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TOPEKA — The Legislature has several options for transforming Kan-ed and saving the state money, auditors reported today.

Among the findings delivered today to the Legislative Post Audit Committee were:

• The state could save about $2 million annually by switching half of the institutions that use the Kan-ed network over to commercial internet providers.

• About $2 million could be saved by merging Kan-ed with the state's university network, KanREN.

Kan-ed was launched by the state in 2004 to provide hospitals, schools and libraries access to broadband internet, video conferencing and database services.

Last year, House members approved eliminating the program, which is overseen by the Kansas Board of Regents, saying it had outlived its original purpose. Kan-ed also drew sharp criticism last session from the cable television industry, which accused it of undermining the private market for high-speed data services.

Internet access

Auditors found that about half of the 554 connections to Kan-ed were used only for internet access and another 6 percent weren't used at all.

Kan-ed network connections each cost $690 a month — about 10 times the cost of commercial alternatives, which auditor Laurel Murdie said were readily available throughout the state.

"We had heard concerns that but for the Kan-ed network, some of the members wouldn't be able to get internet service because it's not available or it's really expensive," Murdie said.

But she said auditors verified availability, especially in rural areas, and concluded it was likely most entities could afford to pay for commercial internet, small libraries being the exception.

Rep. Ann Mah, a Topeka Democrat, said small institutions were the very ones she was concerned about should Kan-ed be eliminated.

"The ones I'm worried about are the rural schools that don't have those resources. It's a small number of schools, but it's important to them," Mah said. "I hope we can do a closer analysis of the impact on rural schools."

Sen. Terry Bruce, a Hutchinson Republican, said he agreed that the focus for future network efforts should be rural areas.

"But we cannot justify continuing to spend $7 million a year when most of the services can be provided by private carrier," Bruce said.

Kan-ed's annual budget was reduced from $10 million to $6 million by last year's Legislature.

If Kan-ed paid for its members' commercial internet connections, it would save the state about $1.9 million. If those disconnected from Kan-ed paid for their own commercial internet service, state savings would be about $2.1 million, according to the audit.

Video conferencing and KanREN

The report also found that only about a third of Kan-ed connections were used for distance learning or other video conferencing. That service was mostly used by schools.

Auditors suggested three ways to save the state money for video conferencing services:

• Continue Kan-ed but charge members some amount for the service. Doing so would help eliminate connections to institutions that don't use the service much.

• Merge Kan-ed with KanREN and connect schools needing video conferencing through KanREN.

• Eliminate Kan-ed and switch entirely to internet-based video conferencing services such as GoToMeeting.com.

Andy Tompkins, chief executive of the Kansas Board of Regents, said his staff began looking at merging Kan-ed with KanREN in June.

"What we would do is start moving all those people who need internet only to a commercial provider," Tompkins said. "We would then offer to those who need (video conferencing) to connect to the one regional network that would be there, KanREN.

"We anticipate it would take about 18 months to move to this new system," he said.

KanREN is the broadband network that connects the state's universities. It is funded by fees assessed to the schools. Kan-ed contracts with KanREN to manage its network and has since Kan-ed was launched.

Database and software services

Kan-ed currently provides funding to libraries for subscriptions to educational and research databases, to schools for software to build tests and store documents, and to hospitals for coordination software. In fiscal 2011, total funding for these services was $2.4 million.

However, auditors said providing such content services was not part of Kan-ed's mission of providing connectivity. Officials at Kan-ed already have said they will not fund database and software services after fiscal 2012.