Kansas audit faults accounting of veterans' assistance grants by state, service organizations
TOPEKA — Members of the Kansas Legislature's bipartisan auditing committee expressed concern Monday that two major veterans' service organizations receiving millions of dollars in state grants took significantly different approaches to complying with matching-fund mandates.
Auditors told the joint House-Senate audit committee the Kansas Office of Veterans Service or KOVS should precisely define what activities and costs were allowable as matching support for grants received by the American Legion and the Veterans of Foreign Wars organizations in Kansas. The organizations should be required to submit sufficiently detailed reports on matching funding to allow state officials to precisely verify expenditures, the audit said.
'While KOVS is responsible for making sure service organizations met program requirements, it has provided little guidance on what qualifies as matching support,' said auditor Matt Fahrenbruch. 'This has left the service organizations to interpret the rules very differently.'
Lax KOVS oversight in other areas may have caused misunderstandings between KOVS and service organizations and their supporters, the audit said.
The audit focused on financial reports from 2022 to 2024 related to the Veterans Claims Assistance Program, which was designed to aid veterans with benefit claims, including those tied to disability payments, health care, education and pensions. The audit related to VCAP was requested nearly a year ago by Republican Sen. Virgil Peck of Havana.
Legislators concluded the audit briefing Monday by suggesting the American Legion and Veterans of Foreign Wars should work with the state veterans' service office to produce written guidelines for securing reimbursement for work assisting military veterans with claims.
Sens. Mike Thompson and Caryn Tyson, both Republicans, indicated the Legislature would consider taking up a reform bill next session if accounting practices weren't clarified.
'I appreciate your services. We all know that you guys do a lot,' Tyson said. 'But the report is the question here.'
Herbert Schwartzkopf, who represents the Kansas VFW, told legislators and auditors the organization had been frugal with VCAP grants and complied with expenditure requirements outlined by the state. He said the audit report was a waste of taxpayer dollars.
'Kansas VFW feels like the organization and its members are being branded as liars as all of our words have fallen either on deaf ears or they truly feel we are lying,' he said. 'The opinion of Kansas VFW is that the legislative post audit of the VCAP grant is not worth the paper it is written on and is, at its best, a work of fiction.'
Officials with the state's Office of Veterans Services defended its oversight of the grant program and committed itself to creating a more standard approach to accounting for use of state grant dollars.
Fahrenbruch told lawmakers the two congressionally chartered veterans organizations in Kansas had taken different approaches in terms of what was claimed as in-kind expenditures tied to securing state grants that 'may or may not comply with state law.'
The state's VCAP initiative has provided grants to reimburse costs claimed by the service organizations that included salaries and wages, operating and capital outlay expenditures for training and equipment as well as the work of veterans' service representatives and support staff. Both organizations have operated their own VCAP offices in the state's three Veterans Administration hospitals.
In Kansas, the VFW and American Legion must meet annual matching support requirements equal to a percentage of the VCAP funds the organizations received. In 2022 and 2023, the matching support percentage was set at 33%. In 2025, it was 25%.
'Statute does not define what 'support' is beyond stating that it should be a combination of monetary and non-monetary support,' the audit said.
The Legislature appropriated $2.55 million to VCAP from 2022 to 2024. The American Legion received $1.2 million during that period, while the VFW received $1.14 million. At least 85% of that funding was dedicated to salaries and benefits for VFW and American Legion personnel.
During this three-year period, the American Legion reported matching percentages ranging from 28% to 34%. However, in 2024, half of the reported matching support was for the estimated rental value of VCAP office space in VA hospitals that was provided by the VA for free.
The issue of the American Legion and VFW claiming the estimated value of this free rental space as matching support has been the subject of debate and could be in violation of state law, auditors said.
KOVS officials said they consulted with the state attorney general's office in 2023 about this practice.
'In an email exchange between KOVS and the AG's office provided to us, AG officials advised KOVS that the practice was ethically ambiguous, but not technically prohibited due to broad legal interpretations of what in-kind support can be,' Fahrenbruch said.
William Turner, executive director of the Kansas Office of Veterans Services, said auditors mischaracterized the conclusion offered by Attorney General Kris Kobach's office. Turner said the attorney general's office concluded the practice of counting free office space or other non-monetary support as part of the funding match was 'appropriate, at least to some measure' and that 'ethical views on the matter are up to the individual.'
Auditors also said they were unable to confirm with documentation that all claimed matching support was directly related to VCAP because certain reported expenditures were based on estimates.
'Overall,' the audit said, 'we couldn't determine with certainty whether the American Legion met their matching obligations in the years we looked at.'
In terms of the Kansas VFW, the organization reported nearly $2 million in matching support from 2022 to 2024. About three-fourths of the support was in the form of direct costs and in-kind volunteer work for veterans. The list, however, included funeral services, meals and other community activities that appeared 'contrary to state law,' the audit said.
'More than half of our sample of VFW matching support was not related to the VCAP program, and we couldn't verify the rest,' the audit said.
Auditors reported VFW operated with the understanding that 'any veterans service activity' could be reported as matching support regardless of its connection to VCAP. Fahrenbruch said auditors requested copies of VFW documents supporting this assertion, but none was provided.
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