PERFORMANCE AUDIT REPORT

Local Expenditures of Private Club Liquor Taxes

A Report to the Legislative Post Audit Committee By the Legislative Division of Post Audit State of July 1986

86PA65 Legislative Post Audit Committee Legislative Division of Post Audit

THE LEGISLATIVE POST Audit Committee and its committees should make their requests for perform­ audit agency, the Legislative Division of Post Audit, ance audits through the Chairman or any other are the audit arm of Kansas government. The pro­ member of the Committee. Copies of all completed grams and activities of State government now cost performance audits are available from the Division's about $6 billion a year. As legislators and adminis­ office. trators try increasingly to allocate tax dollars effec­ tively and make government work more efficiently, they need information to evaluate the work of gov­ LEGISLATlVE POST AUDIT COMMITTEE ernmental agencies. The audit work performed by Legislative Post Audit helps provide that information. Senator August "Gus" Bogina, Jr., P.E., Chair We conduct our audit work in accordance with Senator Neil H. Arasmith applicable government auditing standards set forth Senator Norma Daniels by the U.S. General Accounting Office. These stan­ Senator Ben E. Vidricksen dards pertain to the auditor's professional qualifica­ Senator Joe Warren tions,' the quality of the audit work, and the charac­ teristics of professional and meaningful reports. The Representative Robert H. Miller, Vice-Chair standards also have been endorsed by the American Representative Bill Bunten Institute of Certified Public Accountants and adopted Representative Duane Goossen by the Legislative Post Audit Committee. Representative Ruth Luzzati The Legislative Post Audit Committee is a bi­ Representative Bill Wisdom partisan committee comprising five senators and five representatives. Of the Senate members, three are appointed by the President of the Senate and two LEGISLATIVE DIVISION OF POST AUDIT are appointed by the Senate Minority Leader. Of the Representatives, three are appointed by the Suite 301, Mills Building Speaker of the House and two are appointed by the Topeka, Kansas 66612-1285 Minority Leader. Telephone (913) 296-3792 Audits are performed at the direction of the FAX (913) 296-4482 . Legislative Post Audit Committee. Legislators or

The Legislative Division of Post Audit supports full access to the services of State government for all citizens. Upon re­ quest, Legislative Post Audit can provide its audit reports in large print, audio, or other appropriate alternative f.ormat to accommodate persons with visual impairments. Persons with hearing or speech disabilities may reach us through the Kansas Relay Center at 1-800-766-3777. Our office hours are 8:00 a.m. to 5:00 p.m., Monday through Friday. PERFORMANCE AUDIT REPORT

Local Expenditures of Private Club Liquor Taxes

OBTAINING AUDIT INFORMATION

This audit was conducted by Mary Beth Green, Senior Auditor, and Curt Winegamer, Auditor, of the Division's staff. If you need any additional information about the audit's findings, please contact Ms. Green at the Division's offices. TABLE OF CONTENTS

SUMMARY OF AUDIT FINDINGS

LOCAL EXPENDITURES OF PRIVATE CLUB LIQUOR TAXES

The Private Club Liquor Tax in Kansas 1

How Are Cities And Counties Spending Their Portion OfThe Private Club Liquor Tax For Alcohol And Drug Abuse Programs? 4

Do These Expenditures Appear To Be Appropriate And, IfNot, What Steps Can Be Taken To Help Ensure That Such Funds Are Properly Spent? 9

Recommendation 13

APPENDIX A: Private Club Liquor Tax Distributions to Cities and Counties, Calendar Year 1985 15

APPENDIX B: Grants For Local Alcohol and Drug Abuse Programs, Calendar Year 1985 17

APPENDIX C: Types ofGrant Awards, Calendar Year 1985 31

APPENDIX D: Agency Responses 33 LOCAL EXPENDITURES OF PRIVATE CLUB LIQUOR TAXES Summary of Legislative Post Audit's Findings How are cities and counties spending their portion of the private club liquor tax for alcohol and drug abuse programs? The auditors visited a sample of eleven cities and counties selected on the basis of population, location, and annual liquor tax revenue. In calendar year 1985, the sample localities received more than $3 million in private club liquor taxes. More than $1 million of that amount was earmarked for alcohol and drug abuse programs. The auditors found that the sample localities spent these funds on a variety of programs and services, but most funds were spent on substance abuse treatment and education programs. Procedures for awarding and monitoring alcohol and drug abuse grants varied from one community to another, but they generally appeared to be adequate for the level offunding involved. A detailed list ofthe grants awarded by the sample localities during calendar year 1985 can be found in Appendix B. Do these expenditures appear to be appropriate and, if not, what steps can be taken to help ensure that such funds are properly spent? The auditors found that current State law allows moneys in local special alcohol and drug programs funds to be spent on a wide variety of services and programs. In the localities they reviewed, most alcohol and drug program expenditures clearly complied with the requirements of State law. Some localities awarded grants to organizations or programs that did not have substance abuse as their sole or primary concern. While these expenditures did not appear to violate current State law, statutory changes made during the 1986 Session may prohibit such expenditures in the future. Three localities also allocated money for administrative costs, which is not" specifically allowed by State law. The auditors recommended that the Legislature clarify the law to specifically state whether cities and counties may use private club liquor tax funds for administrative costs.

LOCAL EXPENDITURES OF PRIVATE CLUB LIQUOR TAXES State law imposes a 10 percent tax on the gross receipts derived from the sale of alcoholic liquor by private clubs. Revenues generated by this tax are allocated to the State General Fund, the Department of Social and Rehabilitation Services' Community Alcoholism and Intoxication Programs Fund, and cities and counties. One-third of the money distributed to cities and counties must be deposited in special alcohol and drug programs funds, and may only be spent for programs of alcohol and drug abuse prevention, education, intervention, and treatment. Legislative concerns have been raised that local funds intended for alcohol and drug abuse programs are being spent for other purposes. To address these concerns, the Legislative Post AuditCommittee directed the Legislative Division ofPostAudit to conduct an audit of the private club liquor tax expenditures for local alcohol and drug abuse programs. This audit answers two questions: 1. How are cities and counties spending their portion of the private club liquor tax for alcohol and drug abuse programs? 2. Do these expenditures appear to be appropriate and, if not, what steps can be tal{en to help ensure that such funds are properly spent? To answer these questions, the auditors reviewed the current private club liquor tax laws and examined records maintained by the Departments of Revenue and Social and Rehabilitation Services and the State Treasurer. They also visited a sample ofKansas cities and counties to interview local officials and review expenditures from local special alcohol and drug programs funds. Finally, the auditors reviewed recent changes in the private club liquor tax laws and determined whether additional steps are necessary to ensure that these funds are properly spent.

In the sample cities and counties, the auditors found that most expenditures ofprivate club liquor taxes for alcohol and drug abuse programs complied with the requirements of current State law. These cities and counties spent about 90 percent of their 1985 special alcohol and drug abuse funds on programs that were primarily concerned with substance abuse. Another three percent was spent on programs that dealt with alcohol and drug abuse but that did not have substance abuse as their sole or primary concern. The remaining funds, representing about $67,500, were spent on administrative costs, which is not specifically allowed under State law. These and other findings are discussed in more detail after the following overview of the State's private club liquor tax law. The Private Club Liquor Tax in Kansas K.S.A. 79-41aOl et seq. imposes a 10 percent tax on the gross receipts derived from the sale of alcoholic liquor by private clubs. This tax applies to the total amount clubs charge for drinks containing alcoholic liquor. Consumers pay the tax to private club operators, and the operators remit the tax to the Department ofRevenue. The Department of Revenue deposits liquor tax receipts in the State Treasury as follows: 25 percent to the State General Fund, 5 percent to the Department of Social and Rehabilitation Services' Community Alcoholism and Intoxication Programs Fund, and 70 percent to the Local Alcoholic Liquor Fund. The State Treasurer then makes quarterly distributions to cities and counties from the Local Alcoholic Liquor Fund. In addition, if the total amount distributed to cities and counties in any calendar year is less than the amount distributed in 1981, an equalization payment is made the next March 15. Funds for

1. equalization payments come from the State General Fund. The procedures for collecting and distributing private club liquor tax receipts are shown in the figure on page three.

