We estimate the 3 counties we reviewed spent $28.8 million providing a selection of 3 services in fiscal year 2024, which was partially offset by $9.7 million in state, federal, and user fee funding. State law requires counties to provide a variety of core services, such as election administration, law enforcement, and motor vehicle registration. Counties are primarily funded by local tax revenue, and they generally use this revenue to cover the costs of providing the services state law requires. We selected 3 core services and 3 counties to review. The services included criminal prosecution, motor vehicle registration, and ad valorem tax collection. The counties included Gove, Johnson, and Labette counties. We worked closely with county officials to determine how much the 3 counties spent to provide the 3 core services during fiscal year 2024. In total, we estimate the 3 counties we reviewed spent $17.3 million on criminal prosecution in fiscal year 2024, which was slightly offset with $846,000 in grants and user fees. In total, we estimate the 3 counties we reviewed spent $8.3 million providing motor vehicle registration services in 2024, which was partially offset by $5.0 million in user fees. In total, we estimate the 3 counties spent $3.2 million collecting ad valorem taxes in fiscal year 2024, which was fully offset by $3.9 million in user fees and fines. The 3 counties’ costs for the 3 services we reviewed were generally related to meeting requirements in state law. We estimate it would cost the state $19.1 million to cover the 3 counties’ fiscal year 2024 costs for the services we reviewed, but this likely isn’t consistent each year. Officials from the 3 counties we reviewed told us state process improvements would be more helpful than additional state funding. Other estimates for counties’ motor vehicle registration service costs used reasonable methods but differed from ours because we had more detailed and updated data.

This audit evaluated whether entities implemented 9 previous audit recommendations. We determined that 4 of the 9 recommendations have been implemented. The 5 Groundwater Managmeent Districts implemented 1 recommendation from our 2023 audit. of them? The Departments of Revenue and Commerce implemented the recommendation from our 2023 audit of the Rural Opportunity Zones Program. The Secretary of State's Office implemented 1  recommendation,  partially implemented 1 recommendation, and didn't implement the third recommendation from our 2023 audit of election security (part 2). The Department of Revenue implemented 1 recommendation and partially implemented 3 recommendations from our 2024 audit of motor vehicle sales taxes.  

State agencies purchase or lease space to meet a variety of needs ranging from office work to storage to public services. State agencies have discretion in determining what office space they need and how to acquire it. The information in this report is self-reported by agencies because the state doesn’t have a central repository for all agency-owned office space. In fiscal year 2025, state agencies reported owning or leasing 4.1 million square feet of office space across the state. Additionally, in fiscal year 2025, state agencies leased around 63% of their office space and owned about 32% of their office space statewide. They had other arrangements for about 5% of their office space. As far as usage, agencies reported most office space was occupied. Most agencies also reported they had enough space if all employees were asked to work in the office. Most lease agreements in privately owned buildings are less than 10 years in length and can’t be broken unless state funding is terminated. Leasing appears to be the most common option for state agencies to acquire office space in Topeka. In fiscal year 2025, state agencies in Topeka reported leasing costs for privately owned buildings were less than state-owned buildings. The annual cost to own space in Topeka is unclear because few agencies own space and DOA data on state-owned office buildings wasn’t reliable. Agencies’ decisions to lease or purchase office space are based on several factors, some of which are non-financial. About a quarter of the space in the newly renovated Docking State Office Building is office space, and most of that space will be filled with 4 agencies.

The High Performance Incentive Program (HPIP) allows qualifying businesses to earn state income tax credits based on their expenditures on employee training and education and on qualifying capital investments. We couldn't report how much HPIP credit businesses earned and used in recent years because of reliability issues with KDOR's HPIP data. We identified inconsistencies in the data that KDOR officials told us they were trying to resolve.

The Kansas Affordable Housing Tax Credit (KAHTC) is a state income tax credit that matches the federal low-income housing tax credit. Both credits help subsidize the creation of affordable rental housing. The Kansas Housing Resources Corporation (KHRC) administers both credits. Since 2023, when the KAHTC was first allowed, KHRC has awarded rental housing development projects about $73 million in KAHTC credits. It may award an additional $34 million in tax credits by the time the KAHTC ends in 2028. At the time of our audit, no taxpayers had used the KAHTC to reduce their income tax liabilities. However, they will likely begin doing so soon. Over the next approximately 15 years, taxpayers' use of KAHTC credit awards may result in the state forgoing about $1 billion in income tax revenues.

