AOT CFO defends using $12.25M in FHWA indirect reimbursements to close $33M FY27 gap

State House — Agency of Transportation Chief Financial Officer Candace Selquist told the House Transportation Committee on Feb. 4 that the department plans to apply an FHWA-approved indirect cost rate in FY27 to recover roughly $12,250,000 in indirect-cost reimbursements, as part of a package that closes a projected $33 million shortfall in the agency budget.

Selquist said the indirect-cost plan is on file with the Federal Highway Administration and that using it does not increase the federal apportionment; rather, it reallocates part of the existing FHWA apportionment to cover eligible central costs such as utilities, property management and central services. "We are receiving in the '27 budget 12,250,000 worth of indirect costs from FHWA," Selquist said during the hearing.

Why it matters: committee members and AOT officials said the move frees state transportation dollars for other items but reduces the pool of federal funds available for direct project costs. Selquist told lawmakers the agency paired the $12.2 million in indirect receipts with $21 million in internal reductions (including about $5.3…