A new audit by the Kansas Department of Legislative Post Audit has found that the Kansas Department of Commerce did not consistently follow its own rules in awarding COVID funds.
According to the report, the Building a Stronger Economy 1.0 grant program (or BASE 1.0) awarded almost $100 million in federal funds to Kansas entities for infrastructure development. Commerce received 445 BASE 1.0 grant applications requesting a total of about $1.7 billion, and of the $99 million Commerce awarded to 35 recipients, about half went to 10 projects in Butler and Johnson counties.
According to the report, Commerce reviewed applications to the BASE 1.0 grant program and determined which applicants would receive funding using three main steps. Commerce then completed an eligibility review for all 10 applications LPA reviewed and eliminated 1 that wasn’t eligible.
Auditors found that Commerce didn’t consistently follow its own application scoring process for the nine eligible COVID applications reviewed.
LPA was also unable to review the Secretary of Commerce’s final award decisions because the department failed to document the process.
According to the Sunflower State Journal, each of the 35 approved projects received an average of $2.8 million, with awards ranging from $13,500 to $10 million.
“Sixteen of the 35 approved projects received at least 90% of what they requested, while 11 received less than 50% of what was requested,” the Journal reported. “There were six projects approved for Johnson County out of 55 requested, four for Butler County out of nine requested, three for Shawnee County out of 14 requested, and two for Wyandotte County out of 20 requested.”
According to the Journal, one grant, for about $425,000, went to the Mullinville Community Foundation, The foundation listed a former Commerce Department employee – the late Jonathan Clayton – as the secretary/treasurer on the group’s board of directors.
“Clayton, who vanished and was later found dead in a crashed truck, disappeared amid a criminal investigation into the theft of $120,000 from the Mullinville Community Foundation and $70,000 from a local cemetery board,” the Journal reported. “The Commerce Department last year filed a lawsuit against the Mullinville Community Foundation seeking the return of the grant money.”
Commerce didn’t consistently follow its application scoring process for nine of the eligible applications reviewed, and auditors said eight of the nine eligible applications received two scores and one application was scored by one staffer.
Commerce staff said it was a mistake and that the application wasn’t subsequently approved for grant funding, according to the Journal.
Additionally, auditors found that 14 of the 17 reviews of the nine eligible applications appeared incomplete.
Auditors also found 14 reviews with blanks instead of scores for addressing a question about the project’s expected impact.
“When the auditors asked about the missing scores, department staff said the reviewers likely believed the projects didn’t deserve any points in that category,” the Journal reported. “But because they didn’t enter a score, it’s also possible the reviewers unintentionally skipped this question, the audit said.”
According to the Journal, “Kansas State Sen. Caryn Tyson (R-Parker) “questioned why, if the agency was trying to quickly process the applications, it only assigned two staffers to the job.”
“How much of a priority did the department really make it?” Tyson told the Journal.
“Auditors also said the Commerce reviewers often disagreed on objective application factors, such as how many community support letters were provided or whether there was evidence of matching funds or project-related bids and estimates,” the Journal reported.
“Commerce staff said this was human error due to the volume of applications they received and the short time frame they were working within,” LPA said.
According to the Journal, auditors were also concerned about disparities in the scoring process.
“Inconsistencies in an application review process such as these matter because they may affect which applications are approved,” auditors said. “For instance, an application that received only one review wasn’t scrutinized as thoroughly as applications that received two reviews.
“And skipping the question worth the largest number of points decreased the total points these applications could have received, potentially disadvantageing them compared to other applicants,” the auditors said.
“We don’t know how frequent these issues are because we didn’t review all applications, but we think they’re indicative of issues beyond the 10 that we reviewed.”
Moreover, auditors were unable to determine exactly how Lt. Gov. David Toland, who also serves as the Secretary of Commerce, made the final decision on who received grant funds.
“Commerce staff said Toland made the final grant decisions, including which applicants would receive funding and how much each would get,” according to the Journal. “Of the 250 applications that were scored, the secretary selected 35 projects for grant funding, according to the audit.
“Commerce didn’t document these award decisions, so we couldn’t review which projects the secretary considered, why he approved the projects he did, or how the amount of funding was determined,” auditors said. “This limits the program’s public transparency.”
