Department of Employment Security. Compliance Examination for the Two Years Ended June 30, 2011

              State of Illinois
Department of Employment Security
Compliance Examination
For the Two Years Ended June 30, 2011
Performed as Special Assistant Auditors
for the Auditor General, State of Illinois
State of Illinois
Department of Employment Security
Compliance Examination
For the Two Years Ended June 30, 2011
Table of Contents
Page(s)
Agency Officials 1
Management Assertion Letter 2
Compliance Report
Summary 3 - 4
Auditor’s Reports
Independent Accountants’ Report on State Compliance, on Internal
Control Over Compliance, and on Supplementary Information for
State Compliance Purposes 5 - 7
Report on Internal Control Over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards 8 - 11
Schedule of Findings
Current Findings - Government Auditing Standards 12 - 14
Current Findings - State Compliance 15 - 20
Prior Finding Not Repeated - State Compliance 21
Financial Statement Report
The Agency’s financial statement report for the year ended June 30, 2011, which
includes the report of independent auditors, basic financial statements and notes,
supplementary information, and the independent auditor’s report on internal control
over financial reporting and on compliance and other matters based on an audit of
basic financial statements performed in accordance with Government Auditing
Standards has been issued separately.
Supplementary Information for State Compliance Purposes
Summary 22
Fiscal Schedules and Analysis
Schedule of Expenditures of Federal Awards 23 - 26
Notes to Schedules of Expenditures of Federal Awards 27
Schedule of Appropriations, Expenditures, and Lapsed Balances 28 - 29
Notes to Schedules of Appropriations, Expenditures, and Lapsed Balances 30 - 31
Comparative Schedule of Net Appropriations, Expenditures,
and Lapsed Balances 32 - 36
Schedule of Changes in State Property 37
Comparative Schedule of Cash Receipts 38
State of Illinois
Department of Employment Security
Compliance Examination
For the Two Years Ended June 30, 2011
Table of Contents, Continued
Page(s)
Supplementary Information for State Compliance Purposes, Continued
Fiscal Schedules and Analysis, Continued
Reconciliation of Schedules of Cash Receipts to Deposits Remitted to the
State Comptroller 39
Analysis of Significant Variations in Expenditures 40 - 42
Analysis of Significant Variations in Receipts 43 - 44
Analysis of Significant Lapse Period Spending 45
Analysis of Significant Account Balances 46 - 48
Analysis of Accounts Receivable 49 - 52
Cash Basis Schedules – Locally Held Special Programs Fund 53
Agency Functions and Planning Program 54 - 57
Analysis of Operations
Average Number of Employees (Not Examined) 58
Annual Cost Statistics (Not Examined) 59
Emergency Purchases 60
Service Efforts and Accomplishments (Not Examined) 61
Unemployment Rates (Not Examined) 62
State of Illinois
Department of Employment Security
1
Agency Officials
June 30, 2011
Director
June 6, 2011 to present Mr. Jay Rowell
Acting, May 7, 2011 to June 5, 2011 Ms. Theresa Larkin
Previous to May 7, 2011 Ms. Maureen T. O’Donnell
Executive Deputy Director, Administration (formerly Chief of Staff)
September 19, 2011 to present Ms. Barbara Piwowarski
May 8, 2011 to September 18, 2011 Vacant
Previous to May 7, 2011 Ms. Theresa Larkin
Executive Deputy Director, Programs Mr. Andrew Fox
Executive Deputy Director for Service Delivery
December 7, 2010 to present Mr. Amit Singla
June 1, 2010 to December 6, 2010 Ms. Linda Baker Rosenberg
Director of Field Operations (formerly Workforce Development)
August 29, 2011 to present Mr. Julian Federle
June 1, 2010 to August 28, 2011 Vacant
January 16, 2010 to May 31, 2010 Ms. Linda Baker Rosenberg
January 2, 2010 to January 15, 2011 Vacant
Previous to January 1, 2010 Ms. Virginia Long
Deputy Director, Information Services
August 17, 2011 to present Ms. Monica Carranza
January 14, 2011 to August 16, 2011 Vacant
Previous to January 13, 2011 Mr. Antonio Daniels
Chief Financial Officer Mr. Jon Gingrich
Chief Information Services Officer Mr. Thomas Revane
Chief Internal Auditor
August 1, 2010 to present Mr. Marcus A. Dodd
Equal Employment Opportunity Officer Mr. Carlos Charneco
General Counsel Mr. Joseph P. Mueller
Manager, Accounting Services Division Mr. L. Briant Coombs
Manager, Economic Information and Analysis Division Ms. Evelina Tainer Loescher, PhD
Manager, Employment Services Division
Employment Services and Events Ms. Kisha Hart, PhD
Employer and Community Outreach Mr. Bennett Krause
Manager, General Services Division Mr. John Rogers
Manager, Revenue Division Ms. Lois Cuevas
Manager, Unemployment Insurance Division
January 1, 2011 to present Mr. Frank DeMore
Previous to January 1, 2011 Ms. Carolyn Vanek
The Department’s Administrative offices are located at:
33 South State Street 850 East Madison Street
Chicago, IL 60603-2802 Springfield, IL 62702-5603
Pat Quinn
Governor
February 2, 2012
E.C. Ortiz & Co., LLP
333 S. Des Plaines Street, Suite 2-N
Chicago, Illinois 60661
Ladies and Gentlemen:
IDES ILLINOIS DEPARTMENT OF
EMPLOYMENT SECURITY Jay Rowell
Director
We are responsible for the identification of, and compliance with, all aspects of laws, regulations, contracts, or grant
agreements that could have a material effect on the operations of the Agency. We are responsible for and we have
established and maintained an effective system of internal controls over compliance requirements. We have
performed an evaluation of the Agency's compliance with the following assertions during the two-year period ended
June 30, 2011. Based on this evaluation and to the best of our knowledge and belief, we assert that during the
years ended June 30, 2010 and June 30, 2011, the Agency has materially complied with the assertions below,
except as disclosed to the auditors during the engagement.
A. The agency has obligated, expended, received and used public funds of the State in accordance with the
purpose for which such funds have been appropriated or otherwise authorized by law.
B. The agency has obligated, expended, received and used public funds of the State in accordance with any
limitations, restrictions, conditions or mandatory directions imposed by law upon such obligation,
expenditure, receipt or use.
C. The agency has complied, in all material respects, with applicable laws and regulations, including the
State uniform accounting system, in its financial and fiscal operations.
D. State revenues and receipts collected by the agency are in accordance with applicable laws and
regulations and the accounting and recordkeeping of such revenues and receipts is fair, accurate and
in accordance with law.
E. Money or negotiable securities or similar assets handled by the agency on behalf of the State or held
in trust by the agency have been properly and legally administered, and the accounting and
record keeping relating thereto is proper, accurate and in accordance with law.
Yours very truly,
Illinois Department of Employment Security
2
33 South State Street I Chicago, IlIirtOis 60603-2802 I www.ides.state.il.us
State of Illinois
Department of Employment Security
3
COMPLIANCE REPORT
SUMMARY
The compliance testing performed during this examination was conducted in accordance with
Government Auditing Standards and in accordance with the Illinois State Auditing Act.
ACCOUNTANTS’ REPORTS
The Independent Accountants’ Report on State Compliance, on Internal Control Over Compliance and on
Supplementary Information for State Compliance Purposes does not contain scope limitations,
disclaimers, or other significant non-standard language.
SUMMARY OF FINDINGS
Current Prior
Compliance Compliance
Number of Report Report
Findings 7 7
Repeated findings 4 2
Prior recommendations implemented or not repeated 3 1
Details of findings are presented in the separately tabbed report section of this report.
SCHEDULE OF FINDINGS
FINDINGS (GOVERNMENT AUDITING STANDARDS)
Item No. Description Finding Type
11-1 Inadequate Controls Over Computer Security Significant Deficiency
11-2 Inaccurate Balance of Allowance for Uncollectible
Accounts for Other Receivables
Significant Deficiency
FINDINGS (STATE COMPLIANCE)
Item No. Description Finding Type
11-3 Noncompliance with Unemployment Insurance Act Noncompliance/Significant Deficiency
11-4 Performance Evaluation Not Completed Timely Noncompliance/Significant Deficiency
11-5 Interagency Agreements Not Executed in a Timely
Manner
Noncompliance/Significant Deficiency
11-6 Untimely Issuance of Eligibility Determination Noncompliance/Significant Deficiency
11-7 Failure to Verify Social Security Numbers Noncompliance/Significant Deficiency
State of Illinois
Department of Employment Security
4
SCHEDULE OF FINDINGS, Continued
In addition, the following findings which are reported as current findings relating to Government Auditing
Standards also meet the reporting requirements for State Compliance.
Item No. Description Finding Type
11-1 Inadequate Controls Over Computer Security Significant Deficiency
11-2 Inaccurate Balance of Allowance for Uncollectible
Accounts for Other Receivables
Significant Deficiency
PRIOR FINDINGS NOT REPEATED
Item No. Description
A Unsupported Claims on Dependent Children
B Inaccurate Balance of Cash and Cash Equivalents and Benefit Payments Payable
C Untimely Preparation and Review of Monthly Reconciliation Reports
EXIT CONFERENCE
The Department waived having an exit conference per correspondence dated January 17, 2012. The
responses to the recommendations were provided by Kathy Harlan in a letter dated February 2, 2012.
E.C. ORTIZ & CO., LLP
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT ACCOUNTANTS' REPORT ON STATE COMPLIANCE,
ON INTERNAL CONTROL OVER COMPLIANCE, AND ON
SUPPLEMENTARY INFORMATION FOR STATE COMPLIANCE PURPOSES
Honorable William G. Holland
Auditor General
State of Illinois
Compliance
As Special Assistant Auditors for the Auditor General, we have examined the State of Illinois,
Department of Employment Security's (Department) compliance with the requirements listed below, as
more fully described in the Audit Guide for Financial Audits and Compliance Attestation Engagements of
Illinois State Agencies (Audit Guide) as adopted by the Auditor General, during the two years ended
June 30, 2011. The management of the Department is responsible for compliance with these
requirements. Our responsibility is to express an opinion on the Department's compliance based on our
examination.
A. The Department has obligated, expended, received, and used public funds of the State in
accordance with the purpose for which such funds have been appropriated or otherwise
authorized by law.
B. The Department has obligated, expended, received, and used public funds of the State in
accordance with any limitations, restrictions, conditions or mandatory directions imposed by law
upon such obligation, expenditure, receipt or use.
C. The Department has complied, in all material respects, with applicable laws and regulations,
including the State uniform accounting system, in its financial and fiscal operations.
D. State revenues and receipts collected by the Department are in accordance with applicable laws
and regulations and the accounting and record keeping of such revenues and receipts is fair,
accurate and in accordance with law.
E. Money or negotiable securities or similar assets handled by the Department on behalf of the State
or held in trust by the Department have been properly and legally administered and the
accounting and recordkeeping relating thereto is proper, accurate, and in accordance with law.
5
333 SOUTH DES PLAINES STREET, SUITE 2-N CHICAGO, IL 60661 tel: 312.876.1900 fax: 312.876.1911
We conducted our examination in accordance with attestation standards established by the American Institute
of Certified Public · Accountants; the standards applicable to attestation engagements contained in
Government Auditing Standards issued by the Comptroller General of the United States; the Illinois State
Auditing Act (Act); and the Audit Guide as adopted by the Auditor General pursuant to the Act; and,
accordingly, included examining, on a test basis, evidence about the Department's compliance with those
requirements listed in the first paragraph of this report and performing such other procedures as we
considered necessary in the circumstances. We believe that our examination provides a reasonable basis for
our opinion. Our examination does not provide a legal determination on the Department's compliance with
specified requirements.
