is not competitive in these areas appears to be that the Division’s printing equipment, which is geared to produce a broad range of jobs, is not as efficient for printing forms and publications as the equipment of the commercial printers who specialize in these areas.
The audit found that existing inventories of State-held land were inadequate. Although the Secretary of State’s Office and the Division of Accounts and Reports, the two agencies with responsibility for parts of the inventory, were in compliance with existing statutes, neither maintained adequate records for effective management. State agencies didn’t always comply with procedures for establishing the inventory, and they often submitted insufficient information.The audit found that although the State lacked any clear policy regarding the use of potentially surplus land, the individual agencies holding the land were making reasonably good use of it for the State.
The purpose of this audit was to identify all state boards and authorities and to determine which state agency was responsible for funding the operations of such boards, commissions and authorities. This study will be divided into three parts (1) names of the agency and and its related boards, commissions and authorities (2) names of the organizations not funded (3) organizations which are funded through state agencies responsible for the appointment of board/commission/authority/clinical terms. This audit will be used in the development of financial audit programs for state agencies.
In this audit each state agency will be requested to submit a one time inventory report listing all state owned property and leased land including legal descriptions. After review of results by the Post Audit Committee, the inventory reports are to be forwarded to the Department of Administration for permanent record.
State Subsidy of State Agency Affiliated Employee Credit Unions
During recent audit engagements, it was observed that certain state agencies were most likely subsidizing affiliated employee credit unions. To determine the magnitude of the subsidy, if any, and to be able to express an audit opinion on authorized expenditure of state funds, all credit unions chartered to do business in the state should be reviewed.
Housing and Other Maintenance Support Provided to State Employees
The purpose of this audit represents the status of individual agencies as to their arrangements for providing employee maintenance. To obtain an analysis of the varying procedures among agencies and to then submit recommendations for updating and standardizing procedures on a state-wide basis. The primary focus will be given to family-type housing maintenance as this is the most significant area of maintenance in terms of varying procedures and cost factors involved. Observations concerning dormitory housing and food service support will also be included in this audit.