SPRINGFIELD — A major tech failure at two of Illinois’ largest agencies and the lack of a statewide, uniform financial system contributed to an eight-month delay of the publishing of a key document detailing the state’s fiscal health.
The Comprehensive Annual Financial Report, released Thursday, is used by ratings agencies to determine Illinois’ credit rating, which affects the interest rates it receives for bonded projects.
Auditor General Frank Mautino and Comptroller Susana Mendoza, whose offices contribute to the document, agreed a primary reason Illinois’ report was the last one completed in the country was due to the loss of one quarter of the state’s Medicaid data.
The Department of Human Services and the Department of Healthcare and Family Services both use a system that determines residents’ eligibility for public assistance, for which the state receives federal reimbursements. When a third-party technology vendor was completing an update to that system, 25 percent of Illinois’ Medicaid program data was deleted, Mautino said.
Agency officials asked for an extension to work with the federal government to verify the accuracy of information lost in that erasure. Before the CAFR can be completed, auditors verify the books of each agency, sending that data then to the comptroller’s office.
“This is the thing that’s different this year that I don’t know of has happened anywhere at any other time,” Mauntio said. “It’s a big factor.”
The mistake was additionally impactful because of the two agencies it affected. Combined, Mautino said, they make up 28 percent of the revenue and 31 percent of the expenditures of all governmental funds in Illinois.
“That is a big number, and when you have a problem with that number, it impacts the financial statements of the state,” he said.
Mendoza criticized former Republican Gov. Bruce Rauner’s administration for its use of third-party contractors.
“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,” she said in a press release.
The auditor general and Mendoza did not agree the state’s lack of a uniform financial system contributed chiefly to the report’s delayed publication.
Mautino said Illinois officials do not have “great financial controls” because each agency has its own financial reporting system that “can’t speak to each other.” When auditors compile information for the CAFR, they must convert the data first. That takes more time and leaves open the possibility for human error.
“Accurate and timely financial reporting problems continue to exist even though auditors have: continuously reported numerous findings on the internal controls, ... commented on the inadequacy of the financial reporting process of the state, and regularly proposed adjustments to the financial statements year after year,” states an opinion of the CAFR published by the auditor general’s office Thursday.
Mendoza noted in a news release she “agrees” Illinois needs a uniform financial system, but pushed back against the idea it was a “primary” reason for the report’s late release.