The review was performed on December 16-17, 2002 in the KDWP offices located in Pratt, Kansas. Participants in the review were:
Jerry Hover, Director & State Trails Coordinator, KDWP
Kathy Pritchett, Senior Administrative Assistant, KDWP
Don Dilling, Supervisor, Business Management/Fiscal Section, KDWP
David LaRoche, Transportation Engineer, FHWA Kansas
Diana Stevenson, Financial Technician, FHWA Kansas
Sandra Moeller, Financial Specialist, FHWA Missouri
Don Wilson, Transportation Finance Manager, FHWA Kansas
The Recreational Trails Program (RTP) was first authorized by the U.S. Congress in the Intermodal Surface Transportation Efficiency Act of 1991 and was reauthorized in 1998 under the Transportation Equity Act for the 21st Century (TEA-21). The program provides funds for the States to develop and maintain recreational trails and trail-related facilities for both non-motorized and motorized recreational trail uses. The Kansas Department of Wildlife and Parks administers the program in Kansas and FY 2003 funding amounted to $826,747.00. Within Kansas, funding is being utilized for trail development, program administration and educational activities.
1. Purpose and Scope of Review:
The purpose of the review was to evaluate KDWP's administration of the Recreational Trails Program in Kansas in order to provide reasonable assurance to Federal program managers that 1) the KDWP financial accounting system accurately classifies costs as direct or indirect and that any costs reimbursed by FHWA are reasonable and eligible for Federal participation, 2) that KDWP administration and oversight of the program and its sub-grantees is on-going and effective, and 3) that all applicable Federal regulations and RTP program guidelines are being followed by KDWP and all sub-grantees.
The scope of the review included interviews with key KDWP RTP program personnel along with the testing of KDWP internal controls. Advisory Committee, project and sub-grantee files were reviewed, including: program promotion (advertisement and solicitation of proposals), selection and award procedures, project agreements, contracts, original invoices, billings to FHWA, vehicle and travel charges, equipment and inventory records, KDWP payroll charges, etc. The Single Audit reports for State fiscal years 2000 and 2001 were also reviewed.
The following references were used during the review: FHWA's "Common Rule" 49 CFR 18 - Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments; OMB Circular A-87 - Cost Principles for State, Local and Indian Tribal Governments; OMB Circular A-122 - Cost Principles for Non-Profit Organizations; OMB Circular A-133 - Audits of States, Local Governments, and Non-Profit Organizations; and the FHWA Recreational Trails Program Guide.
2. Program Discussion:
Within the KDWP, the Parks Division manages the RTP. Jerry Hover, Kathy Pritchett, and Linda Lantermen, Asst. Director of Parks, are the staff members that have RTP responsibilities. The Parks Division also manages the Land and Water Conservation Fund (LWCF), which is administered in a similar manner as the RTP. An application packet that contains information about the RTP is available from the Parks Division and online at the KDWP website. The Parks Division has also prepared a "Recreational Trail Planning Guide."
KDWP has a statewide trail plan that is in the process of being updated. The Kansas Trails 2002-2007 Statewide Plan is a long-range comprehensive plan whose purpose is to identify trail resource priorities; trail users' needs, and recommended actions for Kansas trail managers and partners. The Statewide Comprehensive Outdoor Recreation Plan (SCORP) is also being updated at this time. This satisfies the intent of the RTP legislation that requires each state to have a recreational trail plan. Planning costs associated with this activity are charged to state administrative costs as appropriate.
The KDWP Parks Division and Kansas Department of Transportation (KDOT) have not directly coordinated on the planning issues or other overlapping program interests related to the RTP. Others within KDWP coordinate with KDOT on specific Transportation Enhancement (TE) projects (administered by KDOT) that have been initiated by KDWP. In addition, KDWP and KDOT appear to have a good working relationship on the environmental clearance process related to KDOT projects.
The Kansas Trail Advisory Committee is composed of four members representing all terrain vehicle (ATV), equestrian, hiking and biking interests. The committee meets at least once a year and members discuss issues, individually visit projects and make recommendations. Meetings are advertised in a manner similar to other KDWP public meetings. This includes advertisements and public news releases. Information can also be found on the KDWP website. The KDWP has an independent oversight commission, which also looks at the RTP recommendations made by the advisory committee. The commission does not approve individual project applications, but does work to achieve the consensus of all parties where possible. The KDWP Secretary makes the final decision on project selection.
