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.
K-12 Education: Reviewing Issues Related to Special Education Funding
In 2005-06, the percent of special education “excess costs” covered by State categorical aid varied between 45% and 207% for 69 school districts and special education cooperatives. Those that spent more on special education per student had less of their excess costs covered by categorical aid. However, because some special education revenues and expenditures weren’t handled correctly, districts and cooperatives will receive almost $800,000 less categorical aid than they were entitled to for the 2007-08 school year. In addition, capping the amount of categorical aid districts and cooperatives could receive would free up a small portion of aid to be redistributed, but wouldn't completely eliminate the variation in the percent of excess costs that are reimbursed. Finally, recent changes to Medicaid will cost the State an estimated $24 million in Medicaid funding, starting in the 2007-08 school year. Under current law, the Legislature will replace 92% of the lost funding with State categorical aid, but because of the way categorical aid is distributed, districts and cooperatives in more affluent suburban areas likely will gain funding, while those in high-poverty areas likely will lose funding.
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.
Kansas Public Employees Retirement System: Financial Audit of Fiscal Year 2007
This financial-compliance audit of the Kansas Public Employees Retirement System, covering fiscal year 2007, is required by State law. The work was done by Berberich Trahan & Co., a certified public accounting firm under contract with Legislative Post Audit. The audit found that the System fairly presented its financial statements, met applicable legal requirements, and had no significant weaknesses in its financial management procedures.
The KU Medical Center and KU Hospital: Reviewing Selected Operational Issues
Since 2001, research spending from all sources has grown from 23% of total spending in 2001 to 32% in 2007. The amount of the State operating grant spent for research accounts for only $3.6 million, and represents an unchanged 3% of State grant expenditures. However, more of the State grant now is being spent on other costs, and less on education. The Kansas City campus received almost all the $13.3 million increase in State grant moneys since 2001. Among other things, it uses State funds to pay for the Medical Center’s Kansas City-based administrative operations, and some residency program costs, an expense covered by different funding sources in Wichita. The big increase in research spending has come from other sources—primarily federal research grants generated by faculty on the Kansas City campus. The differences in the amounts spent on research between Kansas City and Wichita have raised concerns in Wichita, which has received accreditation citations for not having research opportunities. The Legislature created the University of Kansas Hospital Authority in 1998 to improve the financial viability of the KU Hospital. The current organizational relationship between the Hospital and Medical Center follows State law, and is similar to how teaching hospitals and medical schools are organized in many other states. However, the financial relationship between the Medical Center and Hospital isn’t defined in State law, and is a source of contention between the two. Although comparisons of financial support with other states have significant limitations, the amount of financial support the Medical Center has received in the past from all affiliated hospitals does appear to be relatively low. The value of the care provided to medically indigent patients may be recorded as either charity care or bad debt, and is referred to as uncompensated care. When reporting the value of charity care or bad debt in its financial statements, the KU Hospital follows generally accepted accounting principles. Those principles require public teaching hospitals to report the value of that care based on their established charges for the services provided. However, reporting the value of uncompensated care (charity care plus bad debt) on that basis results in much higher dollar figures than if the care is valued based either discounted rates for paying patients or the cost of the care.
The KU Medical Center and KU Hospital: Reviewing Selected Financial Issues
We saw no evidence to indicate the Medical Center was having trouble covering its ongoing operations. From 2004-2006, its current assets for ongoing operations increased by about 31%, its current liabilities for ongoing operations increased by 13%, and its cash balances and ratios looked healthy. The School of Medicine has made multi-year commitments totaling $79 million to department chairs since 1999. The Medical Center has paid about 61% of the commitments made since 2003, mostly with KU Endowment and Research Institute funds. Over the next five years, the Medical Center has committed nearly $250 million to capital expenditures, which have been approved by the Board of Regents and the Legislature, and have identified funding sources. Finally, officials recently unveiled plans to spend $800 million over 10 years to expand research. Funding sources haven’t been fully identified; possible sources include moneys from an affiliation with St. Luke’s Hospital as well as contributions from the Kansas City area. The Legislature appropriated $5 million to the KU Cancer Center for both fiscal years 2007 and 2008 to help it reach a designation from the National Institutes of Health as a Cancer Center and Comprehensive Cancer Center. In 2006, Center officials indicated that State funding would be used for research, drug discovery, outreach, and administration. In fiscal year 2007, about $2.2 million of the $5 million appropriation (45%) was used for research. Center officials indicated State funds are used to fill the gaps that other funding sources don’t cover. This year, the Hospital Authority executed a $1.8 million separation agreement with its former CEO. Nothing in law or regulation prohibited the Hospital from giving a separation package of that size, which was equal to three years of the CEO’s annual base salary. The agreement included both ongoing responsibilities and concessions from the CEO. Board members told us they thought the separation package was in the Hospital’s best interest. We tried to determine if similar packages had been granted in other states where the hospital CEO had left, but were unable to make a determination because information of this nature was limited. In April 2006, the Hospital contracted for a new medical-records system projected to cost about $50 million over five years. The cost difference between the two vendors was calculated at between about $1 million and about $12 million– much smaller than the $30 million some thought. The range of costs resulted from uncertainty about the amount of work the Hospital would have to supply to implement the software. The Board’s decision appeared to be based on the fact that Epic did the best in all the Hospital’s evaluations, and that physicians and staff preferred it to Cerner. Board members told us cost was a secondary consideration.
