During Fall 2003, full-time faculty in selected departments at the 7 universities overseen by the Board of Regents typically taught about 3 classes each, spent about 9 hours per week in the classroom, and taught a total of 80 students. Teaching loads hadn’t changed significantly since our 1985 audit, but the number of hours faculty spent teaching, and the number of students they taught, were somewhat lower. Faculty salaries generally stayed well ahead of inflation, but salary disparities in the same departments across universities have grown significantly. Universities are placing somewhat less reliance now on using graduate teaching assistants to teach classes than in the past. The Board of Regents requires prospective faculty and graduate teaching assistants to be interviewed, and tested if necessary, to determine whether they are proficient in spoken English, but it hasn’t monitored the policy’s effectiveness. For our sample candidates, most universities didn’t follow all applicable requirements, but 69% of the candidates had been through some type of proficiency screening process. Despite the existence of the current policy, problems still existed with some of these instructors’ English-speaking proficiency.
Compliance and Control Audit: Department of Wildlife and Parks
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. The audit found no deficiencies.
Reviewing Operations of the Pooled Money Investment Board Fiscal Year 2004
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
Kansas Public Employees Retirement System: Financial Audit of Fiscal Year 2004
This financial-compliance audit of the Kansas Public Employees Retirement System, covering fiscal year 2004, 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.
Kansas Lottery: Financial Audit of Fiscal Year 2004
This audit of the Kansas Lottery for fiscal year 2004 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, met applicable legal requirements, and had no significant weaknesses in its financial management procedures.
Regulation of Child Care Facilities and Foster Homes: Determining Whether KDHE Is Providing Effective Oversight and Whether KDHE and SRS Provide Duplicate Regulation of These Facilities
Since our 1997 audit, KDHE has made some improvements regarding its oversight of child care providers, but many of the same types of problems persist. This audit identified a number of issues, including: the Department hasn't performed all required background checks, some inspections and complaint investigations weren't conducted in a timely and thorough manner, and it failed to oversee the inspection work performed by child-placing agencies. Also, the Department isn't taking stronger enforcement actions partly because of limitations it perceives in the State's child-care laws and its high threshold for evidence of non-compliance. Kansas generally regulates the same types of child care facilities as the comparison states. Ways that KDHE could increase the efficiency of its regulation include implementing a risk-based inspection system, extending its annual license renewal cycle, and reducing the frequency of background checks. Duplication of regulatory responsibilities is occurring in three areas–initial inspections of family foster homes, investigation of child abuse and neglect complaints at child care facilities, and inspections of community mental health centers that provide child care services. SRS and KDHE have formed a working group to reduce the number of conflicting and duplicate regulations affecting mental health centers. Duplication in the other two areas could be eliminated by having KDHE rely on the inspections conducted by child-placing agencies, and by cross-training SRS inspectors to inspect child care facilities.
Tax Enforcement: A K-GOAL Audit Determining Whether the Department of Revenue Is Collecting Delinquent Trust Taxes Owed The State
The Department of Revenue has a number of good practices for identifying businesses that aren't registered for trust taxes, filing timely returns, or remitting all the taxes owed. Its efforts could be strengthened by getting more cities and counties to help identify unregistered or under-remitting businesses, performing more automated cross-checking both internally and with other State agencies to find unregistered businesses, by consistently using information it collects from motor vehicle dealers to identify dealers that may not be paying all the sales tax they owe. Although most businesses voluntarily remit the trust taxes they collect on behalf of the State ($4.2 billion in fiscal year 2004), about $191 million in delinquent trust taxes was referred for collection activity that year. Collections from delinquent accounts have increased significantly in recent years, but we identified several problems with the Department's collection efforts in 40 sample cases, including delays in referring delinquent accounts into collections, lack of prompt actions to collect moneys, and lack of aggressive enforcement actions. Increasing the resources devoted to delinquent tax collection efforts would appear to be cost-effective.
