They are not "Kansas" - there's no such school. It's a state. It's like calling Wichita a state, when it's actually a city in Kansas, more appropriately called, like CCNY, Wichita City University. So, call them what they are here as well, Ku. It makes the message clear. And I believe they prefer it anyway. A double winner.
If they prefer to be called KU, then Kansas it is!