Of the 20 districts we reviewed, only some had adequate access controls for their accounting systems, and very few had adequate written policies. School districts use accounting systems to manage their expenses and report on their financial information. It’s critical that school districts protect their accounting systems against unauthorized access. School districts are not required to follow the state’s IT security policies. We compiled a set of IT security and accounting best practices to evaluate school districts’ access controls for accounting systems. We reviewed accounting system access control policies and practices for 20 judgmentally selected school districts across Kansas. None of the 20 districts we reviewed had adequate IT security access control practices in all 3 categories we evaluated. Almost all school districts we reviewed (19 of 20) lacked all expected account management control practices within their accounting systems. Most school districts we reviewed (16 of 20) also did not have all expected identity management practices in place within their accounting systems. About half of the school districts we reviewed (11 of 20) had all expected controls in place to limit user access to their accounting systems, and most school districts had at least 4 of the 5 controls we reviewed. Finally, very few of the 20 districts we reviewed had adequate written policies related to any access controls for their accounting systems. Smaller school districts tended to lack more access controls for their accounting systems, but all districts could benefit from formalized policies. KSDE told us that districts have been moving to computerized systems quickly, and it was not surprising that districts have very few policies. 

This audit evaluated whether agencies implemented 6 previous audit recommendations. We determined that 3 of the 6 recommendations have been implemented. The Kansas Department for Children and Families (DCF) and Department for Aging and Disability Services (KDADS) implemented 2 recommendations and partially implemented 2 other recommendations from our 2022 audit of foster care services. The Kansas State Department of Education (KSDE) implemented the recommendation from our 2022 limited-scope audit of social workers employed by school districts. Finally, KSDE partially implemented the recommendation from our 2022 limited-scope audit of scholarship granting organizations' compliance with distribution requirements for the Tax Credit for Low Income Students Scholarship Program. 

The Building a Stronger Economy 1.0 and 2.0 grant programs (or BASE grant programs) awarded almost $150 million in federal funds to Kansas businesses for infrastructure development. The Department of Commerce selected which program applicants would be awarded funding. It required BASE grant recipients to provide matching funds equal to at least 25% of the project cost. We reviewed the planned matching expenditures in all 72 BASE grant award agreements. Commerce approved planned matching expenditures in 3 main categories, with construction costs (including materials, labor, and site work) being the largest. Commerce approved almost half of planned matching expenditures for costs recipients incurred prior to signing a BASE grant agreement. Department officials told us they allowed pre-award matching expenditures to give recipients credit for project expenses incurred prior to the BASE grant award. Finally, we identified several issues with the accuracy and completeness of the BASE grant award agreements that could not be reconciled by the department.

From 2021 – 2023, Manhattan, Overland Park, and Wichita appeared to use most of their transient guest tax revenue appropriately, but a small portion was inappropriate or unclear. Kansas statute allows cities and counties to charge guests at hotels or other short-term lodgings a tax (called a transient guest tax), which local governments can then use to fund tourism-related expenditures. Most cities with a transient guest tax charge more than the 2% rate in statute because they use the home rule provision in the Kansas Constitution to exempt themselves. The 3 cities we reviewed spent transient guest revenues differently from 2021 to 2023 but most of their spending appeared to be appropriate. All 3 cities used transient guest tax revenues to pay the local convention and visitors bureaus to promote tourism. All 3 cities appeared to use transient guest tax revenues to finance tourism and convention related bonds. Wichita appeared to use transient guest tax revenues to maintain and operate existing tourism facilities. Manhattan and Wichita used transient guest tax revenues on direct grants or sponsorships for tourism. In 2023, Manhattan transferred $100,000 of its transient guest tax revenue to the general fund, but we could not determine if it was used appropriately because of a lack of documentation. Wichita spent $16,000 of guest tax revenue from 2021 – 2023 to cover city administrative and audit fees, which is inappropriate because the expenses are not related to tourism and conventions. Finally, we also found a difference between certain definitions in Wichita's transient guest tax ordinances and state law. As a result, since 1992, KDOR may have collected and Wichita may have received transient guest tax revenues from guests at some hotels and other lodging entities that aren’t authorized in Wichita’s charter ordinance. 

The Kansas Department for Aging and Disability Services (KDADS) oversees Aging and Disability Resource Center (ADRC) services to help older adults and people with disabilities. Until 2024, KDADS contracted with Area Agencies on Aging (AAAs) to provide ADRC services. In 2024, KDADS split the one AAA contract for ADRC services into 2 contracts, one for the Home and Community Based Services (HCBS) assessments and one for the remaining ADRC services. KDADS officials told us they changed the ADRC services contract to mitigate the appearance of a conflict-of-interest and to address longstanding performance issues with HCBS waiver assessments.