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.
Wireless Enhanced 911: Reviewing Implementation of the 2004 Act
In 2004 and 2006, the Wireless Enhanced 911 Act and the Voice-over Internet Protocol (VoIP) Enhanced 911 Act were passed to encourage local Public Safety Answering Points (PSAPs) to update their emergency phone systems to handle calls from wireless phones and VoIP calls. In all, officials from 100 of the State’s 115 PSAPs said they expected to have fully implemented a wireless E-911 system by the end of 2008, and all said they would complete implementation by 2010. Fees imposed on wireless subscribers under the Acts generated approximately $40 million between July 2004 and June 2008. Through June 2008, PSAPs reported spending almost $23 million of grant and local fee money, with the biggest category of spending being for equipment. 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 now and December 2012 would far exceed E-911 estimated expenditures. However, projected revenues may not be enough to cover anticipated radio maintenance and upgrades. Our analysis showed seven individual PSAPs will have difficulty covering all their estimated expenditures through 2010. Further, after the funding change in July 2010, at least 10 PSAPs will have difficulty covering monthly operating expenses.
Department of Commerce: A K-GOAL Audit Reviewing the Department’s Management Staffing Levels
The Department of Commerce had more staff in management positions than any of our five comparison agencies. On average, the Department had fewer people reporting to each of its managers, and many of these managers were located at fairly low reporting levels in the Department. The heaviest concentration of management staff--one management position for every 1.2 non-management positions--was in the Employment Services Section of the Department’s Workforce Development Division. In addition, the Department had organized its five workforce development regions with a double layer of management. Overall, we estimated that $61,000 to $99,000 could be saved annually by bringing the Department’s proportion of management more in line with other agencies. Finally, we found that discrepancies between authorized and filled positions, as well as limited access to complete organization charts for some State agencies, hampered good analyses of agency staffing levels.
Agricultural-Related Agencies: A K-GOAL Audit Determining Whether Cost Savings Could Be Achieved By Making the Animal Health Department and the Conservation Commission Part of the Department of Agriculture
Kansas is one of six states that doesn’t place any of its animal health oversight or conservation grant functions within its Department of Agriculture. The remaining 44 states have varying degrees of those functions placed under their Department of Agriculture. Kansas could save about $710,000 a year by merging the two agencies with the Department of Agriculture. About $630,000 of the savings comes from eliminating or restructuring staff positions, while about $80,000 comes from other operating costs reductions. Although agency officials expressed concerns about restructuring, we found those issues could be overcome. During this audit, we identified other issues regarding the operations of the Animal Health Department and the Conservation Commission. For example, the Animal Health Department hasn’t fully developed and implemented policy manuals and criteria for assessing the results of inspections--these items were recommended in a previous audit issued in 2002. Other issues related to the efficient use of staff and technology need to be studied by management at both agencies.
K-12 Education: Reviewing School Districts’ At-Risk and Professional Development Programs
For the 2008-09 school year, the State will give school districts an estimated $368 million to provide additional services to students who are at risk of failing academically. We selected and visited 10 sample districts to determine whether the at-risk services they provide are supported by research and are implemented as part of a thorough school improvement process. In general, they appear to provide at-risk services, both academic and non-academic, that are research-based, and eight of the 10 districts had a good improvement process in place to address the needs of at-risk students. We also looked at the types of professional development school districts provide. Statewide, the most common types of development training provided by districts include curriculum and assessment development, instructional best practices, intervention strategies, and technology training. The programs provided by our 10 sample districts were supported by research, and for seven of the 10 districts were clearly tied back to student needs. Finally, a recent survey of Kansas teachers indicates that targeted professional development may help the performance of at-risk students.
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.
Kansas Public Employees Retirement System: Financial Audit of Fiscal Year 2008
This financial-compliance audit of the Kansas Public Employees Retirement System, covering fiscal year 2008, 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.
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.
Kansas Lottery: Financial Audit of Fiscal Year 2008
This audit of the Kansas Lottery for fiscal year 2008 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.