In our opinion, the Department complied, in all material respects, with the compliance requirements listed
in the first paragraph of this report during the two years ended June 30, 2011. However, the results of our
procedures disclosed instances of noncompliance with the requirements, which are required to be reported
in accordance with criteria established by the Audit Guide, issued by the Illinois Office of the Auditor
General and which are described in the accompanying schedule of findings as items 11-1 to 11-7.
Internal Control
Management of the Department is responsible for establishing and maintaining effective internal control
over compliance with the requirements listed in the first paragraph of this report. In planning and
performing our examination, we considered the Department's internal control over compliance with the
requirements listed in the first paragraph of this report as a basis for . designing our examination
procedures for the purpose of expressing our opinion on compliance and to test and report on internal
control over compliance in accordance with the Audit Guide, issued by the Illinois Office of the Auditor
General, but not for the purpose of expressing an opinion on the effectiveness of internal control over
compliance. Accordingly, we do not express an opinion on the effectiveness of the Department's internal
control over compliance.
A deficiency in an entity's internal control over compliance exists when the design or operation of a
control over compliance does not allow management or employees, in the normal course of performing
their assigned functions, to prevent, or detect and correct, noncompliance with the requirements listed in
the first paragraph of this report on a timely basis. A material weakness over compliance is a deficiency,
or combination of deficiencies, in internal control over compliance, such that there is a reasonable
possibility that material noncompliance with a requirement listed in the first paragraph of this report will
not be prevented, or detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over
compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not
identify any deficiencies in internal control over compliance that we consider to be material weaknesses,
as defined above. However, we identified certain deficiencies in internal control over compliance that we
considered to be significant deficiencies as described in the accompanying schedule of findings as items
11-1 to 11-7. A significant deficiency in an entity's internal control over compliance is a deficiency, or a
combination of deficiencies, in internal control over compliance that is less severe than a material
weakness in internal control over compliance, yet important enough to merit attention by those charged
with governance.
6
As required by the Audit Guide, immaterial findings excluded from this report have been reported in a
separate letter to your office.
The Department's responses to the findings identified in our examination are described in the
accompanying schedule of findings. We did not examine Department's responses and, accordingly, we
express no opinion on the responses.
Supplementary Information for State Compliance Purposes
Our examination was conducted for the purpose of forming an opInIon on compliance with the
requirements listed in the first paragraph of this report. The accompanying supplementary information as
listed in the table of contents as Supplementary Information for State Compliance Purposes is presented
for purposes of additional analysis. We have applied certain limited procedures as prescribed by the
Audit Guide as adopted by the Auditor General to the 2011 and 2010 Supplementary Information for
State Compliance Purposes, except for Annual Cost Statistics, Service Efforts and Accomplishments and
Unemployment Rates on which we did not perform any procedures. However, we do not express an
opinion on the supplementary information.
We have not applied procedures to the 2009 Supplementary Information for State Compliance Purposes,
and accordingly, we do not express an opinion thereon.
This report is intended solely for the information and use of the Auditor General, the General Assembly, the
Legislative Audit Commission, the Governor, agency management, and federal awarding agencies and pass
through entities and is not intended to be and should not be used by anyone other than these specified parties.
8. (!, . GI<=-J 7'
Chicago, Illinois {)
February 2, 2012
7
E.C. ORTIZ & CO., LLP
C ERT IFIED PUBL IC ACCOUN TANTS
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Honorable William G. Holland
Auditor General
State of Illinois
As Special Assistant Auditors for the Auditor General, we have audited the financial statements of the
Operating Fund and Special Programs Fund (Individual Nonshared Governmental Funds) of the State of
Illinois, Department of Employment Security (Department), as of and for the year ended June 30, 2011,
and have issued our report thereon dated February 2,2012. We conducted our audit in accordance with
auditing standards generally accepted in the United States of America and the standards applicable to
financial audits contained in Government Auditing Standards, issued by the Comptroller General of the
United States.
Internal Control Over Financial Reporting
Management of the Department is responsible for establishing and maintaining effective internal control
over financial reporting. In planning and performing our audit, we considered the Department's internal
control over financial reporting of the Individual Nonshared Governmental Funds as a basis for designing
our auditing procedures for the purpose of expressing our opinions on the fmancial statements and not for
the purpose of expressing an opinion on the effectiveness of the Department's internal control over
financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Department's
internal control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination
of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement
of the entity's financial statements will not be prevented, or detected and corrected on a timely basis.
Our consideration of internal control over financial reporting was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in internal control over
financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not
identify any deficiencies in internal control over financial reporting of the Individual Nonshared
Governmental Funds that we consider to be material weaknesses, as defined above.
8
333 SOUTH DES PLAINES STREET, SUITE 2-N CHICAGO, IL 60661 tel: 312 . 876 . 1900 fax: 312.876 . 1911
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Department's Individual Nonshared
Governmental Funds financial statements are free of material misstatement, we performed tests of its
compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance
with which could have a direct and material effect on the determination of financial statement amounts.
However, providing an opinion on compliance with those provisions was not an objective of our audit, and
accordingly, we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government Auditing Standards.
This report is intended solely for the information and use of the Auditor General, the General Assembly,
the Legislative Audit Commission, the Governor, Department management, and federal awarding
agencies and pass-through entities, and is not intended to be and should not be used by anyone other than
these specified parties.
~ . <!-. GJ.~ 7
Chicago, Illinois U
February 2, 2012
9
E.C. ORTIZ & CO., LLP
C ERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Honorable William G. Holland
Auditor General
State of Illinois
As Special Assistant Auditors for the Auditor General, we have audited the financial statements the
Unemployment Compensation Trust and Title XII Interest Fund (Individual Nonshared Proprietary Funds) of
the State of Illinois, Department of Employment Security (Department), as of and for the year ended June 30,
2011, and have issued our report thereon dated February 2,2012. We conducted our audit in accordance with
auditing standards generally accepted in the United States of America and the standards applicable to
financial audits contained in Government Auditing Standards issued by the Comptroller General of the
United States.
Internal Control Over Financial Reporting
Management of the Department is responsible for establishing and maintaining effective internal control over
financial reporting. In planning and performing our audit, we considered the Department's internal control
over financial reporting of the Individual Nonshared Proprietary Funds as a basis for designing our auditing
procedures for the purpose of expressing our opinions on the financial statements and not for the purpose of
expressing an opinion on the effectiveness of the Department's internal control over financial reporting.
Accordingly, we do not express an opinion on the effectiveness of the Department's internal control over
financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow management
or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct
misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in
internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial
statements will not be prevented, or detected and corrected on a timely basis.
Our consideration of internal control over financial reporting was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over financial
reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any
deficiencies in internal control over financial reporting of the Individual Nonshared Proprietary Funds that we
consider to be material weaknesses, as defined above. However, we identified certain deficiencies in
internal control over financial reporting, described in Finding 11-1 and 11-2 in the accompanying
Schedule of Findings that we consider to be a significant deficiency in internal control over financial
reporting. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control
that is less severe than a material weakness, yet important enough to merit attention by those charged with
governance.
10
333 SOUTH DES PLAINES STREET, SUITE 2-N CHICAGO , IL 60661 reI: 312.876.1900 fax: 312.876.1911
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Department's Individual Nonshared Proprietary
Funds financial statements are free of material misstatement, we performed tests of its compliance with
certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could
have a direct and material effect on the determination of financial statement amounts. However, providing an
opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not
express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters
that are required to be reported under Government Auditing Standards.
The Department's responses to the findings identified in our audit are described in the accompanying
Schedule of Findings. We did not audit the Department's responses and, accordingly, we express no
opinion on them.
This report is intended solely for the information and use of the Auditor General, the General Assembly, the
Legislative Audit Commission, the Governor, Department management, and federal awarding agencies and
. pass-through entities, and is not intended to be and should not be used by anyone other than these specified
parties.
d,Q ~ Gf. Chicago, Illinois O
February 2,2012
11
State of Illinois
Department of Employment Security
12
Compliance Examination
Current Findings – Government Auditing Standards
For the Two Years Ended June 30, 2011
11-1 Inadequate Controls Over Computer Security
The Department of Employment Security (Department) had inadequate controls over the security and use
of Super IDs.
The Information Services Division (ISD) is responsible for the development and maintenance of the
Department’s information systems and for preserving the integrity and security of information
warehoused within those systems. The Department processed approximately $2.6 billion in employer
unemployment tax revenue contributions and $6.4 billion of unemployment benefit payments in fiscal
year 2011.
A Super ID is a user ID that gives the user full access to all files, programs, tables and databases in all
environments (Development, Test and Production). The Department had issued five Super IDs. Four
Super IDs were assigned to the Applications Manager who supports the Human Resources, Finance, and
Revenue systems, and one Super ID was assigned to the Applications Manager who supports the Benefits
system. The ISD managers allow their programmers to use the Super IDs by sharing the password.
We noted that the ISD programmers were sharing and using Super IDs almost daily, on a non-emergency
basis in the Production environment for resolving transactional or application-related problems that
occurred during the regular day or at night’s batch processing. Since the Super IDs were shared, the
individual accountability over its use was limited. In addition, the use of Super ID to resolve
transactional or application-related problems bypassed normal application specific controls and audit
trails.
A log of the use of the Super ID and approvals is maintained; however, there is no documented approval
(pre or post) by the data owner on the use of the Super ID, nor is there a formal notification and user
acceptance of the resolutions performed. Only the ISD Manager of the programmer signs the approval
form. Furthermore, the transaction logs that document the use of the Super ID were not descriptive
enough to show the actual transaction codes that were executed, or the tables or files that were accessed.
Therefore, there is no assurance that only authorized and appropriate modifications were made to the
production data.
According to the Department, production control staff were not always available to follow the normal
process for fixing errors that occurred when converting transactions from the Benefit Information System
(BIS) to the Benefit Charging System (BCS). The Department found it more efficient and expeditious for
the programming staff to use system utilities to correct the data so the BCS could correctly process the
transactions. There was still a large volume of BIS data that needed to be cleaned up in July and August
of 2010 prior to the conversion to IBIS.
13
The use of the Super IDs increases the risk of unauthorized access to systems and data which could
jeopardize the integrity of the Department’s resources. Programming staff should generally be limited to
accessing only the information specifically required to complete their assigned system development
projects. Furthermore, Department policy stated that the use of the Super ID should be limited to the
resolution of production problems when the Production Control Unit staff is either not scheduled or
unavailable. (Finding Code No. 11-1, 10-1, 09-2, 08-2)
Recommendation
We recommend the Department:
• Allocate the resources necessary to correct day-to-day transactional and applications related
information systems problems without compromising the security of those systems by over utilizing
Super ID access rights.
• Restrict the use of the Super ID to emergency cases only, as required by Department policy.
• Implement additional compensating controls until the current practices are terminated. Additional
compensating may include:
o Revising the approval process to include approvals by non-IS business application
owner/manager to ensure proper separation of duties.
o Providing a more meaningful transaction log that shows the nature of changes made in using the
Super ID. Review and approval of the transaction logs should be performed, documented and
retained.
Department Response
We accept the recommendation. Since July of 2011, after the time of these findings, the Department has
worked to reduce our reliance on Super IDs. We have restricted the use of these IDs to emergency cases,
which occur outside of regular business hours. Additionally, in August of 2010, we launched our new
Unemployment Insurance system, IBIS. All of the data from our old system, BIS, was converted at that
time and we are currently working on a plan to decommission the BIS application. Therefore, issues
surrounding the use of Super IDs to correct BIS data are no longer relevant.
Our goal is to eliminate the use of Super IDs completely by increasing the skill level of Department
employees working in Information Services Bureau’s (ISB) Support Services. We will work with our
ISB staff to ensure Super ID forms provide a more meaningful description showing the nature of the
changes made using the Super ID, including the actual transaction codes that were executed, or the tables
or files that were accessed. All of this documentation will continue to be reviewed on a weekly basis and
retained by ISB’s Support Services manager.