In calendar year 1985, the Department of Revenue collected approximately $9.6 million in private club liquor taxes, and the State Treasurer distributed about $9.5 million. Collections and distributions differ because distributions to the cities and counties lag about three months behind actual collections, and distribution figures include equalization payments. As the pie chart below shows, cities received more than $6.2 million, or 65.7 percent of the total amount distributed. Counties received an additional $874,000, or 9.2 percent ofthe total.

CALENDAR YEAR 1985 LIQUOR TAX DISTRIBUTIONS

SRS ($120,000) 1.2%

State General Fund ($2,280,000) 23.9%

Cities Counties ($6,261,000) ($874,000) 65.7% 9.2%

Individual cities generally receive 70 percent of the amount collected within the city limits, and counties receive 70 percent of the amount collected from clubs located outside the city limits. Appendix A shows the amount of private club liquor taxes distributed to individual cities and counties during calendar year 1985. Of the moneys distributed to cities and counties, one-third is to be deposited in the local general fund, one-third in the local parks and recreation fund, and one-third in the local special alcohol and drug programs fund. For cities with populations of 10,000 or less, the one-third for the special alcohol and drug programs fund is distributed to the appropriate county and deposited in the county's alcohol and drug programs fund. State law requires money in the local special alcohol and drug programs fund to be spent on services or programs of alcohol and drug abuse prevention, education, intervention, and treatment. Moneys in the special parks and recreation fund must be spent on park and recreational activities. No restrictions are placed on the portion ofprivate club liquor taxes deposited in the local general fund. This audit focused on expenditures from

2. COLLECTION AND DISTRIBUTION OF PRIVATE CLUB LIQUOR TAX

Club Remits Tax to the Department of Revenue

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Collects 10 % Tax From Customers on Gross Receipts From the Sale of Alcoholic Liquor

~ LOCAL GOVERNMENT ~~

CITY SHARE COUNTY SHARE

70 % ofAmount Collected Inside City Limits 70 % ofAmount Collected Outside City Limits CITY> 1/3 - to City General Fund 1/3 - to County General Fund 1 0,000 1/3 - to Parks & Recreation Fund 1/3 - to Parks & Recreation Fund POP. 1/3 - to Alcohol & Drug Programs Fund 1/3 - Alcohol & Drug Programs Fund

46 2/3 % ofAmount Collected Inside City Limits 23 1/3 % ofAmount Collected Inside City Limits CITY ~ 10,000 1/2 - to City General Fund All to Alcohol & Drug Programs Fund POP. 1/2 - to Parks & Recreation Fund

3. local special alcohol and drug programs funds only. Expenditures from local general funds and parks and recreation funds were not reviewed. How Are Cities and Counties Spending Their Portion of the Private Club Liquor Tax for Alcohol and Drug Abuse Programs? To answer this question, the auditors selected a sample of seven cities and four counties for a detailed review ofexpenditures from local alcohol and drug programs funds. Localities were selected to provide a varied sample based on population, geographical distribution, and annual liquor tax revenue. The cities reviewed were Dodge City, Kansas City, Liberal, Newton, Olathe, Topeka, and Wichita. The counties were Clark, Johnson, Rice, and Saline. These 11 localities are shown in the map below.

Localities Audited For Usage of Private Club Liquor Taxes

Wichita @

Localities were selected to provide a varied sample based on population, geographical distribution, and annual liquor tax revenue.

In calendar year 1985, the 11 sample localities received more than $3 million in private club liquor taxes. More than $1 million ofthat amount was earmarked for alcohol and drug abuse programs. The auditors found that the sample localities spent these funds on a variety of programs and services, but most funds were spent on substance abuse treatment and education programs. Procedures for awarding and monitoring alcohol and drug abuse grants varied from one locality to another, but they generally appeared to be adequate for the level of funding involved.

In Calendar Year 1985, the Audited Localities Received More Than $1 Million In Private Club Liquor Taxes For Alcohol and Drug Abuse Programs In each of the localities they visited, the auditors examined accounting records for calendar year 1985 to determine the total amount ofprivate club liquor tax money received,

4. the amount distributed to each of the local funds (general fund, parks and recreation fund, and alcohol and drug programs fund), and whether these distributions were made in compliance with statutory requirements. The total liquor tax receipts for each city and county, and the distributions to their alcohol and drug programs funds, are shown in the table below.

Private Club Liquor Tax Receipts Calendar Year 1985

Alcohol & Drug Total Receipts Program Portion

Cities Dodge City $ 122~540 $ 40,847 Kansas City 282,289 94~096 Liberal 55~013 18,338 Newton 46,868 15,623 Olathe 81,499 27,150 Topeka 687,509 229~153 Wichita 1,732~148 577,383

Counties Clark County 2,814 1,404 Johnson County 47,413 34,834 Rice County 9,492 5,828 Saline County 16,037 6,197

Totals $ 3,083,622 $ 1,050,853

As the table shows, total liquor tax distributions to the 11 audited localities amounted to more than $3 million. This represents 43.2 percent of the private club liquor taxes distributed to all cities and counties in calendar year 1985. Statewide, Kansas' three largest cities--Kansas City, Topeka, and Wichita--accounted for almost 38 percent of the 1985 distributions. These three cities were all included in the auditors' sample. In accordance with State law, the 11 audited localities deposited $1,050,853 of their 1985 private club liquor tax money in their special alcohol and drug programs funds. The localities' use of these funds is discussed in the following sections.

The Audited Localities Spent Their Alcohol and Drug Funds On a Variety of Programs and Services K.S.A. 1985 Supp. 79-41a04 allows cities and counties to spend alcohol and drug programs funds for "the purchase, establishment, maintenance or expansion of services or programs of alcoholism and drug abuse prevention and education, alcohol and drug detoxification, intervention in alcohol and drug abuse or treatment of persons who are alcoholics or drug abusers or are in danger of becoming alcoholics or drug abusers." To determine how the audited localities actually spent funds set aside for alcohol and drug abuse programs, the auditors reviewed local grant files, accounting records and other documentation. They found that the audited cities and counties awarded a total of62 grants worth $1,044,808 during calendar year 1985.

5. As allowed by law, the 62 grants provided funds for a variety of programs. Each program funded, by locality, is described in Appendix B. In general, the funded programs fell into six major categories:

• Treatment: Treatment programs include inpatient and outpatient services, detoxification programs, assistance with the transition back to society, and aftercare programs such as Alcoholics Anonymous. For example, Dodge City awarded $18,900 to New Chance, Inc., a non-profit corporation that provides detoxification, in-patient, out-patient, and alcohol and drug safety action programs for substance abusers and their families.

• Education: Education programs include training on substance abuse recognition for school teachers and other public officials, classes and seminars for students and the general public, media campaigns, and programs to provide books, films, and other educational materials to the community. Most of the audited localities provided funding for substance abuse education programs in their local school districts, and some also funded programs at the college level.

