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The State of Kansas Did Not Properly Obligate Its Neighborhood Stabilization Program Funds

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General, audited the State of Kansas' (State) Neighborhood Stabilization Program I (NSP I). Our audit objectives were to determine whether the State properly obligated its NSP I funds and to determine whether the State's contracts contained all of the required provisions. We concluded the State improperly obligated more than $12 million of its NSP I funds by reporting its funds as obligated in HUD's Disaster Recovery Grant Reporting system without those funds being linked to a specific address and/or household. Also, the State entered into NSP I contracts without all of the required provisions.

We recommended that the Director of the Kansas City, KS, Office of Community Planning and Development require the State to (1) implement a system to track and support its obligations as defined by HUD rules and regulations and (2) deobligate any portion of the more than $12 million in NSP I funds that has not been expended and was improperly obligated. In addition, we recommend that the State amend its NSP I contracts with its subrecipients to include the missing provisions and the additional NSP I funding awarded. Finally, we recommend that the State's NSP staff receive training regarding the required provisions of NSP I contracts.