Financial Regulatory Agencies in Kansas: A K-GOAL Audit Determining Whether Functions Could Be Combined To Gain Cost Efficiencies
Kansas is one of only five states with three or more separate agencies that oversee financial entities and institutions. By consolidating Kansas’ Department of Credit Unions, Office of the Bank Commissioner, and Office of the Securities Commissioner, at least $260,000 could be saved annually, mostly from staff reductions or restructurings. However, several issues related to governance and operation of a consolidated agency would need to be addressed. An additional estimated $295,000 in annual savings could be achieved even if the agencies aren’t consolidated. Those savings come from reducing credit union examinations to the minimum required by law, allowing bank examiners to work from home, and from reducing the amount of office space the agencies rent to the standards published by the Department of Administration. Total estimated cost savings of $2.8 million over five years are conservative. Savings could be significantly higher after a detailed review and restructuring of examination schedules.
State Agency Information Systems: Reviewing the Kansas Health Policy Authority’s Management of Those Systems
Although there are many good aspects to the Health Policy Authority’s security management system, some important safeguards are missing. The Authority doesn’t consider risks that are specific to the agency as part of its risk assessment. It also relies too heavily on default policies without adequately making staff aware of them, and has too many draft policies awaiting approval. The Authority hasn’t done an adequate job of promoting security awareness in general among its staff, and management doesn’t monitor the implementation and effectiveness of the security system. Despite the problems with the security-management process, the Authority does a good job of technically securing its IT resources. Based on our reviews and on more technical work done by a consultant, we found that the Authority’s network is very well secured. We found few vulnerabilities within the network, and all have been fixed. However, the system the Authority uses to manage employee access to Medicaid data doesn’t provide the kinds of reports necessary to properly monitor that access. Finally, the Authority didn’t use a systematic process in responding to its security incidents, primarily because it lacked a formal incident response procedure.
Economic Development: Determining the Amounts the State Has Spent on Economic Development Programs and the Economic Impacts on Kansas Counties
The estimated cost of economic development in Kansas for the preceding five years has been at least $1.3 billion, which includes both spending by State agencies, and State and local forgone tax revenues. Of the $453 million State agencies reported spending, most related to the Department of Commerce. Of the estimated $860 million in forgone tax revenues, most has been local property tax revenues related to industrial revenue bond exemptions. Assessing the effectiveness of economic development programs can be hampered because of the lack of data, and when data are available, most traditional economic development programs or incentives show negative or inconclusive results. Nonetheless, there are some success stories, both traditional and technology-based. The literature suggests that states now must offer economic development assistance to remain competitive, regardless of its cost-effectiveness.We took several approaches to try to assess the results of spending for economic development--from the global to the specific. First, we asked State agencies to report their accomplishment data to us, which showed that more than 130,000 jobs had been created or retained over five years. However, there’s likely to be double-counting in those figures between some programs and tax credits. Second, using historical county-level data, we found there has been a small but measurable statistical relationship between economic development spending in a county and the growth in jobs and businesses in that county between 2003 and 2007. However, all other things being equal, factors like population and employment levels that existed before the assistance was provided had a much greater impact on job and business growth in a county. Third, we analyzed the impact Nebraska Furniture Mart has had Statewide and on individual counties. Statewide, furniture sales increased by 88% from 2002 to 2007, but since 2002 the number of furniture stores and the amount of furniture store sales in nearby counties have declined--sometimes significantly. Finally, we followed up on the findings of an earlier audit, which showed that about one-third of the companies or individuals assisted by several State economic development programs in 1998 were operating a business in Kansas in 2008.
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.
Surplus Computer Equipment: Determining Whether State Agencies Effectively Remove Software and Agency Data From Surplus Computers
Agencies often don’t remove data from computers that are sold to the public through Surplus Property. We obtained computers from Surplus Property that had belonged to at least six Topeka-based State agencies and found data on 10 computers from four of those agencies. Of the 10 computers that still had data, seven had confidential documents, including thousands of Social Security numbers. It appeared that data weren’t properly removed because agencies lacked policies, relied on Surplus Property to do their work, or did a poor job of keeping track of which computers had been processed and which hadn’t. The State needs to strengthen its policy for removing data from computers and take appropriate steps to ensure that agencies are educated about the policy and are following it.
