Audit of the Kansas Board of Veterinary Examiners reveals struggling agency

A legislative audit focused on the Kansas Board of Veterinary Examiners has resulted in a report highly critical of the board’s personnel decisions. Specifically, the audit committee is holding the board responsible for inappropriate and unlawful approval of furlough for the executive director, inadequately managed staff, and a high risk for fraud, abuse and ineffective inspections. The audit report also points to a significant caseload for the state’s lone inspector and the need for additional staffing.

Beginning in August 2010, the audit committee report states, the veterinary board allowed Dirk Hanson, DVM, the board’s full-time executive director, to take a voluntary unpaid furlough totaling close to 1,000 hours during a seven-month period.

The committee deemed the furlough as inappropriate for several reasons. For one, state law allows the furlough of classified staff but not unclassified employees such as Hanson. In addition, Hanson did not submit a furlough plan to the Kansas Department of Administration. According to the audit report, Hanson thought his furlough was approved under a plan he had submitted in 2004. However, the report states, the approval letter for the 2004 furlough clearly indicated that it was authorized only through the end of fiscal year 2005. The committee laid the approval of an “open-ended and poorly defined furlough” at the feet of the board. “As the oversight board for this agency we would expect them to provide more supervision of such an extensive furlough,” the report states.

Representatives of the Kansas veterinary board are defending themselves and Hanson, saying they had the good of the agency and the public in mind. “These actions were taken with fiscally conservative, service-minded intentions and motives,” says Mark Olson, DVM, president of the Kansas Board of Veterinary Examiners, who corresponded with DVM Newsmagazine by e-mail. “The approach was consistent with the established mission, goals and philosophy of the agency--to act in accordance with the highest standards of ethics, accountability, efficiency and openness in a balanced and sensible approach to regulation.”

Olson says the state had encouraged the board to make up anticipated budgetary shortfalls by increasing license and renewal fees paid by veterinarians and registered technicians. “Rather than increasing fees, the agency decreased expenditures,” Olson says--in other words, it decided to to furlough Hanson. Hanson received $33,000 less in pay than if he had worked full time, although he did accrue three additional weeks of leave and maintained his health insurance. Hanson also worked a secondary job during the furlough.

The Kansas veterinary board’s budget worries began in 2009, after the state Legislature “swept a little more than $64,000 from the agency in June 2009,” Hanson told auditors. He also said that in October 2009 state budget officials predicted low cash levels for the agency by March 2011, prompting him to consider furlough to avoid a budgetary shortfall. However, the audit committee’s review of the agency’s monthly financial reports for fiscal year 2011 did not reveal shortfalls. In fact, the committee reports, even at its lowest cash balance the agency had more than three times the amount needed to cover expenditures. “Even if the director had not taken a furlough, the agency would have had sufficient cash balances,” the report states.

The audit committee found that the agency was inadequately managed during Hanson’s furlough because certain aspects of the director’s job could not be delegated. Although Hanson continued to serve as the agency’s representative before the Kansas Legislature, the audit determined that he was not available to provide a presence of qualified regulation to the state’s veterinarians. Due to the staff’s small size--in addition to Hanson, the board employs just two full-time employees--the committee found it impossible for Hanson to delegate day-to-day operations.

“Without this layer of supervision, there was an increased risk that inspections and complaint investigations would not be handled correctly, would be incomplete, or would be biased,” the report states. “Because essentially no one was supervising the employees while the director was on furlough, this important job responsibility was mostly neglected.” Still, the audit found the staff “generally functioned well” during the director’s absence.

When Hanson did return to full-time work in March 2011, his salary was reduced from $69,700 to $60,100. According to the audit, Hanson asked for this voluntary reduction in order to provide raises to the two other board employees--an investigator/inspector and an administrative officer. Hanson told the committee these staff members had not received raises in many years and all requests to increase salary expenditures had been denied. Plus, he said, both staff members had been with the agency for 10 years or more and were talking about leaving. “Because the staff were willing to take on increased responsibilities, the board agreed to raise their salaries in an effort to recognize those responsibilities and keep them with the agency,” Hanson says in the report.

In addition to the unauthorized furlough for Hanson, the audit committee identified other problems in the agency’s operations, including a high risk of fraud in regard to cash payments at the agency, although no evidence of fraud was found. The audit committee found little oversight for the cash handling process and recognized that because the agency has only three employees, it is “not feasible” for separate individuals to be responsible for different parts of the process.

The audit also deemed the agency’s inspection process to be inadequate. It noted that inspections were not unannounced or risk-based and appeared to be conducted quickly and rarely cited noncompliance issues. The agency’s lone inspector conducts between 300 and 400 inspections a year across the state as well as assisting with about 50 complaint investigations. “This seems like a significant amount of work for a single inspector to do thoroughly,” the committee states.

Olson says an additional full-time position to assist with inspections and investigations has been included in the agency’s recently submitted budget. “These actions are in an effort to better meet the needs of the agency in fulfilling its mission of promoting public health, safety and welfare relative to the practice of veterinary medicine within the state,” Olson says.

While the audit report did not recommend adding staff to the agency, it did recommend that the agency stop accepting cash payments, adopt a risk-based approach to scheduling and unannounced inspections, and create and implement written policies and procedures. It also asked the Kansas Department of Administration to address the issue of extending furlough regulations to unclassified employees. “While the board and agency staff do not concur with the findings of the audit, they do concur with and are implementing the recommendations,” Olson says.