Minnesota Office of the Legislative Auditor
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Report Summary
Department of Employee Relations

Programs Selected
Statewide Audit Fiscal Year 1996

 

Public Release Date: February 21, 1997 No. 97-10

Department Background

The Department of Employee Relations (DOER) serves as the central human resource agency for the executive branch of government. Its duties include personnel administration and labor relations. The department operates the State Employee Management (SEMA4) human resource/payroll system in conjunction with the Department of Finance. DOER operates the insurance and workers' compensation programs for state employees. It also responds to the general public seeking information about employment and organizations involved in human and civil rights issues. DOER administers the Public Employee Insurance Program which provides public employees with insurance benefits. It also administers the Minnesota Employee Insurance Program which provides insurance benefit plans to private employers. Karen Carpenter is the current acting commissioner, replacing Wayne Simoneau in October 1996.

Selected Audit Areas and Conclusions

Our audit scope was limited to those areas material to the state of Minnesota's Comprehensive Annual Financial Report for the year ended June 30, 1996. We audited statewide payroll expenditures, revenues and expenditures of the State Employee Insurance Program, the Public Employee Insurance Program, the Minnesota Employees Insurance Program, and the estimated workers' compensation liability.

The state's payroll expenditures were fairly presented in the Minnesota Accounting and Procurement System (MAPS) and the state of Minnesota's Comprehensive Annual Financial Report for fiscal year 1996. MAPS payroll expenditures, totaling $2.1 billion, were properly supported by SEMA4 and PPS subsystem transactions. In addition, SEMA4 properly and accurately calculated, paid and reported employee wages, benefits, deductions, and contributions based on information entered by state agencies.

The Department of Employee Relations fairly presented the financial activities of the State Employee Insurance Fund, the Public Employees Insurance Program, and the Minnesota Employees Insurance Program in the state of Minnesota's Comprehensive Annual Financial Report for fiscal year 1996. In addition, the Insurance Division did enroll, bill, and collect premiums properly for enrollees maintained on the state's insurance system; however, improved financial control is needed over premiums collected for certain retirees not maintained on this system. Although the Employee Insurance Fund has significant cash funds totaling $78 million as of June 30, 1996, DOER is not optimizing the fund's investment income. Also, DOER should obtain legal guidance on the disposition of excess cash held in the Delta Dental Trust and State Payroll Clearing Accounts. In addition, the Insurance Division should take a more active oversight role involving key financial provisions and limits of its State Health Plan under contract with Blue Cross Blue Shield. Payment approval should be provided to fiscal services and be based on compliance with these contractual provisions and limits. DOER needs to collect premiums due from participants in the Public Employee Insurance Program in a timely manner.

The DOER Workers' Compensation Program manages and controls claims costs for work-related injuries to state employees. The department fairly estimated the June 30, 1996, workers' compensation liability to be $101 million.

 

Office of the Legislative Auditor ♦ Room 140, 658 Cedar St., St. Paul, MN 55155