HealthWave: Determining Whether the Program’s Call Center Is Working As It Should
The Kansas Health Policy Authority contracts with a private contractor (MAXIMUS) to operate a Call Center to serve clients from several health insurance programs under the HealthWave umbrella. The Call Center doesn’t have a system in place to ensure that all customer voicemail messages are captured and returned, and it didn’t meet its standards for returning phone messages for almost one-third of the 100 sample messages we reviewed. In most cases, initial attempts to return calls were only one day late. However, in two cases, we found no documentation that any attempts to return the calls had been made. Contributing factors included poorly documented policies, weaknesses in how the Authority and MAXIMUS monitor or enforce the contract, and the lingering effects from high call volumes brought on by new federal documentation requirements. Those federal documentation requirements likely caused decreases in HealthWave Program enrollments during fiscal year 2007--especially for Title XIX programs. We think it’s unlikely that unreturned phone calls had much impact on Program participation, because most individuals whose calls we reviewed were already enrolled in HealthWave, and anyone not enrolled in the Program could phone the Call Center again or receive enrollment information through other sources.
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.
K-12 Education: School Districts’ Use of Additional State Funding
Over the past three years, districts have received a cumulative total of $2.3 billion in new funding, including $1.6 billion from the State. Virtually all the increase in State funding was in four areas--general State aid, State equalization aid, special education categorical aid, and KPERS. In general, districts that received the most new funding per student had more poverty. District spending from the 2004-05 to 2006-07 school years--the most recent year for which spending information is available--increased by almost $630 million. More than 70% of that increased spending was for student instruction, mostly for salaries and benefits to hire additional teachers and paraprofessionals, or to increase teacher salaries. School districts also increased their spending for support services, administration, operations and maintenance, and transportation. Finally, student outcome data continue to show that student performance generally is improving, although larger and high-poverty districts continue to lag behind.
K-12 Education: Assessing the Quality of English as a Second Language Preparation in Kansas Teacher Education Programs
In general, teacher education programs in Kansas don’t appear to adequately prepare teachers to teach students for whom English is a second language (ESL). Overall, 60% of the new teachers we surveyed who’ve taught ESL students said they didn’t feel adequately prepared to teach them. Survey respondents also said they felt far less prepared to teach ESL students than to teach either the general population of students or students with disabilities. Those teachers who felt less prepared to teach ESL students also felt less prepared to teach students in general. Teachers from academic programs that emphasize hands-on experience tended to feel more prepared than those from programs that rely primarily on classroom instruction. Teachers told us requiring more dedicated coursework, hands-on training experience, and foreign language training could improve ESL training. Other factors that affected how prepared teachers felt included the English proficiency of their ESL students and the support they received from their schools.
Foster Care: Reviewing Selected Issues Related to State Contracts for Foster Care and Family Preservation Services
SRS and the Division of Purchases didn’t follow appropriate procedures during the latest foster care and family preservation contract negotiations in 2004. Late in the negotiations, an SRS employee appears to have inadvertently disclosed information to The Farm Inc., which allowed that organization to raise its bids. That disclosure ended up costing the State an additional $2.9 million during the first two years of the contract. With a few minor exceptions, SRS and the Division of Purchases officials handled other aspects of the negotiated procurement process appropriately.The Farm’s outcomes were similar to other contractors in 2006 and 2007. The money the Farm spent from the $23.5 million it received in fiscal year 2007 generally went for items that that seemed reasonably related to providing foster care and family preservation services. In accordance with best practices for non-profits, The Farm didn’t directly compensate its board members, its management compensation was in line with other contractors, and we didn’t see any extravagant travel expenses. We did identify two issues related to a board member that represent a potential conflict of interest. In addition, The Farm donated $500,000 of its fiscal year 2007 net revenues to one of its affiliates. It reported that donation to SRS as an expense rather than a transfer, which made its financial position appear less positive than it was.