Finally, in order to ensure we keep a better audit trail of Super ID usage, we will implement a new policy
that only night shift Computer Room supervisors have access to Super ID passwords. Staff needing to
use a Super ID will need to call the Computer Room supervisor for the password before making any
modifications. All calls to the Computer Room are currently logged and retained.
State of Illinois
Department of Employment Security
14
Compliance Examination
Current Findings – Government Auditing Standards
For the Two Years Ended June 30, 2011
11-2 Inaccurate Balance of Allowance for Uncollectible Accounts for Other Receivables
The Department of Employment Security (Department) understated its allowance for uncollectible
accounts for other receivables by $9.5 million.
The Department established an allowance for uncollectible accounts for other receivables based on 4-year
historical cycle. Other receivables represent benefit overpayments.
As of June 30, 2011, the Department had Other Receivables of $606 million and the allowance for other
receivables at year-end was $413 million. During the audit, we noted that the Department identified on
November 2010 uncollectible accounts of approximately $30 million for write-off. An allowance for
uncollectible accounts percentage of approximately 68.18% based on historical cycle was applied instead
of setting-up the allowance for the whole $30 million, resulting in an adjustment of $9.5 million. This
amount was not material to the financial statements for the year and no adjustment was made to the
financial statements.
According to accounting principles generally accepted in the United States of America (GAAP), the
allowance for uncollectible accounts should represent management’s best estimate of the amount of
receivable that will not be collected. The allowance for uncollectible accounts is a significant estimate
that requires a proper analysis and evaluation of balances. The Fiscal Control and Internal Auditing Act
(30 ILCS 10/3001) requires all State agencies to establish and maintain a system, or systems, of internal
fiscal and administrative controls. Department Procedures Manual No. 5825 allows for procedures for
certifying and writing off benefit overpayments.
Department officials stated that the transition to the new benefit system, IBIS, impacted the process for
calculating the allowance and led to this understatement.
Failure to allow for the full balance of the uncollectible accounts for other receivables may result in
financial misstatement. In addition, untimely writing-off of the uncollectible accounts results in
noncompliance with Department procedures. (Finding Code No. 11-2)
Recommendation
We recommend the Department review its uncollectible accounts in compliance with its procedures and
reevaluate the allowance for uncollectible accounts for other receivables for reasonableness.
Department Response
We accept the recommendation. An adequate allowance for uncollectible accounts for other receivables
has been recorded and the uncollectible accounts noted will be reviewed for write-off.
State of Illinois
Department of Employment Security
15
Compliance Examination
Current Findings – State Compliance
For the Two Years Ended June 30, 2011
11-3 Noncompliance with Unemployment Insurance Act
The Department did not comply with the Unemployment Insurance Act.
During our testing, we noted the following:
• The Department has identified Earnfare Program in its website with a brief description of the
program and provides a hyperlink to the Department of Human Services’ website which provides
more details. However, the Department did not promote the Earnfare Program to employers and
recruit public and private employers to participate.
• The Department did not establish Local Employment Assistance Fund.
• The Department adopted rules to clarify and provide guidance regarding eligibility and fraud. The
Department solicited input from the business and labor communities in developing the new rules,
which were ultimately agreed to by business and labor. The amended Administrative Rules
became effective on June 16, 2010, within 150 days from filing a “Notice of Emergency
Amendment” on January 19, 2010. However, the Department still has not complied with the
mandate to have promulgated these rules within 90 days after the effective date of the mandate,
which is June 30, 2009.
Unemployment Insurance Act (820 ILCS 405/1704.1) (Act) states that the Department shall cooperate
with the Department of Human Services to advertise and promote the Earnfare Program to all employers,
recruit public and private employers to participate in the Earnfare Program, refer recruited employers to
the Department of Human Services for contract negotiations, and notify the Department of Human
Services of available job listings as they occur.
The Act (820 ILCS 405/2105) states that there is to be created the Local Employment Assistance Fund to
be held by the Director.
The Act (820 ILCS 405/601(c)) states that within 90 days of the effective date of the amendatory Act of
the 96th General Assembly, the Department shall promulgate rules, pursuant to the Illinois Administrative
Procedure Act and consistent with Section 903(f)(3)(B) of the Social Security Act, to clarify and provide
guidance regarding eligibility and the prevention of fraud.
Regarding the Earnfare Program, Department officials stated that the State of Illinois has substantially
reduced the Earnfare Program funding to a maximum of 250 slots/positions comprising 31 vendors located
only in Chicago who have regular Earnfare contracts with IDHS Human Capital Development’s Employment
and Training Program.
The Department does not receive funding for the Local Employment Assistance Fund.
16
P.A. 96-30 (820 ILCS 405/601(C) required amendments to Parts 2835 and 2840 of the Department’s
rules, and the Department opted to pursue the amendments as a single package. While the changes to Part
2835 were relatively straightforward, the amendments to Part 2840 required codification of judicial and
administrative precedent regarding the potentially sensitive issue of when an individual is disqualified
from receiving unemployment benefits for voluntarily leaving work. Prior to adopting the rulemaking,
the Department sought input from a variety of interested parties, including the major business and labor
organizations in the State. Addressing all the parties’ concerns involved exchanges of several series of
drafts and, according to Department officials, prevented the Department from meeting the statutory
deadline.
The Department’s non-promotion of the Earnfare Program, non-establishment of the Local Employment
Assistance Fund, and untimely promulgation of rules regarding eligibility and fraud result in
noncompliance with the Act. (Finding Code No. 11-3)
Recommendation
We recommend the Department continue with its corrective actions in promoting the Earnfare Program
and establish Local Employment Assistance Fund, or seek legislative remedy. We recommend the
Department adopt rules within the timeframe set by statute.
Department Response
We accept the recommendation. In response to the Earnfare Program, the Department will work with the
Department of Human Services (DHS) to have DHS clients enroll into the Department’s labor exchange
systems which will ensure notification of employment opportunities and workshops to increase their
employability. In the future, the agency will work to ensure that any legislation establishing a deadline
for the adoption of rulemaking allows sufficient time for the collaborative process by which Department
adopts rulemaking and that the deadline is met.
State of Illinois
Department of Employment Security
17
Compliance Examination
Current Findings – State Compliance
For the Two Years Ended June 30, 2011
11-4 Performance Evaluation Not Completed Timely
The Department did not complete performance evaluations timely.
During our examination of 172 personnel files, we noted 56 employees (33%) whose performance
evaluations were completed untimely. The evaluations were completed from 1 to 336 late.
In addition, we noted 5 employees that did not have current performance evaluations on file.
80 Illinois Administrative Code 302.260 requires that “Performance records shall constitute any material
in an employee’s personnel file which, in the judgment of the Director, is relevant to determining the
appropriateness of proposed or recommended personnel transactions.”
80 Illinois Administrative Code 302.270 requires that “For any employee serving a six month
probationary period, the agency shall prepare and submit to the Department two such evaluations, one at
the end of the third month of the employee’s probationary period and another 15 days before the
conclusion thereof. For an employee serving a four-month probationary period, the agency shall prepare
and submit to the Department an evaluation form three and one half months after the commencement of
the probationary period. For a certified employee, each agency shall prepare such evaluation not less than
annually”.
Department officials stated that the issue was aggravated during this audit period because of the unusually
high increase in the unemployment rate. Field staff (which make up 89% of the sample examined) were
stretched to their limits as the Illinois Unemployment rate reached its peak of 11.2% in January 2010.
Failure to observe the required process in completing performance evaluations resulted in noncompliance
with Illinois Administrative Code. (Finding Code No. 11-4, 09-7, 07-3, 05-5, 03-2)
Recommendation
We recommend the Department ensure the timely completion and submission of employee performance
evaluations and assign responsibility for its monitoring for compliance with the applicable law.
Department Response
We accept the recommendation. The Department is committed to addressing and eliminating this finding.
Steps taken since June 30, 2011, include rolling out performance evaluation training for supervisors
statewide and enhancing the reminder notices to highlight days past due.
State of Illinois
Department of Employment Security
18
Compliance Examination
Current Findings – State Compliance
For the Two Years Ended June 30, 2011
11-5 Interagency Agreements Not Executed in a Timely Manner
The Department did not execute its intergovernmental agreements with other State agencies in a timely
manner.
During our detailed review of 17 interagency agreements, we noted that 15 of the intergovernmental
agreements (88%) had contract terms prior to the completion of an executed agreement. The agreements
were signed between 32 and 214 days late.
Good business practices require that a properly signed two party agreement be executed prior to
commencement of services for both contracts and interagency agreements.
Department officials stated that the Intergovernmental Agreements for Utilization of Leased Space (IGAs)
are based upon Cost Allocation Plans that are developed each year as a requirement under the Workforce
Investment Act (Act). The Act requires that Memorandum of Understanding (MOUs) be drawn up among
partner agencies. The Cost Allocation Plans are included in the MOUs and form the basis for the rental
amounts in the IGAs. The MOU approval process is subject to the approval of the local Workforce
Investment Boards and can cause delays in signing the IGAs.
Failure to execute contracts or interagency agreements in a timely manner could compromise the
Department’s oversight and public accountability. Significant work could be performed and costs incurred
before the public is made aware of the specifics of the contract and may also expose the State to potential
liability. (Finding Code No. 11-5, 09-4, 07-2, 05-8)
Recommendation
We recommend the Department improve its process for timely executing intergovernmental agreements.
Department Response
We accept the recommendation. The Department is continuing to improve the approval process by
beginning the MOU approvals earlier in the year and meeting regularly to speed up the approval process.
As a result, nine of the agreements cited in the finding were executed timely in FY12.
State of Illinois
Department of Employment Security
19
Compliance Examination
Current Findings – State Compliance
For the Two Years Ended June 30, 2011
11-6 Untimely Issuance of Eligibility Determination
The Department did not issue eligibility determinations within the prescribed timeframe.
During the fiscal year, we noted the Department did not meet the acceptable coverage of at least 80% for
timely non-monetary determinations for three of four quarters.
20 Code of Federal Regulation Part 640.3 requires that a State law include provisions for such methods of
administration as will reasonably insure the full payment of unemployment benefits for eligible claimants
with the greatest promptness that is administratively feasible.
Unemployment Insurance Program Letter No. 14-05 issued by the Employment and Training Administration
(ETA) Advisory System of the U. S. Department of Labor states that non-monetary determinations made
within 21 days of issue-detection date are considered timely, and ETA considers a state’s performance to be
acceptable if 80 percent of all non-monetary determinations are completed within 21 days.
Department officials stated that an increased workload due to the prolonged recession has had a significant
impact on timeliness.
Failure to issue eligibility determinations within prescribed timeframes could result in improper payment or
withholding of unemployment compensation. (Finding Code No. 11-6, 09-6)
Recommendation
We recommend the Department implement procedures to ensure all eligibility determinations are made
within the prescribed timeframes.
Department Response
We accept the recommendation. Through load-balancing and revised operations procedures, the
determination completion timeframe has significantly improved, with the last two quarters exceeding the
ETA requirement.
State of Illinois
Department of Employment Security
20
Compliance Examination
Current Findings – State Compliance
For the Two Years Ended June 30, 2011
11-7 Failure to Verify Social Security Numbers
The Department did not verify social security numbers of new claimants.
The Department requires that a claimant provide the local office with a valid Social Security card or other
evidence of his Social Security number (SSN) and any other form of positive identification such as a
driver’s license, state photo ID card, or payroll check. During the year, the Department made benefit
payments of approximately $2.9 million to claimants with SSNs reported as potentially invalid by the
Social Security Administration (SSA).
Department Procedures Manual 5085.10 states that an identity verification investigation is conducted on
all new claims to determine if the SSN provided by the claimant is a valid SSN issued by the SSA.
Department officials stated that when the new Unemployment Insurance Benefit Payment System was
implemented on August 30, 2010, the online verification interface with the SSA Unemployment Insurance
Query (UIQ) was not implemented.
The Department’s failure to verify social security numbers resulted in noncompliance with its own
procedures. (Finding Code No. 11-7)
Recommendation
We recommend the Department verify new claimants’ social security numbers.
