Three state agencies have fully implemented only one of seven recommendations made by legislative auditors in the last four years, a new report shows.
A follow-up audit of the State Department of Education, the state Department of Agriculture and the Department of Commerce examined what recommendations were followed after audits that were done in 2019 and 2020.
The report found that the Department of Education and the Agriculture Department partially implemented four recommendations.
The Department of Education fully implemented one and partially implemented one other. The Agriculture Department partially implemented three.
The audit could not determine whether a recommendation for the Commerce Department was implemented.
Education Department
In 2019, a legislative audit questioned how some school districts were spending money targeted at helping students who are at risk of failing academically.
Legislative auditors found that at-risk money for students went toward teacher salaries and programs that did not appear to specifically address students as required by state law.
The audit also found that at-risk programs in many of the 20 districts audited lacked strong research findings that documented the programs are effective.
It also revealed that districts spent almost $191,000 in at-risk funding on programs not directly related to at-risk students.
The audit recommended the department ensure that any spending guidance provided to local school districts reflects current state law, something that was partially implemented.
In their follow-up, the auditors found that the agency answered 23 questions in a guidance document related to the at-risk program but several did not capture the statutory requirement for expenses or services connected to the program.
The guidance document indicated that at-risk funds may be used for clerical staff if they work at a school where all of the students have been identified as at-risk but with no mention of programming, the audit report said.
The department said the guidance for clerical staff salaries paid with at-risk funds has been updated and is now posted online.
The agency said its guidance suggests a limit on at-risk expenditures that may be spent for teacher salaries despite the lack of such a limit in statute.
“When school districts ask about this topic and the statute is silent, KSDE attempts to provide guidance that follows the intent of the statute,” Deputy Education Commissioner Craig Neuenswander said in a letter responding to the audit.
The auditors in their follow-up found that the agency fully implemented a recommendation to establish a process to determine that any identified programs and practices are evidence-based for at-risk students.
State law doesn’t allow districts to spend money on just any evidence-based practice, only evidence-based programs or practices approved by the Board of Education.
However, the 2019 audit concluded that a new requirement that at-risk funding be spent on evidence-based practices was “poorly managed at the state level and not adequately implemented at the district level.”
The audit also recommended that the State Board of Education should more thoroughly oversee the process for identifying at-risk programs and policies.
The follow-up audit found that this recommendation had not been fully implemented.
After the original 2019 at-risk audit, State Board President Kathy Busch wrote a follow-up letter that said a subcommittee of board members met with agency staff and reviewed the process to verify that practices and programs are identified in accordance with the law.
“That process has been implemented and followed by KSDE staff since that time. This method of providing guidance to staff is consistent with the practice followed by the state board,” Neuenswander wrote in response to the follow-up audit.
Commerce Department
It could not be determined whether the agency implemented a recommendation from a 2020 audit of the angel investor program for small, innovative startup companies.
Three years ago, legislative auditors urged lawmakers to tweak the program after finding instances where businesses left Kansas earlier than allowed by state law.
The legislative audit recommended shortening the length of time businesses must stay in Kansas after drawing investment as part of the angel investors program, which was started in 2004.
The audit also found that it was difficult to gauge the success of the program because benchmarks weren’t written into law, and that businesses didn’t always produce as many jobs as companies that didn’t participate in the program.
The program – at the time of the audit – provided $6 million in yearly tax credits to investors in certain types of innovative companies in areas such as computer systems, pharmaceuticals and medical manufacturing, as well as scientific and research development services.
The program required businesses to stay in Kansas for at least 10 years after receiving an investment, and they’re supposed to pay a penalty if they leave early.
The audit found three instances where a business left Kansas sooner than the 10 years required by law at a cost to the state of about $340,000.
A fourth business whose investors received $25,000 in tax credits may also have left too soon, the audit reported.
The audit recommended that Commerce proactively enforce statutorily required time frames for qualifying businesses to remain in Kansas
“As part of our biannual follow up process, Commerce staff stated that they seek to enforce contractual claw back provisions from companies that left the state during the term of the tax credit agreement,” the follow-up audit said.
“Staff told us they gather Department of Labor data and conduct site visits as part of their annual tracking activities.”
Auditors reviewed a copy of a demand letter sent to one company that left the state prematurely.
They also reviewed a spreadsheet with angel investor information, but the data did not appear to be complete, and it was unclear when the spreadsheet was last updated.
Commerce staff told the auditors that the employee who may have additional information was on extended leave and no one else at the agency had access to the necessary information during the audit.
“As a result, we were unable to confirm whether the agency implemented our recommendation,” the audit said.
Republican state Sen. Mike Thompson of Shawnee questioned why no one else in the agency could answer the auditors’ inquiry.
“We pass out millions of dollars to some of these companies, it would seem that oversight would be paramount. I’m a little disappointed in that report,” he said.
Republican state Sen. Rob Olson of Olathe said he didn’t think the commerce secretary would necessarily know since multiple people have led the agency over the last decade.
However, Olson suggested that the agency might want to ensure that more than one person has access to the information.
Agriculture Department
The agency partially implemented three recommendations stemming from a 2020 audit of a program that examines the accuracy of product prices rung up at the register.
The audit looked at whether the posted price – what’s on the price tag or the shelf label – matched the price charged at checkout.
During an inspection, an inspector visits a retail site and collects and tests 50
or 100 items. A business’s posted prices must be at least 98% accurate to pass an inspection.
The audit found that from 2018 to 2020, retail businesses failed most price verification inspections, and the Kansas Department of Agriculture did not respond consistently to those failures.
The 2020 audit found that businesses failed about 60% of price verification inspections conducted in fiscal years 2018 through 2020.
The 2020 audit found the Agriculture Department didn’t conduct timely follow-up inspections for about 75% of the failed inspections that were reviewed.
The agency also issued legal orders later than it could have, and its fines were small and often reduced further, according to the 2020 audit.
The audit also found that staffing constraints contributed to the problems.
The new follow-up audit found that the agency had partially implemented a recommendation to use program data to develop a more effective inspection strategy
instead of having scale inspections direct their inspection strategy.
The initial audit said the Agriculture Department could focus on inspecting businesses that meet certain criteria, such as the severity of pricing issues, location or type of business.
The agency has developed a document that tracks inspection data for businesses that have failed inspections multiple times.
It identifies retailers requiring follow-up inspections to determine whether and when legal actions are required.
In 2020, auditors also recommended that the agency should do a staffing analysis to estimate the cost of implementing its desired inspection strategy.
The agency has since completed an analysis showing how many more inspections could be carried out if more inspectors were added.
However, the agency didn’t ask for more money from the Legislature this year to add more weight-and-measures inspectors because the agency had higher priorities.
“The decision not to ask for a state general fund budget enhancement this legislative session was made by me, taking into consideration the other agency funding needs regarding continuity of operations for our stakeholders,” Agriculture Department Secretary Mike Beam said in a letter responding to the audit.
“It is likely that retail stores would oppose a change in the statute requiring additional licensing and associated fees,” Beam wrote.
In response to the follow-up audit, Beam said there was an average pass rate of 47.7% from 2020 to 2023 and a fail rate of 52.3%.
“Please note,” Beam said, “that a device may fail with overcharges or undercharges and that the ratio of overcharges to undercharges is one consideration when determining the enforcement action to be taken.”
