REPORT DIGEST DEPARTMENT OF CENTRAL MANAGEMENT SERVICES - UNIVERSITY BENEFITS SCHEDULES COMPLIANCE EXAMINATION FOR THE YEAR ENDED JUNE 30, 2020 Release Date: November 24, 2020 FINDINGS THIS AUDIT: 1 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 0 -- 0 -- 0 Category 2: 1 -- 0 -- 1 Category 3: 0 -- 0 -- 0 TOTAL: 1 -- 0 -- 1 FINDINGS LAST AUDIT: 0 Category 1: Findings that are material weaknesses in internal control and/or a qualification on compliance with State laws and regulations (material noncompliance). Category 2: Findings that are significant deficiencies in internal control and noncompliance with State laws and regulations. Category 3: Findings that have no internal control issues but are in noncompliance with State laws and regulations. State of Illinois, Office of the Auditor General FRANK J. MAUTINO, AUDITOR GENERAL To obtain a copy of the Report contact: Office of the Auditor General, Iles Park Plaza, 740 E. Ash Street, Springfield, IL 62703 (217) 782-6046 or TTY (888) 261-2887 This Report Digest and Full Report are also available on the worldwide web at www.auditor.illinois.gov INTRODUCTION The Department of Central Management Services pays for the group insurance costs for certain university employees on behalf of all State-operated universities in Illinois. At the end of each fiscal year, the Department prepares the University Benefits Schedules that summarize exempt and non-exempt employees and exempt and non-exempt funding. These amounts are utilized in the universities’ fiscal year financial reporting. The State Comptroller also uses these amounts to determine the amount of on-behalf revenue to allocate to the universities. SYNOPSIS • (20-01) The Department used inaccurate data during the calculation of the University Benefit Analysis. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS INACCURATE DATA USED FOR THE CALCULATION OF THE UNIVERSITY BENEFITS ANALYSIS During our examination of the University Benefits Analysis (UBA) for the year ended June 30, 2020, we noted errors in the data used by the Department of Central Management Services (Department), resulting in misstatements of the estimated cost of health insurance benefits paid on-behalf of the University of Illinois (U of I). During our testing of non-exempt contributions, we noted $786,030 in payments were entered into the Benefits Reimbursement System under the U of I for U of I Cooperative Extension Services (CES) retirees in error. The payments made by the U of I were for the CES retirees’ portion of post-employment health insurance benefits, not the State’s portion of those benefits. As such, these payments did not contribute to the State’s total estimated net cost of operating the State Employees Group Insurance Program (SEGIP) represented by the $19,193 average cost per employee. The UBA should only include payments for active employees which contribute to the total estimated net costs of SEGIP. This resulted in a $786,030 overstatement of non-exempt contributions and an understatement in benefit payments paid on-behalf of the U of I. This error was determined not to be material to the UBA; therefore, the Department did not adjust the UBA. (Finding 1, pages 7-8). We recommended the Department ensure the preparation of the University Benefits Analysis is based on accurate and reliable data. The Department agreed with the finding and stated they have already started working with the Department of Innovation and Technology to make changes to the system that will ensure details for the different University of Illinois accounts are accurately reported and included in the UBA. ACCOUNTANT’S OPINION The accountants conducted a compliance examination of management’s assertions regarding the University Benefits Schedules for the year ended June 30, 2020. The accountants stated the Department complied, in all material respects, with the requirements described in the report. This compliance examination was conducted by Sikich LLP. JANE CLARK Division Director This report is transmitted in accordance with Section 3-14 of the Illinois State Auditing Act. FRANK J. MAUTINO Auditor General FJM:meg