Department Response
We accept the recommendation. The process to verify new claimants’ social security numbers for our
Unemployment Insurance system, IBIS, was reinstituted on May 24, 2011. This verification is conducted
through a batch process running nightly to check social security information against the Social Security
Administration’s (SSA) database. We receive notification within 24-hours of claimants whose social
security information does not match SSA records.
Additionally, on February 2, 2012, the Department submitted a Security Design Plan to the SSA, which is
the first step in enabling Department to verify social security information in real-time. This will bring the
Department in full compliance with Department Procedures Manual 5085.10.
State of Illinois
Department of Employment Security
21
Compliance Examination
Prior Material Finding Not Repeated
For the Two Years Ended June 30, 2011
A. Unsupported Claims on Dependent Children
The Department did not obtain required information from claimants regarding dependent children.
In fiscal year 2009, we noted that the Unemployment Insurance Application (page 2) did not provide
space for information on the claimant’s dependent children’s name and birth dates. (Finding Code No. 09-
5)
Status: Implemented
During the current engagement, the Department revised the unemployment insurance application form.
B. Inaccurate Balance of Cash and Cash Equivalents and Benefit Payments Payable
The Department understated its cash and cash equivalents by $43 million. The related benefit payments
payable was also understated by the same account.
In fiscal year 2009, we noted that the Department recorded a transfer of funds for benefit payment when
the actual transfer was not made until July 1, 2009. This resulted to a corresponding understatement in
the Department’s benefit payments payable by the same amount.
Status: Implemented
This was cleared during the financial audit in fiscal year 2010. The Department recorded the transfer of
funds in the proper period.
C. Untimely Preparation and Review of Monthly Reconciliation Reports
The Department did not timely prepare and review the monthly reconciliation reports. In addition,
reconciling items were not adequately supported and adjusted in the books timely.
In fiscal year 2009, we noted that the Department’s monthly reconciliation reports were not prepared
timely and not adequately supported and adjusted in the books timely
Status: Implemented
This was cleared during the financial audit in fiscal year 2010. The Department corrected and adjusted
the reconciling items and prepared the bank reconciliation reports timely.
State of Illinois
Department of Employment Security
22
Supplementary Information for State Compliance Purposes
Summary
Supplementary Information for State Compliance Purposes presented in this section of the report includes
the following:
• Fiscal Schedules and Analysis:
Schedule of Expenditures of Federal Awards
Notes to Schedules of Expenditures of Federal Awards
Schedule of Appropriations, Expenditures, and Lapsed Balances
Notes to Schedules of Appropriations, Expenditures, and Lapsed Balances
Comparative Schedule of Net Appropriations, Expenditures, and Lapsed Balances
Schedule of Changes in State Property
Comparative Schedule of Cash Receipts
Reconciliation Schedules of Cash Receipts to Deposits Remitted to the State Comptroller
Analysis of Significant Variations in Expenditures
Analysis of Significant Variations in Receipts
Analysis of Significant Lapse Period Spending
Analysis of Significant Account Balances
Analysis of Accounts Receivable
Cash Basis Schedules – Locally Held Special Programs Fund
• Analysis of Operations:
Agency Functions and Planning Program
Average Number of Employees
Annual Cost Statistics (Not Examined)
Emergency Purchases
Service Efforts and Accomplishments (Not Examined)
Unemployment Rates (Not Examined)
The accountants’ report that covers the Supplementary Information for State Compliance Purposes
presented in the Compliance Report Section states the auditors have applied certain limited procedures as
prescribed by the Audit Guide as adopted by the Auditor General, except for information on the Annual
Cost Statistics, Service Efforts and Accomplishments, and Unemployment Rates on which they did not
perform any procedures. However, the accountants do not express an opinion on the supplementary
information.
State of Illinois
Department of Employment Security
23
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2011
(Expressed in Thousands)
Federal
Federal Grantor/Pass-Through CFDA Federal
Grantor/Program or Cluster Title Number Expenditures
U. S. Department of Labor Programs:
Unemployment Insurance, Trust
Unemployment Insurance 17.225 $ 2,712,690
Temporary Extended Unemployment Compensation, 17.225 (941)
Extended Benefits 17.225 623,465
Emergency Unemployment Compensation (FUTA) 17.225 (2,692)
ARRA Emergency Unemployment Compensation (GRF) 17.225 1,934,945
ARRA Emergency Unemployment Compensation (NGRF) 17.225 1,006,084
ARRA Federal Additional Unemployment Compensation 17.225 197,890
Unemployment Insurance, Administrative
Unemployment Insurance 17.225 154,089
Emergency Unemployment Compensation 17.225 18,040
Federal Employment Compensation Act (FECA):
Unemployment Compensation for Ex-Military Employees (UCX) 17.225 32,258
Unemployment Compensation for Ex-Federal Employees (UCFE) 17.225 24,141
Trade Readjustment Act (TRA)
Trade Adjustment Activities (TAA) 17.225 10,846
Alternative Trade Adjustment Act (ATAA) 17.225 928
Disaster Unemployment Act
Disaster Unemployment Benefits 17.225 32
Disaster Unemployment Administrative 17.225 1
Total Unemployment Insurance 6,711,776
Workforce Investment Act (WIA)
Adult Program 17.258 86
Youth Program 17.259 94
Dislocated Workers 17.260 117
Total Workforce Investment Act (WIA) 297
See Notes to Schedule of Expenditures of Federal Awards.
State of Illinois
Department of Employment Security
24
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2011
(Expressed in Thousands)
Federal
Federal Grantor/Pass-Through CFDA Federal
Grantor/Program or Cluster Title Number Expenditures
U.S. Department of Labor Programs, continued:
Employment Services
Wagner Peyser 17.207 $ 31,496
ARRA - Wagner Peyser 17.207 10,412
Total Employment Services 41,908
Veterans Programs
Disabled Veterans Outreach Program (DVOP) 17.801 3,992
Local Veteran Employment Representative (LVER) 17.804 2,507
Total Veterans Program 6,499
Bureau of Labor Statistics 17.002 2,873
Work Opportunities Tax Credit 17.271 852
Temporary Labor Certifications for Foreign Workers 17.273 290
Total U.S. Department of Labor 6,764,495
Total Expenditures of Federal Awards $ 6,764,495
See Notes to Schedule of Expenditures of Federal Awards.
State of Illinois
Department of Employment Security
25
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2010
(Expressed in Thousands)
Federal
Federal Grantor/Pass-Through CFDA Federal
Grantor/Program or Cluster Title Number Expenditures
U. S. Department of Labor Programs:
Unemployment Insurance, Trust
Unemployment Insurance 17.225 $ 3,613,715
Temporary Extended Unemployment Compensation 17.225 (1,197)
Extended Benefits 17.225 629,989
Emergency Unemployment Compensation (FUTA) 17.225 43,335
ARRA Emergency Unemployment Compensation (GRF) 17.225 2,778,820
ARRA Emergency Unemployment Compensation (NGRF) 17.225 648,462
ARRA Federal Additional Unemployment Compensation 17.225 599,738
Unemployment Insurance, Administrative
Unemployment insurance 17.225 170,938
Emergency Unemployment Compensation 17.225 20,278
Federal Employment Compensation Act (FECA)
Unemployment Compensation for Ex-Military Employees (UCX) 17.225 34,349
Unemployment Compensation for Ex-Federal Employees (UCFE) 17.225 13,893
Trade Readjustment Act (TRA)
Trade Adjustment Activities (TAA) 17.225 1,896
Alternative Trade Adjustment Act (ATAA) 17.225 708
Disaster Unemployment Act
Disaster Unemployment Benefits 17.225 26
Disaster Unemployment Administrative 17.225 5
Total Unemployment Insurance 8,554,955
Workforce Investment Act (WIA)
Adult Program 17.258 64
Youth Program 17.259 70
Dislocated Workers 17.260 93
Total Workforce Investment Act (WIA) 227
See Notes to Schedule of Expenditures of Federal Awards.
State of Illinois
Department of Employment Security
26
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2010
(Expressed in Thousands)
Federal
Federal Grantor/Pass-Through CFDA Federal
Grantor/Program or Cluster Title Number Expenditures
U.S. Department of Labor Programs, continued:
Employment Services
Wagner Peyser 17.207 $ 26,752
ARRA - Wagner Peyser 17.207 5,672
Total Employment Services 32,424
Veterans Programs
Disabled Veterans Outreach Program (DVOP) 17.801 3,053
Local Veteran Employment Representative (LVER) 17.804 2,455
Total Veterans Program 5,508
Bureau of Labor Statistics 17.002 3,019
Work Opportunities Tax Credit 17.271 594
Temporary Labor Certifications for Foreign Workers 17.273 403
Total U.S. Department of Labor 8,597,130
U.S. Department of Education
Voc. Ed-Perkins Title IIA Leadership 84.048A 20
Total U.S. Department of Education 20
Total Expenditures of Federal Awards $ 8,597,150
See Notes to Schedule of Expenditures of Federal Awards.
State of Illinois
Department of Employment Security
27
Notes to Schedules of Expenditures of Federal Awards
Organization and Grant Administration
The State of Illinois, Department of Employment Security (Department) is a part of the executive branch
of government of the State of Illinois.
The Department has been designated as the primary recipient for the federal programs for which it
receives federal awards. The major responsibilities of the Department as a primary recipient are to ensure
that all planning, public participation, reporting and auditing requirements associated with the federal
awards programs are met and that all available federal awards are received and expended in accordance
with the requirements of the related grant or contract.
The schedules of expenditures of federal awards present activities of all federal financial assistance
programs of the Department.
Significant Accounting Policies
Reporting Entity
The schedule of expenditures of federal awards presents all programs in which expenditures were made
and/or claimed by the Department. The Department is an integral part of the State of Illinois, the
reporting entity.
Basis of Accounting
The schedules of expenditures of federal awards are presented on the modified accrual basis of
accounting with the exception of Unemployment Insurance Trust Accounts and Federal Employment
Compensation Act (FECA) accounts, which are reported on a full accrual.
Relationships to Federal Financial Reports
Amounts reported in the schedules of expenditures of federal awards reconcile with amounts reported in
the related federal financial reports.
State of Illinois
Department of Employment Security
28
Schedule of Appropriations, Expenditures, and Lapsed Balances
Appropriations for Fiscal Year 2011
Sixteen Months Ended October 31, 2011
Lapse Period
Final Expenditures Expenditures
Appropriations through 07/01/11 - Total Lapsed
(Note 1) June 30 10/31/11 Expenditures Balances
TITLE III SOCIAL SECURITY
AND EMPLOYMENT SERVICES
FUND - 052
Central Administration $ 14,077,500 $ 12,294,346 $ 590,250 $ 12,884,596 1,192,904
Finance and Administration 106,395,700 60,623,922 11,365,579 71,989,501 34,406,199
Workforce Development 189,317,400 146,437,818 10,920,745 157,358,563 31,958,837
Trust Fund Unit 1,734,300 122,818 72,105 194,923 1,539,377
Federal Stimulus-ARRA 16,200,000 11,032,145 1,404,029 12,436,174 3,763,826
Total 327,724,900 230,511,049 24,352,708 254,863,757 72,861,143
UNEMPLOYMENT COMPENSATION
SPECIAL ADMINISTRATION
FUND - 055
Workforce Development 14,100,000 13,433,937 88,297 13,522,234 577,766
GENERAL REVENUE FUND - 001
Trust Fund Unit 68,907,700 52,856,290 8,043,071 60,899,361 8,008,339
ROAD FUND - 011
Trust Fund Unit 1,900,000 1,900,000 - 1,900,000 -
NON-DEPARTMENT FUND
IMSA Income Fund - 768 16,700 16,700 - 16,700 -
Total Appropriated $ 412,649,300 $ 298,717,976 $ 32,484,076 $ 331,202,052 81,447,248
NON-APPROPRIATED
Unemployment Compensation Special
Administration Fund - 055 500,739 47,439 548,178
Total Non-Appropriated 500,739 47,439 548,178
Grand Total - ALL FUNDS $ 299,218,715 $ 32,531,515 $ 331,750,230
See Notes to Schedules of Appropriations, Expenditures, and Lapsed Balances.