• Intervention: Intervention programs are intended to detect persons with substance abuse problems, and either intervene in their abuse directly or refer them to treatment programs. The City of Topeka and Saline County sponsored court evaluation programs to make treatment recommendations and referrals regarding criminal offenders involved in substance abuse. The City ofLiberal sponsored a series of newspaper advertisements and a free taxi service to discourage drunk driving on New Years' Eve.

• Enforcement: Enforcement activities include efforts to increase public awareness about and compliance with laws related to substance abuse, as well as funding for staff and equipment used in enforcing these laws. Enforcement activities involve both intervention and education programs. The City of Topeka provided funding for a special police unit to detect and arrest drunk drivers, and the City of Wichita provided funding for an alcohol enforcement detective assigned to reduce the consumption and abuse of alcohol by minors.

• Admirlistration: Some localities allocate alcohol and drug. program funds for administrative costs associated with awarding and monitoring grants. Actual administrative tasks may be performed by local advisory committees or local government employees.

• Other: This category includes miscellaneous grants made to programs that did not appear to have substance abuse as their primary concern. These included numerous domestic violence programs and a telephone hotline for teenagers. While substance abuse was a factor in each ofthese programs, it did not appear to be the primary focus ofthe program. Most private club liquor tax money for alcohol and drug abuse pro­ grams was spent on treatment and education programs. The sample localities awarded 82.6 percent of their 1985 grant funds to treatment and education programs. The total number and types ofgrants awarded by the audited localities are shown in the table on the next page.

6. Types of Grants Awarded by the Audited Localities Calendar Year 1985 Number Amount Percent Type of Program of Grants Awarded of Total

Treatment 22 $ 652,368 62.4% Education 23 210,538 20.2 Intervention 3 24,244 2.3 Enforcement 2 57,144 5.4 Administration 3 67,560 6.5 Other --.2 32,954 --.l2 Totals 62 $ 1,044,808 100.0 %

As the table shows, more than $652,000, or 62.4 percent of the grant money awarded in 1985, was allocated to substance abuse treatment programs. Another $210,000, or 20.2 percent, was spent on education programs. Intervention, enforcement, and administrative programs received 14.2 percent of the grant funds. The remaining 3.2 percent was spent on domestic violence programs, a teen hotline, and educational materials. Individual localities emphasized different categories of grant awards. For example, Kansas City awarded more than 51 percent of its 1985 funds to education programs, and Saline County awarded all funds to an intervention program designed to evaluate criminal offenders with substance abuse problems. Clark County officials did not make any grant awards during 1985 but retained their private club liquor taxes for substance abuse programs ($1,404) in the special alcohol and drug abuse programs fund. The types and amounts of the grants awarded by each of the 11 audited localities are summarized in Appendix C.

Procedures For Awarding and Moni­ Spending Private Club Liquor Taxes toring Alcohol and Drug Program in Rice County Grants Also Varied From One Locality to Another In calendar year 1985, Rice County's only grant award was $2,958 to the Lyons Rotary Club In all cities and counties, the local to fund a "community service building" for governing body is responsible for approving meetings of alcohol recovery groups. Rotary Club grant awards. '"fhe auditors found that the officials told the auditors that the grant money was sample localities used a variety ofprocedures used to pay for utilities and building maintenance. to evaluate and award alcohol and drug According to documents reviewed by the program grants. For example, in some auditors, the building was purchased in 1982 localities the city councilor the county specifically to provide a meeting place for these local alcohol recovery groups. commission actually reviewed and evaluated In June 1985, the Rotary Club submitted a grant requests. Other localities have local report to the Rice County Commission concerning advisory bodies on alcohol and drug abuse usage of the building during the preceding year. that evaluate the requests and make The report indicated the building had been used recommendations to the governing body. by four different alcohol recovery groups (Alcoholics Anonymous, Alanon, Alateen, and The amount of information and After Care) with a total clientel of about 200 documentation required to apply for grants persons. The report also indicated that although also varied. Some localities required detailed Rotary Club officials received requests from other grantapplications containing financial reports community groups wishing to use the building, only the alcohol groups were permitted to do so.

7. and program budgets, while others required only a verbal presentation before the governing or advisory body.

Once grant funds had been awarded, the auditors noted differences in the procedures used to monitor grants. Some localities required quarterly reports showing how grant money had been spent and what program objectives had been acheived. Others required only annual reports which could be used to evaluate grant requests for the following year. A few localities entered into grant contracts with recipients formally specifying how the grant money would be used. These localities generally paid out grant money on a reimbursement basis, after verifying that expenditures were made in compliance with the contract specifications. Finally, the auditors found some localities that did not appear to have any procedures for monitoring the use of grant money. These localities apparently relied on grant recipients to use the money as they had indicated in their grant requests. The localities handling the largest sums of grant money Ilad the most stringent procedures, while those handling smaller amounts had less stringent procedures. For example, the City of Wichita (with 11 grants totaling $600,000) had the most extensive program for awarding and monitoring grants. Requests for funding were reviewed and evaluated by a local advisory board staffed by the City's Department of Human Resources. Agencies seeking funds were required to complete standard application forms incorporating details about the program's operations and projected budget. Those that received grant awards were required to enter into contracts with the City, which not only specified how the grant money was to be spent, but also established minimum performance standards for the program. The City monitored the expenditure of grant money by paying recipients on a reimbursement basis and monitored program performance through quarterly progress reports and annual site visits.

In contrast, Saline County awarded only one grant for $6,197,and appeared to Big Brothers-Big Sisters have limited procedures for monitoring grant Alcohol and Drug Abuse Program awards. The single grant made in calendar year 1985 was an on-going award to help In 1985, the City of Wichita awarded a fund a court evaluation program for offenders $20,418 grant for a substance abuse project with substance abuse problems. No operated by Big Brothers-Big Sisters of Sedgwick documentation was submitted to request the County. The program was designed to identify funds, and no advisory body or professional youth clients with a "high risk" of developing staff was involved in evaluating the request. substance abuse problems. Then the program Instead, the transaction was carried out would provide those youth with suitable volunteer matches, and referrals to substance abuse entirely before the county commission and programs if necessary. During calendar year recorded only in the commission minutes. 1985, the program provided matches and referals Once the grant award had been finalized, no for 47 "high risk" youth. -According to documents formal attempt was made by the County to reviewed by the auditors, the grant money monitor the use of the funds. In general, the provided that year was used to fund the project auditors found that the procedures for coordinator's salary and fringe benefits. awarding and monitoring grants were generally adequate for the level of funding involved. The Department of Social and Rehabilitation Services Also Funds Local Alcohol and Drug Abuse Programs With Private Club Liquor Tax Receipts As ofJuly 1, 1985, five percent of all private club liquor tax receipts are deposited in the Department of Social and Rehabilitation Services' Community Alcoholism and

8. Intoxication Programs Fund. Using these funds, the Department awarded 12 grants to local treatment programs during fiscal year 1986. The programs funded and the grant amounts are listed in the table below.

