Report looks at allocation of $99 million to 35 projects in wake of pandemic
TOPEKA — The Kansas Legislature’s auditors reported Monday the state Department of Commerce didn’t consistently adhere to internal evaluation processes and maintain transparency in selecting recipients of $99 million in federal infrastructure and economic development funding.
Kristen Rottinghaus, deputy auditor of the Kansas Division of Post Audit, said the review raised questions about the commerce department’s compliance in early 2022 with its method of scoring the 250 qualifying applications and the authority wielded by Secretary David Toland to include his personal analysis of applications in wake of the devastating COVID-19 pandemic.
Eligible applications were to be scored by two state agency staff members, but in some instances only one score existed or reviewers left certain questions on scoring sheets blank. Absence of that information could have disadvantaged applicants, the audit report said.
“We think these inconsistencies are important,” said Rottinghaus, who said auditors took a deep dive into 10 applicants.
The Department of Commerce hired a private company to perform initial screening of 455 applications submitted by cities, counties, colleges and universities, businesses and nonprofits. The idea was to inject funding into upgrading business parks, improving health care facilities, modernizing infrastructure as well as invest in other development initiatives.
Applications came from 84 of the state’s 105 counties and sought a total of $1.7 billion. About 200 were discounted because they didn’t meet minimum requirements. The commerce department deployed a scoring rubric and subjective assessments tied to geography, project type and need to narrow the list to 35 projects in 24 counties.
Awards ranged from $13,500 to $10 million, but two counties in Kansas won 29% of the projects and 49% of available money.
Johnson County, the state’s most populous county, received six awards for $33 million. The second-biggest recipient was Butler County with four projects valued at $15.5 million. The population of Butler County ranks 8th among counties in Kansas. The county is represented by Senate President Ty Masterson, an Andover Republican contemplating a Republican campaign for governor in 2026.
Sen. Mike Thompson, R-Shawnee, said the Department of Commerce devoted a lot of time to the application scoring system but he alleged Toland “sort of ignored it.” Toland, who serves as commerce secretary and as lieutenant governor in Kansas, is among potential Democratic candidates for governor.
“Was the scoring system more for appearance or just to give cover for the secretary to decide whoever he wanted to give the money to?” said Thompson, who also questioned whether some projects receiving funding were a higher priority than proposals rejected.
“It seems like it was just willy-nilly granting money,” he said. “It just seems like this was rushed and not well-though-out.”
The grant program, known as Building a Strong Economy or BASE, was established by the so-called SPARK executive committee that included Toland, Masterson, then-House Speaker Ron Ryckman and several appointees of state government officials. SPARK was authorized by Senate Bill 159, which was passed in spring 2021 to handle allocation of an avalanche of federal relief funding.
In terms of the Kansas award recipients, 16 of 35 projects received at least 90% of the amount requested. Eleven of 35 projects secured less than half the request. Twenty of 24 recipient counties had a single project. In addition to multiple grants secured by Johnson and Butler counties, Shawnee County received three grants and Wyandotte County was awarded two grants.
Rachel Willis, director of legislative affairs at the Department of Commerce, said the agency rapidly carried out the grant process in response to a global pandemic that wreaked havoc on the Kansas economy.
“The BASE program has successfully provided funding to support key infrastructure development projects across the state to help expand the state’s base of businesses and residents,” she said. “This was a challenging task given the significant number of applications received and the importance of getting the money into the communities quickly.”
Willis said the Department of Commerce was committed to geographic distribution when making the final grant awards, which meant not all projects receiving the highest technical score could be funded.
“If we only evaluated strictly on technical scores, only a couple regions of the state would have received nearly all the grants, leaving the state’s other regions with nothing,” she said.
Willis said the commerce secretary had authority under state law to evaluate applications “using a broader scope and breadth of factors,” including whether the applicant was in a rural, suburban or urban setting. Toland also took into account diversification in the types of project, potential impact a project would have on the community and how the project aligned with the state’s strategic economic development plans, she said.
The audit report, however, said public transparency was compromised by failure of the Department of Commerce to document Toland’s process of making final decisions on grant awards.
Willis acknowledged human error found its way into documentation of the selection process, but noted the audit “confirmed there was no wrongdoing in the selection process by the agency.”
Rep. Sean Tarwater, R-Stilwell, pressed the state auditor on this point, asker Rottinghaus directly whether the review uncovered fraud.
“This was just assessing their process,” she said. “We can’t speak to any fraud.”
Kansas Reflector is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Kansas Reflector maintains editorial independence. Contact Editor Sherman Smith for questions: info@kansasreflector.com. Follow Kansas Reflector on Facebook and Twitter.
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