Both the City and the County have followed State law regarding the selection of bond professionals, but they have not consistently followed a number of good business practices suggested in the bond literature we reviewed. Our review of bond issuance costs was hampered by incomplete data and proved inconclusive--issuance costs were lower about as often as they were higher. For a sample of negotiated bonds we reviewed, the City appeared to have paid an estimated $2 million in additional interest because the interest rates were set high relative to the market. The City saved about $6.6 million and the County $1 million for the sample of bond refundings we reviewed, but the City has postponed large amounts of debt into the future. Over the past decade the municipalities have spent more than $6 million on bond insurance. The City more than recovered the amount of the insurance premium through lower interest rates on one of the bonds it insured. For the other bonds, information was not available to determine whether the premiums were recovered through lower interest rates. However, the premiums generally were not recovered through other means available to the municipalities. We found that it was fairly commonplace for bond professionals to make political contributions to elected officials. Although we did not find any interrelationships between the bond professionals and the elected officials, we noted that three former City employees work for firms that have served in a lead role on many of the City’s negotiated bond deals.
The Department on Aging and the Department of Social and Rehabilitation Services fund or provide essentially the same long-term-care services, but offer their programs to different groups of elderly individuals. When more than one agency provides or funds essentially the same services, there is considerable duplication of administrative effort, which can result in client confusion, clients falling through the cracks if coordination is inadequate, and in money being spent for administrative activities that otherwise could be spent for direct services. The State might gain some cost efficiencies from consolidating all its long-term-care programs in one agency, as two comparison states have done, but some disadvantages also would result. For an individual client, the State generally can provide home and community-based long-term-care services at a lower cost than nursing home services. However, the total cost to the State of providing those services may not decrease significantly, particularly in the short-run, because states’ new long-term-care programs tend to expand the number of people eligible for services, and because the Medicaid-Waiver Programs may be serving elderly individuals who would not be getting services in the absence of such Programs.
Most large school districts we contacted have central service facilities, but most do not provide services such as pest control, trash disposal, and roofing repair with district employees, as Wichita does. When viewed on a per-square foot basis, the Wichita school district's annual operations and maintenance costs were about 14 percent, or $3.8 million, higher than the average of other large districts in Kansas. About $1.3 million of Wichita’s higher costs were caused by higher electrical rates, and about $1 million could be attributed to leave policies and other fringe benefits that are more generous than other area public sector employers' benefits. We also found that the district had more vehicles than it needed, had excess inventories of supplies, had not aggressively explored ways to save money by contracting for services, and did not have systems to ensure that maintenance employees work efficiently. The district is installing a warehouse inventory system that will reportedly save $900,000 in each of three years, and is considering a proposal that could save it $700,000 annually in transportation costs.
Reviewing the Regulatory Activities of the Emergency Medical Services Board
The audit shows that, although its licensing actions could lead to consolidation of ambulance territories, the Emergency Medical Services Board does not have formal policies for consulting with parties affected by its actions. The Board provides assistance to communities that request it, and the level of assistance provided to the City of Pittsburg was similar to what it provided to other communities. The Board appeared to have erred by not notifying or involving Crawford County officials when it signed an agreement with the City of Pittsburg requiring the City and County to take certain actions.
Compliance and Control Audit: Financial Regulatory Agencies
The plan the Division of Property Valuation submitted to the District Court to correct problems with property valuation in Kansas addressed many of the problems which led to unequal property valuation, but was not very specific about how the Division intended to implement the solutions. In addition, some of the Division's proposed actions appeared overly ambitious based on what its staff has been able to accomplish in the past. The Division's plan either did not address, or did not go far enough, to ensure that State and county staff receive needed training, that methods for measuring compliance with the law identify all counties that have non-uniform valuations, that appraisal directives do not allow non-uniform valuation, and that Division policies do not impose unnecessary burdens on the counties that cause them to use their staff inefficiently. In addition, the Legislature will need to consider amending several laws to close loopholes and to relieve some of the burdens placed on county officials.