Disability Waiver Programs: Reviewing the Use of Appropriations Intended To Upgrade the Wages of Certain Caregivers
Direct caregivers provide services that help people with developmental and physical disabilities stay in their homes. These services include help with typical life functions such as dressing, feeding, bathing, and shopping. For fiscal years 2007 and 2008, the Legislature provided a combined total of more than $50 million in additional funding to SRS to increase reimbursement rates and decrease the waiting lists for both the developmental and physical disability waivers. The 2007 additional funding was expressly intended for increasing caregiver wages. The 2008 additional funding had no such expressed intent. For developmental disability services, SRS used the additional funding to increase reimbursement rates by about 4% in fiscal year 2007 and by almost 9% in fiscal year 2008. All five developmental disability service providers we sampled increased their direct caregivers’ average hourly wages in fiscal years 2007 and 2008. For physical disability services, SRS didn’t use the additional funding it received in fiscal year 2007 to increase reimbursement rates. Instead, SRS used the additional funding to eliminate the waiting list. In fiscal year 2008, SRS did use the additional funding to increase the self-directed services reimbursement rate by 3%. For that year, only two of the five physical disability service providers we sampled increased the average hourly wage rate they paid to their direct caregivers. Under both waivers, even when the average hourly rate increased, not all caregivers received an increase.
Department of Wildlife and Parks: Reviewing Issues Related to the Walk-In Hunting Access Program
In general, the Department of Wildlife and Parks has reasonable policies and procedures to identify and prevent conflicts of interest. However, those policies and procedures could be strengthened by having a more centralized reporting process, having upper management periodically review what’s been reported, and more explicitly specifying consequences for non-compliance with policies. We didn’t identify any Walk-In Hunting Access Program staff with outside employment that represented a conflict of interest. However, we found one instance in 2005 where the Department approved an employee’s request to lease some land to hunters for a fee. That situation had the appearance of a conflict of interest, although the employee reported that he never actually leased the land. Finally, we noted the Department could improve the way it maintains information about land leased through the Program by keeping its databases current, and by assigning a unique and static number to each lease.
State of Kansas: OMB Circular A-133 Audit of Fiscal Year 2007
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 2007.
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. Seventeen findings are reported, nine of which are repeated from prior years (one material weakness, five significant deficiencies, and 11 control deficiencies).
Community Colleges: Examining Whether There Are Ways To Share Resources To Reduce Costs
The Higher Education Coordination Act provided for increased State funding so that community colleges could reduce their reliance on local property tax revenues. The anticipated reductions in local property tax revenues didn’t happen largely because about 21% of the promised funding wasn’t provided and because 10 community colleges didn’t fully comply with the law, even when additional funding was provided. Even so, nine community colleges did reduce their reliance on property tax revenues from 2000 to 2007. Factors such as increased enrollments and tuition rates and growth in assessed valuations where those colleges are located likely had as much to do with the property tax reductions as provisions in the Act. Community colleges like Independence and Coffeyville could do a lot more than they currently do to share resources. In the area of academics they could eliminate duplicate programs with small enrollment and look at sharing faculty, particularly through the use of interactive video conferencing or online courses. Many items could be jointly purchased. For example, simply joining a consortium to purchase natural gas could save the two colleges an estimated $64,000. Sharing support services such as financial aid and registrar functions is more difficult with separate institutions because of factors like competition for students, the lack of standardized procedures and the fact that there are two separate boards of trustees making decisions.
K-12 Education: Estimating the Impact of a Second Count Date on School District Funding
As amended by the Senate, House Bill 2123 from the 2007 session would have allowed districts to receive additional funding if their student enrollment significantly increased from September to February. Over the past three school years, 43 districts would have received almost $7 million in additional funding if House Bill 2123 had been in place. Districts that would have benefited the most from the bill tended to be mid- to large-sized districts on the edge of a metropolitan area that received relatively lower amounts of State and local funding per FTE student through the State’s school finance formula. A review of the current second count date for military dependents shows that some of the statutory provisions for administering it appear to be unclear.
State of Kansas: Financial Audit of Fiscal Year 2007
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 2007. The State’s financial condition for fiscal year 2007, 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.