Kan-ed: A K-GOAL Audit Determining Whether It’s Achieving the Intended Results
In all, 90% of eligible entities are members of Kan-ed, and 34% of those members are fully connected members who can take advantage of videoconferencing and distance learning. A number of members told us they don’t need videoconferencing and distance learning, but others cited a lack of information, equipment, or expertise as reasons for not being connected. Kan-ed officials could strengthen its grant programs by enforcing provisions requiring members to connect as a condition for receiving grant moneys and by monitoring grant spending. Kan-ed’s marketing efforts haven’t been particularly effective because members say the information they receive is too technical, or doesn’t fully explain the benefits of being connected or how to connect to the network. Connected school districts generally have the capability to provide distance learning in a majority of their buildings, mostly through the use of local area networks. It appears that a significant number of new members may become connected over the next five years. If that happens, Kan-ed officials may need to take some of the money they currently use for broadband subsidies and apply that money to equipment grants. A recent study concluded that consolidating Kan-ed with two other similar Statewide networks wasn’t feasible because of differing security levels, differing backbone speeds, and differing governance structures. Although there are pros and cons to having Kan-ed administered by the Board of Regents or some other agency, we saw no significant benefit to be gained from moving Kan-ed at this time.
K-12 Education: Determining the Reasons for Variations in Virtual School Costs
The reported cost of operating virtual schools can vary significantly, with much of the variation in virtual costs due to differences in how schools account for costs. Once differences in accounting and reporting are taken into account, the operating expenditures for our four sample schools ranged from about $1,940 per FTE (Cherryvale) to just more than $4,400 per FTE (Emporia) for the 2006-07 school year. Other factors that contributed significantly to the variation in costs included the number of instructional staff in each school relative to its enrollment, as well as spending on technology, supplies, training, and travel.
Thomas County Economic Development Alliance: Reviewing Its Procedures for Recording and Depositing Loan Payments
This audit looked at the way the Thomas County Economic Development Alliance records and deposits loan payments received. Given its size, the Alliance generally has adequate procedures except that it doesn’t send periodic statements to borrowers. The Alliance did make several errors in recording loan transactions, but those errors seemed to be isolated to one account. Some of those errors might have been detected and corrected sooner if statements showing payments and loan balances had been sent to the borrowers. All errors noted by the audit had been corrected.
Kansas Lottery: Financial Audit of Fiscal Year 2007
This audit of the Kansas Lottery for fiscal year 2007 is required by State law. The work was done by Berberich Trahan & Co., a certified public accounting firm under contract with Legislative Post Audit. The audit found that the Lottery fairly presented its financial statements and met applicable legal requirements. The auditors reported one significant deficiency in internal controls over financial reporting.
K-12 Education: Reviewing the Cost of Vocational Education Programs
Traditionally, Vocational Education focuses on preparing students for occupations that don’t require a bachelor’s degree. Vocational Education programs fall into seven major program areas— the most common ones are Business and Computer Technology, Family and Consumer Sciences, and Trade and Industry. Of the $34 million in State funding for Vocational Education in 2006-07, we estimated about $5 million (or 13%) was for classes that weren’t related to a specific occupation; these classes helped students develop general employability and life skills, or were generic study hall periods. While the Department of Education has a systematic process to review new and existing Vocational Education programs, staff approved four of 10 programs without having all the necessary information to assess their quality. A major overhaul of Vocational Education at the federal level will broaden the State’s current structure to include a number of professional occupations in the near future. This expansion could affect State funding by generating interest in new programs, or by bringing in more students.
