Program Review and Investigations Committee




<MeetMDY1> December 9, 2004


The<MeetNo2> December 9, 2004 meeting of the Program Review and Investigations Committee was held at<MeetTime> 10:00 AM, in<Room> Room 131 of the Capitol Annex. Representative Charlie Hoffman, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Representative Charlie Hoffman, Co-Chair; Senators Charlie Borders, Brett Guthrie, Ernie Harris, Vernie McGaha, Joey Pendleton, and Dan Seum; Representatives Adrian Arnold, Sheldon Baugh, Dwight Butler, and Ruth Ann Palumbo.


Guests:  Mary Evans Sias, President, Kentucky State University; Tom Layzell, President, Council on Postsecondary Education; Gene Wilhoit, Commissioner, Kentucky Department of Education; and Robert Benvenuti, Inspector General, Cabinet for Health and Family Services.


LRC Staff:  Greg Hager, Committee Staff Administrator; Kara Daniel; Rick Graycarek; Tom Hewlett; Margaret Hurst; Van Knowles; Erin McNees; Cindy Upton; and Susan Spoonamore, Committee Assistant.


Minutes of November 9, 2004 were approved, without objection, by voice vote upon motion made by Rep. Arnold and seconded by Sen. McGaha.


Resolutions honoring Sen. David Karem, Rep. Dottie Sims, and Rep. Jim Thompson for their service to the Program Review and Investigations Committee were adopted, without objection, by voice vote upon motion made by Sen. Guthrie and seconded by Sen. Pendleton. 


Tom Hewlett, Program Review staff, presented a follow-up summary to the 2003 Program Review report Postsecondary Education in Kentucky. He stated that the report had examined the governance of Kentucky's system of postsecondary education, with particular attention to Kentucky State University. The report included recommendations to improve the Council on Postsecondary Education's (CPE)  provision of information on accountability to the General Assembly and citizens of Kentucky. (A copy of the report's recommendations can be found, in their entirety, in the LRC Library file).

Mr. Hewlett stated that based on the response to the Program Review report and CPE's 2002-03 Accountability Report, it appeared that CPE had made significant progress in implementing Program Review recommendations 2.1 (CPE to prepare and distribute annual report on accountability), 2.2 (CPE to design a strategic agenda), 3.1 (CPE to review guidelines for comprehensive database), 3.2 (CPE to improve description of information based on samples), and 4.1 (CPE to increase legislators' input to agenda-setting process).

He stated that CPE still needed to give more attention to recommendation 4.2 (easing transfer of credits).  He said that there were no more universities participating in the automated course applicability system than at the time the report was issued.

He stated that CPE had made progress in dealing with the report's recommendations dealing with funding (4.3, 4.4., 4.5, 4.6, and 4.7).  He said that CPE  had clarified a number of reporting issues and limited some uses of funds, and clarified the acceptable sources for matching funds. 

Mr. Hewlett stated that even though Kentucky State University (KSU) would not be able to resolve some issues until a state budget is adopted, KSU was making efforts to address all the report's recommendations.


Rep. Butler asked if progress had been made on developing options to ease transferability of credits. 


Mr. Hewlett stated that some progress was being made but that CPE, in collaboration with the Kentucky Community Technical College System (KCTCS) and other postsecondary institutions, should continue to address recommendation 4.2.


Sen. McGaha asked if there was a specific reason that kept other institutions from assisting students in transferring credits and/or providing a more cost-effective method of providing core college courses.


Mr. Hewlett stated that because the institutions were independent, CPE had only  a certain amount of authority that they could exert. 


Rep. Hoffman introduced Mary Evans Sias, President, Kentucky State University.  Dr. Sias stated that based upon recommendation 5.1 of the report and the information contained in the Baker & Hostetler report, KSU officials had begun a thorough review of administrative staff positions with the goal of streamlining operations and eliminating redundant or unproductive positions. As an example, she stated that KSU had moved from five colleges to three. She said that KSU was also actively focused on enrollment management. She said KSU was pleased to report a 100% pass rate on the PRAXIS exam, along with graduating KSU's first baccalaureate nursing student this year. She said that KSU was given approval from CPE to offer the MBA program starting this fall. 