Medicaid: Reviewing Factors That Affect the Amount of Attendant Care Services Certain Medicaid Clients Receive
Although the opportunity exists for independent living centers and some home health agencies to benefit financially by authorizing more hours of attendant care services for their clients when they also serve as the payroll agent, we found no evidence that was occurring. These agencies actually authorized fewer hours of service for clients in these situations. These clients were more likely to live with someone or have friends or family who could help them out, which could explain why fewer hours of paid services were needed.
Topeka School District: Determining What Factors Led to Delays in the District’s Detection of a Check Fraud (limited-scope audit)
Between June 2001 and April 2003, the Topeka school district lost more than $500,000 to fraudulent checks. The district had reasonable financial procedures in place for trying to prevent or detect check fraud, but they weren't always followed. Specifically, the district's accountant wasn't actually reconciling the district's checking account balance with the bank statement. As a result, the district didn't identify the fraudulent checks for more than two years. The district also generally had reasonable management oversight procedures in place to help ensure that its financial procedures were followed, but that oversight wasn't always done well. District management performed a limited review of bank reconciliations, so didn't notice several indications that there were problems with the reconciliations. Had those things been noticed and pursued, the fraudulent checks could have been discovered earlier, and the district's losses could have been lessened. School district officials across the State should review their financial practices for preventing and detecting check fraud, as well as their oversight procedures for ensuring those financial practices are being followed.
Compliance and Control Audit: Department of Corrections
SHaRP is State government's personnel and payroll computer system. This audit focused on how security was handled during the recent major upgrade to make the system web-based, and how well the Department of Administration controls access to the system. The Department did a good job of considering security throughout the upgrade project, but it never conducted a security risk assessment, and its method of distributing initial passwords to employees wasn't very secure. With a few exceptions, SHaRP had good controls to keep unauthorized people out of the system, and to control what people could do after entering the system. When SHaRP went into production, many people had difficulty with its strict password requirements. When the SHaRP steering committee asked the Department for an exemption to some of the requirements, the Department weakened password requirements for all its applications. We also found that the help desk wasn't asking callers who wanted their passwords changed for enough information to adequately confirm their identity. Finally, we pointed out some ways to improve accountability in the system.
Department of Agriculture: Reviewing the Grain Warehouse Inspection Program
The Grain Warehouse Inspection Program follows a number of good practices in licensing and monitoring grain warehouses, but other weaknesses impair the Program's ability to adequately protect farmers who store grain in State-licensed warehouses. (None of the Program's protections apply to farmers who participate in sale contracts; several other states provide some protections under their grain dealer laws for these transactions.) Kansas' financial requirements, such as bonding, aren't as stringent as those of other states, and some states do more analysis of warehouses' financial solvency. Program staff perform very limited evaluations of the quality of grain stored in warehouses, examiners don't consistently write up all the problems they identify during examinations, and oversight of examiners is inadequate to ensure they carry out all Program responsibilities appropriately and consistently. Further, Program staff allowed at least two warehouses' grain quality problems to continue without taking appropriate enforcement action. Part of the problem stems from the Department's belief that staff don't have the statutory authority to force warehouses to correct problems with grain that is infested or otherwise in poor condition. We think the statute is general enough to give them this authority. We also note that Kansas is the only one of six programs we reviewed that doesn't have authority to impose fines. Finally, the reserve funds that have helped support the Program will be exhausted in fiscal year 2005, requiring the Legislature to adopt a different funding structure for the Program.
