Colorado Dept. of Transportation audit uncovers massive problems

By Dan Karpiel

The Surveyor

With Colorado’s population booming – the state was the fifth-fastest-growing in the nation in 2018 according to the U.S. Census Bureau – transportation infrastructure is critical to maintaining economic growth and a high-quality way of life. Yet, a recent audit of the Colorado Department of Transportation (CDOT) uncovered massive problems with the department’s budget.

According to the performance audit, published in May, several issues of concern were uncovered.

The report finds “problems with the completeness and transparency of the Department’s Budget Plan and controls over spending.” In Fiscal Year 2017, according to the report, CDOT spent $582.7 million, or 37%, more than approved. Additionally, budget-to-actuals analysis could not be performed for nearly $1.3 billion (roughly 80%) of CDOT’s approved budget due to, “a lack of alignment between the budget plan and how the department tracks expenses in the accounting system.”

This is deeply troubling and, while the audit did not find specific instances of fraud, the report concluded there were, “suspicious patterns and anomalies that indicate a lack of detective controls to identify and deter,” fraud by employees.

Furthermore, CDOT did not include information for more than $1 billion carried forward from prior years as well as maintenance project and construction information. These details are statutorily required by the state. The audit stated, “incomplete information reduces the effectiveness of the budget plan as a management tool and decreases transparency and accountability of the department’s budget.”

According to the audit, for Fiscal Year 2017, the budget plan did not accurately reflect federal highway funding, which totaled $718.6 million, which was $43.7 million more than what was approved in the budget plan. During this time CDOT constructed new department offices at a cost of $150 million to the taxpayers.

Another problem uncovered by the audit stated CDOT does not close construction and maintenance projects around the state in the required timeframe. A further problem this issue creates, according to the audit, is the completion delays caused subsequent delays in the release of $29.3 million in funds budgeted for other construction and maintenance projects. The audit reported, “(CDOT) is not maximizing its available funding,” which totaled $1.56 billion in Fiscal Year 2017.

The audit sampled five master task-order contracts and found problems with all five as well as problems with 80 of the 84 related task orders that were also sampled. According to the report, “The problems included scopes of work that did not align between contracts and task orders, unapproved consultant labor rates, contracts without proper approvals, and contract terms that did not comply with state requirements.”

The litany of problems uncovered raise significant questions about oversight, or lack thereof, regarding CDOT’s budgeting process just as Proposition CC – a Democratically-sponsored measure to retain all refunds currently given to Coloradoans under the Taxpayer Bill of Rights (TABOR) for use in education and transportation funding – is set to appear on the November ballot.

The audit did provide a handful of recommendations which it listed as follows.

One, include all required information in the budget plan or seek statutory changes, if needed; reflect all planned spending and revenue in the budget plan; and routinely analyze budget-to-actual data based on the budget plan categories. Two, implement policies and processes to routinely analyze vendor and payment data for suspicious patterns or anomalies, and investigate any indicators of potential fraud. Three, develop reports and implement policies and processes to evaluate the timeliness of construction project closure and release of unused funds. Four, implement controls over the cost, duration and scope of work in master task order contracts. 

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