ILLINOIS CUT ITS DEFICIT IN HALF IN FISCAL YEAR 2018, ANNUAL CAFR SHOWS
Loss of state data by outside vendor a key factor in delay of report’s release, as forewarned by Comptroller Mendoza
SPRINGFIELD – The Comprehensive Annual Financial Report (CAFR) released today shows Illinois cut its general funds deficit by $6.849 billion — from a deficit of $14.612 billion in fiscal year 2017 to a deficit of $7.763 billion in fiscal year 2018. That is largely because of a refinancing of state debt from high-interest to low-interest repayment.
The state’s total assets were approximately $53.9 billion on June 30, 2018, a decrease of $400 million from June 30, 2017. The state’s total liabilities were approximately $248.1 billion on June 30, 2018, an increase of $33.3 billion from June 30, 2017. The state’s largest liability balances are the net pension liability of $133.6 billion and the other post-employment benefits liability of $55.2 billion.
Health and social services expenditures of $29.2 billion comprised the largest expenditure function for fiscal year 2018, decreasing by $1 billion from fiscal year 2017. The second-largest expenditures, education expenditures, including spending for elementary and secondary education as well as higher education, totaled $25.4 billion, an increase of $3 billion, or 14%, from fiscal year 2017.
The Illinois Office of Comptroller compiles the CAFR from reports submitted by individual state agencies that are required to be audited by the Auditor General’s Office. If any of those audits is not complete, the Office of Comptroller cannot publish the CAFR. Since December, the Office of Comptroller has been ready to publish the CAFR as soon as the remaining audits were completed.
A primary reason for delay in the release of the fiscal year 2018 CAFR was the need for the new administration to try to piece together data lost by an IT vendor working for the previous administration’s departments of Healthcare and Family Services and Human Services.
As the Illinois Office of Comptroller noted in a June 28, 2018, report, four months’ worth of long-term care eligibility findings in 2017 were missing. (see attached report)
Comptroller Susana Mendoza said the prior administration relied too heavily on third-party non-government contractors to perform sensitive data conversions without adequate monitoring controls from state agency officials.
“We should not expect outside consultants to perform critical government functions, especially regarding data involving eligibility determinations under the state’s Medicaid program serving the state’s most vulnerable citizens, without adequate controls to protect the state’s program and ultimately state taxpayers,” Comptroller Mendoza said.
In April, Comptroller Mendoza announced her office would institute new contract reporting requirements for IT vendor agreements of more than $5 million. The new Information Technology Milestone Report rules require state agencies to publish progress and performance updates on ongoing IT initiatives, precisely to avoid data losses like this.
In addition to the missing data the Auditor General’s Office encountered at the departments of Healthcare and Family Services and Human Services, late adjustments relating to receivables were required as a result of the audit of the Department of Employment Security.
Comptroller Mendoza agrees with a repeated finding by the Auditor General’s office that the state needs a coordinated financial reporting system. However, it is important to note that was not a primary reason for this year’s delay.