An Audit Report on Agencies' and Higher Education Institutions' Compliance with Benefits Proportional by Fund Requirements
February 2007
Report Number 07-013
Overall Conclusion
In fiscal years 2005 and 2006, state agencies and higher education institutions generally complied with requirements to pay employee benefits proportionately to funding sources. They did this by submitting the required reports and making the required refunds to General Revenue that were identified on those reports.
The requirements to pay benefits proportionately to funding sources are set forth in Article IX, Section 6.11, of the General Appropriations Act (79th Legislature) and Comptroller of Public Accounts' Accounting Policy Statement (APS) 011. Although agencies and higher education institutions generally complied with proportionality requirements, the timeliness of report submission and processing of refunds to General Revenue could be improved. In fiscal years 2005 and 2006, state agencies and higher education institutions were required to refund a net total of $8,640,113 to General Revenue to comply with proportionality requirements. Of that amount, $425,116 (5 percent) has not yet been refunded.
Beginning in fiscal year 2005, community colleges were required to submit Benefits Proportional by Fund reports for informational purposes only. Community colleges are not required to make refunds to General Revenue to achieve proportionality until fiscal year 2008. Although community colleges significantly increased the timeliness of their report submissions in fiscal year 2006, 20 of them (40 percent) still did not submit reports by the established due date for that fiscal year.
The State Auditor's Office also audited the accuracy of three agencies' fiscal year 2005 Benefits Proportional by Fund reports. The Department of State Health Services and the Department of Aging and Disability Services should improve controls to ensure compliance with proportionality requirements. The third agency audited--the Commission on Environmental Quality--has adequate procedures to ensure its Benefits Proportional by Fund report is complete and accurate.
The Office of the Comptroller of Public Accounts has assisted agencies and higher education institutions in complying with proportionality requirements by clarifying Accounting Policy Statement 011. For example, it has clarified the criteria that qualify an agency to claim Single Funding status, and it has established clear due dates for making refunds to General Revenue.
The State Auditor's Office has previously reported that, in some cases, agencies and higher education institutions must comply with other proportionality requirements that differ from the requirements to pay employee benefits proportionately to funding sources. This caused a lack of clarity about how to handle these circumstances. During this audit, we determined that agencies and higher education institutions still face inconsistencies between laws, rules, and federal grant restrictions that may prevent them from achieving proportionality requirements.
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