OCEAN CITY, Md. - A new state audit of Worcester County Public Schools has identified several financial oversight concerns, including allegedly questionable purchases by a management employee that have been referred to the Maryland Office of the State Prosecutor.
The Financial Management Practices Audit, released in February 2026 by the Maryland Office of Legislative Audits, reviewed the school system’s financial controls and practices. The audit examined operations from January 2023 through June 2025.
While auditors found many areas operating appropriately, several key findings raised concerns.
Procurement activity referred to State Prosecutor
Auditors reported “questionable procurement activity involving a management employee” and referred the matter to the Office of the State Prosecutor.
The report notes that a referral does not mean a criminal act occurred or that charges will be filed.
Due to the referral, auditors said the details of the purchase activity were not included in this report, but findings would be addressed in a separate audit report in the future.
Incomplete employee screenings
The audit claims Worcester County Public Schools did not consistently complete a newly required screening process for employees hired into positions involving direct contact with minors.
Maryland law requires school systems to obtain written statements from applicants regarding prior child sexual abuse or misconduct investigations and to contact prior employers for confirmation, according to auditors. This screening is separate from criminal background checks.
Auditors reviewed 10 employees hired after the law took effect and found six had not undergone the required screening as of October 3, 2025, despite being employed between 39 and 450 days. Two additional screenings were reportedly completed late.
In its written response, Worcester County Public Schools agreed with the finding and said it has taken immediate corrective action. The district stated it reinforced human resources procedures, implemented centralized review before employment clearance, and will conduct periodic file reviews to ensure compliance going forward.
Bus contractor payments questioned
Transportation payments were also cited in the audit, marking a repeat finding from the district’s previous audit in 2017.
Auditors found that Worcester County Public Schools could not support approximately 1.8 million dollars paid to bus contractors for per-mile maintenance costs during fiscal year 2024. The rate was set at 1.072 dollars per mile, but auditors reported that no data was cited to justify that amount.
In addition, auditors found that fuel payments to contractors included federal excise taxes and state fuel taxes. Contractors are exempt from those taxes and can receive credits when filing tax returns. Auditors estimate that if fuel taxes had been excluded, contractor payments would have been approximately one million dollars lower over fiscal years 2020 through 2024.
Worcester County Public Schools agreed with the findings and said it will work to obtain actual maintenance cost data to establish contractor rates. The district also said it will examine procedures for excluding fuel taxes from payments. Any changes would require Board of Education approval. The estimated completion date for corrective actions is July 2026.
Health insurance oversight concerns
The audit also claims the school system did not adequately monitor the performance of a third-party administrator that processes employee and retiree health insurance claims.
Auditors found the district did not consistently compare enrollment records to invoices from the third-party administrator or verify that billing rates matched contract terms. The audit also found the district did not independently verify the administrator’s compliance with contractual performance measures.
The third-party administrator reported self-assessed penalties of 17,008 dollars for fiscal year 2024, but auditors found no independent verification process in place.
This issue was also cited in the district’s previous audit.
In response, the school system agreed with the findings and said it will begin quarterly reviews comparing enrollment records to invoices. It also plans to establish a formal annual review process to independently assess compliance with performance standards. Completion dates range from July to September 2026.
Cybersecurity findings redacted
The audit includes cybersecurity-related findings that are redacted from the publicly available report under Maryland law.
The report does reference a December 2024 vendor data breach involving unauthorized transfers of student and educator personal information. Worcester County Public Schools notified affected individuals in January of 2025. The vendor offered credit monitoring services to impacted individuals.
Specific cybersecurity findings and corrective actions were not made public.
Areas without significant findings
Auditors did not report significant deficiencies in several areas, including:
-Revenue and billing controls
-Federal grant management
-Equipment controls
-Facilities maintenance
-Food services
-Board ethics compliance
Independent financial statement audits from fiscal years 2019 through 2024 did not identify material weaknesses.
What’s next
The most significant outstanding issue remains the procurement referral to the Office of the State Prosecutor. A separate audit report detailing those findings is expected at a later date.
WBOC previously reached out to the Office of the State Prosecutor in January regarding a possible investigation involving a Worcester County Public Schools executive. The prosecutor's office said it could not comment on the existence or status of an investigation unless and until it results in criminal charges.
Worcester County Public Schools stated it agrees with the audit’s published findings and recommendations and is implementing corrective actions to strengthen oversight and ensure compliance moving forward.
WBOC will continue to follow developments, including the release of the separate procurement report.