Audit of State-Managed Federal Programs Identifies Compliance Issues

Today, the Oregon Secretary of State's Audits Division released the annual Statewide Single Audit of state-managed federal programs for the state fiscal year ended June 30, 2025. While the vast majority of public dollars audited were in compliance, the audit identified several serious compliance issues across multiple programs.

Oregon spent $21.1 billion in federal funds from July 1, 2024, to June 30, 2025, across 433 programs. The Secretary of State's office audited 16 programs accounting for $14.6 billion of those expenditures, nearly 70% of the total. In that review, auditors identified one program where noncompliance with federal standards was both material and pervasive, leading them to issue an Adverse Opinion with the report. They also identified another program where they could not obtain sufficient evidence to verify compliance, leading to a Disclaimer of Opinion.

"The State of Oregon takes our responsibility to be good stewards of tax dollars seriously," Oregon Secretary of State Tobias Read said. "This audit will help agencies improve their administration of federal programs to ensure the state is efficiently spending public money to the best benefit of the public."

The Basic Health Program (BHP), administered by the Oregon Health Authority, received an Adverse Opinion after auditors discovered the system contained errors associated with both the upper and lower limits of income eligibility, resulting in known and likely questioned costs of $15 million. Auditors recommend the department identify all individuals impacted by system errors and refund BHP.

Two findings led to the Adverse Opinion for the Basic Health Program:

• Auditors found the annual household income threshold of 133% of the federal poverty level was not correctly coded in the Oregon Eligibility (ONE) system's determination rules for BHP. Department management said that system control testing was performed, but the lower limit threshold was inadvertently removed from testing protocols.
  
• The ONE system did not end benefits for individuals when a response to a request for information (RFI) indicated the individual was over the 200% income maximum and ineligible.

When reviewing the Highway Planning and Construction program, administered by the Oregon Department of Transportation, auditors requested expenditure data needed to perform required testing of key compliance requirements. The department provided transaction data but could not limit it to just the 2025 fiscal year federal expenditures. Auditors were unable to reconcile this data to the information that was needed.

Both agencies agreed with auditors' recommendations to fix these errors.

The full report and agency responses can be found on the Oregon Secretary of State's website.