The chief executive of the Kansas reading program on the verge of losing a $7.8 million grant offered a textbook scorched-earth rebuttal Monday to claims by state officials impugning financial integrity of the company and asserting abuse of millions of dollars earmarked to help bring low-income families out of poverty.
Andrew Hysell, chief executive officer of Kansas Reading Roadmap since created by Gov. Sam Brownback, said he was contemplating a lawsuit in response to the Kansas Department for Children and Families notification Friday of intent to sever the contact within 30 days based on findings of an internal audit of the after-school and summer-school instructional program.
DCF pledged to continue financing the reading initiative reaching about 10,000 students in Kansas by funneling grant dollars directly to school districts during the 2019-20 academic year. DCF's decision was unusual, because the agency's secretary had signed a one-year extension of the program June 28 that trimmed the grant by 25 percent to $7.8 million annually.
"DCF's cancellation of the grant means the Reading Roadmap will soon lose its educational impact," Hysell said during a news conference in Topeka. "It will hurt the very children the agency is supposed to protect."
DCF Secretary Laura Howard terminated the agreement with Hysell & Wagner, arguing the company's management of the program was "falling short" of basic standards. She said the audit, initiated by the Brownback administration but never finished or released, exposed problems with the company's internal financial controls. DCF auditors determined nearly $2.3 million was incorrectly claimed and paid to Hysell & Wagner from February 2014 to December 2015.
In response to Hysell's news conference, DCF made public a copy of the 29-page internal audit of Hysell & Wagner's accounting from 2014 to 2015, which was completed in 2017 but not published. It concluded the company lacked documentation for more than $820,000 in salary and benefit payments as well as insufficient documentation of $870,000 nonpayroll and indirect costs. The audit challenged $988,000 in advance payments to subcontractors, because some of the payments were in excess of actual costs.
Hysell & Wagner, the audit said, billed the program $2,260 to lobby state senators and logged $2,240 in food costs as travel and supply expenses.
The audit said the state returned to the Reading Roadmap program in 2017 to determine whether the company's standards of accountability for grant funding had improved.
"There was little, if any, improvement made," the audit said.
Hysell, who works out of Washington, D.C., said DCF's decision to release details of the agency's internal audit of prior to end of a 30-day period for development of a response by Hysell & Wagner amounted to a violation of due process and resulted in "unsubstantiated and inaccurate news headlines critical of the firm."
"Trying to attack contracts in the court of public opinion when they cannot prevail in the court of law is a dangerous abuse of governmental authority and subversive of the business environment in the state," he said.
During the news conference, Hysell said DCF mistakenly claimed nearly $1 million in cash advances to participating schools was improper. He challenged DCF's assertion Hysell & Wagner's use of a 9 percent indirect cost rate led to $447,000 in contested funding. In addition, he said DCF shouldn't have questioned $278,000 in salaries paid to Kansas-based staff.
Hysell alleged DCF didn't cancel the contract due to questions about overhead costs. Instead, he said, it was "retaliation for our refusal to sign a subsequent amendment harmful to our schools and program." He said the company rejected the contract addition Aug. 4, which would no longer have permitted their practice of advancing funding to schools.
"DCF doesn't even know where some of their foster children are," Hysell said. "How are they going to run this kind of program?"
Hysell's annual salary under the contract set to be cancelled Sept. 30 would have been $192,500, while his business partner Carol Hazen, who works out of San Diego, had a contract salary of $150,000. The company employed about 60 full-time workers and more than 1,000 part-time staff.
"I think that these salaries represent what executives get paid at large projects like this, whether they are public or private. I believe that public servants ... often get paid less than they would in the private sector," Hysell said.
Hysell said the reading program increased by 26 percent the portion of participating children reading at grade level.
Brownback, a Republican, decided in 2013 to address a pledge to improve reading skills among fourth-graders, an goal in his Roadmap for Kansas platform unveiled during his 2010 campaign for governor. He directed DCF to earmark federal Temporary Assistance for Needy Families funding to a new reading program in districts with low test scores and high poverty rates.
Hysell said he hoped the decision to withdraw the contract by the administration of Democratic Gov. Laura Kelly wasn't driven by partisan issues. "I would hate to think this is being defunded because of politics," he said.