The law limiting the expenditures of the State Highway Department for engineering and administrative purposes to ten per cent of the total moneys appropriated for construction, is sufficient for all purposes of the State Highway Department, as an examination of the tabulated report will show. However, as there are no separate funds set aside for the county work as above noted, it has been necessary for this Department to charge in all such work against our own engineering forces, and when I state to you that the total sum for strictly county work, as requested by the county courts, amounts to $137,954.74 in two years, you will see that the Department is carrying a rather heavy burden which in reality does not belong to it. So far the Department has been able to carry the burden and still live within the ten per cent, but at any time the counties increase their construction and engineering work and request our supervision, this might exceed the lawful limit which we are allowed. I recommend that this law be made clearer and that certain funds be set aside for engineering work handled by the State Highway Department for counties. In order to anticipate the large amount of construction for 1919, the State Highway Department has worked a rather large engineering force throughout the summer of 1918 and will continue it through the winter of 1918 and 1919. This preliminary work is absolutely necessary in order to award contracts early in the spring of 1919. The Federal Government requires very carefully prepared plans and estimates for all future Government work and this has been anticipated also, and practically every project has been completed as to engineering features and submitted to the Federal Government for approval. Respectfully submitted, HERBERT NUNN, State Highway Engineer. Report of the State Highway Engineer To the Oregon State Highway Commission December 1, 1916, to November 30, 1918 WORK ACCOMPLISHED