REPORT DIGEST

ILLINOIS STATE BOARD OF EDUCATION

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2021

Release Date:  June 22, 2022

FINDINGS THIS AUDIT:  2

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

FINDINGS LAST AUDIT: 1

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

SYNOPSIS

• (21-01) The Agency did not did not
exercise adequate internal control
over the State’s Evidence-Based
Funding Formula or promptly disclose a
significant known matter to the
auditors.
• (21-02) The Agency did not have a
reconciliation process to provide
assurance census data submitted to its
pension and other postemployment
benefits (OPEB) plans was complete and
accurate.
FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

EVIDENCED-BASED FUNDING FORMULA ERROR

The Illinois State Board of Education
(Agency) did not exercise adequate
internal control over the State’s
Evidence-Based Funding (EBF) Formula
or promptly disclose a significant
known matter to the auditors.

During fieldwork, we noted the
following:
• Agency management disclosed a coding
error to us regarding enrollment
counts within the State’s Evidence-
Based Funding Formula on April 22,
2022. As a result of this error, the
Agency made a significant overpayment
to one school district and
underpayments to other school
districts. We proposed an adjusting
journal entry of $42.552 million to
increase the amount due (a liability)
to the underpaid school districts at
June 30, 2021, which was recorded by
Agency management in the Agency’s
final financial statements. Further,
we proposed the Agency’s management
develop additional footnote disclosure
to address the amount due to the
Agency from the overpaid school
district, which was included within
the Agency’s final financial
statements.
• According to Agency management, they
became aware of this problem in
December 2021 while preparing a report
for the Agency’s Evidence-Based
Funding Professional Review Panel.
Agency management commenced an
investigation of the problem and
disclosed the existence of this matter
to the Agency’s governing board in
mid-February 2022. However, we only
became aware of this problem through
public news reports and legislative
hearings in early April 2022.
Subsequently, we inquired of Agency
officials on April 22, 2022, for
additional information about this
undisclosed problem and the impact of
the matter on the Agency’s ongoing
financial audit. (Finding 1, pages
61-63)

We recommended the Agency implement
controls, including adequate
supervisory reviews, to ensure the
formula for the State’s Evidence-Based
Funding grant program strictly
complies with the applicable
provisions of the School Code.
Further, we recommended the Agency
comply with the Illinois State
Auditing Act by the prompt and timely
disclosure of known events,
conditions, and transactions which
could impact either an ongoing audit
or previously released audit performed
by the Auditor General, even if the
full ramifications of the matter are
not yet known.

The Agency agreed with the
recommendation and stated corrective
actions that will be employed to
ensure the accuracy of the Evidence-
Based Funding are initiating a process
to pursue an independent audit of the
Evidence-Based Funding Formula model,
and conducting independent
compilations of enrollment totals in
order to validate the calculations
from student-level counts to each E-
BFOU’s unit-level summaries.

LACK OF CENSUS DATA RECONCILIATIONS

The Illinois State Board of Education
(Agency) did not have a reconciliation
process to provide assurance census
data submitted to its pension and
other postemployment benefits (OPEB)
plans was complete and accurate.

During testing, we noted the Agency
had not performed an initial complete
reconciliation of its census data
recorded by the State Employees’
Retirement System of Illinois (SERS)
and the Department of Central
Management Services (CMS) to its
internal records to establish a base
year of complete and accurate census
data. (Finding 2, pages 64-66)

We recommended the Agency work with
SERS and CMS to develop an annual
reconciliation process of its active
members’ census data from its
underlying records to a report from
each plan of census data submitted to
the plan’s actuary.

The Agency agreed with the
recommendation and stated a solution
has been put into place. On September
1, 2021, the Agency’s Human Resources
Department completed an annual
reconciliation for active members’
FY21 census data in collaboration with
SERS and CMS. This data will be used
for FY22 and FY23 financial statements
and the reconciliation of new members
will continue in future years.

We will review the Agency’s progress
towards the implementation of our
recommendations in our next financial
audit.

AUDITOR’S OPINION(S)

The auditors stated the financial
statements of the Agency as of and for
the year ended June 30, 2021 are
fairly stated in all material
respects.

This financial audit was conducted by
Kerber, Eck & Braeckel 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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