Community Alcoholism and Intoxication Programs Fund Private Club Liquor Tax Grant Awards Fiscal Year 1986

Agency Grant Period Amount

Central Kansas Foundation for Alcohol and 1-1-85 to 12-31-85 $ 59,600 Chemical Dependency, Salina Mid-America All Indian Center-Indian Alcoholism 1-1-85 to 12-31-85 7,774 Treatment Services, Wichita Mental Health Center 1-1-85 to 12-31-85 34,750 Humbolt Mental Realm Center of East Central Kansas 7-1-85 to 12-31-85 13,635 Emporia Cherokee County Mental Health Center 7-1-85 to 6-30-86 30,051 Baxter Springs Horizons Mental Health Center-Wheatlands 7-1-85 to 6-30-86 29,100 Substance Abuse Center, Hutchinson Smoky Hills Foundation for Chemical Dependency 7-1-85 to 6-30-86 78,908 Hays Southwest Kansas Alcohol and Drug Addiction 7-1-85 to 6-30-86 51,210 Foundation, Liberal Sunrise, Inc, 7-1-85 to 6-30-86 104,250 Larned Western Kansas Foundation for Alcohol and Chemical 7-1-85 to 6-30-86 14,000 Dependency, Inc" Garden City Wichita/Sedgwick County Department of Community 7-1-85 to 6-30-86 51,407 Health Alcoholism Counseling Center, Wichita Douglas County Citizens Committee on Alcoholism 10-1-85 to 9-30-86 111,500 Lawrence

Total Fiscal Year 1986 Grant Awards $ 586,185

Unlike grants awarded from local special alcohol and drug programs funds, State law requires money in the Community Alcoholism and Intoxication Programs Fund to be spent on community-based treatment programs only. In addition to these grants, K.S.A. 41-1126 authorizes the Department to spend up to 10 percent of the money in the Fund on the administrative costs ofits Alcohol and Drug Abuse Section.

Do These Expenditures Appear To Be Appropriate And, If Not, What Steps Can Be Taken To Help Ensure That Such Funds Are Properly Spent? To answer this question, the auditors reviewed State laws and interviewed officials from the Department ofSocial and Rehabilitation Services. They also examined the audited localities' expenditures from their special alcohol and drug programs funds. Finally, the auditors reviewed changes made in the private club liquor tax law during the 1986 Session.

9. The auditors found that current State law allows moneys in local special alcohol and drug programs funds to be spent for a wide variety of services and programs. In the localities revievved, most alcohol and drug program expenditures clearly complied with the requirements of State law. Some localities also awarded grants to organizations or programs that did not appear to have substance abuse as their sole or primary concern. These programs included domestic violence and child abuse programs and a hotline for teenagers. While these expenditures did not necessarily violate current State law, changes made to K.S.A. 79-41a04 during the 1986 Session may prohibit such expenditures in the future. Finally, three localities allocated money for administrative costs, which is not specifically allowed by State law. In the Audited Localities, Most Liquor Tax Expenditures For Alcohol and Drug Abuse Programs Complied With State Law

Under current State law, money in local special alcohol and drug programs funds may be spent on a wide variety of services and programs. K.S.A. 1985 Supp. 79-41a04 allows localities to spend such funds for "the purchase, establishment, maintenance or expansion ofservices or programs ofalcoholism and drug abuse prevention and education, alcohol and drug detoxification, intervention in alcohol and drug abuse or treatment of persons who are alcoholics or drug abusers or are in danger ofbecoming alcoholics or drug abusers." In 1985, more than 90 percent of the funds spent by the audited localities went to programs that \vere primarily concerned with some aspect of alcohol or drug abuse prevention, education, intervention, or treatment. Under State law, funding for these programs is clearly appropriate.

The Audited Localities Awarded a Alcohol and Drug Program Funds Small Portion Of Their 1985 Funds For a Telephone Hotline To Programs Primarily Directed at Three localities--Kansas City, Olathe, and Social Problems Other Than Alcohol Johnson County--granted a total of $11,915 to a And Drug Abuse mental health agency in Wyandotte County to fund a 24-hour crisiS and information telephone Approximately $33,000, or 3.2 percent service for teenagers. Most of the funding was of the 1985 funds, were spent on domestic provided by the City of Kansas City. The alcohol violence and child abuse programs, a and drug program funds provided more than 50 telephone hotline for teenagers, and educa­ percent of the hotline's total budget for 1985. tional materials on various subjects including, Hotline volunteers were trained to be but not limited to, substance abuse. These particularly sensitive to substance abuse problems programs are listed in the box on page 11. and to make referrals to treatment programs. Most of these programs justified their According to documents reviewed by the requests for alcohol and drug abuse funds by auditors, about 12 percent of the calls handled by the hotlinethat year involved substance abuse as pointing out a relationship between the the primary issue of the call. An undocumented primary problem addressed by the program number of additional calls involved substance and substance abuse. However, some of the abuse as a secondary issue. However, the programs established a more direct link auditors did not find any indication that the alcohol between their activities and substance abuse and drug funds were specifically tied to the than others. handling of these substance abuse calls.

Johnson County and Olathe, for example, provided funding for a domestic violence organization on the basis of statistics indicating that more than 40 percent of the clients served by the program had substance abuse problems. Although the grant documents did not indicate that the funds would be used to treat alcohol or drug abuse problems, officials from the Drug and Alcoholism Council of Johnson County indicated that they had

10. encouraged the organization to channel grant funds to substance abuse activities. Further, in 1986 the organization hired a counselor to specifically deal with substance abuse problems. In contrast, the City of Newton awarded a $1,000 grant for a training program to educate kindergarten and first grade students about child abuse. The program was intended to teach children how to recognize "good" and "bad" touching and respond to abuse situations. Although local officials based their decision to award the grant on statistics showing that 70 to 80 percent of all child abuse cases are related to substance abuse, the program itself did not appear to be concerned with substance abuse. Due to the broad statutory definition ofallowable expenditures from alcohol and drug programs funds, these programs generally could not be considered in violation of State law. However, the auditors found that Dodge City awarded $3,260 to the public library to purchase educational materials concerning not only substance abuse, but also topics such as parenting, self-e.steem development, and child abuse. It appears that the portion of this money spent on topics other than alcohol and drug abuse was not an appropriate expenditure of alcohol and drug programs funds.

Grants Emphasizing Social Problems Other Than Substance Abuse Calendar Year 1985

Locality Organization or Program Grant Amount

Dodge City Domestic Violence Care Group $ 7,336

Liberal Southwest Kansas Association for the Prevention 5,000 of Alcohol and Drug Abuse-Child Abuse Program

Newton Harvey County Coalition for Children 1,000 Red Flag, Green Flag Touching Program

Olathe Johnson County Association for Battered Persons 2,591

Johnson County Johnson County Association for Battered Persons 1,852

SUbtotal--Domestic Violence Programs $17,779

Kansas City Mental Health Association in Wyandotte County $ 11,600 Telephone Hotline for Teenagers

Olathe Mental Health Association in Wyandotte County 184 Telephone Hotline for Teenagers

Johnson County Mental Health Association in Wyandotte County 131 Telephone Hotline for Teenagers

Subtotal--Teen Hotline $11,915

Dodge City Dodge City Public Library $ 3,260 Purchase materials on alcohol and drug abuse, parenting, physical abuse, and other topics,

Total $ 32,954

11. Three Localities Used Alcohol and Drug Program Funds To Pay Administrative Expenses Olathe, Wichita, and Johnson County spent part of their alcohol and drug programs funds on costs associated with administering these funds. The City of Wichita allocated $54,260 to its Department of Human Resources to provide support staff for the Wichita­ Sedgwick County Alcohol and Drug Abuse Advisory Council. The City of Olathe and Johnson County allocated a total of$13,300 to the Drug and Alcoholism Coucil ofJohnson County. Both of these advisory bodies review requests for alcohol and drug program funds and make recommendations to the local governing body. They also monitor the organizations that actually receive funds. While localities may reasonably incur administrative expenses for their programs, State law does not specifically authorize cities and counties to use alcohol and drug program funds for that purpose. In contrast, the Department of Social and Rehabilitation Services has specific statutory authority to use up to 10 percent of its liquor tax funds for administration.

