An independent audit of Ketchikan School District health insurance claims found that the Borough of Ketchikan Gateway’s accounting was consistent with amounts reported by the insurance broker for the past five years.
Arjava Consulting’s Traci Schact presented the results of her audit to the Ketchikan School Board on Wednesday.
Both the borough and the district are self-insured, with Meritain as the insurance administrator and USI as the insurance broker. The borough pays insurance claims for both entities under a 1999 agreement, with the district reimbursing the borough for the cost of those claims.
Although the district has historically owed the borough for unpaid debts each year, in recent years the size of that debt has grown, reaching more than $4 million in total at the end of last year. The district subsequently took steps to avoid further worsening the deficit and hired an independent auditor to examine whether any structural deviations had contributed to this deficit in order to inform future Medicare budgeting.
Schact explained Wednesday that his audit included interviews with district and borough finance staff and representatives from Meritain and USI, as well as the borough and the district’s external auditors. She analyzed Meritain’s reports on claims, stop-loss payments and expenses and compared them to the borough’s accounting for fiscal years 2018 to 2022.
“The borough made a few errors in accounting for health plan activity; however, these errors were either corrected in a subsequent plan year or were not material,” Schact explained Wednesday.
For example, some of these errors were related to delays in processing stop loss redemptions within a single fiscal year, which were eventually corrected.
The total amount of these errors was not material, she explained, amounting to approximately $193,000 over the five-year period, or less than 1% of claims, stop-loss payments and expenses declared combined during this period.
Chairman of the board, Stephen Bradford, asked Schact on Wednesday to confirm that he understood the result correctly: “There have been differences in the amounts reported. These differences are mainly the result of timing and would ultimately be corrected over the five years that you have You have found a sum total of some differences in the two reports, but from an auditor’s perspective the amount of the difference is not significant Is this an accurate description ?”
“Absolutely,” Schact said.
The council had no further questions for him and acknowledged his hard work.
“I want to express my appreciation for your willingness to step in and do a very thorough and thorough job on our behalf,” Bradford said. “Thank you so much.”