SUMMARY

The federal financial assistance administered by state agencies during FY 2024-25 included $16.5 billion in cash assistance, $1.6 billion in noncash assistance, and $36.6 million in outstanding loan balances. Seven agencies administered 94.9 percent of the federal expenditures during FY 2024-25: the Department of Health Services (DHS) administered $10.6 billion, the University of Wisconsin (UW) System administered $1.9 billion, the Department of Public Instruction (DPI) administered $1.5 billion, the Department of Transportation (DOT) administered $1.1 billion, the Department of Children and Families (DCF) administered $0.9 billion, the Department of Workforce Development (DWD) administered $0.6 billion, and DOA administered $0.4 billion. Other agencies administered $1.2 billion. 

The State was required to separately identify the federal funding it expended as a result of the public health emergency, including funding provided under the American Rescue Plan Act (ARPA). In its Schedule of Expenditures of Federal Awards (SEFA), the State reported that it spent $1.2 billion through federal programs or clusters for purposes related to the public health emergency during FY 2024-25. 

The largest portion of these expenditures was $502.0 million related to the Education Stabilization Fund (ESF). These federal expenditures also included spending of $462.4 million through the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) program, $42.4 million through the Disaster Grants - Public Assistance (Presidentially Declared Disasters) program, $30.6 million through the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) program, $26.1 million through the Coronavirus Capital Projects Fund, and $11.0 million through the Immunization Cooperative Agreements program. These six largest programs do not include expenditures under an additional 44 programs or clusters as reported in the SEFA. 

An auditor provides a qualified opinion on compliance when the compliance concerns are material in relation to a specific compliance area tested for a federal program or cluster. We qualified our opinion on compliance related to certain compliance requirements for two federal programs, including:

• the Dairy Business Innovation Initiatives program administered by UW-Madison; and
  
• the Motor Carrier Safety Assistance Program administered by DOT.

UW-Madison administered the Dairy Business Innovation Initiatives program for which it contracted with a subrecipient to administer the program. The subrecipient worked with UW-Madison to provide grants to farmers or dairy processors to diversify farming activities, create products, and enhance dairy exports. Federal regulations require UW-Madison to ensure procedures are in place to monitor advanced federal funding to its subrecipients to limit the time between the expenditure of funding and the drawdown of federal funds. 

During our FY 2023-24 audit (report 25-04), we found that UW-Madison did not follow all federal regulations when advancing funds to its subrecipient, and we recommended that UW-Madison ensure disbursements to the subrecipient complied with all federal cash management requirements. We also qualified our opinion on compliance with the cash management compliance requirement. During our FY 2024-25 audit, we again found that UW-Madison made advance payments to its subrecipient that did not ensure the time between the subrecipient receiving funds and the subrecipient disbursing funds was appropriately minimized. Therefore, we again qualified our opinion on compliance for this program, and we made recommendations to UW-Madison to implement improvements and address the noncompliance concerns.

As part of administering the Motor Carrier Safety Assistance Program, DOT is required to comply with certain financial reporting requirements. We qualified our opinion on compliance for this program because DOT did not complete financial reporting requirements for the program. We made recommendations to DOT to implement controls and address the noncompliance concerns.

Our 48 recommendations related to 20 findings, including 5 findings related to internal control deficiencies we identified in our audit of the State’s ACFR (report 25-33). We consider 3 of these findings to be material weaknesses and 17 to be significant deficiencies.

A material weakness is a deficiency, or a combination of deficiencies in internal control over compliance or financial reporting, such that there is a reasonable possibility that a material misstatement or material noncompliance will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control over compliance or financial reporting that is less severe than a material weakness in internal control, yet important enough to merit attention by those charged with governance.

At DHS, we reported 7 significant deficiencies for a total of 7 findings for which we made 15 recommendations. At DOT, we reported 2 material weaknesses and 3 significant deficiencies for a total of 5 findings for which we made 13 recommendations. At DOA, we reported 4 significant deficiencies for a total of 4 findings for which we made 11 recommendations. At UW System, we reported 1 material weakness and 2 significant deficiencies for a total of 3 findings for which we made 8 recommendations. For DPI, we reported 1 significant deficiency for 1 finding for which we made 1 recommendation.

¹ A material weakness is a deficiency, or a combination of deficiencies, in internal control over compliance or financial reporting, such that there is a reasonable possibility that a material misstatement or material noncompliance will not be prevented or detected and corrected on a timely basis.

² A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over compliance or financial reporting that is less severe than a material weakness in internal control, yet important enough to merit attention by those charged with governance.

We also identified $2.6 million of questioned costs that DHS charged inappropriately to federal funds as well as an undetermined amount. These questioned costs related to the Children’s Health Insurance Program (CHIP).

Finally, we followed up on the progress of state agencies to address recommendations we made in our FY 2023-24 single audit (report 25-04). Eight findings we report for FY 2024-25 were repeat findings from FY 2023-24 or prior years, including findings related to cash management for the Dairy Business Innovation Initiatives program, eligibility for CHIP, and SEFA reporting at UW System Administration. Such repeat findings indicate state agencies did not take sufficient and appropriate action on our prior recommendations during FY 2024-25. The federal government will work with state agencies to resolve the new and continuing concerns we identified.

On July 7, 2025, UW System implemented a new enterprise resource planning system. With the implementation of the new system, significant changes will be necessary for UW System Administration to complete financial reporting, meet federal regulations in administering grant programs, and compile the UW System SEFA for FY 2025-26.

Because UW System is part of the State’s financial reporting entity, it must meet timelines established by DOA related to the compilation and preparation of the State’s FY 2025-26 ACFR and SEFA. UW System Administration will need to work more closely with DOA during FY 2025-26 to ensure it does not delay DOA’s financial reporting for the State of Wisconsin in December 2026 or the issuance of the FY 2025-26 single audit, which is required to be submitted to the federal government by March 2027.