Kansas audit questions state’s management of 4.1 million square feet of office space

Adam Proffitt, secretary of the Kansas Department of Administration, says an audit report on office space leased or owned by the state government will serve as motivation to upgrade accounting and budgeting systems to more precisely establish office-space costs to taxpayers. The audit says existing information is inadequate to fully understand financial implications of decisions by agencies to lease or rent office space. In this Jan. 16, 2025, image, Proffitt speaks to a committee of the Kansas Legislature at the Capitol. (Tim Carpenter/Kansas Reflector)

TOPEKA — The Kansas Department of Administration responded to a report from the Kansas Legislature’s auditors by promising to upgrade outdated systems for determining costs of operating state office buildings and to reform a flawed approach to setting rental rates for state agencies.

The state of Kansas owned or leased 4.1 million square feet of office space across the state in the fiscal year ending July 1, but the Legislature’s auditing division found the Department of Administration didn’t have detailed written policies guiding estimation of operating costs or setting of rates for renters, the auditor said.

State auditors said it was “critical” the agency blend state budget and accounting systems to produce firm data. The Department of Administration committed to improving its property management practices.

The audit also said Kansas didn’t have a “regimented, formal process where a single agency examines agencies’ needs and determines the best option for both square footage and leasing versus owning. Instead, agencies have a lot of discretion in determining what works best for them.”

Frank Burnam, deputy secretary for operations at the Department of Administration, said the audit requested by Sen. Rick Billinger, R-Goodland, was appreciated because it exposed shortcomings in property management.

“It really kind of helped open our eyes into some really old, antiquated ways of calculating and determining what these costs are,” he said.

Burnam said the Department of Administration would strive to set multiyear lease rates for state agencies rather than adjust rates annually. A flat rate would provide more consistency for state agencies and reflect methods common to commercial landlords.

 

78 agencies, 524 properties

In the report released to the Legislature’s joint auditing committee this week, analysts said the state leased or owned 4.1 million square feet of office space. Two-thirds was leased from private owners, while 32% was held by the state. Overall, agencies were bound by terms of 241 lease agreements.

The audit revealed 5% of the state offices were acquired through other means. Lansing Correctional Facility was built with a lease-purchase contract. The legislative, judicial and executive branches of state government occupy 189,000 square feet of space in the Capitol or Kansas Judicial Center, but none pay for office space. Those costs were covered with a “monumental building surcharge” of $3.30 per square foot assessed against state agencies leasing space elsewhere in Shawnee County.

The audit focused on 524 state properties affiliated with 78 state agencies. The report documented state agencies’ office space in 102 of 105 counties. The outliers, for purposes of this audit, were Elk, Stanton and Wichita counties. The report excluded property in hands of state universities, school districts and district courts.

Currently, the Department of Administration must approve state agency lease agreements. The secretary of administration must inform the Legislature’s joint building committee before approving leases of privately owned space with more than 10,000 square feet or for periods longer than two years.

The Legislature and Kansas governor have direct roles in deciding whether the state purchased or built office space.

“None of these processes or approvals require agencies to formally compare the advantages, disadvantages and costs of leasing office space to purchasing office space,” the audit said.

The audit said at least 106 of 241 state agency lease agreements for privately owned buildings were for periods of more than 10 years.

It would cost the state an estimated $16.5 million to terminate all state office leases as of July 2025, auditors said. The largest penalty for breaking leases — at a cost of  about $4 million — was for two Kansas Department of Revenue locations in Topeka, the report said.

Most state agencies said they had sufficient space for all employees if they were required to work from an office. Only 24 agencies among the 78 audited said they lacked space to accommodate every staff member. Deficient agencies included the Kansas Board of Cosmetology and Kansas Department of Education.

“We’re moving into an era of AI where less office work is going to be needed, as well as more people are working in the field or remotely,” said Rep. Kristey Williams, R-Augusta.

State agencies reported 16 of 524 office space locations across the state had unused space. Four had been unoccupied for more than five years. Three had areas unfit for occupancy. For example, Kansas Neurological Institute had a building with a mold problem and leaking roof.

 

Leased or owned

In fiscal year 2025, the audit said, state agencies in Topeka reported leasing costs for privately owned buildings were less than state-owned buildings. Auditors said the potential benefit of ownership was muddled because “DOA data on the cost of state-owned office buildings wasn’t reliable.”

Adam Proffitt, secretary of the Department of Administration, said the agency was responsible for care of the entirety of state buildings, including space that wasn’t leasable. That could be responsible for driving up the cost of state-owned property in Shawnee County, he said.

He said the Department of Administration also was obligated to make debt payments on two buildings in the Capitol Complex, and those payments were baked into leases for state-owned property.

“To be clear, D of A is not disputing that many of the leases of private office space are lower than those of state-owned space,” Proffitt said.

One-fourth of rebuilt Docking State Office Building comprised office space. New tenants include the Kansas Highway Patrol, Kansas secretary of state, state Department of Commerce and the Department of Administration.

Sen. Caryn Tyson, R-Parker, said the Legislature ought to determine why the secretary of the Kansas Department of Agriculture had an office in Topeka and Manhattan.

“Little things like that are just kind of ridiculous,” Tyson said. “Especially as a taxpayer.”

In 2013, then-Gov. Sam Brownback moved the Department of Agriculture to a building adjacent to the Kansas State University campus. The department maintained administrative offices in Topeka.