Lawmakers press ODOT on budget error, staffing and corrective audits; agency outlines fixes and outside reviews

The Joint Committee on Transportation held an informational meeting March 18 to examine oversight and accountability at the Oregon Department of Transportation after the agency disclosed a budget cash‑flow error in late 2023. Committee members heard from ODOT Director Chris Strickler and Principal Internal Auditor James Hansling about corrective steps, audit findings and planned reforms.

Why it matters: Lawmakers said the agency’s budget and project delivery performance affects maintenance of state roads and the size of future funding requests. Committee leaders said they want assurance that future revenue forecasts and project estimates will be accurate before asking voters or the Legislature for new revenue.

Audit and error: ODOT officials told the committee the agency’s finance and budget division discovered an error in the department’s cash‑flow model at the end of 2023 and publicly disclosed the issue to the Oregon Transportation Commission in May 2024. The department then reorganized budget functions into a single finance and budget division and asked internal audit to review corrective actions.

James Hansling, ODOT’s principal internal auditor, described statutory changes in House Bill 2017 that strengthened the internal audit office’s independence and transparency. “We conduct our audits in accordance with government auditing standards,” Hansling told the committee, and the office now posts completed audit reports and a two‑year audit plan on ODOT’s website.

Key audit findings: The internal audit found that federal revenue projections in the cash‑flow model were inflated because the model did not fully reflect how projects were programmed in the Statewide Transportation Improvement Program (STIP), especially projects advanced to seek federal reimbursement (so‑called advanced construct). The audit noted that roughly 85% of House Bill 2017 dedicated funding had corresponding STIP allocations through 2027, with a gap auditors could not fully reconcile from available records.

Immediate and planned fixes: Director Chris Strickler told lawmakers the agency has taken steps including rebalancing the STIP to fit expected cash flow, updating budgeting procedures to use historical federal reimbursement rates rather than optimistic projections, creating a plan to reconcile HB 2017 funds with program allocations, and seeking potential replacements for the cash‑flow tool. Strickler said those steps were begun before the audit was complete and that the audit was used to validate and refine remedies.

Staffing and vacancies: Lawmakers asked whether cutting vacancies could close the shortfall. ODOT officials reported roughly 500 current vacancies and said that unfilled positions would reduce near‑term costs but are not a one‑for‑one solution. The agency warned that vacancies reduce service delivery capacity in maintenance and project delivery.

Outside consultants and timeline: Committee vice chair Bruce Starr said the Legislature procured an outside consultant team (Joshua Lapoli and Shane Marshall) for a rapid review of project delivery and organizational structure; Starr said the first phase would be about three weeks with the full work completed in under two months so results could be available before the session ends.

Specific audits and questions: Legislators pressed auditors about what “gaps in documentation” mean in practice, whether audits look for fraud or performance risk, and how project schedules and delays are tracked. Hansling said the audit approach depends on objectives: some reviews are full audits while others are non‑audit process reviews intended to determine whether committee or advisory processes slow delivery.

Budget tools and borrowing: Witnesses discussed the agency’s use of GARVEE bonds and commercial paper to manage timing of obligations and federal reimbursements; Director Strickler said some short‑term borrowing was used to meet timing needs tied to project obligations and settlement obligations such as ADA work. Committee members asked for details about a separate ADA curb‑ramp audit (which compared curb ramp costs and noted an average per‑ramp cost difference) and requested follow‑up information from staff.

Next steps: The committee requested additional information, including reconciled HB 2017 funding allocations, documentation on advisory committees, details on vacancies and positions tied to preservation and project delivery, and answers about ADA curb ramp recommendations. ODOT officials said they would provide the requested materials to the committee and continue implementation of corrective actions while the outside review and internal audits proceed.