Kansas Fire Marshal: Reviewing the Funding and Administration of the Agency
The Fire Marshal’s Office receives less direct oversight than most Kansas agencies and most fire safety agencies in other states. While agency officials expressed concerns about being under a board or commission, the issues they raised didn’t appear to be unique and confront most agencies in Kansas. The Office conducts timely and thorough investigations into the causes of fires, but there were numerous problems with inspections, including not conducting all the annual inspections required by law, notifying facilities about their inspections in advance, not using a checklist during inspections, and failing to maintain complete documentation. The Fire Marshal’s Office also did a poor job of overseeing the handling of complaints, and its enforcement efforts against facilities that don’t correct violations were inadequate as well. Reorganization of the Office in 2003 resulted in a top-heavy management structure and polarized its staff, and the Office’s controls over computer passwords were weak. Over time, the levy on fire insurance premiums that is used to fund the Fire Marshal’s Office generated far more money each year than the agency needed, resulting in large balances in its fee fund by the end of fiscal year 2002. Since fiscal year 2003, the levy has been used to fund additional programs and large transfers have been made to the General Fund, reducing balances in the fee fund. Because of these actions, and because the growth in fire insurance premiums is expected to slow, the Fire Marshal’s share of levy proceeds may not cover its costs in 2004 and 2005, and the agency could have cash shortfalls in early 2006.
Plumb Thicket Landfill Application: Determining Whether KDHE’s Review Complied with Applicable Laws and Regulations (limited-scope audit)
The Plumb Thicket landfill, proposed for a 950-acre site in northern Harper County, has been controversial from the beginning. Citizens concerned about potential environmental impacts have sued over the County’s decision to grant zoning for the project, and KDHE has stopped all review of the landfill application pending the court’s ruling. Local citizens have questioned whether KDHE followed all applicable laws and regulations in reviewing the application. We found that the application materials Waste Connections submitted to KDHE met the requirements in effect at the time the application was submitted. In addition, KDHE’s review appeared to be reasonably thorough. We did note several weaknesses in KDHE’s review: it didn’t follow a State law that calls for it to seek advice and counsel from local health authorities, and it didn’t question several representations made by the company applying for the landfill permit that we thought should have been questioned. The Department needs to develop uniform guidance for its staff to follow in reviewing landfill applications, but we saw nothing in the documents we reviewed that would cause us to question KDHE’s independence.
Information Technology Projects: Determining Whether the Chief Information Technology Officer Has Followed All Applicable Approval and Notification Requirements (100-hour audit)
Out of frustration about computer projects taking longer and costing more than estimated, the Legislature required agencies to develop project plans and go through a formal approval and notification process before such projects can be implemented. These processes weren’t followed for the Department of Revenue’s streamlined sales tax project. Initially, the Department informed the CITO that the project would cost less than $250,000, which was below the threshold for the approval process. When project bids came in at more than $1 million, neither the CITO nor the Department followed the applicable procedures. The CITO’s chief staff person told Department and Division of Purchases officials that the contract could be awarded without CITO approval, which would be given later. That approval was never provided. The CITO didn’t report information about the project to the Joint Committee on Information Technology as soon as the project’s true size was known. In addition, several other computer projects have begun before receiving the needed approvals.
In 2003, the State prescription drug plan paid 1.5 million claims totaling $55 million. For the most part, payments made to Kansas' pharmacy benefits manager, AdvancePCS, appeared to be accurate and in accordance with the terms of the contract. However, we identified some problems relating to payments for claims for ineligible people and inaccurate dispensing fees, which may result in AdvancePCS not meeting the accuracy standard of 99.9% required by its contract with the State. The most significant problem (paying claims for ineligible people) also was identified in a 2001 audit as a problem area. Even though we found relatively few problems, we recommend that the State improve its routine oversight and monitoring of the claims payments. Given the amount of money involved, better monitoring reduces the likelihood that the State will lose significant amounts to inappropriate claims payments.
