In Kansas, individuals must pay a 6.5% sales or use tax when purchasing any vehicle that is primarily stored or used in the state. This is paid either at the dealership or at a county treasurer’s office. Ultimately, KDOR is responsible for collecting motor vehicle sales and use tax from dealerships and counties. The Kansas Department of Revenue had procedures to help ensure dealerships remit vehicle tax but was missing several key procedures related to county tax remittance. We saw evidence that KDOR had several procedures related to training and guidance for counties and dealerships as well as procedures related to the monitoring and enforcement of dealerships. However, KDOR was missing several procedures related to the monitoring and enforcement of counties. One county didn't remit taxes for 15 months, resulting in about $11 million in delinquent taxes. Additionally, KDOR's lack of written procedures means efforts to ensure that individual buyers and dealerships are remitting aren't as effective as they could be. And KDOR's MOVRS database had significant errors, preventing us or them from doing a state-wide analysis.

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In the 2022-23 school year, the Louisburg school district spent a little more than $31 million. Generally, state law allows districts broad discretion in how they spend their state and local funding, but there are some exceptions. We selected 57 expenditures (representing $1.2 million) across 6 funds to determine whether the district spent them in accordance with state law. We selected funds that have a mix of broad and specific spending rules sets in state law. We chose expenditures that represented a good cross-section of different types of expenditures. Because we did not choose the sample randomly, we cannot project the results to all expenditures. Of the 57 expenditures we reviewed, we identified 12 (about $63,000) related to at-risk and capital outlay that did not comply with state laws related to those funds. This included expenditures such as seating, salaries for interpreters, and a contract to operate light and sound equipment.

The Angel Investor Tax Credit (AITC) program incents investors to invest in Kansas start-up businesses. In exchange for investing in a participating start-up businesses, an investor can receive a tax credit equal to up to 50% of their investment. As part of this audit, we surveyed investors and businesses that participated in the AITC program. The purpose of the surveys was to learn how the program influenced investors' and businesses' behaviors. Investors who responded to our survey told us the program caused them to invest more or sooner in participating businesses. Businesses who responded to our survey told us the program helped them do more than they otherwise would have been able to (e.g., hiring more staff or offering more products). As part of this audit, we also evaluated whether Commerce implemented a process to make sure participating businesses stayed in Kansas as required by state law. We determined Commerce had implemented a process, but the process has room for improvement.

The 6 state universities did not have a shared definition of what diversity, equity, and inclusion activities are, but there were some common themes.The universities provide a variety of DEI-related services and activities such as food pantries, support groups, and tutoring services to a wide range of students. To determine how much universities spent on DEI-related activities, we asked the universities to report expenditures related to common DEI themes shared across the universities. In the 2022-23 school year, universities reported spending about $45 million in DEI-related activities, of which, about $9 million was paid for with state funding. Nearly all of the $9 million universities reported spending in state funding was spent on salary and benefits for faculty and staff who engaged in DEI-related activities. Universities reported spending a small amount of state funding on DEI-related training and other non-personnel expenses like travel, software, and outreach programs. The universities DEI-related expenditures are self-reported and we have a limited ability to determine if they are accurate and complete. Last, the universities do not have consistent measures for determining whether DEI-related activities are effective for achieving their DEI goals. Universities receive money from foreign sources for a few reasons including tuition and fees, gifts, and contractual services. In 2022-23, state universities reported receiving about $116 million in foreign contributions, but most ($111 million) was for tuition and fees. In the 2022-23 school year, universities reported receiving contributions from 170 countries but about half was from India and China. The universities foreign contributions are self-reported and we have a limited ability to determine if they are accurate and complete.

The 3 community colleges we reviewed (Butler, Garden City, and Hutchinson) spent an average of $2.8 million annually in college funds such as student tuition, fees, public sources of funding, and other income on athletic departments from fiscal years 2018 to 2022. Most athletic department spending was for coaching salaries and the sports of football and basketball. The 3 community colleges also spent an average of $1.2 million annually in student fees and private funds on athletic scholarships during these 5 years. The total athletic department and athletic scholarship spending was similar to expenditures at the other colleges competing in the Kansas Jayhawk Community College Conference in fiscal year 2021. We also reviewed student-level data for 8 sports at the same 3 community colleges from fiscal years 2018 to 2022 and found that most student athletes are from outside of Kansas. Further, most athletic scholarships are awarded to student athletes from outside of Kansas. Other colleges participating in the Kansas Jayhawk Community College Conference also generally drew in athletes from outside of Kansas in fiscal year 2022.

The KPERS 3 retirement plan was created by the Legislature to help improve the long-term sustainability of the KPERS trust fund. KPERS 3 is a cash balance plan. There are other types of retirement plans, including defined benefit, defined contribution, and hybrid plans. We compared KPERS 3 to other plans on key plan metrics. These plans included KPERS 2, Thrift Savings, Nebraska's cash balance plan, Oklahoma's defined contribution plan, Indiana's hybrid plan, and Utah's hybrid plan. We found that KPERS 3 gives employees less flexibility, requires them to share some financial risk, and generally provides lower benefits than other plans we evaluated. Further, we found that employees of defined benefit plans (such as KPERS 1 and 2) are generally more satisfied and more likely to remain at their job compared to employees of other plan types (such as KPERS 3).

This audit determined whether selected state agencies and school districts adequately complied with certain IT security standards and best practices. State agencies must follow state IT security standards to protect sensitive information against data loss and theft. Local entities are not required to follow the state's policies. 8 of 15 entities we audited did not substantively comply with IT standards and best practices in at least 2 of 3 subject areas we evaluated. Specifically, 9 of 15 entities did not substantively comply with selected systems operations and configuration controls. 8 of 15 entities did not substantively comply with selected continuity of operations planning controls. Lastly, 7 of 13 entities did not substantively comply with selected data center controls. The findings demonstrate a poor "tone at the top" at many entities--meaning lack of top management oversight and supervision. Other factors contributing to the findings included too much reliance on contracted entities, unfamiliarity with requirements, and shortage of IT security staff.

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