Audit Discovered Non-Compliance with Grant Terms and Conditions
Kansas Department for Children and Families Secretary Laura Howard today terminated the agreement with Hysell & Wagner, LLC, which administers the Kansas Reading Roadmap (KRR) program. In addition, Howard also announced the agency will directly fund schools
that made plans to offer the KRR program during the 2019-20 school year at the same level Hysell & Wagner was contractually obligated under the terminated grant.
“The Department for Children and Families is committed to ensuring that recipients of federal and state funds are spending those funds efficiently,” Howard said. “After reviewing the results of a DCF audit and despite heightened oversight during the first six months of 2019, it’s clear that Hysell & Wagner is falling short of this basic standard.”
The audit, initiated during the Brownback administration but never finalized or released, uncovered problems with internal controls required to achieve compliance with grant terms and conditions and applicable state regulations. All totaled, DCF auditors determined nearly $2.3 million were incorrectly claimed and paid to Hysell & Wagner during the time period from February 2014 to December 2015.
Since January, DCF Economic and Employment Services leadership uncovered additional concerns with Hysell & Wagner’s FY 2019 Kansas Reading Roadmap grant, including:
- TANF funds, categorized as indirect costs, used for excessive payments to company executives surpassing federal salary limits
- $216,000 was paid to owners as direct expenses and more than $607,000 has been charged to the grant in “guaranteed payments” as indirect expenses which would also go to the owners
- TANF funds, categorized as indirect costs, were used for 38 trips between Kansas and the CEO’s and CFO’s residences in Washington, DC, and San Diego, CA
- Administrative expenses charged to the Kansas Reading Roadmap grant exceeded federal and grant-specific limits of 15% of grant costs.
DCF has, in good faith, worked with Hysell & Wagner to educate and correct the identified issues. Despite these efforts, Hysell & Wagner continues to struggle with the heightened monitoring requirements and has rejected revisions in their FY 2020 contract addressing indirect costs.
“I’ve always been concerned about the use of no-bid contracts and lack of accountability under the previous administration,” Governor Laura Kelly said. “It’s clear that the State of Kansas cannot continue to support Hysell & Wagner’s administration of the Kansas Reading Roadmap program.
I am pleased that the Department for Children and Families is providing direct funding to schools for the coming year to ensure they receive the funds they’re counting on.”
Hysell & Wagner has until September 15 to complete their work with the program including providing notice of termination to sub-recipients of the award. DCF issued the draft audit to Hysell & Wagner August 15. The company has up to 30 days to respond. Once the agency receives their response the audit report will be finalized and made public.