Minnesota Office of the Legislative Auditor
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Report Summary
Minnesota State Colleges and Universities
Employee Separation Payments

 

Financial Audit Division Report 16-15 Released October 20, 2016

The Office of the Legislative Auditor conducted this audit to determine whether Minnesota State Colleges and Universities (MnSCU)1 had adequate internal controls over the calculation and payment of employee separation payments in compliance with state statutes, MnSCU board policies, applicable collective bargaining agreements, and other legal requirements. Employee separation payments are payments made to employees when they separate from employment. These include, for example, payments of unused vacation hours to employees who resign their positions and payments of a portion of a retiring employee’s unused sick leave into a health care savings account. MnSCU paid approximately $46.4 million in separation payments in fiscal years 2014, 2015, and 2016 (through March 31, 2016).

Conclusions

For most separation payments, Minnesota State Colleges and Universities had generally adequate internal controls to ensure that its human resources staff accurately calculated and paid separation payments. However, it did not have adequate internal controls for certain early retirement incentive payments related to health insurance benefits.

For the items we tested, Minnesota State Colleges and Universities generally complied with financial-related legal requirements for most separation payments. However, it did not consistently comply with legal requirements for early retirement incentives related to health insurance benefits.

Audit Findings

  • For faculty age 65 or turning 65 in the year following separation, who choose an early retirement option, Minnesota State Colleges and Universities paid a larger health insurance benefit for university faculty than it paid for college faculty, although the contractual basis for the different approaches is unclear.
  • Minnesota State Colleges and Universities lacked internal controls to ensure the accuracy of all separation payments paid to employees eligible for early retirement incentives. Inaccurate payments primarily occurred related to health insurance benefits, but also occurred in other areas.
  • Minnesota State Colleges and Universities did not have documentation to justify payments of early retirement incentives, as required by the Minnesota State College Faculty bargaining agreement. This is a repeat finding.2

 


1 In July 2016, Minnesota State Colleges and Universities changed its name to Minnesota State for marketing and communication purposes. In this report, we refer to the entity by its legal name, Minnesota State Colleges and Universities (MnSCU).

2 Office of the Legislative Auditor’s Financial Audit Division Report 10-29, Minnesota State Colleges and Universities, Finding 3, issued September 14, 2010.

More Information

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