Register of Deeds Technology Fund: Reviewing the Amounts Collected and the Uses of Those Moneys(limited-scope audit)
The 2002 Legislature allowed counties to collect a $2-per-page technology fee on certain real estate transactions to provide upgraded equipment and technological services in the county register of deeds' offices. For 2003, that fee generated from $3,250 to $2.5 million in the 20 counties we reviewed. The 10 most populous counties collected an average of $600,000; the10 least populous counties averaged about $5,300. Technology fee receipts in 8 of the 10 most populous counties were actually greater than their register of deeds' entire operating budgets in 2003. About 94% of the $1.8 million in purchases we reviewed in Shawnee, Johnson, and Reno Counties was spent on equipment and technology services allowed by law. The Johnson County Register of Deeds spent about $112,000 (6%) on unallowable purchases such as office furniture, painting, and cleaning office areas. Although transfers to other county departments are allowed, Reno County officials didn't comply with the transfer provisions in the law when they bought equipment benefitting other county departments. We concluded the risk of spending technology funds on unallowed or unintended purposes will increase in the future, at least in the more populated counties, because these offices receive large and ongoing revenues from the technology fees, while their technology needs will be met over time.
City of Wichita: Examining the Provision of Emergency-Response Services in Newly Annexed Areas (limited-scope audit)
State law requires cities that unilaterally annex land to provide services after annexation that are equal to or better than those provided to the area by a township or special district before annexation. When Wichita unilaterally annexes land, law enforcement is the only emergency service that significantly changes; fire services are covered by a first-responder agreement between Wichita and the County Fire District, and ambulance services are provided county-wide. Police response times for 4 areas Wichita recently annexed significantly improved after annexation for lower-priority calls, but not for high-priority and emergency calls. Also, the Wichita Police don't respond in-person to all the property crimes the County Sheriff's Office responds to. Although the Sedgwick County Fire District continues to provide for services to the areas Wichita has annexed, it has lost about $41 million in its tax base to annexation, or about $500,000 annually in lost property taxes. On the other hand, in Johnson County we noted at least one instance of a city not receiving additional tax dollars for providing fire services to the new areas it annexed—the opposite problem from Sedgwick County.
Taxation of Contractor Equipment: Determining Whether Kansas’ System of Taxes and Fees Is Similar to Surrounding States
Local governments in all the states we contacted assess personal property taxes against construction equipment, but Kansas, Colorado, New Mexico, and Texas will collect property tax even if a contractor already has paid in another state. With few exceptions, Kansas and its neighboring states don't impose motor vehicle registration fees on construction equipment, primarily because such equipment isn't regularly driven on state roads or highways or the interstate highway system. All contractors have to pay oversize/overweight permit fees in Kansas and all 4 of the surrounding states we contacted, but those fees are much lower in Kansas. Kansas could generate about $1 million or more of new revenues each year by imposing some fees that other states already collect, and by increasing existing fees to bring them in line with what other states charge.
State of Kansas: OMB Circular A-133 Audit of Fiscal Year 2003
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 2003.
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. Sixteen findings are reported.
Encouraging Entrepreneurship: Examining Ways Kansas Could Improve Its Efforts
Entrepreneurs who want to start a new business in Kansas can get technical or financial assistance through 16 State-funded programs and other government and private programs. From 1998 to 2002 the State spent an estimated $33 million on such start-up programs, about 8% of the total spent on economic development activities. In comparison, the State spent about $23 million on programs designed to recruit established out-of-State businesses. Most of the State's universities and community colleges offer at least one entrepreneurship course, although the emphasis varies among institutions. Areas where Kansas could better promote entrepreneurship include making it a higher strategic priority, increasing venture capital funding, developing business mentoring programs, and creating an inventory of existing programs. We couldn't compute an overall return on investment for moneys spent on entrepreneurial and business recruitment programs. Historical employment and payroll information we could review gave some insight into the results such programs have achieved. In general, the businesses recruited to Kansas in 1998 created more lasting jobs and more payroll than a sample of start-up businesses that received State financial assistance that year.