During the 1986 Session, Changes Were Made to Further Restrict Use of Private Club Liquor Tax Funds For Alcohol and Drug .Programs The Special Committee on Judiciary studied the private club liquor tax law during the 1985 interim. As a result of that study, House Bill 2822 was passed by the 1986 Legislature. This bill amended the private club liquor tax law, and as of July 1, 1986, moneys in local special alcohol and drug programs .funds may only be used for programs "whose principal purpose is" alcoholism and drug abuse prevention, education, intervention, or treatment of abusers or potential abusers. Although the law will still allow localities considerable flexibility in awarding grants, funding for activities not directly concerned with substance abuse would appear to be prohibited under the amendment. It appears that organizations such as the domestic violence groups and the telephone hotline will only be eligible for alcohol and drug abuse funds if they establish sub-programs that focus on substance abuse problems.

Any Options For Further Restricting Expenditures of Private Club Liquor Taxes For Alcohol and Drug Programs Would Require Changes in State Law From their review of expenditures in the 11 sample localities, the auditors found no indication that .changes are needed to strengthen enforcement of the current private club liquor tax law. Existing statutes were broad enough to allow funding for most of the programs encountered, including those that did not appear to have a direct relationship to substance abuse. Effective July 1, 1986, House Bill 2822 should further restrict the types ofprograms eligible to receive alcohol and drug programs funds. If there is an interest in further restricting expenditures of private club liquor taxes, K.S.A. 79-41aOI et seq. could be amended. For example, the law could be amended to include definitions of allowable services or programs of "prevention and education," "detoxification," "intervention," and "treatment." Whether or not the law is amended to further restrict the use ofalcohol and drug programs funds, the Legislature should consider amending K.S.A. 79-41a04 to clarify whether cities and counties may use these funds for administrative costs.

12. Recommendation

The Legislature should clarify K.S.A. 79-41a04 to specifically state whether or not cities and counties may use private club liquor tax funds for administrative costs.

13.

APPENDIX A Private Club Liquor Tax Distributions to Cities and Counties Calendar Year 1985

This appendix lists all cities and counties that received at least $5,000 in private club liquor taxes during calendar year 1985. Information concerning the amounts received by cities and counties that are not listed may be obtained from the Legislative Division of Post Audit.

Cities Receiving Cities Receiving More Than $5,000 Amount More Than $5,000 Amount

Abilene $ 9,215 Lansing $ 6,372 Anthony 5,159 Larned 12,615 Arkansas City 43,972 Lawrence 228,621 Atchison 10,898 Leavenworth 58,563 Belleville 8,746 Leawood 19,462 Beloit 7,046 Lenexa 95,399 Burlington 7,189 Liberal 55,013 Chanute 43,750 Lindsborg 7,348 Cimarron 5,492 Lyons 5,915 Clay Center 6,061 Manhattan 195,761 Coffeyville 28,673 Marysville 12,381 Colby 21,593 McPherson 33,908 Columbus 7,744 Merriam 48,944 Concordia 24,097 Mission 10,971 Derby 7,809 Mission Hills 37,948 Dighton 7,550 Ness City 7,549 Dodge City 122,540 Newton 46,868 ElDorado 34,904 Norton 8,097 Ellinwood 8,759 Oakley 8,636 Emporia 135,436 Ogden 6,431 Fort Scott 15,028 Olathe 81,449 Garnett 7,962 Osawatomie 6,539 Goodland 18,660 Ottawa 19,698 Great Bend 91,768 Overland Park 673,270 Harper 10,862 Parsons 25,101 Hays 118,435 Pittsburg 45,941 Garden City 118,027 Village 25,490 Hiawatha 7,845 Pratt 29,126 Hill City 5,097 Russell 13,191 Hutchinson 122,525 Salina 136,146 Independence 52,039 Seneca 6,376 lola 13,063 Shawnee 40,229 Junction City 107,969 Smith Center 8,949 Kansas City 282,289 Tonganoxie 5,200 Kinsley 5,582 Topeka 687,509 Kiowa 5,158 Ulysses 8,722 Lake Quivira 7,071 Wellington 20,316

15. Cities Receiving Counties Receiving More Than $5,000 Amount More Than $5,000 Amount

Westwood $ 8,195 McPherson $ 18,569 Wichita 1,732,148 Miami 16,775 Winfield 14,576 Mitchell 11,621 Montgomery 10,437 Subtotal $ 6,030,986 Nemaha 8,049 Neosho 12,034 Subtotal--Other Cities 230,046 Norton 7,371 Osage 6,423 Subtotal--All Cities $ 6,261,032 Pawnee 6,326 Phillips 5,783 Pratt 20,652 Counties Receiving Reno 25,990 More Than $5,000 Republic 5,044 Rice 9,492 Allen $ 8,912 Rooks 5,007 Anderson 5,243 Russell 12,066 Atchison 8,498 Saline 16,037 Barton 20,057 Scott 8,656 Bourbon 12,966 Sedgwick 105,148 Brown 11,934 Shawnee 19,915 Cherokee 9,244 Sherman 18,289 Cheyenne 5,121 Smith 5,534 Clay 9,225 Stafford 5,769 Cloud 13,630 Sumner 16,161 Coffey 7,969 Thomas 10,796 Cowley 22,056 Trego 6,690 Crawford 20,876 Washington 6,286 Dickinson 10,749 Wilson 11,488 Ellis 20,079 Wyandotte 9,413 Finney 24,082 Geary 9,373 Subtotal $ 762,952 Greenwood 5,529 Harper 8,010 Subtotal-- Jackson 7,907 Other Counties 110,639 Jefferson 8,207 Johnson 47,413 Subtotal-- Kingman 5,791 All Counties $ 873,591 Labette 12,174 Leavenworth 8,541 Lyon 5,590 Total--AII Cities Marshall 11,955 and Counties $7,134,623

16. APPENDIXB

Grants For Local Alcohol and Drug Abuse Programs Calendar Year 1985

This appendix lists all the local special alcohol and drug program fund grants awarded for calendar year 1985 by the localities reviewed during this audit. All of the listed grants were funded with the city or county's portion of the private club liquor tax earmarked for alcohol and drug abuse programs. The total amount of private club liquor taxes received by each city or county for alcohol and drug abuse programs is also listed.

17. Dodge City Grants For Local Alcohol and Drug Abuse Programs Calendar Year 1985

Amount Organization indicated it would use This organization received funds... awarded... the funds to.....

Area Mental Health Center $ 4,483 Provide clinical services to clients diagnosed as alcoholics. Also, staff members would provide educational talks and workshops on alcohol use and abuse.

Dodge City Public Library 3,260 Purchase books, periodicals, and tapes concerning alcohol and drug education, parenting, self-esteem development, physical abuse, missing children, and other related areas. Also to fund monthly programs on alcohol abuse, sexual abuse, family counseling, and safety.

Domestic Violence Care Group 7,336 Provide shelter, food, medical support, transportation, and counseling for victims of domestic violence. The Domestic Violence Care Group indicated that approximately 80 percent of their cases"·involve the use and abuse of alcohol or drugs by the batterer.

