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San Francisco HSS receives clean audit; board accepts FY2015 financial statements
Summary
KPMG issued an unmodified (clean) opinion on HSS financial statements for year ending 6/30/2015; auditors reported no deficiencies and the board voted to accept the audited statements after staff explained drivers of a $11.3M net asset decrease.
KPMG presented an unmodified (clean) opinion on the City and County of San Francisco Health Service System's financial statements for the year ended June 30, 2015, and the Health Service Board voted Dec. 9 to accept the statements.
"We had performed the audit of the financial statements of HSS in accordance with generally accepted auditing standards ... the result of that report is an unmodified or clean opinion," KPMG manager Jewel Lee told commissioners during a scheduled audit presentation. Lee also said the required Report on Internal Control over Financial Reporting identified no deficiencies.
Deputy Director and CFO Pamela Levin and principal administrative analyst Yuri Gologorski explained the financial drivers behind the numbers: a $17.1 million decrease in net assets for the Blue Shield plan driven primarily by pharmacy specialty drugs and unfavorable facility/medical claims experience, a smaller $0.8 million decrease in the City Plan, and a $6.6 million favorable offset from dental and other gains. Levin said a change in the unearned contribution policy and use of stabilization reserves also affected cash and receivable balances.
KPMG highlighted several financial statement movements in its presentation: a 0.64% increase in the reserve for claims, a 40% rise in premiums payable (largely due to Blue Shield and Delta Dental rate and membership changes), and a roughly 96% decrease in unearned contributions after a 2015 collection-policy change.
"I don't want you to just rush by that — we have an unmodified or clean audit of our financial statements," President Scott emphasized after the audit report was delivered.
After questions about the relative role of membership growth versus per-claim cost increases, the board moved and seconded a motion to accept the audited financial statements; the motion passed by voice vote.
Levin also presented fiscal-year projections through June 2016: a projected trust-fund balance decline from $81.5 million (June 2015) to $78.7 million (projected June 2016), driven by reserve use and the need to subsidize 2015–16 rates, and noted ongoing monitoring and planned February reviews with actuarial consultants and AON on reserve retooling.
Hard copies of the auditors' report are available at the HSS office and the statements were posted on myhss.org, Levin said. The board requested follow-up detail on actuarial allocations, performance-guarantee balances and the corrected tables provided at the meeting.
