The comes from the fact the dropdownlist does not trigger change event either on initial load or on manual filtering (done by the cascading functionality), hence the MVVM value binding is not notified and the model is not updated. We will address this in some of our next Kendo UI / UI for ASP.NET MVC releases. You can find more information about this here
For now you can workaround this behavior triggering change event manually in the dataBound event:
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