Auditors find high compliance for adult virtual credits but flag inconsistent KSDE audit practices and weak written policies

Legislative Post Audit told the committee that nearly all adult virtual school credits submitted for state funding complied with statutory criteria, but auditors concluded the Kansas State Department of Education’s (KSDE) audit process for those credits is not consistently applied and lacks sufficient written policies.

"We found that 99% of the credits the districts submitted appeared to comply with the criteria set in statute," Heidi Zimmerman, principal auditor with Legislative Post Audit, said in her presentation. She told the committee auditors reviewed five districts for the 2022 school year and five districts for 2023 (one district was in both samples), and that about 55 credits out of nearly 5,900 reviewed did not comply with statute.

The audit asked two questions: whether the credits districts submitted for adult virtual school funding complied with state funding rules, and whether KSDE’s audit process adequately ensures funded credits comply with state law and is applied consistently across districts. For the first question, auditors concluded compliance was generally high. For the second, LPA found the department’s audit process inadequate in several ways.

LPA identified multiple policy and practice gaps at KSDE: no written definition or threshold for "excessive credits," no documented steps KSDE will take when districts fail to implement corrective action plans, inconsistent treatment of work‑experience credits, and limited written guidance on supervisory review and documentation standards for audits. Zimmerman said those undocumented practices sometimes resulted in KSDE denying credits that Legislative Post Audit judged to be statutorily compliant.

The audit examined a contested case: Central Plains School District (USD 112). LPA reported Central Plains was initially funded for about 2,800 credits in 2022; KSDE auditors later denied funding for roughly 670 credits during their audit, and after an appeal KSDE restored about 120 credits, leaving roughly 540 credits unfunded in KSDE’s accounting. LPA said it identified about 500 credits for Central Plains that appeared statutorily compliant but that KSDE had not funded because auditors lacked confidence in the transcripts.

"Every credit that we counted for Central Plains was supported by the transcript," Zimmerman told the committee, explaining LPA’s approach: start with credits submitted for funding (KCAn entries) and use transcripts and vendor records to determine which credits were actually earned in the audited year and met statutory criteria (age, Kansas residency, course passed, and six‑credit annual cap).

KSDE Deputy Commissioner Frank Harwood told the committee the department’s fiscal‑auditing approach prioritizes correct funding for districts while protecting taxpayers. Harwood acknowledged some KSDE procedural gaps and said the department planned to add a redundant age‑verification step, but he disputed LPA’s characterization of KSDE practices. "LPA changed the scope of the audit from what was approved," Harwood said, and he criticized LPA’s use of third‑party vendor records (Graduation Alliance) in its review. He told the committee that state law requires verification by official school transcripts and that KSDE audits the district transcript record rather than third‑party vendor logs.

The disagreement between LPA and KSDE centers on methodology and on how auditors should treat transcript errors. LPA said it counted credits that could be verified as earned in the audited year even when other credits on the same transcript appeared to be misdated. KSDE described multiple rounds of requests to Central Plains for corrected transcript records and said it lost confidence in the accuracy of some transcripts after repeated, inconsistent submissions. KSDE said it withheld funding where transcripts could not be verified to protect taxpayers.

Committee members asked about the practical effects of the differences. Representative Tarwater expressed concern for students and districts if funding is withheld and asked whether claims against the state might arise; other members urged clarifications in statute or in KSDE guidance. Harwood noted the state’s written rules require transcript verification and said department practice conforms to law and the virtual monitoring guide used to administer funding. LPA recommended KSDE adopt clearer, written audit policies and consistent documentation and supervisory‑review standards.

The committee accepted the adult virtual school funding audit as part of the meeting’s consent calendar.

Auditors and KSDE officials agreed to follow up: LPA recommended policy clarifications and KSDE said it would strengthen age verification and review its guidance. The committee chair urged relevant legislative committees to examine the audit recommendations and KSDE’s responses.

The written audit contains detailed findings, tables of credits reviewed, and recommendations for KSDE and the Legislature; committee materials include the audit report and agency responses.