For the 1999-2000 school year, Kansas didn't report $204 million in expenditures that should have been reported to the National Center for Education Statistics. These included expenditures from federal grant funds, local gifts and grants, and school-level activity moneys. Because future federal aid payments were based on expenditures reported that year, Kansas' 2002-2003 federal education aid was at least $3.8 million less than it would have been. About 85% of those unreported expenditures were considered to be instruction-related. That was enough to:- raise Kansas' 1999-2000 percent spent on instruction from 57.3% to 59.2%- raise Kansas' ranking among the states in spending on instruction from 48th to 41st place- move Kansas' percent spent on instruction much closer to the average of 4 nearby states- make Kansas' reported expenditures per student--both in total, for instruction, and for support/non-instruction--among the highest of those statesWe did note significant inconsistencies in both the expenditure and staffing information NCES collects and publishes that made us reluctant to make more detailed staffing and expenditure comparisons by particular categories. We also noted that Kansas school districts have added more than 5,600 new positions since 1997-1998, even though Statewide enrollment levels have been flat.
Reviewing the Operations of the Pooled Money Investment Board
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 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.
Reviewing the Operations of the State Treasurer’s Office
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 10 questions about selected financial management responsibilities of the Treasurer's Office, mainly those involving that Office's custodial responsibilities for State moneys. In general, the audit found no significant deficiencies. The audit makes 3 recommendations to improve security, recordkeeping, and documentation. The Treasurer's Office agreed with these recommendations.
Valuing Commercial Buildings for Property Tax Purposes: Determining Whether Current Procedures Ensure Accurate Appraisals at Fair Market Value
More than one-fourth of the 32 commercial office buildings we reviewed in Johnson, Sedgwick, Shawnee, and Wyandotte Counties didn't appear to be accurately valued–7 appeared to be undervalued, and 2 appeared to be overvalued. Of these 9 buildings, 6 were in Shawnee County, while each of the remaining counties had 1. When buildings appeared to be undervalued, it was generally because counties hadn't considered all the income each building produced, such as revenue from parking garages, or in considering a building's value they had used different rates for rent, expenses, vacancy, or rate of return than their own market studies suggested were appropriate. The lack of documentation in Sedgwick, Shawnee, and Wyandotte Counties' files prevents anyone from being able to know how accurate their commercial appraised values are. At the State level, the Property Valuation Division's current oversight system provides a broad, high-level review of counties' compliance with State law requiring uniform and equal appraisal of property at fair market value. Although the Division provides guidance and training, conducts annual reviews, and follows-up to see whether problems are corrected, it could strengthen its oversight by periodically reviewing a sample of individual property files and assessing whether and how well counties are applying appraisal procedures.
Meat Processing Plants: Determining What Factors May Have Contributed to a Decline in the Number of Small Plants and What Impact That Has Had on the State’s Economy
The number of state-inspected meat plants in Kansas dropped from 151 in 1996 to 88 in September 2002, a decline of 63 plants. Of those 63 plants, 44 went out of business and the rest generally switched to federally inspected or custom-exempt plants. Nearly all other states with state inspection programs saw declines in the number of plants. Many plant owners in Kansas who'd gone out of business cited the lack of profitability and changes they'd have to make to meet federal regulations as the primary causes. The economic impact of these closings would largely be felt only in the small, rural communities, not on a Statewide basis. Finally, while Kansas' efforts to help small meat processors stay in business appear to be similar to those of other states, current plant owners said being able to participate in interstate commerce would help them most.To avoid duplicating the effort of an ongoing federal review by USDA Food Safety Inspection officials, we limited the work we did to assess adequacy of staffing levels, training, and consistency of inspections. Our audit and the results of the federal review (expected by early Spring 2003) should be read in conjunction to get a complete picture of the inspection program's performance. Based on our limited work, Kansas' inspection staff levels don't appear to be out of line when compared to other states. Most inspection staff think they've received adequate training in how to recognize problems in plants, although many plant owners and some inspectors don't think regulations and policies are applied consistently across the State. Inspectors also cited lack of consistency with enforcement efforts across the State.
Compliance and Control Audit: Soldiers' and Veterans' Homes
The Department hadn't established adequate procedures for documenting, tracking, or disposing of items that had been seized. Most law enforcement officers who responded to our survey told us they'd received sufficient training but that they needed more guidance, especially with the disposal of items no longer needed as evidence. Before this audit was approved, the Department had begun drafting new procedures, but the draft procedures we saw didn't address all of the weaknesses we identified. People we talked to both inside and outside the Department said they weren't aware of problems with seized items being used inappropriately.
