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Post‑audit: HPIP data inconsistent; Kansas affordable housing tax credit awarded $73 million but not yet used
Summary
Josh Luthai told lawmakers that HPIP data provided by the Department of Revenue were inconsistent across datasets and could not be reported accurately in a limited‑scope review; KHRC has awarded roughly $73 million in state affordable‑housing tax credits but none had been claimed yet by investors at audit time.
Josh Luthai, an auditor with the Legislative Division of Post Audit, presented a limited‑scope audit on the High Performance Improvement Program (HPIP) and the Kansas Affordable Housing Tax Credit (KAHTC). "We didn't report on the amounts of HPIP credits businesses earned and used because of data limitations," Luthai told the committee.
HPIP: inconsistent tax data
The HPIP program offers state income tax credits for qualifying business training and capital investments. Luthai said the audit team reviewed three CADOR datasets that should track HPIP credits and found conflicting totals for the same tax years — for example, for tax year 2019 one dataset showed businesses earned about $900 million and used about $90 million, while another showed about $230 million earned and $110 million used, and a third showed about $160 million earned and $100 million used. Because the datasets were inconsistent and the review was a limited (100‑hour) engagement, auditors did not attempt a full reconciliation.
CADOR officials told auditors the inconsistencies stemmed from data‑entry errors, tax‑system limitations and complexity related to how some businesses pass credits through to owners or shareholders. Kathleen Smith of the Department of Revenue told the committee that CADOR provided three successive datasets and "the third dataset that we provided on August 13 ... CADOR believes that this reasonably reflects what are the actual numbers for tax years 2019 through 2023." She also told the committee, “these numbers change daily because tax returns are being filed, amended tax returns are being filed.” CADOR told the committee it plans to finish a data review by the start of 2026; audit staff and committee members asked CADOR to provide corrected, validated figures to the committee when available.
KAHTC: awards, timing and potential state cost
The audit found KHRC awarded nearly $73 million in state affordable‑housing tax credits as of August 2025. The state credit matches the federal low‑income housing tax credit in structure and KHRC issues awards through an application process. Luthai noted that investors may not use the state credit until housing projects are complete and occupied; at the time of the audit no investors had used the state credit. Because the state awards can be claimed annually for up to 10 years for each project, the audit illustrated a “stacking” effect: credits awarded in early years may cause overlapping foregone tax revenue in later years. Using reasonable timing assumptions, the audit estimated potential foregone state tax revenue could reach roughly $1.0 billion over the multi‑decade life of awards issued through the program, though the report cautioned that estimate excludes other tax revenue generated by construction and economic activity.
Report context and committee questions
Senator Tyson, who requested the audit, and other committee members pressed CADOR and KHRC staff about data reliability and program mechanics. Representatives and senators asked for more detail about project lists in appendix A (KHRC provided a table of award recipients and unit counts), the timing when investors can claim credits, and how credits are used in practice. KHRC’s Ryan Vincent emphasized that the program leverages federal private‑activity bond cap and private investment and said the agency believes the program has substantially increased the production of affordable housing in Kansas: he said the program facilitated about 5,700 units across 67 projects since the credit was created and noted economic activity stemming from construction and occupancy.
Actions and next steps
Auditors recommended CADOR continue review and correct HPIP data and report corrected figures to the legislature; CADOR agreed and set a target to complete the work by early 2026. Committee members asked the Department of Revenue to provide interim updates by email and to notify the committee when the validation is complete. KHRC said it will continue to provide details on awarded projects and the agency offered to help the committee evaluate program outcomes and economic impacts.
Ending
The committee heard that HPIP tracking will require a full‑scope audit to reconcile CADOR’s detailed tax records. In the meantime, CADOR pledged continued data review and KHRC defended program results while noting the state credit’s long‑term budgetary effects.
