The N.C. Department of Transportation continues to be under the watchful eye of the state auditor, who in a report released this week says that department failed to exceed its developed spending plan only by pure luck.
The report from State Auditor Beth Wood’s office said that while the DOT didn’t exceed the spending plan between July and December 2020 (the first half of the fiscal year), it wasn’t necessarily due to stellar forethought. Auditors said the spending plan wasn’t developed based on specific projects or operations.
“Consequently, the fact that the Department had not yet exceeded its Spending Plan was largely due to chance,” the report says. “It was not the result of Department Management’s planning and control based on realistic expectations for the fiscal year.”
Because DOT still hasn’t implemented the state auditor’s recommendations to develop the plan based on specific projects and operations and to monitor and enforce highway division compliance with that plan, it is still at risk for overspending or fraud in future periods, the audit said.
State lawmakers tasked the state auditor’s office with conducting an annual performance audit of DOT last year following a report from Wood’s team that found the department exceeded its 2019 fiscal year spending plan by $742 million.
Examiners discovered that rather than base the spending plan for fiscal 2021 on specific projects, divisions within DOT developed budgets based on prior-year spending or General Assembly appropriations.
The report notes that the preliminary engineering division planned to spend $130 million in the first half of fiscal year 2021, but only spent $106 million. Good for North Carolina taxpayers, right? Not exactly.
“The significant variance highlights how the Department’s planned spending was not based on actual planned projects for the year,” the report points out. “Further, since planned spending was not based on actual planned projects, it will be difficult for management to determine the causes of the variances and take appropriate corrective actions.”
N.C. DOT staff told auditors they found it difficult to forecast projects during the pandemic. They also said a statistical modeling tool was still in development when the fiscal 2021 spending plan was being created. DOT said it plans to use that tool in developing the fiscal 2022 spending plan.
In a response included with the audit, N.C. DOT Secretary J. Eric Boyette said the department agreed with the findings and “there is additional work to be done.”
“While full implementation is not complete, progress has been made and is continuing,” he wrote.
Carolina Journal reported in May that Wood’s office found sloppy recordkeeping at the department led to inaccurate reports on advance construction. Part of the law enacted by legislators last year requires N.C. DOT to submit a detailed report because state auditors determined there was no external evaluation or oversight of the department’s advance construction practices.