State of Illinois
Department of Employment Security
29
Schedule of Appropriations, Expenditures, and Lapsed Balances
Appropriations for Fiscal Year 2010
Eighteen Months Ended December 31, 2010
Lapse Period
Final Expenditures Expenditures
Appropriations through 7/1/10- Total Lapsed
(Note 2) June 30 12/31/10 Expenditures Balances
TITLE III SOCIAL SECURITY
AND EMPLOYMENT SERVICES
FUND - 052
Central Administration $ 13,469,400 $ 11,552,719 $ 632,851 $ 12,185,570 1,283,830
Finance and Administration 101,506,000 73,174,348 14,540,576 87,714,924 13,791,076
Workforce Development 181,891,600 144,873,067 12,007,082 156,880,149 25,011,451
Trust Fund Unit 1,734,300 82,363 16,643 99,006 1,635,294
Federal Stimulus-ARRA 30,500,000 15,234,756 194,843 15,429,599 15,070,401
Total 329,101,300 244,917,253 27,391,995 272,309,248 56,792,052
UNEMPLOYMENT COMPENSATION
SPECIAL ADMINISTRATION
FUND - 055
Workforce Development 14,100,000 13,502,252 48,025 13,550,277 549,723
GENERAL REVENUE FUND - 001
Trust Fund Unit 6,907,700 5,260,854 1,646,846 6,907,700 -
ROAD FUND - 011
Trust Fund Unit 1,900,000 - 1,900,000 1,900,000 -
NON-DEPARTMENT FUND
IMSA Income Fund - 768 16,700 16,700 - 16,700 -
Total Appropriated $ 352,025,700 $ 263,697,059 $ 30,986,866 $ 294,683,925 57,341,775
NON-APPROPRIATED
Unemployment Compensation Special
Administration Fund - 055 3,561,560 39,991 3,601,551
Total Non-Appropriated 3,561,560 39,991 3,601,551
Grand Total - ALL FUNDS $ 267,258,619 $ 31,026,857 $ 298,285,476
See Notes to Schedules of Appropriations, Expenditures, and Lapsed Balances.
State of Illinois
Department of Employment Security
30
Notes to Schedules of Appropriations, Expenditures, and Lapsed Balances
Appropriation Authorization, Fiscal Year 2011
Appropriation amounts were authorized by Public Act 096-0956, as approved by the Governor on
July 1, 2010, pursuant to Article IV, Section 9(d) of the Illinois Constitution of 1970. Pursuant to Section
13.2 of the State Finance Act, the sum of transfers among line item appropriations shall not exceed 2% of
the aggregate appropriation. Based on the Office of the Comptrollers records, the Department’s transfer
totaling $825,000 did not exceed this ceiling.
Appropriation Authorization, Fiscal Year 2010
Appropriation amounts were authorized by Public Act 096-0042, as approved by the Governor on
July 15, 2009 and Public Act 096-0890 approved on April 26, 2010, pursuant to Article IV, Section 9(d)
of the Illinois Constitution of 1970. Pursuant to Section 13.2 of the State Finance Act, the sum of
transfers among line item appropriations shall not exceed 2% of the aggregate appropriation. Based on
the Office of the Comptrollers records, the Department’s transfer totaling $1.8 million did not exceed this
ceiling.
Basis of Accounting
Data contained in these schedules have been taken directly from the records of the State Comptroller.
The Comptroller's Statewide Accounting Management System (SAMS) controls expenditures by line item
as established in approved appropriation bills. Budgets are essentially on the cash basis, modified for
expenditures during the lapse period.
Non-Department Funds
Funds under this title are not controlled by the Department. However, state appropriation laws pertaining
to these funds give the Department authority to appropriate monies for unemployment benefits claimed by
employees of these funds.
State of Illinois
Department of Employment Security
31
Notes to Schedules of Appropriations, Expenditures, and Lapsed Balances, continued
Directors and Board of Review Salaries Paid from Title III Social Security and Employment Services
Fund
The Department directly pays its Director and Board of Review from the Title III Social Security and
Employment Services Fund appropriations. The appropriations and expenditures are as follows for the
fiscal year ended June 30:
Director Board of Review Total
2011
Appropriation $ 142,200 $ 75,000 $ 217,200
Expenditures 142,200 75,000 217,200
Lapse $ - $ - $ -
2010
Appropriation $ 142,305 $ 75,000 $ 217,305
Expenditures 142,305 75,000 217,305
Lapse $ - $ - $ -
2009
Appropriation $ 142,339 $ 75,000 $ 217,339
Expenditures 142,339 75,000 217,339
Lapse $ - $ - $ -
State of Illinois
Department of Employment Security
32
Comparative Schedule of Net Appropriations, Expenditures,
and Lapsed Balances
For the Years Ended June 30, 2011, 2010 and 2009
Year ended June 30
2011 2010 2009
PA096-0956
PA096-0042 &
PA096-890 PA095-0731
CENTRAL ADMINISTRATION
Title III Social Security and Employment Services Fund:
Appropriations (net of transfers) $ 14,077,500 $ 13,469,400 $ 11,796,400
Expenditures:
Personal services 8,145,466 7,784,704 6,936,695
Contribution to State Employee's Retirement System 2,280,534 2,209,344 1,454,943
Contribution to Social Security 599,323 569,600 504,990
Contributions to group insurance 1,485,307 1,309,646 1,271,368
Contractual services 253,327 176,916 265,265
Travel 40,918 55,193 52,716
Telecommunications services 79,721 80,167 77,973
Total Expenditures 12,884,596 12,185,570 10,563,950
Lapsed Balances $ 1,192,904 $ 1,283,830 $ 1,232,450
FINANCE AND ADMINISTRATION
Title III Social Security and Employment Services Fund:
Appropriations (net of transfers) $ 106,395,700 $ 101,506,000 $ 89,529,600
Expenditures:
Personal services 19,024,288 18,315,798 17,585,052
Contribution to State Employee's Retirement System 5,327,873 5,198,469 3,700,725
Contribution to Social Security 1,393,686 1,342,117 1,295,262
Contribution to group insurance 3,751,528 3,478,300 3,480,711
Contractual services 37,845,769 53,606,579 48,547,357
Travel 58,889 87,746 61,897
Commodities 615,887 969,242 1,093,022
Printing 1,715,911 2,090,780 1,859,536
Equipment 90,928 115,801 75,318
Telecommunications services 2,061,628 2,288,088 1,646,901
Operation of automotive equipment 92,373 80,695 59,536
America's Labor Market Information System 10,741 141,309 148,520
Total Expenditures 71,989,501 87,714,924 79,553,837
Lapsed Balances $ 34,406,199 $ 13,791,076 $ 9,975,763
State of Illinois
Department of Employment Security
33
Comparative Schedule of Net Appropriations, Expenditures,
and Lapsed Balances, Continued
For the Years Ended June 30, 2011, 2010 and 2009
Year ended June 30
2011 2010 2009
PA096-0956
PA096-0042 &
PA096-890 PA095-0731
WORKFORCE DEVELOPMENT
Title III Social Security and Employment Services Fund:
Appropriations (net of transfers) $ 189,317,400 $ 181,891,600 $ 156,785,900
Expenditures:
Personal services 90,849,646 89,631,202 78,475,551
Contribution to State Employee's Retirement System 25,440,226 25,442,834 16,515,954
Contribution to Social Security 6,679,663 6,583,521 5,777,041
Contributions to group insurance 19,632,889 18,041,497 16,601,866
Contractual services 718,371 2,473,820 836,877
Travel 520,429 530,638 616,804
Telecommunications services 5,243,307 5,671,845 4,521,364
Employment Security Automation 1,061,435 2,713,508 343,840
Benefit information System 7,198,562 5,673,299 7,199,468
Awards and Grants 6,821 4,505 2,876
Tort Claims 6,659 113,480 -
Refunds 555 - -
Total Expenditures 157,358,563 156,880,149 130,891,641
Lapsed Balances $ 31,958,837 $ 25,011,451 $ 25,894,259
Unemployment Compensation Special Administration Fund:
Appropriations (net of transfers) $ 14,100,000 $ 14,100,000 $ 14,100,000
Expenditures:
Legal assistance required by law 1,522,234 1,550,277 1,471,658
For deposit into Title III Social Security and
Employment Services Fund 12,000,000 12,000,000 12,000,000
Total Expenditures 13,522,234 13,550,277 13,471,658
Lapsed Balances $ 577,766 $ 549,723 $ 628,342
TOTAL WORKFORCE DEVELOPMENT
Appropriations (net of transfers) $ 203,417,400 $ 195,991,600 $ 170,885,900
Expenditures 170,880,797 170,430,426 144,363,299
Lapsed Balances $ 32,536,603 $ 25,561,174 $ 26,522,601
State of Illinois
Department of Employment Security
34
Comparative Schedule of Net Appropriations, Expenditures,
and Lapsed Balances, Continued
For the Years Ended June 30, 2011, 2010 and 2009
Year ended June 30
2011 2010 2009
PA096-0956
PA096-0042 &
PA096-890 PA095-0731
TRUST FUND UNIT
General Revenue Fund:
Appropriations (net of transfers) $ 68,907,700 $ 6,907,700 $ 14,242,700
Expenditures:
Unemployment Compensation benefits former
State employees - 6,907,700 14,242,700
Governors discretionary appropriation 53,991,661 - -
Operational expenses 6,907,700 - -
Total Expenditures 60,899,361 6,907,700 14,242,700
Lapsed Balances $ 8,008,339 $ - $ -
Road Fund:
Appropriations (net of transfers) $ 1,900,000 $ 1,900,000 $ 1,900,000
Expenditures:
Unemployment Compensation benefits to
DOT employees 1,900,000 1,900,000 1,900,000
Lapsed Balances $ - $ - $ -
Title III Social Security and Employment Services Fund:
Appropriations (net of transfers) $ 1,734,300 $ 1,734,300 $ 1,734,300
Expenditures:
Unemployment Compensation benefits to former
State employees 194,923 99,006 41,004
Lapsed Balances $ 1,539,377 $ 1,635,294 $ 1,693,296
IMSA Income Fund:
Appropriations (net of transfers) $ 16,700 $ 16,700 $ 16,700
Expenditures:
Unemployment Compensation benefits to former
State employees 16,700 16,700 2,082
Lapsed Balances $ - $ - $ 14,618
State of Illinois
Department of Employment Security
35
Comparative Schedule of Net Appropriations, Expenditures,
and Lapsed Balances, Continued
For the Years Ended June 30, 2011, 2010 and 2009
Year ended June 30
2011 2010 2009
PA096-0956
PA096-0042 &
PA096-890 PA095-0731
TOTAL TRUST FUND UNIT
Appropriations (net of transfers) $ 72,558,700 $ 10,558,700 $ 17,893,700
Expenditures 63,010,984 8,923,406 16,185,786
Lapsed Balances $ 9,547,716 $ 1,635,294 $ 1,707,914
FEDERAL STIMULUS - ARRA
Appropriations (net of transfers) $ 16,200,000 $ 30,500,000 $ 4,953,000
Expenditures:
Pursuant to applicable-ARRA 3,522,173 13,729,082 -
Administrative expenses-ARRA 8,914,001 1,700,517 -
Total Expenditures 12,436,174 15,429,599 -
Lapsed Balances $ 3,763,826 $ 15,070,401 $ 4,953,000
GRAND TOTALS - ALL DIVISIONS
Appropriations (net of transfers) $ 412,649,300 $ 352,025,700 $ 295,058,600
Expenditures 331,202,052 294,683,925 250,666,872
Lapsed Balances $ 81,447,248 $ 57,341,775 $ 44,391,728
SUMMARY BY FUND - Expenditures
General Revenue Fund $ 60,899,361 $ 6,907,700 $ 14,242,700
Title III Social Security and Employment Services Fund 254,863,757 272,309,248 221,050,432
Unemployment Compensation Special Administration Fund 13,522,234 13,550,277 13,471,658
Road Fund 1,900,000 1,900,000 1,900,000
IMSA Income Fund 16,700 16,700 2,082
Total Expenditures $ 331,202,052 $ 294,683,925 $ 250,666,872
State of Illinois
Department of Employment Security
36
Comparative Schedule of Net Appropriations, Expenditures,
and Lapsed Balances - All Funds
For the Year Ended June 30, 2011, 2010 and 2009
Year ended June 30
2011 2010 2009
PA096-0956
PA096-0046 &
PA096-890 PA095-0731
Appropriations (net of transfers) $ 412,649,300 $ 352,025,700 $ 295,058,600
Expenditures
Personal services 118,019,400 115,731,704 102,997,298
Contribution to State Employee's Retirement System 33,048,633 32,850,647 21,671,622
Contribution to Social Security 8,672,672 8,495,238 7,577,293
Contributions to group insurance 24,869,724 22,829,443 21,353,945
Contractual services 38,817,467 56,257,315 49,649,499
Travel 620,236 673,577 731,417
Commodities 615,887 969,242 1,093,022
Printing 1,715,911 2,090,780 1,859,536
Equipment 90,928 115,801 75,318
Telecommunications services 7,384,656 8,040,100 6,246,238
Legal assistance required by law 1,522,234 1,550,277 1,471,658
For deposit into Title III Social Security and
Employment Services Fund 12,000,000 12,000,000 12,000,000
Unemployment Compensation benefits to former
State employees 63,010,984 8,923,406 16,185,786
America's Labor Market Information System 10,741 141,309 148,520
Employment security automation 1,061,435 2,713,508 343,840
Benefit information system redefinition 7,198,562 5,673,299 7,199,468
Operation of automotive equipment 92,373 80,695 59,536
Awards and grants 6,821 4,505 2,876
Tort claims 6,659 113,480 -
Refunds 555 - -
Pursuant to applicable-ARRA 3,522,173 13,729,082 -
Administrative expenses-ARRA 8,914,001 1,700,517 -
Total Expenditures 331,202,052 294,683,925 250,666,872
Lapsed Balances $ 81,447,248 $ 57,341,775 $ 44,391,728
State of Illinois
Department of Employment Security
37
Schedule of Changes in State Property
For the Two Years Ended June 30, 2011
Year Ended June 30, 2011
Balance Net Balance
July 1, 2010 Additions Deletions Transfers June 30, 2011
Equipment $ 22,752,336 $ 1 01,546 $ 16,399 $ (1,199,380) $ 21,638,103
Year Ended June 30, 2010
Balance Net Balance
July 1, 2009 Additions Deletions Transfers June 30, 2010
Equipment $ 23,913,391 $ 6 22,057 $ 53,303 $ (1,729,809) $ 22,752,336
Note: Additions and deletions were reconciled to property reports submitted to the Office of the
Comptroller by the Department.
