EUTF Could Rehire Firm With Poor Track Record
The state is considering whether to rehire a Los Angeles firm that took four times as long as it should have to do a financial evaluation of the Hawaii public-employee health insurance trust fund.
A valuation report (which looks at assets and liabilities) of the Hawaii Employer-Union Health Benefits Trust Fund is required every two years, and one is due for the current budget year ending June 30. But the firm only released its — covering 2009 — last month.
Now, as its contract comes up for renewal, the company says it can turn around a new report by December, one-fourth the time it took to produce the 2009 report.
At a monthly trustee meeting Wednesday, EUTF Administrator Barbara Coriell recommended the board again use consulting firm for its fiscal 2011 report. She cited “an advantage to staying with the same company.”
But given Aon’s track record, board chairman Dean Hirata said he had concerns about using them again.
“I have real concerns with Aon saying they can complete it in six months when they took two years to complete the last one,” Hirata told the board.
The 2009 report has also raised red flags with the Hawaii State Auditor which would like to “test the completeness and accuracy of the underlying data that was provided from EUTF to Aon,” according to an EUTF accounting operations report.
The reports are necessary for the state and counties to determine whether the fund is producing a good rate of return.
The 2009 report showed that the EUTF, which covers approximately 200,000 active and retired state and county employees and their dependents, is facing an estimated $14 billion in unfunded liabilities. The liability grew by more than $5 billion between 2007 and 2009.
Coriell said Aon was not solely to blame for taking so long to produce the 2009 report. The company had to wait for data from the state and counties. She said Aon has assured her that the firm could complete the new report before the end of the calendar year. Coriell did not say how much Aon’s current contract is worth.
The board did not make a decision on the contract, since the agenda item was for informational purposes only. Coriell said she wanted to let the board know the situation and would recommend offering Aon a contract at the July meeting. (Because Aon has an existing contract, the new work could fall under a so-called supplemental contract, which would not need to go through the formal RFP process.)
Hirata asked Coriell to research alternative options before the next meeting should the board choose to issue an RFP for the work.
