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Jan. 25, 2012
TOPEKA The director of the University of Kansas Cancer Center today urged legislators to "not throw the baby out with the bath water" as they consider the results of an extensive audit of the Kansas Bioscience Authority.
Dr. Roy Jensen told the House Appropriations Committee that the authority had been critical to the KU Cancer Center's seven-year initiative to become accredited by the National Cancer Institute.
"If it wasn't for the KBA, there would be no initiative. I can state that categorically," Jensen said.
KU officials expect a visit from the NCI inspection team next month and should know yet this year whether the center gains NCI designation, which officials say would boost federal research dollars to KU and assure better care for cancer patients.
The bioscience authority, headquartered in Johnson County, was created by the 2004 Kansas Economic Growth Act. The independent agency receives several million dollars each year in state tax money, which the authority's directors are expected to use as seed capital for companies and efforts aimed at boosting bioscience development and jobs in the state.
On Tuesday, members of the Senate Ways and Means Committee were briefed on the audit performed by BKD LLP, a leading forensic auditing firm. Most accepted the auditors' statements that the months-long review had turned up no significant problems in the way the agency reached investment decisions or implemented them, though it faulted former authority chief executive Tom Thornton for using agency funds to travel to Cleveland for a job interview and then for "scrubbing" all records from the hard drive on his agency laptop computer despite the fact the audit was under way.
Some female employees also reported a "toxic environment" at the agency, which auditors said resulted partly from Thornton's office affair with a young female worker who later became his wife. Auditors described anonymous reports of trysts in Thornton's office as "water cooler gossip."
Apart from Thornton's misbehavior, auditors said the agency's investments generally had been well overseen and dispensed. They described the audit as "exhaustive."
Sen. John Vratil, a Leawood Republican, said the audit first pushed last year by Sen. Susan Wagle, R-Wichita, and then by Gov. Sam Brownback had turned out to be not worth the effort or cost.
KHI News Service
"KBA paid almost $1 million to find out that a former employee did some things that were indefensible," he said. "We paid $960,000 to recover $4,800."
But BKD auditors took heat today during a joint meeting of House and Senate Commerce committees chaired by Wagle.
Sen. Ty Masterson, an Andover Republican, asked how auditors could conclude the agency was properly overseen without knowing what had been on the hard drive of Thornton's laptop.
"What's concerning to me is what we don't know about what we don't know," he said.
Rep. Scott Schwab, an Olathe Republican, said "you don't erase hard drives like that unless you're trying to hide something criminal."
'High level of compliance'
But BKD managing partner Jim Snyder told lawmakers the auditors found no evidence of criminal behavior and that the agency had a full set of financial records for its grants and investments despite whatever documents Thornton had erased.
When interviewed by auditors about the "scrubbing," Thornton reportedly said he had personal information on the laptop that he didn't want exposed.
"A forensic audit is all about trying to find the gotcha," Snyder said. "Having kicked the tires very hard, we found a very high level of compliance" with KBA procedures and policies.
But Snyder's comments seemed to leave most lawmakers on the commerce panel unsatisfied.
Masterson said lawmakers might need to "clean house at the agency" or restructure it.
The governor has called for a moratorium on further KBA investments until the "Legislature decides what kind of future the state wants for the KBA."
Wagle has scheduled another hearing on the audit for Thursday. Lawmakers are expected to hear from Agriculture Secretary Dale Rodman, who was part of the governor's team that helped expand the scope of the review after a first draft of the audit report was given to the KBA and shared with the administration. The final report ended up at more than 150 pages.
The audit produced a flurry of activity at the Statehouse, with the governor and his conservative legislative allies apparently pushing for a stronger hand in how the authority is run. The board's majority currently is made up of directors appointed by Democratic Govs. Kathleen Sebelius and Mark Parkinson. Former Democratic Gov. John Carlin sits on the board and its chair is Dan Watkins, a Lawrence attorney and longtime Democratic activist.
Meanwhile, moderate Republicans, Democrats and others have rushed to defend the authority.
Support for cancer center
In his presentation to the House budget committee on KU's application for NCI accreditation, Jensen said the KBA had paid for half of a new $53 million state-of-the-art research facility that was an essential starting point for becoming a nationally recognized cancer center.
"The building that has been renovated on the medical center campus ... provided us with space that allowed us to recruit the senior leadership" for the KU Cancer Center, Jensen said. "We simply cannot bring these people on board unless we have a place for them to do great research. (KBA) funding allowed us to move forward in a way that there really is no other mechanism to allow us to do that."
Rep. Anthony Brown, R-Eudora, who later in the day co-chaired the commerce committee meeting, asked Jensen if he thought the audit would damage the cancer center's NCI application.
"There's concerns in the Legislature (and elsewhere) that this damaging report and the mishandling of funds by the KBA may taint or hurt our ability to acquire designation," Brown said.
Jensen said he did not think it would affect the application.
He told lawmakers that the KBA "has done an enormous amount of good. Make sure that we take care of what's gone right with the KBA while we're working to fix things."
Thanks to the agency, the economic recession did not have as large an effect on the cancer center, Jensen told KHI News Service after the meeting.
"Because of the KBA, we had resources when many of our competitors did not have resources," he said.
Jensen said the cancer center has created 1,100 jobs and should create nearly 1,000 more as it continues to grow. He said its total regional economic impact so far has been more than $450 million and would approach $1 billion within the next few years.