Reviewing the Process for Providing Health Insurance Benefits for State Employees
Premiums for State employee health insurance in Kansas were generally higher than in nearby states we reviewed. Variations in deductibles and co-insurance amounts employees must pay make it difficult to make blanket statements about how our benefits compare, but generally Kansas' benefits compare favorably. Also, Kansas had the lowest annual maximum out-of-pocket costs for employees who use health insurance a lot. Steps the State Employees Health Care Commission has taken to obtain benefits at the lowest cost include things like soliciting multi-year bids and negotiating rates before signing health insurance contracts. All State employees do not have equal access to the same insurance plans across the State. But employees covered under the State's conventional health insurance plan have access to most general practice doctors, dentists and hospitals in their cities. Finally, if the Regents' employees had been a separate group within the 1993 State employee health insurance plan, that group's claims experience would have resulted in 18 percent lower premiums for that group and 14 percent higher premiums for other employees. When such differences have occurred in the past the Health Care Commission has acted to equalize premiums for all employees.
Kansas Public Employees Retirement System, Reviewing Investment Practices and Performance for Fiscal Year 1992
The performance audit found that the Kansas Public Employees Retirement System’s investments performed above average when compared to industry benchmarks, and above average when compared to ten other state retirement systems. The System calculates its rate of return on investments on a monthly time-weighted basis, much the same as other state retirement systems. The System compensates its investment managers under a negotiated fee structure, based on the market value of the assets managed. This practice is also followed by most other state retirement systems contacted during the audit.
Compliance and Control Audit: Youth Centers at Atchison and Topeka
In fiscal year 1992, the Bureau provided record checks and laboratory services to local law enforcement and other criminal justice agencies at a cost to the State of about $2.2 million. Like other states, the Bureau has a policy of providing services to these agencies at no charge. The Bureau also provided about 120,000 record checks to non-criminal-justice agencies at a cost of about $650,000. Like other states, the Bureau charges a fee for these services. Because the Department of Health and Environment refuses to pay for its record checks, other agencies end up paying higher fees than necessary and the Bureau still does not collect enough money to fully recover its costs.
Reviewing Racing Commission Records Regarding Race Track Operations (100-hour audit)
Audited financial statements submitted by the tracks show that the tracks have been profitable, but that their debt and cash flow situations could make them susceptible to financial problems very quickly if their revenues declined. This situation may have been aggravated by significant distributions of cash by the tracks to their stockholders. In addition, the reports show that the tracks have had a significant number of financial transactions with their own stockholders. Some of those transactions could have resulted in track expenses being higher than they would have been if those transactions had been with independent parties. Within the scope of this audit, we did not attempt to determine if track expenses actually were higher than needed. The audit recommends improvements in the Racing Commission’s oversight of race track operations.
Reviewing the Fire Fighter Recognition Program Operated by the State Fire Marshal’s Office (100-hour audit)
The audit shows that while State law does not specifically address whether the State Fire Marshal could administer the Fire Fighter Recognition Program, it does not appear that the law would prohibit the Fire Marshal from administering the Program, as the Office is currently doing. The Fire Fighter Recognition Program has cost the State less than $500 to-date. Because the Fire Marshal’s role with the Recognition Program is relatively limited, it is not likely to incur substantially greater costs in the future. Finally, enrollments in the University of Kansas’ Fire Service Training courses have declined in recent years, but most of the declines occurred before the Recognition Program was developed. A number of factors, including a loss of federal funding, an increase in fees, and changes in certain certification requirements, contributed to the reduced enrollments.
Reviewing the Accuracy of Job Placement Information the Department of Human Resources Is Reporting About the Kan Work Program (100-hour audit)
Although the Department of Human Resources records some information about clients’ employment status after-the-fact, it does not appear that those actions were intended to be misleading. In most cases we reviewed, the Department could not have conducted follow-up activities when required because client referrals from the Department of Social and Rehabilitation Services were late. Nevertheless, conducting follow ups late may affect the interpretation of program information, client employment assistance, and program effectiveness. In addition, the Department of Human Resources has job placement follow-up information that the Department of Social and Rehabilitation Services could use to track job-retention rates and provide the Legislature with meaningful program information. However, the Department of Social and Rehabilitation Services does not ask for this information.
