FINANCIAL OPERATIONS (in thousands)

FY 2007

Additions

Contributions

Employer...…….....................................................

State...……...........................................................

Plan Member:

Activities...……...............................................

Retirees...…….................................................

Consolidated Omnibus Budget Reconciliation Act

Total contributions............................................

Interest income...…….................................................

Federal government Medicare Part D..........................

Total additions..................................................

Deductions

Benefit payments.........................................................

Administrative expense................................................

Total deductions...............................................

Net increase/(decrease) ..........................................

Net assets held in trust for

other postemployment benefits

Beginning of year..................................................

End of year..........................................................

              $ 58,191

                 75,839

                 77,377

               128,580

                      189

               340,176

                   3,454

                 17,026

               360,656

               356,212

                   3,253

               359,465

                   1,191

                 64,599

              $ 65,790

SUPPLEMENTARY INFORMATION

FY 2007

Number of retirees and beneficiaries receiving benefits……....

Number of waived retirees who may elect healthcare coverage in the future...……............................................................

Number of terminated plan members entitled to but not yet receiving benefits…….......................................................

Number of active plan members...............................................

Total…........................................................................

Number of participating employers...........................................

61,260

  19,260

14,188

129,322

244,030

1,007

AGENCY DIRECTOR

During Audit Period:  Mr. Barry S. Maram

Currently:  Mr. Barry S. Maram           

Failure to submit financial statements timely

INTRODUCTION

This digest covers the financial audit of the Department of Healthcare and Family Services’ Teacher Health Insurance Security Fund for the year ended June 30, 2007.  The financial audit report includes one significant deficiency in internal control finding.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

FINANCIAL STATEMENTS NOT TIMELY

The Illinois Department of Healthcare and Family Services (Department) did not provide the auditors with timely financial statements for the Teacher Health Insurance Security Fund.

The Department did not provide complete financial statements for the year ended June 30, 2007 to the auditors until March 3, 2008.  Financial statements were received nine months after the year end.

The Department’s management has the ultimate responsibility for the Department’s internal control system to ensure that the financial statements are timely.

Department management stated that the delay in completing the financial statements was attributed to the implementation of Statement No. 43 of the Governmental Accounting Standards Board, Financial Reporting for Postemployment Benefit Plans Other than Pension Plans (GASB43).  As part of the implementation, an actuary firm was acquired through the bid process and significant collaboration was necessary between the Department, the Governor’s Office of Management and Budget and the Teachers Retirement System, causing an overall delay in the reporting process.  (Finding 1, pages 17-18)

We recommended the Department review its current process for the preparation of the Teacher Health Insurance Security Fund’s financial statements and allocate the resources necessary to ensure the financial statements are completed on a timely basis.

Department management concurred with our recommendation and stated when a new standard is implemented it is critical that due care be given to ensure proper implementation.  The implementation of this standard required that an actuarial valuation be performed.  Once received, this valuation had to be reviewed by management within the Department and the Governor’s Office of Management and Budget (GOMB) to ensure that the information was accurate.  Once the review was final, the financial statements were completed and supplied to the Auditor General’s Office.  The extended timeframe necessary for completion of the report was four months following the initial due date of the statements.  Although the Department recognizes the importance of providing timely financial information, we also realize the need for accurate data.  As the initial implementation has now been completed, the Department does not anticipate delays in FY’08.

AUDITORS’ OPINION

Our auditors state the financial statements of the Teacher Health Insurance Security Fund as of June 30, 2007, are fairly presented in all material respects.

___________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:TLD:pp

AUDITORS ASSIGNED

This audit was performed by the staff of the Office of the Auditor General.