Greenwood, Inc. 3,668 Provide meeting facilities, literature, and program aids for Alcoholics Anonymous groups. Also to provide rehabilitating alcoholics with transportation to and from treatment facilities.

New Chance, Inc. 17,117 Provide detoxification, residential, and outpatient treatment for alcoholics and drug addicts. Also to provide Alcohol Safety Action Programs.

Saint Mary of the Plains College 4,891 Provide lectures, training, and information on alcohol and drugs to the students as well as local professional organizations.

Total 1985 Grant Awards $ 40,755

Total 1985 Private Club Liquor Tax Receipts For Alcohol/Drug Abuse Programs: $ 40,847

18. Kansas City Grants For Local Alcohol and Drug Abuse Programs Calendar Year 1985

Amount Organization indicated it would use This organization received funds... awarded... the funds to.....

Catholic Social Services $ 3,600 Develop a training program for students to promote peer pressure against substance abuse and help students recognize pressure situations.Focus on a local private grade school and a local private high school.

Kansas City Community College 9,000 Provide information on alcohol and drugs, workshops, and referrals to youths and families. Activities targeted at the campus population, but community residents would be included in awareness activities.

Mental Health Association in 11,600 Provide a 24-hour crisis and information Wyandotte County hotline for youth in the area. Hotline volunteers are trained to be particularly sensitive to drug and alcohol abuse issues and make referrals to other programs.

Salvation Army Shield of Service 12,000 Provide detoxification~~·and reintegration programs to residents with substance abuse problems.

Spanish Speaking Office 5,662 Provide an alcohol prevention project to educate Hispanic youth and children about the potential abuse of alcohol and drugs.

Substance Abuse Center of Eastern 10,300 Provide an intermediate treatment facility for Kansas, Inc. adult alcohol and drug addicts who do not have the financial resources to pay for treatment.

Turner House, Inc. 12,128 Provide a substance abuse program for adolescents through group discussions, education, and referrals to support programs.

Unified School District 500 12,345 Provide an alcohol education and awareness program for youths and youth educators. Focus on middle and high schools.

Wyandot Mental Health Center, Inc. 6,500 Provide an alcohol and drug abuse treatment program for adolescents.

Total 1985 Grant Awards $ 83,135

Total 1985 Private Club Liquor Tax Receipts For Alcohol/Drug Abuse Programs: $ 94,096

19. Liberal Grants For Local Alcohol and Drug Abuse Programs Calendar Year 1985

Amount Organization indicated it would use This organization received funds... awarded... the funds to...."

City of Liberal $ 247 Fund "Don't Drink and Drive" advertisements and free taxi service for citizens on New Year's Eve.

Liberal Police Department 428 Purchase narcotics booklets and video film for education programs.

Southwest Kansas Alcohol and Drug 9,600 Provide detoxification, inpatient and Addiction Foundation, Inc. outpatient services, counseling, and a halfway house for individuals with alcohol and drug abuse problems.

Southwest Kansas Association for Prevention 5,000 Provide an education and treatment program of Alcohol and Drug Abuse for children on child abuse issues. Organization indicated that many cases of child abuse handled in the program are alcohol or drug-related.

Total 1985 Grant Awards $ 15,275

Total 1985 Private Club Liquor Tax Receipts For Alcohol/Drug Abuse Programs: $ 18,338

20. Newton Grants For Local Alcohol and Drug Abuse Programs Calendar Year 1985

Amount Organization indicated it would use This organization received funds... awarded... the funds to.....

F.A.R.M. House/Mirror, Inc. $ 1,606 Purchase video cassette recorder equipment and two video tapes on substance abuse. This organization assists persons with alcohol or drug dependency and related problems.

Halstead School District 1,000 Expand the district's substance abuse progam for educating staff and students. Also to provide in-service training on drug abuse prevention.

Harvey County Coalition for Children 1,000 Provide the "Red Flag, Green Flag Touching Program" to educate children about good and bad touching and how to deal with child abuse. According to the organization, 70 to 80 percent of child abuse cases involve some type of substance abuse.

Hesston College 700 Fund "Alcohol Education Week" and a "Non-alcoholic Beverages Night". Also, to order publications and obtain training on alcohol awareness for staff members.

Hesston School District 780 Expand the district's alcohol and drug education curriculum for high school students.

Newton Police Department 298 Purchase slide shows concerning the detection of alcohol and drug abuse for training police officers.

Newton School District 4,000 Continue the district's substance abuse program, including in-service training and workshops for teachers and training programs for students.

Newton Substance Abuse Board 146 Fund advertising and promotion of a lecture tour of "Father Martin" speaking against drug and alcohol abuse.

Total 1985 Grant Awards $ 9,530

Total 1985 Private Club Liquor Tax Receipts For Alcohol/Drug Abuse Programs: $ 15,623

21. Olathe Grants For Local Alcohol and Drug Abuse Programs Calendar Year 1985

Amount Organization indicated it would use

This organization received funds... awarded... the funds to... u

Drug and Alcoholism Council of $ 1,245 Fund the administrative costs associated Johnson County with reviewing grant proposals and making recommendations to the city commissioners on expenditures of private club liquor taxes. Staff memeber also reviews periodic progress reports submitted by funded agencies.

Johnson County Association for 2,591 Provide comprehensive services for Battered Persons battered persons and their families, including counseling and referral for alcohol and drug-related issues.

Johnson County Substance Abuse Services 20,715 Provide non-medical detoxification, outpatient counseling, and integration services for alcohol and drug abusers and their families.

Mental Health Association of Wyandotte County 184 Provide a 24-hour crisis and information hotline for teenagers.

Olathe School District 4,253 Provide alcohol and drug education programs in junior and senior high schools, and to provide parent information seminars on alcohol and drugs.

Speas Resource Center 906 Obtain audio-visual educational materials on alcoholism and substance abuse for its free loan collection of such materials.

Substance Abuse Center of Eastern Kansas 1,231 Provide residential, inpatient treatment and aftercare for chemically addicted persons.

Total 1985 Grant Awards $ 31,125

Total 1985 Private Club Liquor Tax Receipts For Alcohol/Drug Abuse Programs: $ 27,150

22. Topeka Grants For Local Alcohol and Drug Abuse Programs Calendar Year 1985

Amount Organization indicated it would use This organization received funds... awarded... the funds to.....

Community Addictive Treatment Center $ 53,353 Provide treatment programs for alcoholics and addicts, including residential treatment, outpatient aftercare, follow-up, and relapse prevention groups.

I Care Recovery Home, Inc. 19,000 Provide inpatient and outpatient treatment services, reintegration services and outpatient counseling and referrals for American Indians and low-income individuals with substance abuse problems.

National Council on Alcoholism-­ 17,800 Provide pre-sentence evaluations, case Alcohol Safety Action Project monitoring, alcohol information schools, and referral services for persons arresting for driving under the influence of alcohol or drugs under the jurisdictions of the municipal court and surrounding county courts.

National Council on Alcoholism-­ 23,000 Provide alcohol and drug abuse prevention Youth Program and education programs for school children, as well as workshops and seminars for teachers, volunteers, and parents.

Shawnee County Community Assistance 29,103 Provide alcohol and drug abuse prevention, and Action, Inc., Satellite Program on intervention, and treatment programs Alcohol and Drug Abuse targeted at low-income and minority individuals in Shawnee County.

Shawnee County Mental Health Center, 45,500 Provide alcohol detoxification services, as . Services for Alcohol-Related Problems well as evaluation and referral services to continuing care or treatment programs.

Topeka Police Department 25,500 Fund salaries of officers assigned to special units to detect and arrest drivers who are under the influence of alcohol.