For the 6-month period generally covered by this audit (January-June 2001), 22 requirements were monitored. Of those, SRS was in compliance with 5 (23%), and wasn't in compliance with 17 (77%). SRS met about one-third of the requirements specifically related to investigating reports of abuse and neglect and managing foster care cases. However, it continued to be out of compliance with 3 requirements related to maintaining data and systems that contribute to the good management of the foster care system. This audit is the last in a series of audits we've conducted since 1993 looking at SRS' compliance with the settlement agreement. The parties have agreed that SRS was in substantial compliance with the agreement, and the agreement expired June 30, 2002. As part of a new quality assurance effort within SRS, the parties have agreed SRS will continue to review any outstanding areas of the agreement that weren't in compliance as of June 30, and will provide an annual report to the Legislature on the results of this monitoring effort.
Medicaid Cost Containment: Controlling Costs of Long-Term Care
Kansas' spending on Medicaid-funded long-term care rose by $157 million between 1998 and 2001, or about 33%. Rising reimbursement rates for nursing facilities-primarily driven by higher direct-care salary costs-accounted for almost $47 million of that increase. Spending for "waiver" services provided in the home or community-primarily driven by significantly more people receiving services-accounted for $110 million of the increase. Factors driving up waiver costs to a lesser extent: relatively small increases in reimbursement rates and in the average amounts of services clients received. Among the reasons why so many more people are getting services in the community: the "woodwork" effect, a change in financial eligibility requirements, the closing of several long-term care institutions for the developmentally disabled, additional funds being provided to serve more people, and a new program for severely emotionally disturbed children.SRS and the Department on Aging need to analyze data already available to them to identify and manage areas where costs need to be controlled. Cost control measures we identified include serving only the neediest by raising the minimum scores required to qualify for the program, tightening financial eligibility requirements, and taking better steps to ensure that people haven't purposefully sheltered assets in order to qualify for Medicaid. The Departments also could limit the number of eligible people who can receive services by using waiting lists, paying less for services by limiting the amount spent per consumer, and stepping-up their efforts to identify and recoup payments that shouldn't have been made. Also, they could roll back or delay nursing home rate increases scheduled to go into effect for fiscal year 2003. Finally, the Departments could work with the Legislature to develop ways to encourage people to pay for their own long-term care.
Corporate Income Taxes: Reviewing Factors Affecting the Recent Steep Drop in Those Tax Receipts
For fiscal year 2002, net corporate income tax receipts were $100 million below November 2001 estimates, and about $118 million below 2001 receipts. The downturn in the economy appears to have been the primary factor affecting the steep drop in corporate income tax net receipts. Other contributing factors were: a Supreme Court decision ordering the Department to refund $25 million in taxes paid, multi-state corporations apportioning less of their income to Kansas, and an increase in the number and amount of income tax credits taken. These and other factors will continue to affect net receipts in the future. Overall, there's been less scrutiny of corporate tax returns since the implementation of a new computer system in 2001. Before converting to that system, the Department elected to ease up on the review of corporate tax credits claimed on returns. Under the new system, returns receive less overall scrutiny than in the past. Recently, the Department has one fewer auditor and has averaged about 7 fewer audits than in previous years. However, the additional dollars the State has received as a result of audits has stayed fairly constant. Although Kansas does fewer field audits than comparison states, those audits generally have found a larger amount of additional taxes due.
Animal Breeders and Sellers in Kansas: Determining Whether Improvements Have Been Made In the Regulation of This Industry
Both Kansas breeders and those who buy their animals agree that conditions in the animal breeding industry have improved significantly since 1990. Those improvements can be attributed in large part to efforts the Animal Health Department has undertaken, such as adopting comprehensive standards and regulations, implementing inspection schedules and procedures, and improving the staffing levels for the Program. However, several improvements such as a standard inspection manual, adherence to the inspection schedules, a uniform system for classifying violations, and a standardized system of sanctions still are needed to ensure the Program operates efficiently and effectively. Also, the Legislature needs to consider options for recouping costs associated with caring for animals that are seized by the Department. Two options we identified were requiring animal owners to post a cash bond when animals are seized, or establishing a fund financed by animal breeders that could be used to cover these costs.