State of Illinois
Department of Employment Security
38
Comparative Schedule of Cash Receipts
For the Years Ended June 30, 2011, 2010 and 2009
Year ended June 30
Descriptions of Receipts 2011 2010 2009
TITLE III SOCIAL SECURITY AND EMPLOYMENT
SERVICES FUND - 052
U. S. Department of Labor $ 220,827,374 $ 233,905,419 $ 185,136,068
U. S. Department of Education
Federal Stimulus Package 14,401,368 19,999,300 3,187,913
Fund Transfers - Unemployment Compensation
Special Administration Fund 12,000,000 12,000,000 12,000,000
Miscellaneous 18,919 3,059 740,836
Illinois State Board of Education - - 173,631
Health Care and Family Services 4,884 4,884 4,884
Other States 217,000 - 90,000
Fines, Penalties or Violations 10,956 13,476 17,898
User Fees - 55 300
Returned Petty Cash Fund 100 - 300
Subscriptions and Publications 1,620 1,510 720
One Stop Participants 503,776 543,081 586,488
Reimbursement/Jury Duty & Recoveries 3,116 3,775 2,692
General Revenue Fund - 40,000 40,000
Copy Fees 5,899 5,172 4,285
Shared Data Access Fees 1,665 2,220 2,220
Labor Market Information 4,160 6,197 16,375
Commerce & Economic Opportunity 389,213 175,027 244,110
Investment Income Repurchase Agreements 6,232 9,924 172,151
Prior Year Refunds and Voids 17,180 10,246 6,467
Total Fund (052) $ 248,413,462 $ 266,723,345 $ 202,427,338
UNEMPLOYMENT COMPENSATION SPECIAL
ADMINISTRATION FUND - 055
Payroll Tax Penalties $ 13,500,414 $ 9,280,735 $ 13,841,336
Unemployment Insurance 1,189,381 1,224,406 1,717,981
Judgement Interest/UI Claim 135,871 162,084 158,675
IPTIP UC Special Administration 4,343 8,436 84,651
Total Fund (055) $ 14,830,009 $ 10,675,661 $ 15,802,643
State of Illinois
Department of Employment Security
39
Reconciliation Schedule of Cash Receipts to Deposits
Remitted to the State Comptroller
For the Two Years Ended June 30, 2011
2011 2010
Title III Social Security and Employment Services Fund - 052
Cash receipts per Department $ 248,413,462 $ 266,723,345
Add: Deposits in transit at beginning of fiscal year - -
Less: Deposits in transit at end of fiscal year - -
Less: Investment income (6,232) (9,924)
Deposits remitted to the State Comptroller $ 248,407,230 $ 266,713,421
2011 2010
Unemployment Compensation Administration Fund - 055
Cash receipts per Department $ 14,830,009 $ 10,675,661
Add: Deposits in transit at beginning of fiscal year - -
Less: Deposits in transit at end of fiscal year - -
Less: Investment income - -
Deposits remitted to the State Comptroller $ 14,830,009 $ 10,675,661
Note: To avoid deposits in transits, monies are requested from the Federal government
a week before the end of the period.
State of Illinois
Department of Employment Security
40
Analysis of Significant Variations in Expenditures
(Expressed in Thousands)
The variations presented below were obtained from amounts presented in the Schedules of
Appropriations, Expenditures and Lapsed Balances, except for the Unemployment Compensation Trust
Fund information, which was obtained from the Individual Nonshared Proprietary Fund Financial
Statements.
Variations totaling over $1,000 and 15% were considered significant.
Title III Social Security and Employment Services Fund - 052
2010 2009 Amount %
Expenditures $ 272,309 $ 221,050 $ 51,259 23%
The increase in expenditures was primarily due to the increase in employee payroll, group
insurance and retirement, statistical services, postage, and auditing and management services.
Unemployment Compensation Special Administration Fund - 055
2011 2010 Amount %
Expenditures $ 14,070 $ 17,152 $ ( 3,082) -18%
The decrease in expenditures was primarily due to the mandatory transfer of Trade
Readjustment Act program settlement that was completed in fiscal year 2010.
Special Programs Fund - 1136
2011 2010 Amount %
Employment and
economic development $ 11,548 $ 3,098 $ 8,450 273%
The increase in employment and economic development expenditures was due to the winding
down of various UI Federal government extension programs as such claims were started to
be applied to Trade Readjustment Act program.
2010 2009 Amount %
Employment and
economic development $ 3,098 $ 5,659 $ ( 2,561) -45%
The decrease in employment and economic development expenditures was due to various UI
Federal government extension programs that were implemented. These UI federal government
extension programs were applied first before claims were paid under Trade Readjustment
Act program.
Increase (Decrease)
Increase (Decrease)
Increase (Decrease)
Increase (Decrease)
State of Illinois
Department of Employment Security
41
Analysis of Significant Variations in Expenditures, Continued
(Expressed in Thousands)
Unemployment Compensation Trust Fund - 1138
2011 2010 Amount %
Benefit payments and
refunds $ 6,424,471 $ 8,259,960 $ ( 1,835,489) -22%
The decrease in federal grants received was due to the winding down of various Federal
programs. Most claimants were no longer eligible on various Federal programs in fiscal
year 2011.
2010 2009 Amount %
Benefit payments and
refunds $ 8,259,960 $ 5,086,053 $ 3 ,173,907 62%
The increase in federal grants received was due to the continued high unemployment and
eligibilities under various Federal programs, resulting in increase in claims paid and increase
in draw of funds from Federal government.
Title XII Interest Fund - 1402
2011 2010 Amount %
Interest expense $ 50,485 $ - $ 5 0,485 100%
The increase in interest expense was due to the interest charged by the Federal government
on unpaid advances/loans starting January 1, 2011.
Increase (Decrease)
Increase (Decrease)
Increase (Decrease)
State of Illinois
Department of Employment Security
42
Analysis of Significant Variations in Expenditures, Continued
(Expressed in Thousands)
General Revenue Fund - 01 (Not Examined)
2011 2010 Amount %
Expenditures $ 60,899 $ 6,908 $ 53,991 782%
The increase in expenditures was due to the increase in claims paid to former State employees
and payment of $26 million of fiscal year 2010 expenditures.
2010 2009 Amount %
Expenditures $ 6,908 $ 14,243 $ ( 7,335) -51%
Although UI claims paid to former State employees increase from 2009 to 2010, there was not
enough appropriated amount in fiscal year 2010 as such $26 million was paid using future
appropriations.
Increase (Decrease)
Increase (Decrease)
State of Illinois
Department of Employment Security
43
Analysis of Significant Variations in Receipts
(Expressed in Thousands)
The variations presented below were obtained from amounts presented in the Comparative Schedules of
Cash Receipts for fiscal years 2011, 2010 and 2009, except for the Unemployment Compensation Trust
Fund information, which was obtained from the Individual Nonshared Proprietary Fund Financial
Statements.
Variations totaling over $1,000 and 15% were considered significant.
Unemployment Compensation Special Administration Fund - 055
2011 2010 Amount %
Revenues $ 14,830 $ 10,675 $ 4,155 39%
The increase in revenue was due to the increase in payroll tax penalties collection.
2010 2009 Amount %
Revenues $ 10,675 $ 15,803 $ ( 5,128) -32%
The decrease in revenue was due to the decrease in payroll tax penalties collection.
Unemployment Compensation Trust Fund - 1138
2011 2010 Amount %
Contributions $ 2,626,928 $ 1,849,486 $ 7 77,442 42%
The increase in contributions was due to increase in employer contribution rate from 7.25% in 2010
to 8.04% in 2011.
2010 2009 Amount %
Contributions $ 1,849,486 $ 1,600,817 $ 2 48,669 16%
The increase in contributions was due to increase in employer contribution rate from 6.8% in 2009
to 7.25% in 2010.
Increase (Decrease)
Increase (Decrease)
Increase (Decrease)
Increase (Decrease)
State of Illinois
Department of Employment Security
44
Analysis of Significant Variations in Receipts, Continued
(Expressed in Thousands)
Unemployment Compensation Trust Fund - 1138, continued
2011 2010 Amount %
Federal grants received $ 3,756,303 $ 4,685,503 $ ( 929,200) -20%
The decrease in federal grants received was due to the winding down of various Federal
programs. Most claimants were no longer eligible on various Federal programs in fiscal
year 2011.
2010 2009 Amount %
Federal grants received $ 4,685,503 $ 1,644,757 $ 3 ,040,746 185%
The increase in federal grants received was due to the continued high unemployment and
eligibilities under various Federal programs, resulting in increase in claims paid and increase
in draw of funds from Federal government.
Special Programs Fund - 1136
2011 2010 Amount %
Revenues $ 11,548 $ 3,098 $ 8,450 273%
The increase in revenues was due to the winding down of various UI Federal government
extension programs as such claims were started to be applied to Trade Readjustment
Act program.