Reviewing the Hiring and Promotion Practices of the Public Safety Agencies: A K-GOAL Audit of the Adjutant General’s Office, Fire Marshal’s Office, Highway Patrol, and the KBI
Many public safety employees are dissatisfied with their agencies' hiring and promotion processes, and survey responses from all 4 agencies indicated the highest level of concern was with promotions. In all, 36 - 54% of survey respondents said their agencies' promotion processes weren't fair or objective. Our review of a random sample of hires and promotions from fiscal year 2003 and of a sample of complaints raised by employee surveys also found problems with agency hiring and promotion practices. For example, both the Fire Marshal's Office and the KBI used reallocation to promote some employees rather than filling positions through a competitive process. The Fire Marshal's Office, the Highway Patrol, and the KBI all hired or promoted some employees who didn't meet minimum job requirements Finally, the Adjutant General's Office, the Highway Patrol, and the KBI didn't have current position descriptions. Overall, the problems we saw generally were caused by agencies not following laws or their own policies, rather than a lack of policies. These problems may be compounded by the fact that the Division of Personnel Services has significantly curtailed its oversight of agency personnel practices.
West Nile Virus: Reviewing the Department of Health and Environment’s Case Reporting (limited-scope audit)
As of November 2003, the Department of Health and Environment had reported, to the public and to the Centers for Disease Control and Prevention, 90 severe cases of West Nile Virus infection that were confirmed by the State laboratory or the CDC. These were the only types of cases KDHE reported until October 2003, when it decided to add commercial laboratory results to its public reporting of West Nile Virus cases. As of November 2003, KDHE had reported to the public 731 cases that tested positive at commercial laboratories in 2003. The Department hadn't reported 20 unconfirmed but @probable@" cases of severe West Nile Virus infection
Job Expansion Programs: Determining Whether State Agencies Are Collecting the Information Needed To Know Whether These Programs Are Successful (limited-scope audit)
The Department of Commerce administers the State's major job expansion programs. Department officials ask companies that participate in these programs to provide the types of information they would need to assess whether the promised jobs were created, but companies don't always provide it. Our review of a sample of files showed that Department officials didn't receive 24 of the 137 reports (17%) that companies were required to file. Also, Department staff generally don't verify the accuracy of the information companies do provide; instead, they rely on participating companies to submit accurate information. Finally, the Department's annual report shows the number of jobs companies promised to create, not the number of jobs actually created, or even the number companies report they've created. The 12 companies in our sample that had submitted complete information to the Department reported that they have created only 67% of the jobs promised by the established deadline.
Electronic Certificates of Title: Reviewing the Effects of New Legislation (limited-scope audit)
Electronic titles have reduced the risk of title fraud, theft, and loss. However, they won't significantly reduce the number of reprinted titles as intended for several years, because there are still many paper titles with liens in circulation. The impact of electronic liens on the efficiency of title processing has been limited, but is likely to grow if more lenders enroll and use the system. Some groups reported problems with the implementation of electronic titles, but these don't represent fundamental flaws with the new systems. The problems were related to the increased complexity of some transactions, a perceived lack of information regarding these changes, and frustration with the Department's customer service.
Kansas’ Central Motor Pool: Determining Whether All Significant Costs and Savings Were Considered In Decisions To Change This Function (limited-scope audit)
Changes the Governor announced to the Central Motor Pool will free up an estimated $9.3 million for other uses. But that decision wasn't based on a cost-benefit analysis. Rather it was based on policy and budgetary considerations that involved such things as eliminating redundancy in the way the State owned and issued vehicles, identifying and eliminating underused vehicles, and freeing up moneys set aside or requested to buy replacement vehicles to be used for other purposes. Actual costs or cost savings aren't known because reducing vehicles might not actually reduce travel costs, agencies may incur additional costs because of the changes, and most agencies still are going to need to replace their aged vehicles that normally would have been replaced during the moratorium. Finally, the Department's decision to terminate the Van Pool Program because it wasn't self-supporting was based on revised assumptions about what costs should have been allocated to the program over the years. The cost impact of those revised assumptions was applied retroactively, and Pool participants were never given an opportunity to cover those costs.