Two of the local units of government reviewed during this audit increased their property tax levies between 1988 and 1989, including a 0.7 percent increase in Overland Park, and a 17.2 percent increase in Johnson County. During the audit, nothing came to our attention that would indicate that the three local units were not in compliance with State laws regarding their 1989 property tax levies. Due to the limited timeframe for the audit, we could not determine the extent to which local units may have taken advantage of the tax lid exemptions by reallocating their mix of funding resources.
Reviewing the Effectiveness of Property Tax Limitations Enacted in Response to Statewide Reappraisal--Leavenworth and De Soto (100-hour audit)
All six local units of government reviewed during this audit increased their property tax levies between 1988 and 1989, ranging from an eight percent increase for Unified School District 232 in De Soto to a 33.4 percent increase in Leavenworth County. During the audit, nothing came to our attention that would indicate that the six local units were not in compliance with State laws regarding their 1989 property tax levies. Due to the limited timeframe for the audit, we could not determine the extent to which local units may have taken advantage of the tax lid exemptions by reallocating their mix of funding resources.
Determining the Costs to the Attorney General’s Office to Defend Two Recent Lawsuits (100-hour audit)
We found that the Attorney General's Office incurred total costs of about $25,000 to defend the first lawsuit and about $39,300 on the second lawsuit, for a total of $64,300. These costs include staff attorneys' salaries and fringe benefits, overhead costs, payments to outside counsel, and other direct costs to the Attorney General's Office. We also found that staff attorneys in the Attorney General's Office spent about 261 hours on the first case and 938 hours on the second case.
Food Service Operations at Correctional Facilities
The State spent about $5.85 million to obtain food for correctional facilities in fiscal year 1989. The facilities that were open all year spent an average of 95¢ per meal to purchase food. Most of the food is purchased from State sources--either from State contracts or from Kansas Correctional Industries’ meat processing plant. The audit report recommends that the Department establish a Statewide policy on how meals are to be counted, so that costs can be reported consistently. The report also makes numerous recommendations for the Department and its facilities to hold down the costs of food service operations. Our recommendations to the Department include establishing Statewide food-management policies and procedures, standardizing menus for all Department facilities, considering consolidated purchasing and warehousing, reviewing staffing levels and supervision of inmate food service workers, and ensuring that weaknesses are addressed at the facilities we visited.
The Pooled Money Investment Boards’ Loan Program for Farmers and Small Businesses
The Pooled Money Investment Board has offered the low-interest loan Program six times since September 1985, in amounts that ranged from $6 million to $31.5 million and totaled $106.5 million. The Program has cost the State between $1.4 million and $4.9 million in forgone interest, and some of the investments the Board made to fund the Program appear to conflict with the law governing investment of the Freeway Fund. Banks generally used the money to make low interest loans to customers, but four of 17 banks we reviewed did not loan out all the money they received. Most of the loans went to existing customers who refinanced existing debts at lower interest rates. The Program needs well-defined eligibiltiy criteria and effective oversight. Finally, this report presents self-reported data for a sample of economic development programs in Kansas.
Drug Acquisitions Under the Medical Assistance Program
The Department of Social and Rehabilitation Services' contract system for acquiring drugs for the Medical Assistance Program appears to be cost-effective. For seven drugs under the contract system or other limitations during fiscal year 1989, we estimated that drug costs between September 1988 and February 1989 were approximately $230,000 less than they would have been without the system. Three of the seven drugs accounted for about 97 percent of these savings. Medical assistance recipients who had taken the seven drugs, as well as physicians who had prescribed the drugs, generally reported that the drugs were adequate to treat the appropriate medical condition. Finally, pharmacists who dispensed the drugs to recipients generally did not like the system. The pharmacists' concerns, however, were business-related and generally did not involve the quality of patient care.
Personal Computer Sales by State University Bookstores
The University of Kansas, Kansas State University, Wichita State University, and the University of Kansas Medical Center are selling computers through their bookstores. The bookstores at the University of Kansas and Kansas State University sold a combined total of 1,573 computers during the last two fiscal years. Both sold a small number of customers more than one computer, which was not allowed under their contracts with computer companies, and both also sold a small number of computers to people who were not eligible to purchase them. Computer sales are not being financed with State moneys at either university. However, the University of Kansas makes loan funds available through federal loan programs, and the Kansas University Endowment Association also makes loans for computer purchases.
Pasture and rangeland were appraised based on the ability of the land to support livestock. This is a use-value method of appraisal. The appraisal processes used by the counties we visited were fairly uniform, but adverse land conditions that could limit the usefulness and value of the land were not always taken into account. In addition, Reno County had a large number of problems resulting from incorrectly classified soil. On average, for the parcels of land we reviewed, valuation of pasture and rangeland decreased as a result of reappraisal. In addition, for another sample of parcels of land reviewed, it appeared that valuations based on use-value were actually lower than if rental rates alone had been used.
Review of an Escape at Stockton Correctional Facility
We found that facility administrators followed the rules and regulations governing their decision whether to place the inmate in administrative segregation, and the basis of their decision to keep him on the premises appears to have been reasonable, based on the documented information available at the time. A lack of communication within the facility meant that important information about the inmate's behavior was not available to facility administrators when they decided to not place the inmate in administrative segregation.