Kansas Housing Resource Corporation: Reviewing the Section 42 Housing Tax Credit Program
From 2004-2007, 93 developments comprising 3,200 housing units and costing about $316 million were constructed with Section 42 tax credits. Developers were awarded tax credits with a 10-year value of $217 million, which they sold for approximately $184 million, to offset their development costs. About two-thirds of the housing units built were new and one-third were rehabilitated. The Kansas Housing Resources Corporation has recently taken steps to increase the number of rehabilitated developments receiving tax credits. Overall, 87% of developments approved were in one or more of the higher-need areas identified in either federal requirements or State plans used to administer the Program. However, in many smaller communities with waiting lists for public housing, developers haven’t proposed any developments. Overall, the average rents charged for many of the tax-credit-financed housing units were well below federal limits, and in most regions, were below rent limits set for HUD-administered low-income housing. For 14 developments receiving tax credits, the Corporation didn’t compare the proposed development to other developments as required by State regulation. Finally, compared to Kansas, several other states made more funding available to supplement their Section 42 tax credit program. The most common ways other states supplemented their Section 42 tax credit programs included general fund appropriations, state-level tax credit programs, revolving loan funds, and earmarking certain fees (such as mortgage registration fees) for housing.
Children’s Programs: Reviewing Whether They Are Coordinated To Avoid Duplication and Maximize the Use of Resources
Out of about 220 children’s programs in Kansas, 20 State-funded and three federally administered programs focus primarily on serving children age five and under. Those 23 programs reported serving more than 500,000 children and spending almost $310 million in fiscal year 2006. At the State level, the risk of duplication comes from having multiple programs offering similar types of services. This risk appears highest in three categories–preschool services for children, home-based education services to parents of young children, and child-care services to low-income clients. Having multiple agencies involved in administering programs can create administrative duplication. We identified six education-related programs administered by agencies other than the Department of Education and three social services/child safety programs administered by agencies other than SRS. At the local level, where most services actually are provided, the same types of administrative duplication can exist when multiple local agencies administer programs. Efforts to coordinate children’s programs at both the State and local levels primarily consist of coordinating groups and interagency agreements. A primary example is the Kansas Early Childhood Comprehensive Systems Plan Stakeholders Group, which has worked to develop Statewide strategies for serving young children. Legislation passed in 2007 mandated a plan to bring early childhood education services under a single office in the future, which could have a number of benefits, but issues involving funding and the definition of “education” will be need to resolved. At the local level, issues such as community size and competition for funding can affect the extent of coordination that occurs. Finally, consolidating Kansas’ programs won’t increase federal funding coming into the State because most federal funding is either fixed or based on formulas.
Kansas Dental Practices Act: Determining the Impact of the 1998 Changes to the Act
Because dental scaling assistants are unlicensed, it’s difficult to obtain reliable information on their current employment status. Available information shows that since 1998, 400 dental assistants have completed the training to become scaling assistants, and our survey indicates that at least 158 currently are working, although the majority spend less than half their time scaling and polishing teeth. There’s no significant evidence to suggest that dental hygienist positions are being replaced by dental scaling assistants.
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.
K-12 Education: Reviewing the Research on Charter School Performance
Charter, magnet, and alternative schools give students public alternatives to traditional public schools. In 2006-07, almost 15,000 students attended the 60 charter, magnet, or alternative schools throughout the State. Researchers have found mixed results when comparing the performance of charter and magnet schools to traditional schools. There are no recent studies on the performance of alternative schools, but older studies found positive results.
State Hiring Practices: Determining Whether Requirements Related to Veterans’ Preferences Are Being Met
State regulations implementing the Kansas Civil Service Act create a veterans’ preference for classified positions. The regulations require State agencies to interview eligible veterans who apply for a classified position and who meet the minimum requirements of the position. Our review of 144 veterans who applied for 61 classified positions at four State agencies during 2006 found that in all but three cases, the veterans either were given an interview or there was a valid reason the interview didn’t occur. During our review, we saw no evidence that veterans received only “token” interviews. State regulations are silent regarding a veterans’ preference for unclassified positions.