The KDWP makes a strong effort to meet the 30/40/30 suballocation requirement; however, they have trouble meeting the 30% motorized suballocation. This is attributed to several factors. Property within Kansas is 97% privately owned and there are no statewide organizations to promote motorized interests. Nationwide, Kansas ranks last in the amount of public lands. Efforts have been made, especially on Corps of Engineer (COE) off-road areas to establish ATV areas. Reimbursement grants are a problem for the COE to deal with. They must get a private group to front such projects due to contracting restrictions placed on them by the Thompson Amendment to the Water Act of 2000. Also, KDWP is currently working with the cities of Wichita and Garden City to establish ATV areas. The new SCROP will address this issue when released.
In light of this, the committee has had to waive the 30% motorized suballocation on an annual basis. This has been generally noted in the meeting minutes. At the last meeting, all motorized project applications were approved. The remaining funds were then moved to fund non-motorized trail activities.
A 20% matching share is generally required of RTP applicants that have included the COE, Fish & Wildlife Service (FWS), cities, counties, school districts, recreational district, and support groups. Matching shares are provided by local jurisdictions or groups and are in the form of donation of funds, materials, and services. While striving to obtain a 20% match on individual projects, ultimately some projects are over matched and some under matched but a minimum of 20% match is obtained on an annual program-wide basis. The COE has been involved with a number of RTP projects in Kansas. The COE usually provides a 15% match on COE sponsored projects with a match based on labor and materials. A front group is needed to provide the remaining 5% match.
Youth Conservation Corps (YCC) groups have not been used for recreational trials projects due to the lack of these types of groups in Kansas. The Americorps has been used extensively. The Americorps is an internship program under the jurisdiction of the FWS. While many of the participants in the program are young, there is no age limitation requirement. Interested parties receive information on projects from news releases, the website, word of mouth, statewide meetings, etc.
KDWP projects follow the same process used for other projects. These projects originate locally by KDWP Park personnel who prepare the application.
The KDWP includes all selected projects in their annual program as one Federal project for the purpose of authorization and reporting to FHWA. Minor modifications to projects are handled as bookkeeping items. When projects are added or canceled then KDWP formally requests FHWA authorization.
The Park Division monitors projects and if no activity is seen within a year they will write the sponsor a follow-up letter. In addition local Parks personnel within a given geographical area keep tabs on projects in their areas. Project progress is also monitored during the billing process. Invoices, canceled checks, etc., along with a description of completed work are checked for reasonableness. During routine travel Park Division personnel make site visits to projects. Projects on which questions have been raised or help is requested are also visited and may include a review of local accounting. A final invoice serves as notice that a project is complete. All projects are visited by the KDWP at some point prior to closing out a project.
Engineering services costs, if any, have been bundled into the overall cost of projects. These are very small amounts, generally under $2000. The KDWP has a consultant on retainer and may use them to look at their own RTP projects.
The RTP legislation requires that States consider projects that benefit the natural environment. The KDWP meets this caveat by giving preference points to applications that provide such a benefit.
The environmental clearance process for RTP projects starts with the applicant completing an environmental review checklist as part of the application. An aerial photo is required as part of this package. The Park Manager reviews the package and a site visit is made. For selected projects, the KDWP Environmental Section does an environmental review for final project clearance. The LWCF 6(f) provision has not been utilized by KDWP. In many cases, parks in which RTP projects have been implemented, the 6(f) protection already applies to the park.
The Parks Division has incorporated KDOT's Disadvantaged Business Enterprise (DBE) directory as its own and follows the KDOT DBE program. The KDWP provides most of its grants directly to project sponsors. Projects that KDWP puts out to bid are advertised in a manner that is open to all prospective bidders. However, they do not coordinate with KDOT regarding the DBE program.
The overall project process is considered to be working well by the KDWP. They had no suggestions for improvements to the project delivery process
The FHWA/KDWP project agreement for RTP project RT0099(001) expired as of 09/30/2002. Costs incurred after this date that are related to this still active project cannot be reimbursed by FHWA until the project agreement is amended to extend the Project Period to a later date.
Condition statements 7 and 8 which appear on the KDWP Project Agreement form that is executed with each Project Sponsor, are not in conformance with Federal regulations, i.e., 49 CFR 18.42. Condition statement number 7 states ..."the Project Sponsor will retain copies of all financial records for this project for a period of 3 years." Condition statement number 8 refers to allowing..." the Federal Highway Administration reasonable access to all financial records pertinent to this project"...
The retention period begins from the time the grantee (KDWP) submits to the awarding agency (FHWA) its final expenditure report, i.e., final billing. The retention period starting time for sub-grantees is also based upon KDWP's final billing submittal to FHWA. See 49 CFR 18.42(c)(1).