2010 2009 Amount %
Revenues $ 3,098 $ 5,659 $ ( 2,561) -45%
The decrease in revenues was due to various UI Federal government extension programs that
were implemented. These UI federal government extension programs were applied first
before claims were paid under Trade Readjustment Act program.
Title XII Interest Fund - 1402
2011 2010 Amount %
Revenues $ 90,000 $ - $ 90,000 100%
This fund was established in May 2011 for payment of the interest on loans from federal
government due in September 2011.
Increase (Decrease)
Increase (Decrease)
Increase (Decrease)
Increase (Decrease)
Increase (Decrease)
State of Illinois
Department of Employment Security
45
Analysis of Significant Lapse Period Spending
For the Years Ended June 30, 2011 and 2010
Lapse period spending totaling 20% or more of total expenditures were considered significant.
July 1, 2011 to October 31, 2011
In fiscal year 2011, there was no significant lapse period spending for all funds.
July 1, 2010 to December 31, 2010
General Revenue Fund
In fiscal year 2010, $6.9 million benefit was paid to former State employees and of this amount
$1.6 million was paid during lapse period.
State of Illinois
Department of Employment Security
46
Analysis of Significant Account Balances
Variations totaling over $1,000,000 and 15% were considered significant.
A. Nonshared Governmental Funds
Title III Social Security and Employment Services Fund - 52
The $2 million (84%) increase in “Cash and cash equivalents” account from fiscal year 2010 to 2011
was due to timing of funding drawn from the Federal government.
The $2 million (48%) decrease in “Cash and cash equivalents” account from fiscal year 2009 to 2010
was due to delay by Federal government in issuing of obligation authority to the Department resulting
in delays in draws of funding.
The $4 million (94%) decrease in “Due from other State funds” account from fiscal year 2010 to 2011
was due to the depletion of the balance of monies for the Stimulus Reed Act program deposited in
fiscal year 2009 by the Federal government in the UI Trust Fund to support the administrative
expenditures of the Department.
The $15 million (80%) decrease in “Due from other State funds” account from fiscal year 2009 to
2010 was due to the withdrawal of monies for the Stimulus Reed Act program deposited in fiscal year
2009 by the Federal government in the UI Trust Fund to support the administrative expenditures of
the Department.
The $19 million (104%) increase in “Due to other State funds” account from 2010 to 2011 was due to
the delay in payment of billings from Central Management Services for various consolidated
expenses such as facilities expenses and statistical services. In fiscal year 2011, seven months of
expenditures were paid during the lapse period while in fiscal 2010, four months of expenditures were
paid during the lapse period.
The $5 million (38%) increase in “Due to other State funds” account from 2009 to 2010 was due to
the delay in payment of billings from Central Management Services for various consolidated
expenses. In fiscal year 2010, four months of expenditures were paid during the lapse period while in
fiscal year 2009, two months of expenditures were paid during the lapse period.
The $1 million (100%) increase in “Due to component units” account from 2010 to 2011 was due to
late payment of vouchers on consultancy services provided to the Department.
The $3 million (100%) increase in “Deferred revenues” account from 2010 to 2011 was due to the
grants receipts earned but not drawn or received within sixty days after fiscal yearend.
State of Illinois
Department of Employment Security
47
Analysis of Significant Account Balances, Continued
A. Nonshared Governmental Funds, Continued
Unemployment Compensation Special Administration Fund - 055
The $7 million (52%) decrease in “Cash and cash equivalents” account from fiscal year 2009 to 2010
was due to the decrease in penalty and interest on unemployment insurance taxes transferred from
Unemployment Compensation Trust Fund for the first three quarters in fiscal year 2009 as compared
to fiscal year 2010.
The $2 million (51%) decrease in “Due from other State funds” account from 2010 to 2011 was due
to change in timing of transfer of funds from quarterly last year to monthly this year resulting to a
lower month-end balance.
B. Nonshared Proprietary Funds
Unemployment Compensation Trust Fund - 1138
The $24 million (26%) increase in “Cash and cash equivalents” account from 2009 to 2010 was due
to increase in unemployment insurance claims which resulted in an increase in the level of cash held
at the bank which is at least three days of benefit payments per CMIA regulation.
The $437 million (100%) decrease in “Deposits held by the federal government” account from 2010
to 2011 was due to change in US Treasury ruling requiring the withdrawal of any balance from the
State’s treasury UI account to be used up first before availing or obtaining loan/advances from the
federal government. Also, if there were remaining balance, these were withdrawn by the US
Treasury for the repayment of loan/advances.
The $254 million (139%) increase in “Deposits held by the federal government” account from 2009
to 2010 was due to the additional funding given by the Federal government, the distribution of Reed
Act benefit for modernization of UI for $200 million and the increase in employer contribution rate.
The $225 million (56%) increase in “Receivables - Taxes” account in 2011 from 2010 was primarily
due to late payment of unemployment insurance taxes due from employer coupled with the increase
in employer contribution rate from 7.25% to 8.04%
The $61 million (46%) decrease in “Receivables - Intergovernmental” account from 2010 to 2011
was due to the winding down of Federal programs and most claimants were no longer eligible on
various Federal programs and combined wage claims due from other states were promptly paid
monthly.
The $26 million (24%) increase in “Receivables - Intergovernmental” account from 2009 to 2010 was
due increase in claims on various Federal programs.
The $69 million (63%) increase in “Receivable - Others” account from 2009 to 2010 was due to
increase in overpaid claims as a result of the continuous increase in unemployment.
State of Illinois
Department of Employment Security
48
Analysis of Significant Account Balances, Continued
B. Nonshared Proprietary Funds, Continued
Unemployment Compensation Trust Fund - 1138, Continued
The $27 million (77%) increase in “Due from other State funds” account from 2010 to 2011 was due
to increasing number of other State agencies that were not paying their unemployment insurance
taxes billings timely.
The $22 million (186%) increase in “Due from other State funds” account from 2009 to 2010 was due
to increasing number of other State agencies that were not paying their unemployment insurance
taxes billings timely.
The $81 million (44%) decrease in “Benefit payments payable” account from 2010 to 2011 was due
to the winding down of various Federal programs resulting to lesser accrual for benefit claims at end
of the fiscal year.
The $44 million (19%) decrease in “Benefit payments payable” account from 2009 to 2010 was due
to the implementation of debit card and direct deposit system of payment to claimants resulting to
prompt processing of benefit payment by the Department.
The $2 million (30%) decrease in “Intergovernmental payable” account from 2010 to 2011 was due to
prompt payment of the Department’s combined wage claims due to other States.
The $4 million (38%) decrease in “Intergovernmental payable” account from 2009 to 2010 was due to
prompt payment of the Department’s combined wage claims due to other States.
The $5 million (77%) decrease in “Due to other State funds” account from 2010 to 2011 was due to
change in timing transfer of funds from quarterly last year to monthly this year resulting to a lower
month-end balance.
The $13 million (67%) decrease in “Due to other State funds” account from 2009 to 2010 was due to
the transfer of monies for the Stimulus Reed Act program deposited in fiscal year 2009 by the Federal
government in the Unemployment Insurance Trust Fund to support the administrative expenditures of
the Department.
The $2.2 billion (100%) increase in “Due to federal government” account from 2009 to 2010 was due
to advances/loan obtained to support the increasing claims for unemployment insurance.
Title XII Interest Fund - 1402
The $90 million (100%) increase in “Cash and cash equivalents” is due the establishment of this fund
in May 2011 under section 2108 of the Illinois Unemployment Insurance Act.
The $50 million (100%) increase in “Due to federal government” is due the accrued interest related to
the outstanding advances from January 1, 2011 to June 30, 2011 payable on September 30, 2011.
State of Illinois
Department of Employment Security
49
Analysis of Accounts Receivable
(Expressed in Thousands)
For financial reporting purposes for fiscal years 2011 and 2010, the Department classified its accounts
receivable in the following categories:
A. Nonshared Governmental Funds
Intergovernmental Receivables
Intergovernmental receivables represent reimbursements due from federal government to reimburse
the Department’s administrative expenditures. Intergovernmental receivables totaled $26,459 at
June 30, 2011 and $27,468 at June 30, 2010.
The Department does not calculate an allowance for uncollectible accounts for intergovernmental
receivables as the amounts are due from other governmental entities and receipt is reasonably assured.
In addition, the Department does not maintain records that age entirely the intergovernmental
receivable balance. Therefore, an account receivable aging schedule for intergovernmental receivable
has not been provided on the accompanying schedules.
B. Nonshared Proprietary Fund
Taxes Receivables
Taxes receivables represent unemployment taxes, known as contributions, owed by private, non-governmental
employers to the Trust Fund. The Department records the receivable based on actual
outstanding receivable plus estimate based on Budget’s Trust Fund Model and an allowance for
uncollectible accounts is recorded. Taxes receivables, net of allowance for uncollectible accounts,
totaled $626,853 at June 30, 2011 and $402,356 at June 30, 2010. Some of the methods used by the
Department to collect these receivables include statements of account, telephone collections,
determination and assessments, property liens, outside collection agencies, comptroller’s offset,
deferred payment agreements and bank levies.
Intergovernmental Receivables
Intergovernmental receivables represent reimbursements due from other State governments for
unemployment benefits paid to those states’ ex-employees by the Trust Fund. The receivables also
include amounts due from the federal government, for ex-military and federal employees, emergency
unemployment, and extended benefits compensation. Intergovernmental receivables totaled $72,748
at June 30, 2011 and $133,699 at June 30, 2010. For local and other state governments, the
Department sends quarter billings or statements to collect the receivables. For ex-military and federal
employees’ claims, the Department draws the funds for the receivable due.
State of Illinois
Department of Employment Security
50
Analysis of Accounts Receivable, Continued
(Expressed in Thousands)
B. Nonshared Proprietary Fund, continued
Other Receivables
Other receivables represent monies owed from claimants who received benefits which exceeded the
allowable amounts. The Department records the receivable based on actual outstanding overpayment
receivable plus an estimate of additional overpayments related to the period, and an allowance for
uncollectible accounts is recorded based on historical collections. Other receivables, net of allowance
for uncollectible accounts, totaled $192,783 at June 30, 2011 and $178,658 at June 30, 2010.
Methods used to collect these receivables include recoupment from future benefits, use of the
comptroller’s offset system, statements of indebtedness, deferred payment agreements, and referral to
the Illinois Attorney General.
State of Illinois
Department of Employment Security
51
Analysis of Accounts Receivable, Continued
(Relates to Proprietary Fund Only)
(Expressed in Thousands)
See the following schedules for an aging of the taxes receivables and other receivables balances.
Receivable for the quarter Receivable from prior Total Taxes
ended June 30, 2011 quarters Receiva b l e s
$ 546,953 $ 217,904 $ 764,857
Less allowance for uncollectible accounts (138,004)
$ 626,853
Taxes Receivables at June 30, 2011
Total
2007 and Other
Prior 2008 2009 2010 2011 Receivables
$ 100,212 $ 25,432 $ 50,036 $ 141,111 $ 288,977 $ 605,768
Less allowance for uncollectible accounts ( 412,985)
$ 192,783
Other Receivables at June 30, 2011
State of Illinois
Department of Employment Security
52
Analysis of Accounts Receivable, Continued
(Relates to Proprietary Fund Only)
(Expressed in Thousands)
Receivable for the quarter Receivable from prior Total Taxes
ended June 30, 2010 quarters Receivable
$ 340,349 $ 178,052 $ 518,401
Less allowance for uncollectible accounts (116,045)
$ 402,356
Taxes Receivables at June 30, 2010
Other Receivables at June 30, 2010
Total
2006 and Other
Prior 2007 2008 2009 2010 Receivables
$ 93,866 $ 30,847 $ 31,650 $ 62,270 $ 249,738 $ 468,371
Less allowance for uncollectible accounts (289,713)
$ 178,658
State of Illinois
Department of Employment Security
53
Cash Basis Schedules
Locally Held Special Programs Fund
For the Years Ended June 30, 2011 and 2010
Cash Cash
Balance Cash Cash Balance
July 1, 2010 Receipts Disbursements June 30, 2011
Trade Readjustment Act $ (42,064) $ 10,811,462 $ 10,845,953 $ (76,555)
Disaster Unemployment Assistance - 32,374 32,374 -
Alternative Trade Adjustment Act (1,404) 927,583 927,683 (1,504)
Total Special Program Fund $ (43,468) $ 11,771,419 $ 11,806,010 $ (78,059)
Cash Cash
Balance Cash Cash Balance
July 1, 2009 Receipts Disbursements June 30, 2010
Trade Readjustment Act $ (4,650) $ 1,858,302 $ 1,895,716 $ (42,064)
Disaster Unemployment Assistance - 25,890 25,890 -
Alternative Trade Adjustment Act (2,415) 708,841 707,830 (1,404)
Total Special Program Fund $ (7,065) $ 2,593,033 $ 2,629,436 $ (43,468)
June 30, 2011
June 30, 2010
Note: The negative cash balance is due to the timing of federal drawdown. The drawdowns were based
on direct deposits and debit cards issued in SFY 2011 and SFY 2010.