K-12 Education: Reviewing Issues Related to Virtual Schools
Kansas currently has 28 virtual schools providing education to K-12 students, including adults working towards a high school diploma. These virtual students are a very small but rapidly growing population, currently representing about 2,000 students, or about 1% of Kansas’ total student population. Virtual schools are funded the same way as traditional schools, but cost less to operate. Although the data are limited, virtual students scored lower on 2005-06 State assessment tests than traditional students. The Department of Education has developed a set of comprehensive policies for general oversight of virtual schools, which have been recognized as some of the strongest in the country. However, the Department’s actual oversight of virtual schools is weak because it generally isn’t following the processes it has established to implement these oversight policies. In addition, many specific risks inherent in operating virtual schools aren’t adequately addressed, especially at the State level. Finally, the Mullinville school district’s practice of "giving" virtual students to nearby districts isn’t allowed by law, and highlights the need for more stringent oversight measures to prevent school districts from manipulating State funding and assessment results.
K-12 Education: Reviewing the Staff Recruitment and Retention Strategies Used by Kansas School Districts
To recruit teachers, districts use strategies to identify traditional candidates, create new pools of teachers, and improve the financial incentives offered to teachers. To retain teachers, districts try to improve teacher working conditions, help new teachers adjust to the district and community environment, and increase compensation for current teachers. To recruit principals, districts try to identify current principal candidates, develop new principal candidates, and offer candidates financial incentives. Superintendents consistently rated financial incentives as effective strategies for teacher recruitment, teacher retention, and principal recruitment. Superintendents generally rate the strategies currently offered by the State as effective, especially the Department of Education’s employment website. Superintendents would like the State to remove restrictions on hiring retired teachers, ease teacher licensing requirements, and provide more funding for teacher compensation and other financial incentives.
Health-Care Related Programs in Kansas: Determining What Funding Kansas Receives and Who Administers It
Our inventory focused on three types of government-funded health-care related programs in Kansas--State administered, federally administered, and research--and on programs that were clearly medical in nature or related to substance abuse and mental health. Health-care related programs administered by seven State agencies accounted for about $2.5 billion of the nearly $6 billion in spending we identified for 2006, including $1.6 billion on health care programs and $.8 billion on long-term care. Federally administered health-care related programs accounted for $3.3 billion in spending, nearly all of which was for Medicare. Health-care related research spending totaled about $131 million, with most of that being spent by the University of Kansas.
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.
State of Kansas: OMB Circular A-133 Audit of Fiscal Year 2006
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 2006.
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. Except for the Temporary Assistance for Needy Families program, the State complied, in all material respects, with the requirements applicable to each of the federal programs audited. Twenty-two findings are reported, two of which are repeated from prior years.
K-12 Education: Alternative Models for Organizing Middle Schools and High Schools
High schools have been organized in basically the same way for much of the last century. Over the last 25 years, a variety of pressures have prompted many schools to attempt a number of school reforms. These reforms include offering alternative schedules, organizing schools around a theme, creating small learning communities, establishing alternative instructional formats, and implementing comprehensive school reforms. While most models have examples of successful schools, there is little rigorous research available that assesses the effectiveness of each model.
Department of Commerce: Personnel Practices Related to Employees in the Divisions of Business and Workforce Development
At the time of the audit, 217 of the 300 people transferred from the Department of Labor still were working for the Department of Commerce. Of the 83 transferred employees who’ve since left the agency, most voluntarily resigned, retired, or transferred to another State agency. Most replacements for those employees came from outside the Department, had less experience related to workforce development, slightly better education levels, and were hired at the same or lower salaries. Since the transfer, at least 23 fewer direct-service positions were filled, and a number of higher-level positions had been created and filled. Although a number of current employees expressed concerns about leaving direct-service positions unfilled, Department officials said such changes were necessary to reflect different agency needs following the reorganization. For most personnel actions we reviewed, the Department followed statutes, regulations, and best practices. However, we found some problems related to conducting annual performance evaluations, retroactively paying employees, getting approval before downgrading information technology positions, and using reallocated positions to promote employees without competition. When surveyed, Department employees generally rated the Department’s performance appraisal process and general workplace policies and practices fairly high, but they rated the fairness of the hiring and promotion process much lower. As a group, employees transferred from the Department of Labor tended to have more negative assessments of the Department’s personnel practices.
