CSU expects reprimand over $1.6M health insurance contract

  • By Peter Sachs
  • Staff Writer
  • May 14, 2009 @ 8:00 AM

Chicago State University officials expect they’ll get another slap on the wrist from state auditors for failing to re-bid a $1.6 million contract for student health insurance – a series of events that board members are blaming on former president Elnora Daniel.

The contract should have been put up for competitive bidding from other health insurance providers a year ago, officials said, but instead it was quietly renewed for the current academic year. Despite that, the board voted 4-1 yesterday to extend the same contract through the next school year, until August 2010, after some discussion of the issue.

“I would hate to have another audit exception because the board failed to ask a question such as this for a $1.6 million contract that has been extended and whether we are legally within the bounds of what we can do,” Board Chairman Leon Finney said.

Board attorney Mark Dunn said the district had to pay the Chickering Group – a division of health insurance giant Aetna – since it has been providing coverage to students in the current school year.

Other officials agreed that CSU would probably get a reprimand from the state over the contract, but seemed to think there was no way around it.

“Approve the contract but ask that by the September board meeting, there is an explanation of what had happened, why this was not acted on by the beginning of the previous fiscal year,” Dunn said.

The state Auditor General has not yet publicly released its audit of Chicago State for the 2007-2008 fiscal year, which ended in June 2008. In 2006, the state auditor found that in the previous year, CSU had not properly filed its contracts with the state.

Finney asserted several times that the bind the university is in over student health insurance is because of former president Daniel, who left the school a year ago.

“I always indicated that (Interim President Frank Pogue) could take no responsibility nor be held accountable for any misdeeds or actions or failure of the previous administration,” Finney said.

But even after voicing concerns about the contract, Finney voted with the 4-1 majority in favor of extending it, largely unchanged, for the next school year. Student trustee Juwuan Sutton voted against it.

After the meeting, Finney was unable to say why he had voted for extending the contract when he and other officials recognized it was not properly bid. He said he thought he was simply ratifying the student health insurance for the current school year. A document in the board report listed the contract as running from August 2009 to August 2010.

Nancy Hall-Walker, the university’s general counsel, said it came down to a time crunch.

“We didn’t have time to bid it out,” she said. “We started the bid process but it would not be completed in time for the fall semester.”

Daily News Staff Writer Peter Sachs covers higher education. He can be reached at 773.362.5002, ext. 18, or peter [at] chitowndailynews [dot] org.

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