She stated that KSU agreed with recommendation 5.2 that KSU and CPE should review the affordability and options for  renovating Young Hall. She stated that the renovation was essential for KSU's enrollment to grow, enabling KSU to support the debt service necessary to build and renovate residence halls in the future.

She stated that pursuant to recommendation 5.3, KSU officials had met with officials of the Finance and Administration Cabinet, the Personnel Cabinet, and the Commerce Cabinet Secretary to discuss ways KSU and state government could forge a closer relationship in the training and education of state employees.

Dr. Sias stated that regarding recommendation 5.4 for a review of KSU's benchmark institutions, the Baker & Hostetler report noted that few if any universities were comparable to KSU. She said that KSU continued to use the existing benchmarks and is working with CPE to determine more comparable benchmark universities. 

Dr. Sias noted that KSU was working aggressively with its alumni in fundraising efforts for scholarships.

Dr. Sias told the committee that officials of KSU were committed to renewing its excellence.


Sen. Borders commended KSU for taking the PRAXIS pass rate from 56 percent to 100 percent. 


Sen. Pendleton stated that he appreciated the agricultural department at KSU because it had played a large role in the development of aquaculture by reaching out to other regional universities across the state.


Rep. Butler asked what schools had been eliminated or changed.


Dr. Sias stated that some schools had been merged. She said that KSU now had a College of Professional Studies, which included the nursing program. She said that mathematics and sciences were together, and then the teacher education program.


Rep. Butler asked if KSU was implementing any off-site campuses.


Dr. Sias stated that KSU was aggressively pursuing community colleges for off-site campus facilities in the Lexington and Louisville areas. She said that KSU was looking at offering intersession programs  for nontraditional students.  


Sen. Seum asked for a breakdown in the number of students attending KSU full-time and part-time, including night school students.


Dr. Sias stated that 60 percent of the 2,200 students would be classified as full-time and the remaining students would be considered nontraditional students.


Sen. Seum asked if an enrollment of 3,600 students would help to make KSU viable.


Dr. Sias stated that she considered KSU viable now, but 3,600 students would increase revenues.


Sen. Seum stated that there was a need for minority teachers, especially in Jefferson County.  He asked if Kentucky State was in the process of producing minority teachers.


Dr. Sias stated that KSU was strengthening its teacher education program, adding some master degrees in those programs, and fully expected to lead the way in producing minority teachers.


Rep. Hoffman stated that there seemed to be a greater confidence level in getting KSU back to a school of excellence.


Thomas D. Layzell, President, Kentucky Council on Postsecondary Education, stated that CPE was positive about the developments and direction that KSU was heading. He stated that officials from CPE and KSU met regularly to discuss the university's progress toward implementing the recommendations from the Baker/Hostetler report and the Program Review and Investigations Committee's report. 

Dr. Layzell stated that the Council had updated transfer policies, including the General Education Transfer Policy. He stated that the Council and the institutions had developed a completer degree program that would allow the transfer of all credits from transfer and applied KCTCS degrees to universities. He explained that the Web-based Course Applicability System allowed students to track how courses transfer to the four participating universities. He stated that in May 2004, the Council developed a transfer student handbook, Transfer Assistance for Success in Kentucky, which is available on the Council Web site.

Dr. Layzell explained that institutions were willing to participate in the course applicability system, but there were technical issues. He stated that the four institutions already in the system had the software necessary to participate. He said that some institutions were either in the process of developing new student information systems or developing interfaces between existing systems. He stated that the Council would continue to monitor and support progress toward statewide implementation of the Course Applicability System.

Dr. Layzell stated that CPE was not a governing board that could mandate changes, but CPE did not view that as an obstacle when it came to pushing issues to ensure that the right things get done at the right time. 


Sen. Pendleton asked why it was taking so long to implement the Course Applicability  System statewide.


Dr. Layzell stated that seven years was too long, but good progress was being made. He agreed that CPE needed to move faster and make even more progress. He stated that he felt that the transfer process between KCTCS and the four-year institutions had improved.  He said the issue is how to increase the transfer rate. 