Wireless Enhanced 911: Reviewing Implementation of the 2004 Act
In 2004, the Wireless Enhanced 911 Act was passed to encourage local Public Safety Answering Points (PSAPs) to update their emergency phone systems to handle calls from wireless phones. In all, officials from 61 of the State’s 115 PSAPs said they expected to have fully implemented a wireless E-911 system by the end of 2006, and all but one said they would complete implementation by 2010. Fees imposed on wireless subscribers under the Act generated approximately $21 million between July 2004 and November 2006. Through June 2006, PSAPs reported spending $6.7 million of that fee money, slightly more than half of which was spent on equipment, monitors, and software. We identified very few problems with the way fee moneys were spent. An early assessment of the adequacy of wireless E-911 funding had to involve many estimates, projections, and assumptions. Within the limitations those factors create, it appears that, on a Statewide basis, revenues generated between 2007 and June 30, 2010 (when the funding structure for the system changes) would far exceed estimated expenditures. Although many individual PSAPs would have difficulty covering all their estimated expenditures, there’s likely to be more than enough money in the Wireless Enhanced 911 Grant Fund to cover those shortfalls.
Department of Wildlife and Parks: Reviewing Its Lease of the Campus House for Its Northeast Regional Office (limited-scope audit)
The Department of Wildlife and Parks generally followed State law and leasing guidelines when it leased the Campus House on the former Menninger campus for its northeast regional office. But the facility is much larger than it originally advertised for, than recommended in the Governor’s space standards, or than is common in other regional or park offices. Department officials chose the location because of the possibility of getting adjacent land donated as a State Park. Before moving in, the Department spent more than $113,000 to remodel the facility. The lease agreement doesn’t include provisions allowing the Department to recoup any of those remodeling costs, or establishing a purchase price. Recent appraisals of the Campus House property in the $700,000-plus range are nearly triple the appraised value in 2004 when the lease was signed. The final purchase price for the building and property will determine whether this transaction is financially beneficial to the State.
K-12 Education: Comparing the Centralization of School District Accounting in Different States (limited-scope audit)
The purpose of accounting systems is to communicate financial information about an organization. For that information to be valuable, it must be understandable, reliable, relevant, timely, consistent, and comparable. For many years, legislators have expressed concerns that it’s difficult to meaningfully compare expenditures for different school districts. When we looked at the accounting systems used in 20 states, none used a centralized accounting system, where all districts are required to uniformly record data into a single (central) computer system. Fourteen states have standardized accounting systems (where districts are required to uniformly record data into their own computer systems). Six states and Kansas have adopted a uniform chart of accounts for districts to use in reporting their accounting data, but not when recording transactions.
State of Kansas: Financial Audit of Fiscal Year 2006
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 state-wide audit are presented in two parts. This first part is the report on the Division of Accounts and Reports CAFR for fiscal year 2006. The State’s financial condition for fiscal year 2006, as shown in the CAFR, is presented fairly and in conformity with generally accepted accounting principles. The second part, the Report on Federal Awards in Accordance with OMB Circular A-133, will be issued subsequently.
Department of Labor: Reviewing Error Rates for Unemployment Benefit Payments, A K-GOAL Audit of the Department
For 2005, the U.S. Department of Labor reported that Kansas had the highest unemployment benefit overpayment rate in the nation; nearly 45% of all unemployment benefits were paid in error. Almost all of Kansas’ payment errors occurred because unemployed workers didn’t register for job services –an eligibility requirement contained in State law. Historically, Kansas’ Department of Labor hasn’t enforced the requirement to register for job services, and there have been no consequences at either the federal or State level. To help reduce the unemployment benefit overpayment rate, in November 2006 the Department implemented a new regulation that requires only the “highest need” unemployed workers to register for job services. The regulation eliminates the registration requirement for more than 90% of the unemployed Kansans who previously were required to register. Although Kansas’ error rate likely will drop sharply as a result of the new regulation, the lower error rate is being achieved at the expense of the broader goal of helping unemployed workers find jobs through the registration process. Other states we contacted require most unemployed workers to register, but have taken different approaches to keeping their error rates low, including cutting off benefits for workers who fail to register, and looking for ways to automatically register unemployed workers when they apply for benefits.
Kansas Public Employees Retirement System: Financial Audit of Fiscal Year 2006
This financial-compliance audit of the Kansas Public Employees Retirement System, covering fiscal year 2006, is required by State law. The work was done by Berberich Trahan & Co., a certified public accounting firm under contract with Legislative Post Audit. The audit found that the System fairly presented its financial statements, met applicable legal requirements, and had no significant weaknesses in its financial management procedures.