After multiple audits of both rounds of the “Building a Stronger Economy” (BASE) Grant program have routinely found issues with the way the Kansas Department of Commerce, the department, rather than attempting to correct a history of mismanagement, is attacking the act of being audited.
“We wish to note the following key points. This is the third audit conducted on the BASE program and the 12th audit reviewing economic development and the Department of Commerce since 2022,” Lt. Governor David Toland, who also serves as Kansas secretary of commerce, wrote in response to the audit. “Thousands of staff hours have been spent responding to these audits, all at taxpayer expense. Yet, like the other two audits conducted on the BASE grants, no recommendations to the agency were made in this audit by LPA.”
The Kansas Department of Legislative Post Audit, which recently released its latest examination of the BASE 1.0 and 2.0 grant programs, noted that it made no recommendations because the programs had ended and no further grants were being awarded.
However, LPA said it “identified several issues with the accuracy and completeness of the BASE grant award agreements that could not be reconciled by the Department of Commerce.”
For example, there were minor discrepancies in the total number of BASE grant awards the department provided to LPA in this audit and the number it had previously reported in other places.
“This means we can’t be sure the list of agreements we received is complete and accurate. For example, the department gave us 37 BASE 2.0 agreements,” auditors wrote. “However, the department had previously reported 38 BASE 2.0 award recipients in a press release. Furthermore, at the time of this audit, the department’s website listed 39 BASE 2.0 award recipients. Department officials told us that the information available online was outdated. They said some agreements had been terminated or combined, resulting in 37 final BASE 2.0 agreements.”
There were also differences in the total amount of BASE 2.0 grant award funds. This means LPA can’t be sure the list of agreements it received is complete and accurate.
The 37 BASE 2.0 grant agreements reviewed listed total grant funds of $45.5 million. Commerce officials told LPA they initially awarded $49.5 million in grant funds, but two recipients declined their awards. However, the department did not provide LPA with documentation confirming the initial award amount of $49.5 million or the 2 declined awards. Department officials also told LPA that they still plan to award an additional $4.5 million in BASE 2.0 grant funding, for a total of $50 million overall. It is unclear how the department will award the remaining funding.
How the department is planning to award another $4.5 million in funding in programs it told LPA are closed is unclear.
Toland also complained that the audit wasn’t measuring the success or failure of the program.
“None of the three audits conducted on the BASE program shared any information about the success and positive impact of this robust grant program,” Toland wrote. “It is important to not lose sight of the fact that the BASE 1.0 and 2.0 programs have had a tremendously positive impact on Kansas businesses and Kansas communities.”
However, that was not the objective of the audits, but rather to make sure taxpayer funds — whether state or federal — were being properly administered.
Previous audits found issues with BASE grants
Indeed, a previous audit of BASE 1.0 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, 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.
Commerce has a history of transparency and accountability issues
The department Toland leads has a history of failing to properly oversee various grants — and indeed, even to follow state law.
The Americans for Prosperity Foundation-Kansas won a victory earlier this year when Kansas Attorney General Kris Kobach found that the Kansas Department of Commerce violated the Kansas Open Records Act (KORA) by failing to turn over documents responsive to requests under the act.
“In the process of responding to our inquiry, Mr. (Bob) North noted he discovered an additional group of documents should have been provided to you that were not provided in the department’s response to your request,” the AG’s office wrote. “We have confirmed these records have been mailed to you.
“Because the department did not provide all records responsive to Americans for Prosperity Foundation’s November 10, 2021 request, the department violated the KORA.”
In other words, after more than three years of requests by AFPF-Kansas — and the filing of multiple complaints under KORA—North, Commerce’s general counsel “found” additional records that his office had initially not turned over.
LPA late last year found Commerce’s transparency database is out of compliance with state law.
Moreover, records requests from the Sentinel in October of 2024, found that Commerce claimed they do not have a list of to whom they’ve given money — or how much.
This suggests two possibilities — either Commerce is lying about not maintaining a list, or is grossly incompetent.
Dave Trabert, CEO of the Kansas Policy Institute, which owns the Sentinel said at the time there is a third possibility.
“The Kansas Department of Commerce has a pattern of not having routine information available, like a report listing grant history. That pattern suggests Commerce officials may be deliberately not creating reports to avoid Open Records requests. Commerce officials surely have ready access to the information; they just don’t want the public to see it.”
