The Legislative Audit Division told the Section A Subcommittee of Appropriations that it expects to increase its billing rate and billable hours in the 2027 biennium as the state shifts toward annual federal single audits and continues to audit pandemic-era federal programs.

“For this next biennium, we have to do essentially three years’ worth of federal auditing in two years,” Legislative Auditor Angus McIver said, summarizing the division’s workload challenge under House Bill 132, which requires a change to the audit cycle.

Why this matters: agencies’ ability to receive federal funds depends in part on timely, complete federal single audits. The audit division said it is proposing a higher hourly audit rate and changed internal budgeting to cover expanded audit work, including more information‑technology controls testing. The division also asked the subcommittee to approve appropriation language that lets the Office of Budget and Program Planning reallocate pooled audit dollars if the composition of federal testing differs from estimates.

Billing rate and appropriation drivers: McIver and Deputy Legislative Auditor Cindy Jorgensen said the division’s current billing rate is $97.11 per hour for fiscal 2025, a jump from fiscal 2024. The division has proposed a projected billing rate of $99 per hour for the 2027 biennium, which Cindy Jorgensen said forms the basis of the appropriation requests presented to the budget office. "The projected billing rate is $99 an hour and that is the basis for the appropriations that you'll see today," Jorgensen said.

Jorgensen told the committee the primary drivers of the increase are (1) filling vacant positions to staff up for the annual single audit cycle and (2) salary increases enacted in House Bill 13. She said the division’s budget is heavily weighted toward personnel costs—about 95 percent of expenditures—and that an estimated 55 percent of the division’s funding will be state special revenue while about 45 percent will be general fund in the next cycle.

Pool restructuring and estimated hours: The division reconfigured how it estimates and bills audit work. Instead of allocating single‑audit hours to each agency’s standalone audit appropriation, the division combined single‑audit work into a single “single audit pool” and created a separate “statewide audit pool.” The single audit pool is estimated at 33,789 hours; the statewide audit pool is estimated at 11,674 hours. The pools allow the division to flex hours across agencies if the mix of federal programs to be tested changes during the year.

The division provided agency examples to explain the new structure. Office of Public Instruction (OPI) is listed with roughly 3,132 audit hours under the new model after combining elected‑official audit work, single‑audit support and IT testing. The Department of Justice shows about 1,278 hours and the Department of Environmental Quality about 724 hours based primarily on federal program testing needs.

Pandemic-era funds and watch list: Jorgensen emphasized that some COVID‑related federal funds remain in programs and will require additional testing. Programs that continue to flow pandemic funds are flagged for continued attention; others are placed on a watch list and may be added to the single‑audit scope if expenditures move above federal thresholds.

IT audits and staffing: McIver and deputy IT audit lead Micki Ciesnik said the division is expanding IT auditing. Ciesnik described the work as testing controls that support confidentiality, integrity and availability of systems that feed financial statements and federal program reporting. The division repurposed an existing position to create deputy leadership for IT audit and expects to be fully staffed in the coming weeks. McIver said the division wants to move toward an appropriation and billing model that supports enterprise‑wide IT risk assessment and cyclical security/reliability testing for mission‑critical systems.

Budgetary housekeeping DPs: The division flagged two decision packages (DPs) that appear in budget materials. DP 806 would reduce the division’s general fund appropriation by about $470,000 to reflect higher state special revenue collections tied to increased billing rates. DP 2807 requests a one‑time fund switch to repurpose existing audit hours toward an enterprise IT risk assessment because the division does not yet have a rate model in place for that IT work.

Risks and next steps: McIver said the top risk is timing and scale: shifting to annual single audits combined with new federal program work and staffing adjustments creates a narrow margin to complete required audits on time. "No single audit, no federal funds, and that's a big deal," he said. The division asked the committee to approve appropriation amounts and the pool structure while retaining flexibility to reallocate hours as federal testing needs become clearer.

Cindy Jorgensen noted she will retire at the end of March and highlighted staff who helped prepare the estimates. The division will return later in the month with additional budget materials and performance metrics. The subcommittee did not take a formal vote during the presentation and will address appropriation and rate items during executive action after upcoming agency presentations.

Ending: The subcommittee moved on after the audit presentation to other agenda items and scheduled executive action later in the week.