Topeka Youth Project 10,577 Provide educational programs to youth and make alcohol or drug problem referrals to treatment programs.

Total 1985 Grant Awards $223,833

Total 1985 Private Club Liquor Tax Receipts For Alcohol/Drug Abuse Programs: $229,153 Wichita Grants For Local Alcohol and Drug Abuse Programs Calendar Year 1985

Amount Organization indicated it would use This organization received funds... awarded... the funds to.....

Big Brothers/Big Sisters of Sedgwick $ 20,418 Identify high-risk youths and provide those County, Substance Abuse Project youths with viable role models with knowledge of the social, emotional, and physical health implications of substance abuse.

City of Wichita, Department of Human 54,260 Provide adminstration and support staff for Resources the Wichita-Sedgwick County Alcohol and Drug Abuse Advisory Board.

City of Wichita, Community Health 79,000 Provide therapeutic rehabilitation services, Department, Alcoholism Family including outpatient counseling to substance Counseling Center dependent persons and family members.

Drug and Alcohol Abuse Prevention Center 91,439 Provide alcohol and drug abuse prevention programs including education, and training services for parents, youth, women, minorities, and the elderly.

Mental Health Association of Sedgwick County 1,075 Purchase three films to provide substance abuse information to the community.

Mid-America All-Indian Center, Indian Alcohol 38,070 Provide rehabilitation services and Treatment Services outpatient counseling to substance abusers, emphasizing American Indians with abuse problems.

Parallax Program, Inc. 63,265 Provide rehabilitation services for drug dependent persons. Also to provide aftercare for persons who have been rehabilitated and need support in the community.

Recovery Services Council, Inc. 97,596 Provide rehabilitation, including intermediate Intermediate Treatment Unit treatment services, for substance dependent persons.

Recovery Services Council, Inc. 30,469 Provide reintegration services to chemically Reintegration Unit dependent persons who need support in making the transition from substance dependency and structured treatment to an independent existence.

Recovery Services Council, Inc. 92,764 Provide detoxification services, health Social Detoxification Unit assessments, and treatment to substance dependent persons.

24. Wichita Grants For Local Alcohol and Drug Abuse Programs Calendar Year 1985

Amount Organization indicated it would use This organization received funds... awarded... the funds to......

Wichita Police Department $ 31,644 Fund an Alcohol Enforcement Detective to reduce the availability and consumption of alcohol by minors.

Total 1985 Grant Awards $ 600,000

Total 1985 Private Club Liquor Tax Receipts For Alcohol/Drug Abuse Programs: $577,383

25. Clark County Grants For Local Alcohol and Drug Abuse Programs Calendar Year 1985

Amount Organization indicated it would use This organization received funds... awarded... the funds to.....

No grants were awarded by Clark County for Calendar Year 1985.

Total 1985 Private Club Liquor Tax Receipts For Alcohol/Drug Abuse Programs: $ 1,404

26. Johnson County Grants For Local Alcohol and Drug Abuse Programs Calendar Year 1985

Amount Organiz~tion indicated it would use This organization received funds... awarded... the funds to.....

Drug and Alcoholism Council of $ 12,055 Fund the administrative costs associated Johnson County with reviewing grant proposals and making recommendations to the city commissioners on expenditures of private club liquor taxes. Johnson County Association for 1,852 Provide comprehensive services for Battered Persons battered persons and their families, including counseling and referral for alcohol and drug-related issues.

Johnson County Substance Abuse Services 14,796 Provide non-medical detoxification, outpatient couseling, and integration services for alcohol and drug abusers and their fam Hies.

,Mental Health Association of Wyandotte County 131 Provide a 24-hour crisis and information hotline for teenagers.

Shawnee Mission Schools, Alcohol Education 1,638 Provide a family-oriented education and 'Program prevention program on alcohol and drugs in the Shawnee Mission schools.

Speas Resource Center 648 Obtain audio-visual educational materials on alcoholism and substance abuse for its free loan collection of such materials.

Substance Abuse Center of Eastern Kansas 880 Provide residential, inpatient treatment and aftercare for chem ically addicted persons.

Total 1985 Grant Awards $ 32,000

Total 1985 Private Club Liquor Tax Receipts For Alcohol/Drug Abuse Programs: $ 34,834 Rice County Grants For Local Alcohol and Drug Abuse Programs Calendar Year 1985

Amount Organization indicated it would use This organization received funds... awarded... the funds to.....

Lyons Rotary Club $ 2,958 Fund the maintenance and utilities for a community service building used to hold meetings of various Alcoholics Anonymous groups.

Total 1985 Grant Awards $ 2,958

Total 1985 Private Club Liquor Tax Receipts For Alcohol/Drug Abuse Programs: $ 5,828

28. Saline County Grants For Local Alcohol and Drug Abuse Programs Calendar Year 1985

Amount Organization indicated it would use This organization .received funds... awarded... the funds to.....

Central Kansas Foundation for Alcohol $ 6,197 Assist the courts by testing and evaluating and Drug Abuse individuals whose violations indicated the misuse or alcohol or drugs at the time the violation was committed.

Total 1985 Grant Awards $ 6,197

Total 1985 Private Club Liquor Tax Receipts For Alcohol/Drug Abuse Programs: $ 6,197

29.

APPENDIXC Types of Grant Awards Calendar Year 1985

Inter- Enforce- Admin- Treatment Education vention ment istration Other Total Cities Dodge City $ 25,268 $ 4,891 $ 10,596 (b) $ 40,755 Kansas City 28,800 42,735 11,600 (c) 83,135 Liberal 9,600 428 $ 247 5,000 (d) 15,275 Newton 8,530 1,000 (e) 9,530 Olathe 21,946 5,159 $ 1,245 2,775 (f) 31,125 Topeka 146,956 33,577 17,800 $ 25,500 223,833 Wichita 401,164 112,932 31,644 54,260 600,000 Counties Clark (a) 0 Johnson 15,676 2,286 12,055 1,983 (g) 32,000 Rice 2,958 2,958 Saline 6,197 6,197

Totals $652,368 $210,538 $24,244 $57,144 $67,560 $32,954 $1,044,808

(a) Clark County did not award any grants during calendar year 1985.

(b) Dodge City awarded $7,336 to the Domestic Violence Care Group and $3,260 to the Dodge City Public Library for materials on topics including, but not limited to, substance abuse.

(c) Kansas City awarded $11,600 to the Mental Health Association of Wyandotte County for a telephone hotline for teenagers.

(d) Liberal awarded $5,000 to the Southwest Kansas Association for Prevention of Alcohol and Drug Abuse for a child abuse program.

(e) Newton awarded $1,000 to the Harvey County Coalition for Children to fund the "Red Flag, Green Flag" touching program to educate children about physical abuse.

(f) Olathe awarded $2,591 to the Johnson County Association for Battered Persons and $184 to the Mental Health Association of Wyandotte County for a telephone hotline for teenagers.

(g) Johnson County awarded $1,852 to the Johnson County Association for Battered Persons and $131 to the Mental Health Association of Wyandotte County for a telephone hotline for teenagers.

31.

APPENDIXD

Agency Responses

Copies of the draft audit report were sent to the Departments ofRevenue and Social and Rehabilitation Services and the State Treasurer's Office on June 23, 1986. Draft copies were also sent to officials in the localities reviewed during this audit. The Department of Social and Rehabilitation Services, the City ofOlathe, and Rice County submitted written responses to the draft report. Those responses are included in this Appendix. The Department of Revenue indicated that it had no written response to the audit. As of July 10, 1986, no written responses had been received from the State Treasurer's Office or officials in Dodge City, Kansas City, Liberal, Newton, Topeka, Wichita, Clark County, Johnson County, and Saline County. On August 14, 1986, a written response was received from the -City of Wichita. That response is also included in this Appendix.

