Topeka ? State agencies identified $500 million in “buy last” spending priorities, according to an audit released Wednesday.

But many of the agencies also cautioned that many of those expenditures were critical to the needs of Kansans, and that they identified the funding only to comply with the audit exercise.

The 243-page report comes out as lawmakers are struggling to close a $200 million budget deficit in the current fiscal year, and upwards of a $1 billion shortfall in the next fiscal year, which starts July 1.

State Rep. Virgil Peck Jr., R-Tyro, who is chairman of the House-Senate Legislative Post -Audit Committee, said the report was “almost mind-boggling” and will prompt a lot of discussion.

But no members of the committee asked any questions about details of the report after it was presented. And a packed room of agency officials filed out of the room as the committee went on to other business.

As part of the report, auditors asked state agencies to prioritize their programs into “buy first, buy next, buy last, or don’t buy.” They were told to put 80 pecent of their funding into the “buy first” category and about 10 percent into the “buy next” and “buy last” categories.

The agencies placed $500 million worth of programs into the “buy last” category and $23 million into the “don’t buy” category, although officials said most of those “don’t buy” expenses had already been cut to address the current shortfall.

Most of the state funding to regents universities, such as Kansas University, was excluded from the study because auditors are conducting separate reports on those budgets.

In the “buy last” category, health officials placed reducing rates to doctors and others who provide care to children covered by the State Children’s Health Insurance Program.

The Department of Education put in its “buy last” category funding for pre-kindergarten, teacher training and mentoring programs and education to students in juvenile centers.

But it cautioned against thinking those programs are not needed.

“These programs have proven to be highly effective, which can be substantiated by state and national research, and have led to increased student achievement over the past eight years,” said Deputy Education Commissioner Dale Dennis.

Auditors also said the state spends “a significant amount” for optional Medicaid and special education services. Medicaid provides health care to the poor and those with disabilities.

The Division of Post Audit identified $315.6 million in optional spending for services that aren’t required by the federal government, such as dental care, vision care, pharmacy and home- and community-based services.

But health officials said eliminating these services would create more long-term, expensive health problems.

The auditors said the state also spends $15.3 million in special education costs for programs for gifted children even though federal law doesn’t require it.

But Mark Tallman, a spokesman for the Kansas Association of School Boards, however, said state lawmakers have long supported the need to provide gifted students with programs that will help them excel.

The report is available on the kansas legislature’s Web site.