A state audit has determined North Carolina's health insurance program for state employees and retirees was set up without effective outside oversight.

State Auditor Les Merritt's office said Wednesday the real power to run the North Carolina State Health Plan rests with legislators.

That may violate the constitution's separation of powers and leave the executive who runs daily operations without appropriate oversight.

Legislators were told last month the plan could run out of cash to pay claims from its 650,000 members by late 2008, and that it would need at least another $100 million.

A spokesman for House Speaker Joe Hackney said a legislative oversight committee hasn't reviewed the audit. The plan's executive administrator said he and his staff didn't dispute the report.