33. STATE OF KANSAS

JOHN CARLIN, GOVERNOR

STATE DEPARTMENT OF SOCIAL AND REHABILITATION SERVICES

ALCOHOL AND DRUG ABUSE SERVICES ROBERT C. HARDER, SECRETARY 2700 WEST 6TH STREET TOPEKA, KANSAS 66606 (913) 296-3925 KANS-A-N 561 -3925 June 25, 1986

Mr. Meredith Williams Legislative Post Auditor 109 W. 9th, Suite 301 Mills Building Topeka, KS 66612-1285 Dear Mr. Williams: Thank you for providing SRS/ADAS with a draft copy of your recently completed performance audit report, Local Expenditures of Private Club Liquor Taxes. We believe the report accurately captures a number of issues which have been brought to our attention in recent years. We agree with the report's recommendation that the legislature clarify its position on whether or not cities and counties may use private club liquor tax funds for administrative costs. (pp. 12-13) On the subject of administrative costs, the report correctly notes that SRS has specific statutory authority to use up to 10 percent of its 1iquor tax funds for administration. It might be important for persons reading the report to know that we have not exercised that option. Instead, the entire 5% designated to SRS has gone to fund programs in our Kansas Alcohol and Drug Abuse Continuum of Care. A statement on page 8 did surprise us: IIIn general, the auditors found that the procedures for awarding and monitoring grants were generally adequate for the level of funding involved. II Reports from the field have suggested that very little grant monitoring exists for a significant portion of the city or county-funded system. With one or two notable exceptions, we have seen little evidence of needs assessments or other tools that might suggest a policy-based allocations process. In no case have we seen evidence linking local grants to written strategic plans for the prevention, intervention or treatment service system within a particular locality or region. We believe the proposed language quoted above portrays a more planned, thorough and accountab1e funding and mon i taring system than actually exi sts, whatever the funding level involved.

34. Page 2

We agree with the reportls conclusion regarding programs that do not conform to the new "principal purpose ll language enacted during the 1986 session. SRS/ADAS actively supported this change, and we believe it will force a re-evaluation of some projects now being funded on the margins of the alcohol and drug abuse service system. We appreciate the opportunity to comment on the report, and we congratulate you on your excellent staff members, with whom we ·oyed interacting.

JM:kh 9400C cc: Dr. Robert C. Harder Mary Beth Green

35. CITY COMMISSIONERS LOIS TAYLOR, MAYOR MARYLIN J. SWARTLEY, VICE-MAYOR FORD BOHL HERMAN CLINE LARRY HUCKLEBERRY

June 26, 1986

Meridith Williams Legislative Post Auditor 109 W. 9th, Suite 301 Mills Building Topeka, KS 66612-1285 Dear Mr. Williams: This letter is in response to your June 23rd request for comment on the draft performance audit report titled Local Expenditures for Private Club Liquor Taxes. In general, the report was fair and accurate regarding the City of Olathe1s fund disbursement. There are two points we would like to make.at this time regarding expenditures for administrative costs. Large, comprehensive substance abuse programs require coordination and administration to insure efficient service delivery. In reviewing the fund request presented by the Drug and Alcoholism Council of Johnson County consideration was given to the proportion of admi­ nistratve costs to the total program budget. We felt their request was reaso­ nable and essential to the effective provision of substance abuse programs. Secondly, we would like to note that our 1985 grant awards totalled $3,975 more than our Private Club Liquor Tax receipts for the period. We are unsure how the post-audit determined that the $1,245 awarded for administration was taken from the tax receipts rather than from our above-allocation grants. Again, the City of Olathe generally agrees with the audit's conclusions. We were happy to provide cooperation and assistance during the audit. If you have any further questions, please call me at 782-2600.

Kise Randall Assistant to the City Manager TP

36.

100 WEST SANTA FE • P.O. BOX 768 • OLA lYE, KANSAS 66061 • (913) 782-2600 Courthouse Phone 257-2232

=~~~~C~E~~C~;O~I~~~O~N;; R· T H o u s E

LYONS, KANSAS 67554

July 2, 1986

Meredith Williams, Legislative Post Auditor Legislative Division of Post Audit 109 West 9th, Suite 301 Topeka, KS 66612-1285

I have finished reviewing the draft copy of your performance audit report on the expenditures of private club liquor taxes. It is a very comprehensive study and appears to fairly define the procedures used in our county for disbursing those funds.

It is good to read of the clarification made by the 1986 Legislature, which will be helpful to our County Commissioners when awarding the grants. Further clarification may also be helpful to us.

My only suggestion would be that it would be beneficial to all counties if they had access to this report, which would help in their decisions regarding the use of the funds in their own counties.

We were happy to assist you in this audit.

~, Sincerely, ~~a~ Ma~Bo1ton Rice County Clerk

37. WICHITA

August 12, 1986

Mr. Meredith Williams Legislative Post Auditor 109 West 9th Street, Suite 301 Topeka, KS 66612-1285

Dear Mr. Williams:

This correspondence is in reference to your letter of June 23, 1986, re­ garding Local Expenditures of Private Club Liquor Taxes.

Corrections and clarifications relative to the auditors' initial findings were sent to you on June 3, 1986.

The following comments are submitted in response to the July, 1986, draft copy of your performance audit report, Local Expenditures of Private Club Liquor Taxes:

As stated on page 12 of the draft report, State law does not specifically authorize cities and counties to use alcohol and drug program funds for administrative purposes. It is the City of Wichita's interpretation that because the Statutes neither prohibit nor authorize such expenditures, reasonable administrative costs are justifiable program expenses.

The City has allocated funds to its Human Resources Department to provide staff support services to the Wichita-Sedgwick County Alcohol and Drug Abuse Advisory Board (ADAAB). The administrative duties outlined in prior correspondence include staff support to the Wichita-Sedgwick County Alcohol and Drug Abuse Advisory Board, monitoring of program perfor­ mance to insure contract compliance and technical assistance to service providers. Additional responsibilities the Substance Abuse Unit perform are development of the long-range Comprehensive Substance Abuse Plan for Wichita-Sedgwick County and staffing of special committees created to review specific concerns of the community, the governing bodies and the Board.

The Special Alcohol Tax Statute allows allocation of funds for administrative costs of programs providing direct services. It is the City's position that administrative expenses logically fall into the same category.

38. LilY Of' WICHITA 2 Mr. Meredith Williams August 12, 1986

The enactment of House Bill 2822 mandates that local special alcohol and drug program funds may only be used for programs whose "principal pur­ posen is substance abuse prevention, education, intervention or treatment. Substance abuse issues, policies and concerns are the sole responsibility of the Substance Abuse Unit of the Human Resources Department. Therefore, the Human Resources Department's sub-unit, due to its exclusive focus on substance abuse, should continue to qualify under the new legislation as a legitimate expenditure.

In the event the Legislative Post Audit Committee recommends amending K.S.A. 79-41a04 to clarify whether cities and counties may use the funds for administrative costs, I would sincerely hope that the Committee would endorse the use of the funds for justifiable administrative expenses.

If you have any questions, please do not hesitate to contact me.

CC/pd cc: Lorraine Griffin Johnson

39.