REPORT DIGEST DEPARTMENT OF CENTRAL MANAGEMENT SERVICES - STATE EMPLOYEES GROUP INSURANCE PROGRAM COMPLIANCE EXAMINATION – SCHEDULE OF ALLOCATION FOR THE YEAR ENDED JUNE 30, 2019 Release Date: June 16, 2020 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 This digest covers the Compliance Examination of the Schedule of Employer Allocations by Fund, the Schedule of University On Behalf Allocations, the Schedule of Other Post Employment Benefit (OPEB) Amounts by Fund, and the Schedule of Deferred Amounts by Measurement Year of the State Employee Group Insurance Program (SEGIP) as of and for the year ended June 30, 2019 and the related notes to the Schedules. The Department of Central Management Services (Department), with the assistance of the public retirement systems sponsored by the State, is the administrator of this single-employer defined benefit OPEB plan not administered through a trust. The plan was established to provide health, dental, vision, and life insurance benefits for certain retirees and their dependents. Certain agencies and funds of the State of Illinois present financial statements in accordance with generally accepted accounting principles (GAAP) and those agencies and fund employers must recognize their proportionate share of the collective OPEB amounts for OPEB provided to members through the SEGIP plan in order to present their financial statements in accordance with GAAP. The Governmental Accounting Standards Board (GASB) Statement 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions requires the participating entities that prepare financial statements in accordance with Generally Accepted Accounting Principles (GAAP) to recognize their proportionate share of certain collective OPEB amounts in their financial statements, which includes the net OPEB liability. Prior to the implementation of GASB Statement 75, the portion of the Plan’s liability not covered by assets was not allocated among the agencies and funds for financial reporting purposes. GASB Statement 75 changed previously followed financial reporting requirements and as a result agencies and funds are required to report their portion of the collective OPEB amounts in their GAAP basis financial statements. Due to the agencies and funds needing to report their proportionate share of the collective OPEB amounts in their financial statements prepared in accordance with GAAP, the Department has prepared the Schedule of Employer Allocations by Fund, the Schedule of University On Behalf Allocations, the Schedule of OPEB Amounts by Fund, and the Schedule of Deferred Amounts by Measurement Year which provide the necessary financial information for each entity to report their proportionate share of the collective OPEB amounts in their financial statements. By having these schedules examined it also provides the entities and the State’s auditors an Independent Accountant’s Opinion on the allocations and collective OPEB amounts reported in the Schedules. The SEGIP net OPEB liability at June 30, 2018 was $40.1 billion. At June 30, 2019, the SEGIP net OPEB liability was $43.9 billion. ACCOUNTANT'S OPINION The accountants conducted a compliance examination of specified requirements regarding the Schedule of Employer Allocations by Fund for the year ended June 30, 2019, the Schedule of University On Behalf Allocations for the year ended June 30, 2019, the Schedule of Other Post Employment Benefit Amounts by Fund for the year ended June 30, 2019, and the Schedule of Deferred Amounts by Measurement Year for the year ended June 30, 2019, and the total ending OPEB liability, total deferred outflows of resources, total deferred inflows of resources, and total OPEB expense for the total of all participating State Agencies and Universities in the State Employee Group Insurance Program as of and for the year ended June 30, 2019, and the related notes to the Schedules. The accountants stated the Agency complied, in all material respects, with the criteria set forth in Notes D through M of the Notes to the Schedules 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:SKM