Dr. Greg Hager, Committee Staff Administrator, provided background on recommendations from the 2003 report The Commonwealth Accountability Testing System

He stated that recommendations 2.1, 2.2, and 2.3 had to do with dropout rates.  He stated that the report expressed a concern that Kentucky's measurement of dropout rates may not be accurate.  He stated that this concern was not based on information specific to Kentucky, but from national studies and from analyses done in other states. He said that these other studies consistently indicated that actual dropout rates were higher than reported rates. 

He stated that recommendation 2.4 resulted from a request by the committee to estimate the costs of CATS testing.  He said that the report recommended that a specific cost category be included in the accounting system. 

He explained that recommendations 4.1, 4.2, and 4.3 were developed because of concerns about the scoring of writing portfolios. He said that the recommendation 4.1 stated that KDE should work with schools and districts to reduce, as much as possible, the practice of teachers scoring their own students' portfolios. He said stated that recommendation 4.2 stated that KDE should consider implementing a system to track the performance of portfolio scorers, and recommendation 4.3 stated KDE should consider establishing consequences for schools that have low portfolio audit agreement rates, consider reauditing schools that had a high number of scoring inaccuracies, and consider increasing the number of schools randomly selected for audits.


Rep. Baugh asked if KDE was able to track students who decided to withdraw and attend a Christian school or be homeschooled. He also asked if the withdrawals would be considered in the dropout rate.


Commissioner Gene Wilhoit, Kentucky Department of Education, stated that those withdrawals were not a part of the dropout equation as long as those students were enrolled in a home school or  private school.


Commissioner Wilhoit stated that the Department of Education had been working aggressively to provide more detailed information to teachers about what is expected in terms of student performance standards. He said that improvements were also being made to the writing portfolio process. He said that in spring 2005, the Department would be implementing an assessment for reading and mathematics in grade levels 3 through 8. He stated that KDE was working to decrease the turnaround time for results by implementing electronically based administration.

Commissioner Wilhoit stated that per recommendation 2.3, a statewide system was being implemented for tracking students. He said that the technology infrastructure and components were in place to receive selected data via automated connections from the school districts' student management systems, to a state-level data database at pre-determined times. He stated that the department anticipated implementation of the state data system in the 2004-2005 school year.

He stated that as suggested in recommendation 2.4, KDE created a MUNIS project code that would allow districts to identify various expenditures such as personnel, equipment, and supplies.

He stated that KDE had taken numerous steps to implement the recommendations in 4.1. 


Sen. Harris asked how many students were tested yearly, and approximately how much did it cost per student.


Commissioner Wilhoit estimated that the state cost per test unit was approximately $15.  He said that the total cost to the state was $8.2 million. 


Sen. Pendleton asked if KDE had any plans to hold students accountable for their test results, specifically 12th grade seniors who did not see the test as necessary to graduate or be accepted into college.


Commissioner Wilhoit stated that a change had been made to the testing system to move the math, science, and social studies tests to the 11th grade. He stated that the only requirement for the 12th grade was a writing portfolio. He said that it would be good if the writing portfolio could be used as a part of submission or consideration by the higher education institutions once those students graduate. He stated that KDE was willing to change the nature of the writing test so if a student was interested in a traditional four-year college degree, then the writing portfolio at the senior level could be in the student's area of interest. 


Sen. Pendleton stated that he was concerned about students dropping out of school and being homeschooled because bad grades would prohibit them from getting their driver's license. He stated that there should be monitoring to assure that the students were homeschooled properly. 


Commissioner Wilhoit stated that Kentucky has among the least restrictive rules, conditions, and laws concerning homeschooling. He said there were no requirements for educational levels or monitoring of student performance. He stated that the General Assembly would have to decide if more oversight of homeschooling was needed.


Rep. Hoffman asked which states had adopted legislation to provide for monitoring of home school problems or issues; and whether any of their regulations should be considered for Kentucky.


Commissioner Wilhoit stated that he would provide the Committee an analysis of other states' regulations. 


Sen. Borders said that he would estimate that most parents are doing a good job of homeschooling their children. He added that the General Assembly needs to deal with the issue of accountability. 


