Kansas county pushes back on report claiming $40 million in funds unaccounted for

(The Sentinel) – The Unified Government of Wyandotte County is pushing back on a report by KMBC and repeated in a state legislative committee, that a state audit of UG finances found $40 million unaccounted for. In addition to the audit finding an error in the appropriation of $313,000 in road and bridge funds, KMBC reported on its website:

The audit also found a $40 million budget discrepancy, which made it unclear where that money went.

That claim is denied by UG Chief Financial Officer Dr. Shelley Kneuvean in a statement to The Sentinel:

“We would greatly appreciate your assistance in correcting the misinformation that is circulating. We recognize the importance of ensuring that public-facing documents, such as the online budget book, are accurate and consistent, as these are essential to maintaining public trust and transparency.

“However, it is important to distinguish between errors in a published budget document and financial audit findings indicating that funds are missing or unaccounted for. The audit did not identify missing or unaccounted-for funds. Rather, it identified discrepancies on a couple of pages within the budget document that require correction. Characterizing these documentation errors as $40 million in unaccounted-for funds is inaccurate and creates unnecessary public concern. We would appreciate your assistance in ensuring that the nature of these findings is communicated accurately.”

Dr. Kneuvean also provided an audit summary of the probe:

The audit by Kansas Legislative Post-Audit was requested by Edwardsville Mayor and State Representative Carolyn Caiharr, reflecting her community’s concerns that county funds have not been fairly distributed throughout Wyandotte County. Presentation of the audit and the response from Dr. Kneuvean before the Legislative Post-Audit Committee begins here at the 54:00 minute mark.

The city and county merged in 1997. According to the Post-Audit report, the study examined three state-administered funding streams provided to the county. The county’s share of the UG budget is roughly 25%. Post-Audit never made the $40 million claim in its report.

During our limited review of certain county-focused funds and services, we found many funds and services were operating as expected or required. However, we noted an incorrect allocation of the highway funding, improper cost allocations between Kansas City and the county for one department, a few inaccuracies in budget information, and record-keeping issues with interagency agreements.

The issues we identified pointed to UG management’s errors or lack of oversight related to statutory requirements, departmental allocations, operational transitions, and record-keeping. Given the heightened scrutiny the UG may receive in its unique environment, these errors could contribute to continued mistrust by stakeholders.

The audit’s recommendations:

The UG should allocate future Special Highway revenue as required and establish a separate county road and bridge fund to ensure that county Special Highway revenue is spent according to requirements.

The UG should confirm publicly available budget information reconciles and is accurate throughout the document and for each fund and department.

The UG should work with relevant parties to review and re-establish existing interlocal agreements. Going forward, the UG should create a process to verify interlocal agreements are signed and dated by the appropriate representatives of each participating entity. Lastly, the UG should establish a process to create a complete and centralized inventory of executed agreements and ensure they are appropriately maintained.

Dr. Kneuvean also provided The Sentinel with UG’s public response to the audit:

“We are pleased that the Post Legislative Audit of the use of Wyandotte County funds found that the funds were used appropriately across all areas of the county. We also appreciate the audit noting that a revision is needed to the method of how the state highway funds are distributed. Because Wyandotte County has only a few small roadways located in its unincorporated area, the application of the statute creates a disproportionate amount of funding for this small area. (The statute currently states that 10% of these funds should be deposited into a separate county highway fund, even though it is for a very limited number of roadway lane miles.)

“The UG has been allocating these funds in a commonsense way, based on the percentage of population within each incorporated area as contemplated in the statute and applying this allocation to the unincorporated area rather than a flat percentage. The result of this is that the cities of Edwardsville, Bonner Springs, and Kansas City, Kansas, have been receiving slightly more funding than they would have otherwise if the statute were applied as written. It should be clear that all of the funding has been used for roads and bridges as required by the statute, and the only issue at hand is the methodology to allocate the funds.

“The UG will be working with the state legislature in hopes of amending the statute to better allocate funding for roads and bridges for counties with a small area of unincorporated land and provide the resources to better maintain our infrastructure for the community.”