Senate committee hears bill to award state employees 10% of recovered savings for reporting fraud and waste

The Senate Committee on Government Efficiency opened a hearing on Senate Bill 450, which would authorize the secretary of administration, in consultation with the office of inspector general or the attorney general, to grant a monetary award equal to 10% of state savings realized from a state employee's report of fraud, waste or abuse, after deducting investigation and recovery costs, Reviser David Weese told the committee.

"If the secretary of administration, in consultation with the office of inspector general or the attorney general, determines that such report results in the saving of state funds, the amount of the award would be 10% of the savings realized by the state," Weese said, adding that awards would only be made if the state had actually collected the recovered funds and that disciplinary protections would be governed by the Kansas Whistleblower Act (KSA 75-29-73).

The bill's sole oral proponent, Senator Mike Murphy, said the measure is intended to encourage employees who observe fraud or inefficiency to come forward and be rewarded for saving taxpayer dollars. "I think it's kind of ownership," Murphy said, recounting a private-sector example: "They determined that was a $19,000,000 annual savings... and so he got a check for 1,900,000. Kind of nice." Murphy said he drew on corporate experience and on similar programs in other states when drafting the bill.

Committee members pressed the bill's authors on several points. Senator Alley said employees whose job is to find savings'for example, inspector general staff or auditors'should be excluded from eligibility to prevent those administering or whose duties include identifying recoveries from profiting. Alley raised a hypothetical: if an inspector general's office found $150,000,000 in savings, a straight 10% award would amount to $15,000,000. "If the people are doing that as their job, then they should not be participating in this program," Alley said.

Murphy responded that he agreed the language should be tightened to exclude routine duties from award eligibility and said he would work with advisers to refine the bill.

Senator Shane questioned how this proposal relates to an existing employee suggestion program that carries a $3,500 cap. Weese explained the $3,500 limitation in KSA 75-37-105 applies to the existing suggestion program administered by the Department of Administration but does not apply to the new fraud, waste and abuse reporting program created in SB 450; the bill as drafted would provide 10% of the first 12 months'documented savings with no cap for the reporting program.

Senator Hoelscher asked what would prevent partisan or retaliatory complaints. Murphy said the Department of Administration should screen early claims and "weed that sort of stuff out," acknowledging false or bad-faith reports are a risk but arguing the program could promote care for public funds.

The committee recorded that there were no additional proponents, neutrals or opponents and closed the hearing on Senate Bill 450; the chair said the committee will meet Monday to work the bills heard this week and encouraged members to prepare any amendments. The meeting also approved the January minutes earlier in the session; the chair announced the motion "carries."

A follow-up procedural question noted the committee's coach portal used to gather suggestions has been taken down after the committee reviewed submissions; the chair said members or members of the public may still email suggestions to committee members or the committee assistant.

The committee did not take a final vote on Senate Bill 450 during the hearing; next procedural steps are to consider amendments when the committee meets to work bills on Monday.