REPORT DIGEST

DEPARTMENT OF CENTRAL MANAGEMENT SERVICES -
COMMUNITY COLLEGE HEALTH INSURANCE SECURITY
FUND

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2023

Release Date:  February 15, 2024

FINDINGS THIS AUDIT: 1

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  0 -- 0 -- 0
Category 2:  0 -- 1 -- 1
Category 3:  0 -- 0 -- 0
TOTAL:  0 – 1 -- 1

FINDINGS LAST AUDIT:  2

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

This digest covers the Department of Central
Management Services (Department), Community
College Health Insurance Security Fund
financial audit as of the year ended June
30, 2023.

SYNOPSIS

•  (23-1) The Department failed to determine
premiums that will allow for the
establishment of an actuarially sound
reserve for the Community College Health
Insurance Program.

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 first reported the
Department had failed to determine premiums
that would allow for the establishment of an
actuarially sound reserve. During Fiscal
Year 2023 testing, we continued to identify
exceptions, as noted below:

• The State Employees Group Insurance Act of
1971 (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 13.42% of the
total insurance rate for benefit recipients.
The projected total additional cost to the
Fund was $340,388.

• 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
Program. As of June 30, 2023, the Program
had a fund deficit of $107.107 million. The
Program does not have an actuarially sound
reserve.  (Finding 1, pages 25-26) This
finding has been reported since 2021.

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
Program or seek legislative relief from the
statutory requirement.

The Department agreed with the finding and
has worked with the Governor’s Office of
Management and Budget (GOMB) to enact
legislation that will allow for increases to
the contributions provided by active
employees, districts, and the General
Revenue Fund. Additionally, the department
stated it worked with GOMB to provide for an
additional $50 million in transfers to the
fund which was used to reduce the payment
back log. Lastly, the Department stated that
these two remedies, based upon current
projections, are expected to completely
eliminate the back log by Fiscal Year 2032.
Subsequently, revenues will be accrued in
order to establish a sound reserve balance.

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, 2023, are fairly stated in all
material respects.

This financial audit 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

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