‘Department of Central Management Services, Community College Health Insurance Security Fund – Financial Audit’ – InsuranceNewsNet

SPRINGFIELD, Illinois, June 10 (TNSRep) — The Illinois Auditor General issued the following financial audit on June 9, 2022, involving the Department of Central Management Services, Community College Health Insurance Security Fund:

Here are excerpts:

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FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

FAILURE TO DETERMINE PREMIUMS THAT ALLOW FOR ESTABLISHMENT OF ACTUARIAL SOUND RESERVE

The Department of Central Management Services (Department) failed to determine premiums that will allow for the establishment of an actuarially sound reserve for the Community College Health Insurance Program (Program).

In the Fiscal Year 2018 and 2019 compliance examination, we reported the Department had failed to determine premiums that would allow for the establishment of an actuarially sound reserve. During Fiscal Year 2021 testing, we continued to identify exceptions, as noted below:

* The State Employees Group Insurance Act of 1971(5 ILCS 375/6.9(e)(1) (Act)) states, for a community college benefit recipient, up to 75% of the total insurance rate shall be paid from the Community College Health Insurance Security Fund (Fund). During testing, we noted the Fund covered 75.044% of the total insurance rate for benefit recipients. The projected total additional cost to the Fund was $10,846.

* The Act (5 ILCS 375/6.(e)(2)) states the balance of the rate of insurance, including the entire premium for any coverage for community college dependent beneficiaries that has been elected, shall be paid by deductions authorized by the community college benefit recipient. During testing, we noted the Fund covered 1.619% of the total insurance rate for benefit recipients. The projected total additional cost to the Fund was $38,633.

Additionally, the Act (5 ILCS 375/6.9(e)) requires the Department to determine premiums that will allow for the establishment of an actuarially sound reserve for the Community College Health Insurance Program. At June 30, 2021 the Program had a fund deficit of $104.136 million and the Program experienced a loss of $16.165 million. The Program does not have an actuarially sound reserve. (Finding 1, pages 24-26)

We recommended the Department ensure premium rates meet the requirements established by the Act. Additionally, we recommended the Department either comply with the law by working with the Governor’s Office of Management and Budget to obtain the necessary appropriation to supplement the Community College Health Insurance Program or seek legislative relief from the statutory requirement.

The Department accepted the finding and recommendation and stated that with the passage of the Fiscal Year 2023 budget, there was established an additional $25M appropriation from the General Revenue Fund for deposit into the Community College Health Insurance Security Fund. The Department stated that while this will not completely eliminate the backlog of payables, it will provide some reduction. Additionally, the Department stated it will continue to work with the Governor’s Office, the Governor’s Office of Management and Budget, the General Assembly, and the various constituency representative to develop a legislative solution to the funding issues of the program.

AUDITOR’S OPINION

The auditors stated the financial statements of the Department of Central Management Services, Community College Health Insurance Security Fund as of and for the year ended June 30, 2021, are fairly stated in all material respects.

This financial audit was conducted by Sikich LLP.

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The report is posted at http://www.auditor.illinois.gov/Audit-Reports/Compliance-Agency-List/CMS/CCHISP/FY21-CMS-CCHISF-Fin-Digest.pdf