A sweeping review of Oregon’s management of federal funding revealed significant compliance failures in key state programs, though auditors said the majority of public funds were still handled properly.
The annual Statewide Single Audit, released by the Oregon Secretary of State’s Audits Division, examined federal funds administered during the fiscal year ending June 30, 2025. Over that period, Oregon agencies spent $21.1 billion in federal money across 433 programs, touching everything from healthcare coverage to transportation infrastructure.
Auditors concentrated their review on 16 of those programs, representing $14.6 billion, nearly 70% of all federal expenditures. While the majority met federal standards, the report identified serious deficiencies in oversight and compliance within two high-profile programs, raising concerns about internal controls and data accuracy.
One of the most consequential findings involved the state’s Basic Health Program, operated by the Oregon Health Authority. Auditors issued an Adverse Opinion, the most severe determination available, after identifying widespread and material noncompliance tied to income eligibility calculations.
At the center of the issue was the Oregon Eligibility system, known as ONE, which is responsible for determining whether applicants qualify for benefits. According to the audit, the system failed to properly apply income thresholds at both ends of eligibility. The lower boundary, set at 133% of the federal poverty level, had not been correctly coded into the system’s rules. At the same time, individuals whose income exceeded the upper limit of 200% were not consistently removed from the program, even after providing documentation confirming ineligibility.
These breakdowns resulted in at least $15 million in questioned costs, with auditors warning that the total financial impact could extend further as additional cases are reviewed. The report calls on the Oregon Health Authority to identify all individuals affected by these errors and to reimburse federal funds where necessary.
The findings also highlighted gaps in system testing. While agency officials reported conducting routine control checks, auditors determined that critical eligibility thresholds had been inadvertently excluded from testing protocols, allowing errors to persist undetected.
A separate concern emerged within the Highway Planning and Construction program, overseen by the Oregon Department of Transportation. In this case, auditors were unable to reach a conclusion on compliance, issuing a Disclaimer of Opinion after determining that sufficient evidence was not available.
The issue was not tied to a specific violation but rather to incomplete data. Although the department provided transaction records, it could not isolate expenditures specific to the 2025 fiscal year or reconcile them with required reporting standards. Without that level of detail, auditors could not verify whether federal requirements had been met.
Despite the severity of the findings, both agencies acknowledged the issues and agreed to implement corrective actions.
Oregon Secretary of State Tobias Read emphasized the broader importance of the audit in reinforcing accountability and improving public trust. “The State of Oregon takes our responsibility to be good stewards of tax dollars seriously,” 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 report underscores the scale and complexity of managing federal funds at the state level, where even small system errors can cascade into multimillion-dollar consequences. It also highlights the critical role of oversight in identifying weaknesses before they expand into larger financial or legal risks.
As agencies move to correct the deficiencies, the audit serves as both a warning and a roadmap, pointing to where systems failed and where stronger safeguards must now be built.