Robert Benvenuti, Inspector General, Cabinet for Health and Family Services, spoke to the committee regarding recommendations 3.2 and 3.3 of the 2004 Program Review report Uncollected Revenues and Improper Payments. He stated that several measures had been taken to strengthen the audit and investigative functions of the cabinet.  He stated that under the Division of Special Investigations, all management and supervisory positions had been filled or would be filled within 90 days; four new investigators had been hired and two additional investigators were in the process of being interviewed; a new Fraud and Abuse hotline operator had been hired; and a three-tiered investigator series had been developed and submitted to the Personnel Cabinet for approval. 


Mr. Benvenuti stated that from March 2004 to October 2004, 641 new investigations were opened; 529 investigations were completed per investigator; $3,963,720 was identified and referred to the appropriate agency for further action; 3,653 hotline calls were received and processed; and investigative protocols with the U.S. Social Security Administration and the U.S. Housing and Urban Development Department were developed and implemented.


Rep. Arnold asked how much of the $4 million dollars was found to be from recipients or providers.


Mr. Benvenuti stated that there were more collections from recipients, but the larger amounts tended to be from providers.


Mr.  Benvenuti stated that the new Division of Audits and Detection had appointed an experienced division director; implemented an internal audit function; provided staff with approximately 600 hours of in-service training; mounted an aggressive recruiting campaign to attract and retain highly qualified personnel; conducted interviews for the hiring of six new auditors; was developing a formal Audit Work Plan for calendar year 2005; and was developing a division policy and procedure standards manual, which would include surveying audit functions in other states in an effort to determine best practices.


            Mr. Benvenuti stated that the Division of Fraud, Waste and Abuse/Identification and Prevention had studied the start-up and recurring costs of implementing and operating a statewide Cooperative Review of Eligibility Program. He said that the Division had hired a branch manager for the program and was recruiting an individual to be the Jefferson County Program supervisor. He stated that once other funding was identified, other supervisory and investigative positions would be posted.


Sen. Pendleton asked when the divisions would be up and running with all positions filled.


Mr. Benvenuti stated that the positions would be filled when additional money became available through the fraud dollars detected.


Sen. Pendleton asked how many additional people would be hired in the future.


Mr. Benvenuti stated that the Division of Special Investigations was projected to have a total of 60 positions, and the Division of Audits was projected to have 41 positions. He stated that because of budgetary constraints and lack of experienced personnel, it could take a few years to fill all the positions.


Sen. Pendleton asked how much it would cost to hire the 101 people as anticipated.


Mr. Benvenuti stated that it would cost approximately $800,000 annually.


Sen. Pendleton asked if he understood correctly that new personnel would be hired as money became available through recovery of fraud dollars.


Mr. Benvenuti stated that was correct.


Sen. Seum asked who was responsible for prosecuting the fraud cases. 


Mr. Benvenuti stated that his office would typically conduct most of the investigation and then contact a law enforcement agency, or a prosecutor, or the FBI, or the federal Office of Inspector General to try to convince someone to take the case.


Sen. Seum asked if all the cases were prosecuted.


Mr. Benvenuti stated that not all cases were prosecuted.


Sen. Seum asked if the recipient or the provider would be off the hook if they returned the money they owed.


Mr. Benvenuti stated that they would be off the hook from further prosecution unless another agency pursued them.


Sen. Seum asked if white collar crime was rampant.


Mr. Benvenuti stated that it was rampant.


Sen. Seum asked if there was something that could be done to declare that a provider or a recipient be ineligible to participate.


Mr. Benvenuti stated that they did have the ability to exclude a Medicare provider. 


Sen. McGaha asked how many outstanding cases were pending prosecution.


Mr. Benvenuti stated that there were hundreds of cases pending. He said it would be helpful if more could be done administratively to help prioritize cases. 


Sen. McGaha asked how many investigators were in the agency.


Mr. Benvenuti stated that there were 23  investigators in the special investigations group.


Sen. McGaha asked how many cases could each investigator handle.


Mr. Benvenuti stated that each investigator could handle up to 400 cases a year.


Rep. Hoffman asked the committee members to review the following study proposals and contact Greg Hager, CSA, to discuss any changes or questions: Issuance, Tracking, and Service of Criminal Warrants; Administrative Costs and Instructional Compensation in Kentucky School Districts; Offshore Outsourcing by Kentucky and Other States; and Medicaid Management Information System and KASPER.


Meeting adjourned at 12:15 p.m.