Off-Campus Vocational Education Courses Offered by Kansas Community Colleges
The 19 community colleges taught 903 off-campus vocational courses in the Fall 1989 semester. The Department of Education has improved its procedures for approving classes taught outside colleges’ designated service areas, but still approved some Fall 1988 classes without the required documentation. The average cost associated with 100 classess we examined was $2,494, or about $54 per credit hour, while average revenuew per class were $4,078, or about $108 per credit hour. Most students we surveyed were very satisfied with their off-campus courses.
Federal regulations require school districts to begin taking action to control asbestos-containing material in their buildings by July 1989. To comply with past and current federal regulations, school district’s estimate they will spend a total of $66 million by 1992. In some instances school districts have done more to control asbestos than required by federal regulations -- primarily by removing the asbestos material rather than requiring or maintaining it -- and thus spent more than necessary. Despite the large amount of money involved, the work performed and people involved are largely unregulated, so districts have little assurance that the asbestos control work performed is adequate and proper.
Results of the State’s Program for Reducing Interest Rates on Agricultural Loans
The interest reduction tax credit program has or will cost the State about $859,800. This includes $170, 500 in foregone tax revenues for 1988 and $689,300 in foregone tax revenues for 1989 and beyond. The credit was claimed by 68 banks in 1988 for at least 669 loans. Most farmers who received reduced-rate loans under the program were experiencing financial difficulties. While most of these farmers were able to make the required payments on their reduced-rate loans, the rate reduction was often only one of several steps taken to help restructure debt and increase cash flow. Many bank officials indicated that they would have reduced the interest rates on certain loans even without the tax credit program.
The Department of Health and Environment’s regulatory procedures comply with federal and State legal requirements, but several aspects of the program are not being managed adequately. The State does not have an established program to minimize production of hazardous waste, but the Department is using a federal grant to develop one. Kansas has adopted the federal requirements for monitoring the movement of hazardous waste, and the system appears to be working as intended. However, the Department has not had adequate procedures for tracking and resolving discrepancies in hazardous waste shipments.
Reviewing Increases in Kansas State University’s Fiscal Year 1989 Utilities Costs (100-hour audit)
In general, the audit shows that Kansas State University’s nearly $700,000 supplemental request for utilities for fiscal year 1989 was the result of substantial utility rate increases combined with unexpectedly heavy usage. The supplemental request does not appear to be connected with the new Bramlage Coliseum, nor with a recent change in the Board of Regents policy related to the State’s full payment of athletic facilities’ operating costs.
In general, the audit showed that the Youth Center at Topeka is not equipped to provide the level of security needed for the individuals being placed there. The lack of a fence around the campus as well as weaknesses in the physical facilities and staffing levels may have allowed students to escape rather easily. Also, Youth Center officials do not take into account all available information such as a student’s runaway history when determining the level of supervision a student needs. More importantly, a lack of strong management at the facility has created an atmosphere where poor performance is tolerated, staff morale is low, and overall security is not as strong as it should be.
Reviewing the Cost of Operating the State’s Unisys Computer Center
It will cost about $6.7 million to operate the Unisys computer center for fiscal years 1989, 1990, and 1991. The Division of Information Systems and Communications analyzed a vendor proposal to contract for operation of that system, and its analysis correctly concluded that it would be less costly to continue operating the system in-house, but the Division understated those cost savings. No alternatives to the current operation of the State’s personnel, payroll, and accounting systems appear to exist, other than contracting with a private vendor.
Reviewing Selected Projections and Cost Estimates for the 1989 Comprehensive Highway Program
The projected inflation and interest rate assumptions used by the Department in determining the costs of the proposed 1989 highway program appeared to be in line with other estimates. Kansas builds its highways to a 20-year design standard, which is greater than the 15-year bonds proposed for the program. Finally, although the Department bases its cost estimates for projects on reasonable assumptions, we were not able to determine the accuracy of those estimates.
Department of Revenue’s Delinquent Tax Collection Process
In the fall of 1988, taxpayers owed the State approximately $71 million in delinquent sales, withholding, and individual income taxes. At that time, the Department of Revenue’s Division of Collections had established uniform collection procedures for those delinquent accounts; these procedures were more consistent and aggressive than actions used before the Division was created in November 1987. Because a proposed automated collection system will not be completed until fiscal year 1990, we could not determine how that system will further enhance the Division’s collection procedures.
Off-Campus Courses Taught by the Regent’s Universities
The number of off-campus courses has declined about 17 percent since 1979, while the types of classes showed little change. Some off-campus classes were not approved before the classes started, as required by Board policy. For the off-campus classes sampled, direct revenues generated by students amounted to less than half the total costs associated with the classes. Finally, off-campus classes appeared to be comparable in quality to on-campus classes, although several universities did not have adequate methods to ensure compliance with Board policies related to off-campus instructors.
The revenues the Department of Revenue reported for the stations in its cost-revenue analysis were accurate. The reported salaries and other operating expenses were estimates that were generally overstated in fiscal years 1984-1986, and understated in fiscal years 1987-1988. The State’s charges for permits do not vary, but the amount motor carriers pay for those permits when ordered from wire service companies or delivered to truck stops may differ greatly. However, there is no indication that those differing charges constitute unequal treatment.
Reviewing the Department of Revenue’s New Computer Systems
The Department of Revenue’s new computer systems for property reappraisal and vehicle processing appear to be achieving their projected benefits. The property reappraisal system was implemented on schedule, but the vehicle processing system took about a year longer to develop than anticipated. Both systems cost more than originally planned, largely because of subsequent changes or enhancements. The vehicle processing system has resulted in some operating efficiencies in the areas of staffing, paperwork backlogs, and equipment.
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.