Senators press MHEC on audit failures, late mandated reports and delays in new financial‑aid system

Department of Legislative Services analyst Sarah Baker told the subcommittee that the Maryland Higher Education Commission (MHEC) has failed to submit a rising share of mandated reports, has repeat Office of Legislative Audits findings across fiscal years 2020–2023, and is behind statutory deadlines for multiple deliverables including reports tied to the BRFAA and new program review requirements. DLS recommended a $250,000 reduction to MHEC’s FY27 general fund appropriation tied to these compliance concerns.

MHEC Secretary Sanjay Rai acknowledged legacy operational disruptions during 2020–2023 and said the current leadership moved immediately to remediate issues. Deputy Secretary Elena Quiroz Levanis told the committee that, of 15 specific audit recommendations identified in the March 2025 audit, the agency has fully addressed 12 and has three in progress. "Of the 15 specific recommendations made by the auditors, we have fully addressed 12," she said.

The committee focused intense questioning on several issues DLS raised: (1) mandated legislative reports that were late or missing (DLS showed the percentage of mandated reports not submitted rose to 58% in 2025); (2) technical vendor errors in the student financial aid system processing that led to 457 possibly ineligible Guaranteed Access awards and the mistaken denial of 172 eligible students for the Guaranteed Access grant (DLS asked whether funding sufficed to cover corrections); and (3) delays and cost growth for the replacement of the MDCAP system with a modernized MD SIS enterprise platform.

MHEC described steps taken: elimination of a problematic 'wash' accounting process, creation of a fiscal firewall to refer delinquent accounts to central collections, reorganization of the Office of Student Financial Assistance and enhanced staffing to eliminate a backlog of more than 1,000 service‑obligation cases, and a triple‑layer review process for the student loan debt relief tax credit. MHEC also reported that the MD SIS project has moved from procurement delays to implementation tasks and that current cost estimates range from $10 million to $20 million with $13.4 million appropriated so far; MHEC said MD SIS is on track for implementation in academic year 2027–28.

Senators asked for precise, line‑level follow‑up and for clearer public reporting of outstanding mandated reports; MHEC’s executive director for external affairs said staff have centralized templates, a compliance tracker, and a plan to resubmit or notify DLS of late submissions. MHEC leaders said several previously flagged issues originated from pandemic‑era operational disruption and staff transitions, and they asked the subcommittee to preserve modest administrative resources to sustain system and compliance improvements.

Next steps: Committee members said they will continue to press for written follow‑up and for verification that outstanding audit recommendations and mandated reports have been fully resolved.