Story Snapshot of what you need to know and why it matters:
- A newly released audit revealed the Maryland State Highway Administration could be on the hook for $358.7 million after classifying certain project expenditures as federally funded without prior authorization.
- If forced to cover that money, the administration's trust fund balance could be significantly depleted.
- The Audit also claims vendors who assisted with planning and designing of State roads, highways, and bridges, may have done so without proper certification
Full Story:
A newly released legislative audit is highly critical of the Maryland Department of Transportation's State Highway Administration (SHA).
The report claims SHA spent and then charged hundreds of millions of dollars in unauthorized federal funds on more than 500 projects.
"The cumulative amount spent on these projects without authorization increased from $9.9 million in June 2020 to $358.7 million
as of August 2025, an increase of 3,523 percent," auditors wrote.
According to the audit, "SHA knowingly charged these costs as federal funds on the State’s accounting records to minimize the Transportation Trust Fund deficit."
The concern now is that since the federal funds weren't authorized to be spent in the first place, SHA may have put itself on the hook to use up most of its $400 million trust fund balance.
Auditors said they found out about what SHA was up to from a referral on their fraud, waste, and abuse hotline.
"We reviewed and tested the related activity and substantiated the allegation," the report reads. "Our review did not identify any matters that warranted referral to the Office of the Attorney General’s Criminal Division, but did identify certain deficiencies that require action by SHA."
That action as recommended by auditors includes "discontinuing its practice of charging project costs as federal expenditures when there are no federal funds authorized for the project."
Auditors also say SHA couldn't provide documentation to support the propriety of related federal funding.
In response to the audit's funding allegations, SHA said this:
"It is not factually accurate to say that projects were not authorized, but it is accurate that in some cases, expenses charged exceeded the initial authorized amount. The State Highway Administration (SHA) followed federally approved accounting practices and no expenses were purposefully miscoded. SHA receives authorization for all federally funded projects in accordance with C.F.R. Title 23 prior to the start of the project and any subsequent expenditures. While projects receive an initial authorization, SHA may incur expenditures during the normal course of business in excess of the federal authorization amount or project agreement end date. In these instances, SHA uses an ordered approach to identify the expenditures and determine if a project modification or change order is needed to seek federal reimbursement. If the expenditure is deemed federally ineligible for reimbursement, it would be expensed to state funds."
The misspending of federal funding was just one of several issues auditors discovered within SHA.
Additionally, the report determined the Administration often failed to ensure proper certification of Architectural and Engineering vendors who assisted with the planning and designing of State roads, highways, and bridges.
"As of March 2025, 25 of 46 inspectors tested did not have some or all of the required certifications when they performed inspections, including 9 inspectors that did not have any of the required certifications," the audit states. "According to the certification training material, without proper certification, inspectors may not be qualified to test construction materials or test results may not be acceptable."
The Administration in response blamed current contract language for the perceived violations.
"Consultant construction inspectors only perform the material inspection testing for materials that they are certified to test. SHA is in compliance from a material testing perspective. Every inspector does not require every certification to comply with material inspection requirements and standards. If the inspector testing the specific material is certified for the specific material being tested, SHA is in compliance. However, SHA acknowledges that current contract language could be viewed to indicate that every inspector needs every material certification to always be active and current. Because this is not actually a requirement, SHA will adjust contract language to match needs on future iterations for these construction management and inspection contracts."
The full audit can be read below.
