County auditor finds policy, funding and equity gaps in MSTIP audit; offers nine recommendations

County Auditor Christine Adams Swanberg presented a December 20, 2024 program audit on the Major Streets Transportation Improvement Program (MSTIP) to the Washington County Board of Commissioners on Jan. 21, finding the program lacks codified authority, policies and consistent financial safeguards.

The audit, carried out by the auditor’s office and senior management auditor Fiona Howell Earl, identified seven findings and issued nine recommendations ranging from drafting county code that authorizes MSTIP to improving cost forecasting and clarifying the county’s approach to equity in project selection. The report said the MSTIP 3 fund had a $301,000,000 modified expenditure budget in the current fiscal year.

Why it matters: MSTIP is the county’s principal local transportation funding program for major roads, and the audit says its structure and practices create financial and program risks — particularly as construction inflation and competing county priorities strain budgets.

The auditor framed the work as a risk assessment and described the report’s two objectives: to identify stakeholders’ perceptions of major risks to MSTIP and to determine whether those risks constituted audit findings that could be mitigated. The office surveyed county commissioners, city mayors, the Washington County coordinating committee (WCCC), members of the WCCC technical advisory committee, staff in Land Use and Transportation (LUT) and other stakeholders, receiving a 65% response rate.

Key findings and recommendations

- Lack of authorization and policy: The audit found MSTIP is not authorized or defined in county code and lacks board-adopted policy. The report recommended the county administrator and LUT draft county code to authorize and define MSTIP and that the board adopt administrative policies to provide program direction.

- Equity vs. equality in project selection: The audit said MSTIP’s approach has shifted toward allocating roughly equal funding per commissioner district by board direction rather than by policy, and that the 3F cycle adopted equity metrics tied to the county’s 2020 equity resolution. The auditor recommended the county clarify how equity metrics and district-based equality should be reconciled and put that approach into formal policy.

- Budget and contingency problems: The auditor reported two years of exceptions to budget policy No. 404, where general-fund transfers to MSTIP were treated inconsistently with policy. The report also described earlier noncompliance with contingency requirements and inconsistent, insufficient inflation and contingency assumptions that left earlier cycles underfunded; it noted cost underestimates for MSTIP 3D/3E had risen to about $90,000,000 by September 2023. Recommendations included complying with budget policy 04/2004 or proposing policy revisions and improving forecasting to include cumulative inflation for multiyear projects.

- Bonding cost-sharing subprogram (BCS): The audit described that a 2015–2016 BCS approach produced geographic advantages for projects in four high-growth areas (North Bethany, Bonny Slope West in unincorporated Washington County, South Cooper Mountain in the City of Beaverton, and River Terrace in Tigard), which reduced available tax revenue for projects elsewhere. The report recommended an administrative policy to ensure fairness between pay-as-you-go and debt-funded projects.

- Bicycle facilities policy and design approval: The audit flagged a 2017 bicycle facilities policy that requires at least two alternative designs with separated bicycle infrastructure and gives the board authority to pick designs; auditors said that conflicts with county code delegating design approval to LUT and increases project time and cost. Recommendations included documenting and authorizing exceptions via the county engineer and, if necessary, revoking the 2017 bicycle policy after updating design standards.

Management response and board discussion

County Administrator Angie thanked the audit staff and said management agreed with some recommendations, partially agreed with others and disagreed with a few findings. Angie recommended creating a MSTIP program guide to be adopted by board resolution rather than prescriptive code, arguing code could limit staff flexibility to respond to opportunistic funding or emergent needs.

On budget and contingency, management said the county had publicly disclosed exceptions to its budget policy and is updating financial policies. The administration also said staff had been authorized to explore bonding and that staff would return to the board with any sale authorization. In the presentation management noted the proposed FY24–25 MSTIP budget included about $180,000,000 in contingency and discussed a potential $150,000,000 in bond proceeds under consideration.

Commissioners praised the audit work and staff responses but differed on emphasis. Commissioner Snyder said, “I wanna thank the county auditor and frankly the county staff. I think this has been a topic that has been of significant interest and concern,” and thanked the teams for the review. Commissioner Willie emphasized that budget limits and competing priorities affect all county programs and cautioned that heavy codification could constrain flexibility for handling countywide demands.

What the audit asks the board to do next

The auditor recommended (among other actions) that the board: draft code to authorize MSTIP and adopt administrative policies; clarify policy guidance reconciling equity metrics with district-based funding; comply with or revise budget policy 04/2004; improve contingency and inflation assumptions in project cost estimates; and clarify policy on bonding vs. pay-as-you-go funding. Management outlined a path for a program guide, updates to design standards and continued policy work, and indicated further board action will be needed to adopt code or repeal the 2017 bicycle facilities policy.

Ending: The presentation, management response and board discussion concluded with Commissioners thanking audit and LUT staff and directing follow-up work; no formal board action to change MSTIP code or policy was taken at the meeting.