One month after state Department of Transportation Commissioner Gena Abraham said the agency had a $1 billion deficit, the DOT board demoted the department's longtime treasurer, and Abraham's staff told the board that they had brought the deficit down to just under $7 million.

The financial news at the board's monthly meetings was not a surprise, since the board last month approved the staff's plan to reduce the deficit.

The board in a split vote Thursday made DOT Treasurer Earl Mahfuz assistant treasurer. The action came a month after the deficit and state auditors' preliminary finding of "material weaknesses" in DOT's accounting systems were announced.

DOT staff and state auditors had pegged the deficit at $893 million as of March 31 and expected it to grow to $1.2 billion by the fiscal year ending June 30 if certain measures weren't taken. The department's annual budget is about $2 billion.

State auditors, criticizing DOT's accounting, said DOT appeared to be putting money on the books that it expected to receive but didn't have yet.

In one example, auditors said DOT had put $600 million in bond proceeds on its books without first getting a contract signed by DOT and the State Road and Tollway Authority boards. So the boards signed the contract, and $600 million of the deficit was wiped out.

Other items to eliminate the deficit included the receipt of federal reimbursements. Also, Abraham said the department was spending less money on projects put out to contract.

No board member or Abraham would call Thursday's vote on Mahfuz a demotion or say the move was related to his job performance. They initiated a search for his replacement, whom they said Mahfuz would train.

Board members said they are only preparing for "succession planning" since Mahfuz will retire in 1 1/2 years. They gave him a standing ovation.

"We don't look at it as a demotion," Abraham said. "It's part of a long-term succession plan."

Board member Sam Wellborn, who made the motion, said in a speech that Mahfuz "has done a masterful job at whatever task he's been given" and is a "good and honorable man, a man of great integrity and flawless character."

By law, the commissioner can't fire or demote the DOT treasurer without the board's vote, and people inside the department and board member David Doss have said Abraham has wanted to oust Mahfuz from the job.

Abraham spokeswoman Ericka Davis said she knew of no such effort by Abraham, and that Abraham and Mahfuz had had to work closely together.

Asked if she is happy with the move, Abraham said she is excited for Mahfuz and for the department.

"We need to find somebody to come in and let Earl train," she said. "There's lots about the federal process that is very extensive that I've learned about in the past seven months, that we have got to get that knowledge base in the department, and we don't have anybody here that can do that beyond Earl."

Doss, who dissented, said it's clear there is no financial crisis based on mismanagement.

"A mere 30 short days ago the sky was falling and we were $1.2 billion short. Thirty days later that number has shrunk to $6 million," Doss said.

Mahfuz said he did not knowingly violate policy, and the problems had been fixed. His defenders said the problems were part of a decades-old way of doing business at DOT that is now being changed, and that Mahfuz had in the past been a whistleblower about financial problems at DOT.

Mahfuz had little comment Thursday except to say he supports succession planning. Asked if the board had reason to change his job, he said, "No," and added, "succession planning."