We also identified five grant management best practices based on our review of publicly available information.
Local Roads Improvement Program
Report 25-26 | October 2025
SUMMARY
In response to the Joint Legislative Audit Committee’s request that we evaluate the administration of state grants by executive branch agencies, we completed a review of the discretionary grants in the Department of Transportation’s (DOT’s) Local Roads Improvement Program. The program assists local governments in improving seriously deteriorating county highways, town roads, and city and village streets. The program provides state funding for projects that are advertised, contracted, and administered at the local level.
The discretionary component of the program contains three types of discretionary grants: county highway improvement discretionary grants, which fund high-cost county highway improvement projects that have a total eligible project cost of more than $250,000; municipal street improvement discretionary grants, which fund high-cost municipal street improvement projects that have a total estimated project cost of $250,000 or more; and town road improvement discretionary grants, which fund high-cost town road improvement projects that have a total eligible project cost of $100,000 or more.
From fiscal year (FY) 2023-24 through FY 2024-25, DOT awarded 119 grants totaling $40.8 million using discretionary funds. As of June 30, 2025, 14 of the 119 grants had ended and received reimbursements.
We reviewed a sample of 30 discretionary grants that DOT executed in 2024, which was the most-recent grant round at the time of our audit fieldwork, and a sample of 15 discretionary grants that ended in FY 2024-25.
In general, state grants involve management of the pre-award, active, and closeout stages
Statutes require DOT to promulgate rules to implement and administer the Local Roads Improvement Program. Since 1991, statutes have required such rules to include procedures for the selection and administration of improvements. Since 1999, statutes have required such rules to include procedures for reimbursements for each of the three types of discretionary grants. Although DOT promulgated statutorily required administrative rules for town road improvement discretionary grants, we found that DOT did not promulgate the statutorily required administrative rules for municipal street improvement discretionary grants or county highway improvement discretionary grants. Instead, DOT established relevant requirements for these discretionary grant types only in its program guidelines.
We also found that DOT did not promulgate statutorily required administrative rules pertaining to cost-effectiveness, contracting with counties, or use of tribal funds. Instead, DOT established such requirements only in its program guidelines.
Application Scoring and Review
Administrative rules and DOT’s program guidelines require county highway commissioners to receive discretionary grant applications by November 1 of each odd-numbered year and to review each application for completeness and accuracy. County highway commissioners are also required to submit all discretionary grant applications to DOT no later than January 15 of each even-numbered year. However, we found that 15 of the 30 discretionary grants we reviewed had applications that were submitted to a county highway commissioner after November 1, 2023. We also found two applications were submitted to DOT after the January 15, 2024 deadline.
Administrative rules require the Statewide Town Road Discretionary Committee to establish criteria for the selection of town road improvement discretionary grant projects. DOT’s program guidelines established similar criteria for the selection of municipal street improvement discretionary grants and county highway improvement discretionary grants. However, we found that 6 of the 30 grant applications we reviewed did not address any of the required selection criteria.
We could not verify whether the scoring and evaluation processes of two statewide committees were consistently reasonable because the committees did not provide DOT with documentation of their scoring determination justifications. We could not assess the reasonableness of county highway improvement discretionary committee scoring processes because DOT did not obtain documentation of the scoring or evaluation processes of these committees.
Town road improvement discretionary grant agreements are required by administrative rules to include three pieces of information. We reviewed the contents of the 10 town road improvement discretionary grant agreements in our file review and found that none contained the intended construction year for their projects, which was one of the pieces of information required by administrative rules.
We identified active stage concerns related to the pilot program, reimbursements, and monitoring
Administrative rules establish a number of expectations for county highway commissioners pertaining to town road improvement discretionary grants under the Local Roads Improvement Program. In August 2023, DOT began a discretionary grant pilot program in 25 counties in northwest and west-central Wisconsin. The program was designed to provide more consistent applicant support and to ease certain administrative burdens of county highway commissioners by delegating programmatic responsibilities to third-party facilitators. Administrative rules do not permit DOT to waive requirements for county highway commissioners pertaining to town road improvement discretionary grants.
DOT’s program guidelines required requests for reimbursement to include final invoices and other documentation supporting payments to contractors. We found that DOT did not formally document its reviews of expenditures for any of the 15 grants we reviewed. DOT determined that all costs submitted for 10 of the 15 grants were eligible costs. However, we could not determine the portion of costs reported to DOT that DOT identified as eligible costs for the remaining five grants.
2003 Wisconsin Act 33 modified statutes to prohibit DOT from requiring that the design and construction of improvements with eligible costs totaling $65,000 or less be certified by a registered professional engineer as a condition of reimbursement. Although DOT’s program guidelines required the certification of a registered professional engineer for all projects with eligible costs greater than $65,000, DOT’s administrative rule has not changed from the $50,000 threshold established prior to Act 33.
Administrative rules require DOT to review a sufficient number of projects to ensure that the program is functioning according to applicable statutes and administrative rules. However, DOT’s program guidelines did not establish a process by which DOT monitored grant recipients while projects were ongoing.
Program guidelines required DOT approval for scope changes, but did not specify that such approval was required prior to the implementation of scope changes. We found that two of the six grant recipients we reviewed that pursed scope changes submitted a scope change form to DOT only after the grant recipients had made changes to their projects. We also found that two of the six grant recipients submitted scope change request forms that were not signed. One grant recipient submitted a blank scope change form.
Statutes typically require program grant recipients to award contracts to vendors on the basis of competitive bids. We found 12 of the 15 grant recipients we reviewed submitted bid tabs or bid summaries to support their bid selections while 3 of the 15 grant recipients relied on board meeting minutes to document their bid selections. However, in two of these three cases, the minutes did not specify the number of bids received for the contract nor whether the contractor was the lowest responsible bidder.
We identified one closeout stage concern related to program outcomes
Although DOT reported on roadway quality overall, it did not assess in writing or publicly report on the impact of the Local Roads Improvement Program on Wisconsin’s roadways.
We make 21 recommendations to DOT for improvements
Please see the complete list of our recommendations on our website. We also include one issue for legislative consideration.