Regulation of Food Service Establishments: Determining Whether the Department of Health and Environment Is Providing Sufficient Regulatory Oversight
Improvements were needed in many aspects of the State's food service regulatory program. The Department licensed some food service establishments before they'd corrected serious and multiple violations. In calender year 2001, about 30% of the establishments required to be inspected weren't, and complaint and follow-up inspections sometimes weren't timely or weren't done. The Department had limited resources to conduct all the inspections required–the number of inspections conducted per inspector exceeded FDA standards–but areas were identified where current staff resources could be used more efficiently and effectively. The Department's annual monitoring of county health agencies it contracts with to conduct inspections focused almost exclusively on the number of inspections completed, and in-depth evaluations of these programs were too infrequent to be effective. Also, the Department didn't take appropriate actions against establishments that repeatedly or seriously violated its regulations. It hadn't established clear guidelines for its inspectors as to when enforcement actions should be taken, and left most decisions about initiating actions up to inspectors. Finally, program managers didn't systematically receive or track information about problem establishments to determine whether appropriate actions were being taken.
Proprietary Schools: Reviewing the Board of Regents’ Responsibilities and Oversight (100-hour audit)
Both the Attorney General and the Board of Regents have received complaints, primarily about 2 proprietary schools. The Board's current level of oversight of proprietary schools needs to be strengthened to provide better assurance that the schools can meet their obligations to students. The minimum standards the Board has adopted don't establish the criteria schools must meet to operate in Kansas. The Board also hasn't implemented written policies and procedures, and Board actions to approve schools aren't well documented. Four proprietary schools whose records we reviewed had been approved even though some requirements hadn't been strictly met. The Board also needs a better system for tracking complaints it receives. Like Kansas, other states we contacted generally don't devote many resources to the oversight of proprietary schools.
State of Kansas: OMB Circular A-133 Audit of Fiscal Year 2001
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…” The audit was conducted by the joint venture of Allen, Gibbs & Houlik, L.C. and Berberich Trahan & Co., P.A. under contract with Legislative Post Audit. The results of the Statewide audit are presented in two parts. The first part was the report on the Division of Accounts and Reports CAFR for fiscal year 2001.
This second part, the Report on Federal Awards in Accordance with OMB Circular A-133, reports on compliance with laws and regulations and provisions of contracts and grant agreements. The State complied, in all material respects, with the requirements applicable to each of the federal programs audited. Five findings are reporte
Compliance and Control Audit: School for the Blind and School for the Deaf
School for the Deaf
Timeliness was a problem with nearly 60% of water structure permits and 60% of safety inspections of hazardous dams. In addition, all complaints about water structures we reviewed either weren't responded to at all, or took far too long to process. These problems were brought about by a number of factors, including high staff turnover, a lack of accurate and complete information needed to manage the Program, and poor management oversight of the Program. Examples of poor management included incomplete checklists for reviewing permit applications, no schedules for dam inspections, and poor follow-up procedures to ensure that problems were corrected. In addition, Kansas' water structures program was responsible for nearly 3 times as many dams as any of the surrounding states–in large part because Kansas' statutory definition of a dam is more broad. Issues were raised about whether water structures were being built in Kansas without permits, and whether such unpermitted bridges were contributing to localized flooding in Sedgwick county. We identified at least 34 water structures in 11 counties that were built without permits in the past 3 years. Recent flooding in Sedgwick County probably wouldn't have been avoided even if permits had been obtained. Another issue concerns whether Program regulations required a sufficient examination to assess the impact a new bridge might have on downstream property owners. This could be a significant issue because the Kansas Supreme Court has held at least 1 county liable for downstream damage caused by a bridge it replaced.
Medicaid Cost Containment: Controlling Costs of Medical Services - A K-GOAL Audit of the Department of Social and Rehabilitation Services
Costs have increased for regular medical services in the Medicaid Program because of a combination of factors involving the number of people enrolled, the amount of services they use, and the amount paid for those services. More clients who are disabled, aged, or children are enrolled in Medicaid now than in the past, and more of the clients enrolled are receiving services, including costly inpatient services for the disabled and aged. On average, each disabled or aged client uses many more services now than before—primarily in the areas of home health services, certain alcohol and drug therapies or treatments, and special education services. Also, children in State custody (particularly juvenile offenders) now receive many more Medicaid-covered residential and treatment services on average for behavioral, mental health, or alcohol and drug problems. Rates for many services were increased, but the decision to raise rates for physician and outpatient services has cost far more than originally anticipated, largely because of increases in the number of people using those services and increases in the number of services used per person. In some cases, we also saw a number of shifts to using more expensive services once rates were increased or new higher-cost services were offered. Many increases have been the result of legislative or agency decisions to broaden the safety net for low-income adults and children, but some decisions have had unexpected consequences. To control costs in the short run, Kansas could quit serving "optional" populations, reduce the length of time certain groups can use benefits, or reduce or limit coverage for non-mandatory services like dental care and hospice. Over the longer term, SRS needs to reduce errors in the amounts paid to providers, systematically monitor and compare expenditure and usage information against expected outcomes, provide managed care for people with extensive medical needs, and ensure other agencies are claiming all possible federal matching moneys.