State of Illinois
Department of Employment Security
54
Agency Functions and Planning Program
Programs
The Illinois Department of Employment Security (Department) is a cabinet-level State government
agency under the leadership of a Director who is responsible for both general policy and day-to-day
agency management. The Offices of the Director include the Chief Financial Officer, Legal
Counsel/Federal Administration, EEO/Affirmative Action, and Information Services. Other functions are
carried out by the following two Bureaus:
Administration maintains the Department’s Policies and Procedures Manual online. It is
responsible for the provision of space, equipment and supplies. It conducts quality assurance and
compliance reviews and is responsible for the Department’s plans and program analyses. The
Bureau provides services for human resources, labor management relations, and workforce
development.
Program Support Operations employs the majority of the Department’s staff. It is responsible
for operating a statewide system of regional and local offices for the programmatic oversight for
the Unemployment Insurance, Employment Services and related programs. The Bureau
administers the employer payroll tax assessed for purposes of funding UI benefit payments. It is
responsible for audit and collections activity related to the UI tax, the processing of reports and
remittances, and providing customer service to employers with respect to their account with the
Department. The Bureau also provides strategic planning for the Department and economic
information and analysis for all interested parties.
The Department operates three major programs: Unemployment Insurance, Job Service, and Labor
Market Information.
Unemployment Insurance
The Unemployment Insurance (UI) program is designed to partially protect eligible workers against loss
of income during periods of unemployment and to contribute to overall economic stability. Like any
insurance system, UI is based on a reserve of funds. The reserve fund, the Unemployment Insurance
Trust Fund, is maintained through contributions collected by the Department from employers defined as
liable under the Illinois Unemployment Insurance Act. When a worker employed by a liable employer
becomes unemployed, he/she can file a claim for unemployment insurance benefits. If the worker meets
all the eligibility requirements set forth by the UI Act, he/she may receive benefits for the maximum
number of weeks payable under the law.
Employment Service
The Employment Services (ES) program is operated under the authority of the federal Wagner-Peyser
Act, as amended by the Job Training Partnership Act of 1983, and is part of the nationwide labor
exchange system. The central aim of ES is to speed re-employment through job matching and
employability development services. The Department maintains close contacts with employers to locate
job opportunities and to meet those labor needs as soon as possible with qualified job applicants. This is
accomplished by matching workers' skills to employers' job orders and referring qualified applicants for
employment interviews. If there are no suitable job openings listed for an individual or group of
applicants, the Department staff attempts to develop openings with employers known to use the skills
these applicants possess.
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Agency Functions and Planning Program, Continued
Programs, Continued
Labor Market Information
The Labor Market Information (LMI) program is also operated under the Wagner-Peyser Act and requires
the Department maintain a labor market program to monitor employment-related conditions and trends.
The LMI program staff collects, analyzes and distributes labor force and economic information. Using
direct surveys, administrative data, and related economic information, LMI describes past, monitors
current, and projects future economic trends in terms of indicators such as population, civilian labor force,
unemployment, employment by industry and occupation, wages, and hours worked. This information is
distributed through regular publications, workshops and seminars, and by the statewide network of Labor
Market Economists.
Plans
The Department prepares a number of compliance plans to obtain federal funding and to satisfy a
requirement of the State budget process.
Federal program plans and reports are submitted to the regional office of the U. S. Department of Labor's
Employment and Training Administration (ETA) or Veterans Employment and Training Service (VETS).
Plans cover one of two fiscal years: the Federal Fiscal Year (FFY) which runs from October 1 through
September 30; or the Program Year (PY) which covers July 1 through June 30, the same period as the
State Fiscal Year (SFY).
The State Quality Service Plan (SQSP) is the annual vehicle for requesting federal funds to administer the
Unemployment Insurance program for the coming FFY. The narrative portion of the SQSP includes a
summary of current-year program activities, program directions and initiatives for the next year; plans to
support ETA’s Strategic Plan objectives under the Government Performance and Results Act (GPRA) and
integrity initiative; corrective action plans to meet federal performance standards that were not met for a
given time period; and a discussion of any program and program review deficiencies with plans to address
them. The budget portion of the plan includes worksheets detailing the Department’s plan for distributing
the funds (by function and quarter) that ETA estimates the Department will receive for the coming fiscal
year. These estimates are based on preliminary federal budget requests.
ETA requires states to submit quarterly status reports to monitor the SQSP’s corrective action plans.
Focusing on action steps scheduled for completion during the report quarter, the narrative describes
actions taken to complete the steps or reasons steps were not completed with alternate plans and/or
completion dates.
The Jobs for Veterans Act of 2002 requires states to submit to VETS 5-year State Grant Applications and
annual Grant Modification Requests to support field staff who provide direct labor exchange services to
veterans and a small number of program administrators. Field staff – Disabled Veterans Outreach
Program (DVOP) specialists and Local Veterans Employment Representatives (LVER) – are assigned to
Department offices throughout the state to ensure that veterans receive employment assistance and the
priority of service mandated by federal regulations. In 2009, the Department submitted its most recent
five-year Grant Application which covers FFY 2010-2014. The grant application has been modified twice
for FFY 2011 and FFY 2012.
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Agency Functions and Planning Program, Continued
Plans, Continued
A State Grant Application and subsequent annual grant modification requests include a program plan (or
modification) and an annual budget plan. The program plan assesses the state’s labor market and the
representation of veterans in the civilian labor force; describes the manner in which the Department
provides or facilitates the delivery of employment, training, and placement services for veterans and the
role of DVOPs and LVERs in that effort; and discusses the Department’s plan for serving special target
groups e.g., disabled veterans, special disabled veterans, homeless veterans, veterans transitioning from
the military, etc.; and for implementing performance incentive awards for quality employment, training
and placement services. It also includes the annual performance goals the Department has negotiated with
the Illinois VETS Director and the VETS regional administrator. The budget plan details the distribution
of Illinois’ projected allocation to staff positions, incentives, and any other expenditures planned to
support or provide needed services to the state’s veteran population. The completed Grant Application
and modification requests are submitted to the VETS National Office via the Illinois VETS Director and
the VETS Regional Office.
In addition to the above, states may submit proposals for special initiatives to target needs not covered by
existing funding. If approved by the VETS National Office, states may receive funding in addition to their
allocations to cover associated expenditures. The Departments’ initiative provides employment services to
homeless veterans and other special populations, such as the disabled and the formerly incarcerated, in the
Chicago metropolitan area.
Federal Wagner-Peyser funding represents another significant portion of the Department’s budget. With
the passage of the Workforce Investment Act (WIA) of 1998, the annual Wagner-Peyser planning process
for basic labor exchange and labor market information services was incorporated into Illinois’
comprehensive five-year strategic plan which treats the many aspects of workforce development. The
Department and the Department of Commerce and Economic Opportunity prepare the plan jointly.
Illinois’ initial strategic plan expired in 2005 and, pending WIA’s reauthorization, was replaced by two
two-year interim plans. For the past several years, the U.S. Department of Labor’s Employment and
Training Administration has given states the option of submitting annual plan modifications and/or new
annual performance goals or of maintaining the status quo while Congress continues to debate
reauthorization
Once a stand-alone plan, the annual Migrant and Seasonal Farmworkers (MSFW) Plan, also known as the
Agricultural Services Plan, is now part of the Foreign Labor Certification Plan that includes H2A-related
activities. Basically, the MSFW plan describes how the Department, with Wagner-Peyser funding, will
make agricultural workers aware of and provide them with services that will improve their opportunities
for more stable employment and will do so in a manner that is qualitatively equivalent and quantitatively
proportionate to services provided to non-MSFWs. Elements of the outreach plan include the resources
the Department will make available for outreach and how those outreach activities will be conducted.
Since there is no discrete allocation for this program, the plan does not include a budget.
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Agency Functions and Planning Program, Continued
Plans, Continued
In addition to the plans required for federal funding, the Department is mandated by the Illinois Welfare
and Rehabilitation Services Planning Act (20 ILCS 10/1 et. seq.) to submit its Human Services Plan to the
General Assembly every two years. The plan contains a comprehensive narrative of products and services
the Department provides through the programs it administers, associated workload and budget for several
past, the current, and the coming State Fiscal Years, and descriptions of how the Department provides for
the best possible use of available resources and delivers its services in coordination with other state
agencies. In addition to submitting the plan to the General Assembly, the Department distributes copies to
the Governor’s Office and to the general public upon request.
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Average Number of Employees
(Not Examined)
The following table summarizes the average number of employees of the Department categorized by
divisional code at June 30, 2011, 2010 and 2009.
2011 2010 2009
Central Administration 135 146 130
Finance and Administration 267 261 263
Workforce Development 1,486 1,524 1,360
Total Employees 1,888 1,931 1,753
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Department of Employment Security
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Annual Cost Statistics
(Not Examined)
2011 2010
Average Benefit Paid Per Claimant $ 3 ,789 $ 3 ,210
Average Administrative Cost Per Claimant $ 2 06 $ 1 76
Note: Amounts were based on Federal fiscal year.
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Emergency Purchases
For the Two Years Ended June 30, 2011
In fiscal year 2011, the Department had no emergency purchases.
In fiscal year 2010, the Department had two emergency purchases to (a) One South State LLC for the
upgrade of the Department’s infrastructure to a fiber based solution amounting to $95,837, and (b) Direct
Response Resource for the production and mailing of important notice to claimants that must be delivered
immediately amounting to $42,577.
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Service Efforts and Accomplishments
(Expressed In Thousands)
(Not Examined)
2011 2010 2009
Activities and Performance
Unemployment Insurance (1)
Initial claims 806.65 999.32 1,154.46
Job Placement (2)
Entered employments 225.20 204.19 149.30
Job openings received 50.51 40.07 36.60
For the Years Ended June 30,
Notes:
(1) The Department provides temporary income assistance in the form of unemployment benefits to
individuals who qualify under federal and state laws.
(2) The Department provides match assistance for employees and specialized assessment and referral
services for job seekers.
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Unemployment Rates
(Not Examined)
The funding for the administration of the Department's programs is provided by the federal government
and is largely based upon State levels of unemployment. National and State unemployment rates by
quarter for calendar 2009 through 2011 as provided by the Bureau of Labor Statistics, are summarized
below:
1st 2nd 3rd 4th
2011
National 8 .90 % 9 .10 % 9 .10 % *
State 8 .90 8 .90 9 .80 *
2010
National 9.70 9.60 9.60 9.60 %
State 11.10 10.50 9.90 9.40
2009
National 8.20 9.30 9.70 10.00
State 8.60 9.90 10.60 11.00
Notes: (a) *Figures not available at time of report.
(b) These rates are seasonally adjusted and subject to revision.
Rate by Quarter