The awarding agency ..."shall have the right of access to any pertinent books, documents, papers, or other records of grantees and subgrantees which are pertinent to the grant, in order to make audits, examinations, excerpts, and transcripts." 49 CFR 18.42(e). FHWA is to have access to all pertinent records and this access shall not be limited to only financial records.
The "Grant Approval and Subsequent Processes" form, which is included in the general information given by the KDWP to applicants, is in error. Statement number 4 in the Project Agreement Section of the form indicates that certain "preagreement costs" could be reimbursed. FHWA Interim Recreational Trails Program Guidance (revised August 1, 1999) states that: ..."reimbursement will not be permitted for costs incurred prior to the date of program authorization by FHWA."
The RTP is codified under Chapter 2 of Title 23 U.S.C. Therefore, the metropolitan and statewide transportation planning requirements apply to the RTP. Coordination with transportation agencies is recommended: to help protect the continuity of existing and proposed trail and greenway corridors; to avoid duplications of efforts; and to coordinate complementary projects, such as TE activities. There has been no direct coordination between KDWP Parks Division and KDOT on the planning requirements. FHWA has acted as a middleman between these two State agencies. The planning requirements would be better served by direct coordination.
The RTP is included within Title I of TEA-21; therefore, the DBE requirements codified in 49 CFR Part 26 also apply to the RTP. The KDWP has indicated they are using KDOT's DBE directory as its own. However, they indicated they are not providing project cost data nor DBE utilization information to KDOT.
FHWA/KDWP should process a modified project agreement on RTP project RT0099(001) as soon as an acceptable extension date for the project period can be agreed upon by both agencies. This recommendation is being made only if any additional costs have been or will be incurred on this project after 9/30/2002 that will be billed to FHWA.
Condition statement number 7, which appears on the KDWP Project Agreement form that is executed with each Project Sponsor (sub-grantee), should be immediately revised to clarify that the three year retention period starts with the closing/final billing of the grant with FHWA. The closing of the Project Sponsor's sub-grant project by the KDWP does not start the three-year records retention period required of the Project Sponsor.
Condition statement number 8, which appears on the KDWP Project Agreement form that is executed with each Project Sponsor (sub-grantee), should be immediately revised to require the Project Sponsor to retain copies of all pertinent records for the project.
Statement number 4 in the Project Agreement Section of the Grant Approval and Subsequent Processes form should be revised to state that no costs incurred prior to authorization by FHWA of the RTP grant with KDWP may be reimbursed.
When submitting the project list to FHWA for authorization, the KDWP should also provide the project information to KDOT for inclusion into the appropriate TIP (if applicable) and the STIP. This should provide the opportunity for coordination envisioned by the planning requirements. In addition, the FHWA should work with the Federal Transit Administration (FTA) to develop a streamlining agreement on joint STIP approval when RTP projects are added into the STIP.
Project cost data and DBE utilization information needs to be provided to the KDOT for inclusion in KDOT's database. Data would need to be provided on at least an annual basis for inclusion in the forth quarter report. In this way, the required DBE utilization reporting would encompass the RTP.
KDWP personnel were very cooperative and helpful during the conduct of the review. All records requested for review were promptly made available.
Available funding for the RTP program is insufficient to fund all project applicant requests in Kansas. The KDWP therefore has chosen to limit the program in Kansas to trail development, educational and KDWP administrative costs. No RTP funding is used for maintenance or operating expenses.
KDWP is subject to the Single Audit Act and has audits performed on an annual basis of its operations. The last audit period covered was for State fiscal year 2001. We reviewed the last two audit reports and there were no material findings reported.
Consultant contracting by the KDWP that is related to the RTP program is on an infrequent basis. KDWP utilizes a firm on a stand-by, when needed basis. Sub-grantees utilization of consultants is rare and costs are typically donated to the project. KDWP utilizes State consultant selection procedures.
Sponsoring of RTP projects by the COE is cumbersome due to the Thompson Amendment in the Water Act of 2000. It is suggested that FHWA/KDWP/COE in investigate and discuss additional options that might be available to streamline the COE sponsorship and reimbursement process as it pertains to the RTP.
6. Summary - Conclusion
No conditions were found which would indicate that material problems exist in KDWP operations and in its oversight of the RTP Program. Internal controls and accounting operations were found to be operating effectively and provide assurance that only eligible and reasonable costs are being claimed against the RTP program. KDWP personnel were quite familiar with Federal regulations and guidelines pertaining to the RTP program and were performing their duties in a conscientious manner.