School District Budgets: Determining Ways to Structure the Budget Document to Make It Understandable and Allow for Meaningful Comparisons
The laws, policies, and practices related to school district budgets are flawed in some areas. Because of the requirements or interpretations of State law, districts are overstating some expenditures and excluding other expenditures altogether. Staffing, enrollment, and expenditure information districts report in their budgets don't tie together, and aren't always reported consistently. In some local budget documents expenditures aren't summarized or grouped into categories, making it difficult to know how much money a district is taking in, or how moneys are being spent. We developed a new format for districts' local budget documents that realigns and summarizes categories of information, includes all revenues and expenditures, and tries to address most of the problems we identified. The new budget format ultimately can be used as a tool to help identify where a district's costs may be out of line compared with peer districts, Statewide averages, or other benchmarks. District officials and board members can use it to explore the reasons for differences in greater detail, and to consider any adjustments they may need to make to increase their district's efficiency. The format presented will need to be reviewed and refined to make it as meaningful and useful as possible.
This document accompanied the audit report, “School District Budgets: Determining Ways to Structure the Budget Document to Make It Understandable and Allow for Meaningful Comparisons.” It shows a new format for districts' local budget documents that realigns and summarizes categories of information, includes all revenues and expenditures, and tries to address most of the problems we identified in the audit. The new budget format ultimately can be used as a tool to help identify where a district's costs may be out of line compared with peer districts, Statewide averages, or other benchmarks. District officials and board members can use it to explore the reasons for differences in greater detail, and to consider any adjustments they may need to make to increase their district's efficiency. The format will need to be reviewed and refined to make it as meaningful and useful as possible.
Expanded Gaming: Reviewing the Reliability of Estimates of Potential Revenues That Might Accrue to the State From Allowing Slot Machines At Race Tracks (100-hour audit)
In connection with legislation that would authorize slot machines at Kansas racetracks, we identified 5 recent estimates of annual net revenues from those machines ranging from $270 million to about $400 million. The estimates for which we could review the methodologies were based on reasonable but different methods. All but one of those estimates tended to cluster around a figure of $325 million. The other estimate reflects a more optimistic assessment of how well the Kansas City track would be able to compete in its market. Based on these estimates, the State could receive between $54 and $82 million for other State programs, a smaller percentage than that retained by most of the other states we reviewed. People we spoke with generally urged some degree of caution in dealing with the estimates because of the uncertainty involved and because it would take some time for net revenues to reach their eventual levels.
Medicaid Cost Containment: Controlling Fraud and Abuse
This audit, conducted by Bland & Associates under contract with Legislative Post Audit, looked at the State's system for controlling Medicaid fraud and abuse. The report noted several positive aspects of that system, but also found a number of serious problems. The part of the system dealing with identification of potential fraud and abuse involves the surveillance and review function, which the Department of Social and Rehabilitation Services has contracted out to Blue Cross/Blue Shield. The effectiveness of that effort is questionable because generally there's no follow-up on information generated by that effort that could point to problems, the focus of the work isn't on the highest risk or most lucrative areas, and there's not much additional analysis outside the standard reports. At least in part, that's because the Department hasn't provided sufficient guidance and direction to that effort, and hasn't followed good contract-management practices. The part of the system dealing with investigation and prosecution of fraud and abuse is handled by the Attorney General's Medicaid Fraud and Abuse Division. Limited to responding only to referrals it gets, that Division is significantly underutilized. This audit didn't attempt to assess the extent to which fraud and abuse is occurring in Kansas. Such an assessment would involve significant effort, but the auditors think that effort would be worth it.
Reviewing the Operations of the Pooled Money Investment Board, FY2001
This audit is required by the Legislative Post Audit Act. It was conducted by Berberich Trahan & Co., 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.
Reviewing the Operations of the State Treasurer’s Office, FY2001
This audit of the State Treasurer's Office is required by the Legislative Post Audit Act. It was conducted by Berberich Trahan & Co., 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. In general, the audit found no significant deficiencies. The audit makes 3 recommendations for improvements, in the areas of security, recordkeeping, and documentation. The Treasurer's Office agreed with these recommendations.
Compliance and Control Audit: Department of Social and Rehabilitation Services