Reviewing the Division of Water Resources Process For Approving Water Permits (100-hour audit)
The audit showed that over the past five years, the backlog of unprocessed applications for new water permits has tripled, and the average time taken to approve permits has doubled. The reasons for growth of the backlog included an unusually high number of permit applications received in 1989, and a sharp drop in the number of applications resolved in 1992. Until very recently, the Division had not placed a high priority on reducing the backlog of new water permit applications. In February 1993, the Division created a temporary task force of 11 existing employees to work on the backlog of applications for new water permits. In addition, the Governor has recommended transferring two positions to the Division of Water Resources to help reduce the backlog of applications in fiscal year 1994. Whether or not the Division’s staff is increased, the Division needs to improve the information available to actively manage its review and approval of water permits.
Reviewing Selected Issues Related to Workers’ Compensation
For the most part, Kansas’ workers’ compensation benefits are neither high nor low when compared with other states. Based on available information, Kansas’ premiums also were slightly below the median for other states and increased at about the same rate as premiums nationally. Over the past few years, laws have been enacted that increased maximum payments for disabilities and death benefits, and required vocational rehabilitation to be provided for many workers’ compensation cases. No information exists to determine their exact cost impact. Other states have enacted a number of measures aimed at reducing litigation, controlling medical costs, reducing fraud and improving workplace safety. Those measures include using arbitration services, implementing medical fee schedules, performing utilization and bill reviews, creating fraud hotlines and investigation units, and overseeing workplace safety. Finally, we found that workers’ compensation agencies in some states have developed extensive data collection systems that allow them to answer basic questions about workers’ compensation, such as which injuries are most frequent or most expensive.
Total expenditures for the programs we reviewed have more than tripled since 1988, primarily because of increases in programs, participants, and in staffing levels and salaries. The licensing boards generally did not have adequate controls to ensure that program funds were spent for the intended purposes. For nearly 80 percent of the cases we reviewed, we determined that the programs were effective. But a significant number of cases, particularly in the physicians’ program, lacked the documentation for us to determine whether they were effective. We found only six cases where we determined that program staff did not take appropriate action. Also, in a few cases, the licensing boards should have taken some action but did not. Finally, the programs that appeared most cost-effective made heavy use of volunteers and did not charge the licensing boards for administrative expenses.
Reviewing the Effectiveness of the Capitol Area Security Patrol
Although relatively few State employees experienced security-related problems during the past year, we found that there were security weaknesses at the buildings included in this audit. Some of the weaknesses were within the Security Patrol’s control and others were not. The Security Patrol did not have enough staff to carry out its contractual responsibilities, or to provide the level of security coverage wanted by some State employees and officials. In several areas the Security Patrol did not have written policies and procedures that seemed necessary to ensure that adequate security was provided. Finally, we noted that the State Capitol and the Landon and Docking State Office Buildings were potentially unsafe, either because doors were locked after hours or because of inadequate fire alarm and detection systems.
Reviewing Counties’ Procedures for Handling Absentee Ballots and for Updating Voter Registration Lists
None of the four counties we reviewed was in complete compliance with absentee voting laws, and sometimes the laws were unclear, conflicting, or difficult for county election officials to follow. Partly because of unclear statutes and a lack of guidance from the Secretary of State’s Office, counties followed inconsistent procedures and had inadequate controls over absentee ballots. This allowed a few individuals to receive more than one absentee ballot or vote more than once. Two of the four counties we reviewed did not carry out all statutorily required updates of voter registration rolls. However, even if all required updates are performed, an inactive voter could legally remain on the voter registration rolls for up to four years.
Examining Selected Activities of the Board of Agriculture’s Marketing Division (100-hour audit)
No specific statute authorizes the Division to conduct international marketing, but such activities are not prohibited under the broad authority given the Division. The Division’s travel expenditures generally conformed to State travel regulations, and travel appeared to be done in a reasonable manner. Hospitality expenses also generally conformed to State policies, and given the type of work the Division does, none of these expenditures appeared to be inappropriate. The Division estimates that since the beginning of fiscal year 1990, its international marketing activities have benefited Kansas companies and producers by a total of $14.7 million or about 67 times the amount the Division spent on international marketing. But the Division has not systematically documented those benefits, and we were unable to verify all the amounts claimed as benefits.