|Public Release Date: March 13, 1998||No. 98-17|
The Department of Employee Relations (DOER) serves as the central human resource agency, including personnel administration and labor relations, for the executive branch of government. The department manages the State Employee Management (SEMA4) human resource/payroll system in conjunction with the Department of Finance. DOER also operates the insurance and workers' compensation programs for state employees, as well as employee insurance benefit plans for participating public and private employers. Karen Carpenter was appointed department commissioner in October 1997.
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, 1997. We focused our audit on statewide payroll expenditures, year end compensated absences, revenues and expenditures of the State Employees Insurance Fund, the Public Employee Insurance Program (PEIP), the Minnesota Employees Insurance Program (MEIP), and the estimated workers' compensation liability.
We concluded that the state's payroll expenditures and compensated absences were fairly presented in the Minnesota Accounting and Procurement System (MAPS) and the state's financial statements for fiscal year 1997. MAPS payroll expenditures, totaling $2.2 billion, were properly supported by SEMA4 subsystem transactions. In addition, the department designed internal controls to provide reasonable assurance that SEMA4 accurately calculated, paid and reported employee wages, benefits, deductions, and contributions based on information entered by state agencies. However, we found that 22 percent of system users have incompatible access to update both payroll and human resource data.
The department fairly presented the financial activities of the State Employee Insurance Fund, PEIP, and MEIP in the state of Minnesota's financial statements for fiscal year 1997. However, we reported that MEIP will be unable to repay a $2 million outstanding loan. We also concluded that the department designed internal controls to provide reasonable assurance that it enrolled, billed, and collected premiums for enrollees maintained on the state's insurance system. However, the department misplaced a $414,000 check for four months indicating the need for improved controls.
The Workers' Compensation Program manages and controls claims for work-related injuries to state employees. The department fairly estimated the June 30, 1997, workers' compensation liability to be $107 million.
The department agreed with the audit report's findings and recommendations. They plan to work with agencies having incompatible SEMA4 security clearances and will take necessary measures to remedy the insurance issues raised.