oversight

Audit of the Illinois State Board of Education's Pension Contributions

Published by the Department of Education, Office of Inspector General on 2006-03-16.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                        UNITED STATES DEPARTl\1ENT OF EDUCATION 

                               OFFICE OF INSPECTOR GENERAL 

                                               Chicago/Kansas City Audit Region 


                       111 N. Canal st. Ste. 940                            8930 Ward Parkway, Ste 2401
                       Chicago, IL 60606-7297                               Kansas City, MO 64114-3302
                       Phone (312) 886-6503                                 Phone (816) 268-0500
                       Fax (312) 353-0244                                   Fax (816) 268-0526




                                                       March 16, 2006


                                                                                Control Number ED-OIG/AOSG{tOOl


Dr. Randy J. Dunn
State Superintendent of Education
lllinois State Board of Education
100 North First Street
Springfield, IL 62777

Dear Dr. Dunn,

The purpose of this letter is to notify you that we are tetminating our audit of the lllinois State
Board of Education (ISBE). The objective of our audit was to detetmine whether selected
Dl:itJ.ois local educational agencies (LEAs) charged federal grants in proportion to the costs
charged to state and local sources of funds for the employer portion of pension contributions.
Our audit covered the period July 1,2003, through June 30, 2004 (2004 fiscal year). We have
terminated our audit because (I) the three lllinois LEAs we reviewed (Springfield School
District #186, Peoria School District #150, and Rockford School District #205) charged federal
accounts in proportion to the costs charged to state and local sources of funds for the employer
share of pension costs for the 2004 fiscal year, (2) the Teacher Retirement System (TRS) has a·
system of internal control in place to provide reasonable assurance that other lllinois LEAs made
the required employer share of pension contributions (10.5 percent for the 2004 fiscal year) for
salaries charged to federal accounts, and (3) the State oflllinois was required to contribute 13.98
percent of TRS eligible salaries to the TRS for the 2004 fiscal year.

Methodology

Before tetminating our audit, we perfotmed the following procedures:

    t. 	 Obtained and reviewed the lllinois law governing lllinois LEAs' contributions to pension
         plans.

   2. 	 Reviewed the 2004 fiscal year Office of Management and Budget Circular A-133 audit
        reports and comprehensive annual financial reports for the three LEAs selected for testing




           Our mission is promote the efficiency, effectiveness, and integrity o/the Department's programs and operations.
Dr. Randy Dunn                                                                                        Page 2 of4
ED-OIGIA05GOOO 1

         (see item #8) and ISBE's Financial Audit and Compliance Examination for the 2004
         fiscal year. 1

    3. 	 Obtained an understanding of the equitable charges clause in Office of Management and
         Budget Circular A-87. According to A-87, Attachment A, Paragraph C.l.e, to be
         allowable under federal awards, costs must be consistent with policies, regulations, and
         procedures that apply uniformly to both federal awards and other activities of the LEA.

    4. 	 Reviewed the federal regulations relevant to our audit objective, including the Education
         Department General Administrative Regulations, 34 C.F.R. Parts 77 and 80.

    5. 	 Obtained from the U.S. Department of Education (Department) Title I, Part A; hnproving
         Teacher Quality (Title II); Individuals with Disabilities Education Act (IDEA), Part B;
         and Reading First funding data showing the amounts of funds disbursed by the
         Department to the ISBE for the 2004 fiscal year.

    6. 	 Obtained from ISBE funding data showing the amounts received from the Department for
         the Title I, Part A; Title II; IDEA, Part B; and Reading First programs and the amounts
         ISBE allocated to the three LEAs selected for testing (see item #8).

    7. 	 Compared ISBE's funding data for the four federal programs to the Department's funding
         data.

    8. 	 Judgmentally selected three LEAs (Springfield School District #186, Peoria School
         District #150, and Rockford School District #205) from the universe of 816 lllinois LEAs
         receiving Title I, Part A, allocations for the 2004 fiscal year.

    9. 	 Visited ISBE and obtained an understanding ofISBE's knowledge of the lllinois Pension
         Code, LEAs' awareness of the law, guidance on pension plan contributions provided by
         ISBE to LEAs, and ISBE's oversight of LEA pension plan contributions.

    10. Visited the three judgmentally selected LEAs and interviewed officials to obtain an
        understanding of the processes used by the LEAs to (a) determine the required share of
        employer pension plan contributions; (b) allocate Title I, Part A; Title II; IDEA, Part B;
        and Reading First funds that were used to pay the employer share of pension
        contributions; and (c) account for Title I, Part A; Title II; IDEA, Part B; and Reading
        First funds that were used to pay the employer share of pension contributions for the
        2004 fiscal year.

    11. Obtained funding data from the three LEAs showing receipts and expenditures for the
        Title I, Part A; Title II; IDEA, Part B; and Reading First programs and compared the data
        to ISBE funding data.


I We did not review the supporting audit documentation or determine the quality of the work performed for these
reports.
Dr. Randy Dunn                                                                           Page 3 of4
ED-OIGIA05GOOO1


    12. Reviewed records for the 2004 fiscal year generated by the TRS (a) showing that the
        three LEAs made their required pension plan contributions for salaries charged to federal
        accounts and (b) supporting the contribution made by the State of lllinois for its "on­
        behalf-of' contribution for TRS eligible employees.

    13. Interviewed TRS officials to gain an understanding of the process used by the TRS to
        determine the pension plan contribution rates to be used by lllinois LEAs and the State of
        lllinois and to obtain an understanding of the responsibility for oversight of pension plan
        contributions made by lllinois LEAs.

We conducted our work from November 2005 through February 2006 at ISBE's office in
Springfield, lllinois; at the offices of Springfield School District #186, Rockford School District
#205, and Peoria School District #150; and our office in Chicago, lllinois. We performed our
work in accordance with generally accepted government auditing standards appropriate to the
scope of our audit.

Administrative Matters

Our audit was limited to the work described above and would not necessarily disclose all
material weaknesses in ISBE's oversight oflllinois LEAs' pension contributions related to
salaries charged to federal accounts. Accordingly, the contents of this letter should not be
construed as acceptance or approval of ISBE's oversight bf Illinois LEAs' pension plan
contributions. The termination of this audit neither precludes further reviews of this or similar
areas by the Office of Inspector General nor does it preclude the U.S. Department of Education
from taking further action concerning any aspect ofISBE's oversight oflllinois LEAs' pension
plan contributions related to salaries charged to federal accounts. The work we performed is not
a substitute for any other reviews or audits required by law, license, or accreditation.

In accordance with the Freedom of Information Act (5 U.S.c. § 552), reports and other
documents issued by the Office of Inspector General are available to members of the press and
general public to the extent information contained therein is not subject to exemptions in the Act.
Dr. Randy Dunn                                                                      Page4of4
ED-OIGIA05GOOO 1

We wish to express appreciation for the cooperation and assistance extended by your staff during
the audit. Should you have any further questions regarding our work, 'p1ease contact Rick Roedel
at (312) 886-8653 Qr Gary Whitman at (312) 886-8658. No response to this letter is required.

                                     Sincerely,



                                     Richard I.
                                     Regional Inspector General
                                     for Audit


cc: 	 Bill McCabe, Chief Financial Officer, OCFO (Acting)
      Danny A Harris, Deputy Chief Financial Officer, OCFO
      Sherrice Rucker, Audit Liaison Officer, OCFO
      Delores Warner, Audit Liaison Officer, OESE
      Phil Maestri, Director, OS Management Improvement Team