Raleigh, N.C. — State Auditor Les Merritt said Thursday his office would conduct a performance audit of the state employee health insurance plan, which experienced a financial meltdown in recent months.

Lawmakers thought the State Health Plan had a $50 million surplus until learning last month that it actually had a $65 million shortfall. Analysts have projected a $250 million deficit within a year.

“This audit was prompted by the $115,000,000 disparity between the initial forecast and the current projection and will focus on oversight and financial forecasting” Merritt said in a statement.

The State Auditor's Office has received numerous phone calls requesting an audit of the plan, he said.

The State Health Plan provides medical insurance for almost 650,000 state workers, public school teachers and retirees. It also administers N.C. Health Choice, which provides coverage for 122,000 uninsured children statewide.

Lawmakers blamed a combination of rising health care costs, mismanagement and poorly founded projections for souring the health plan's finances so quickly. They had suggested making state employees pick up some of the tab for the deficit through higher co-pays, but they backed off that proposal after intense lobbying from state workers and public school teachers.

The plan's administrator was fired early this month because the plan failed to meet its fiscal goals.