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REPORT DIGEST GENERAL ASSEMBLY RETIREMENT SYSTEM, STATE OF ILLINOIS FINANCIAL AUDIT For the Year Ended: June 30, 2007 Release Date: March 4, 2008
State of Illinois Office of the Auditor General WILLIAM G. HOLLAND AUDITOR GENERAL To obtain a copy of the
Report contact: Office of the Auditor
General Iles Park Plaza 740 E. Ash Street Springfield, IL 62703 (217) 782-6046 or TTY (888) 261-2887
This Report Digest and the
Full Report are also available on the worldwide web at http://www.state.il.us/auditor |
SYNOPSIS
¨
The unfunded liability of the General Assembly Retirement System,
State of Illinois (System) was $144.7 million at June 30, 2007. The System’s funded ratio at that date was
37.6%.
¨
The System did not have an adequate segregation of duties for the
approval and payment of contracts. ¨ Public Act 94-0004 (Act) became law on June 1, 2005 and established specific dollar amounts to be contributed to the System by the State for fiscal years 2006 and 2007. {Financial data is summarized on the reverse page} |
GENERAL ASSEMBLY RETIREMENT SYSTEM, STATE OF ILLINOIS
FINANCIAL
AUDIT
|
OPERATING
STATEMENT ANALYSIS |
FY
2007 |
FY
2006 |
|
REVENUES: Contributions - Participants........................... Contributions – Employer /
Appropriations........ Total Contributions......................................... Investment Income - Appreciation in Fair
Value. Investment Income – Net Investments Income Interest Earned on Cash Balances..................... Total Revenues............................................... EXPENSES: Benefits........................................................... Refunds...........................................................
Administrative Expenses.................................... Total Expenses...............................................
Revenue Over / (Under) Expenses.................... |
$ 1,703,344 5,470,429 $ 7,173,773 10,914,976 1,933,225 142,784 $20,164,758 $14,719,292 297,790 220,333 $15,237,415 $ 4,927,343 |
$ 1,491,811 4,175,390 $ 5,667,201 5,786,233 1,957,707 129,049 $13,540,190 $14,065,760 187,917 304,723 $14,558,400 $(1,018,210) |
|
INVESTMENT
SUMMARY – (All investments held in the
Illinois State Board of Investment commingled fund at fair value) |
JUNE
30, 2007 |
JUNE
30, 2006 |
|
Foreign Obligations.................................................................. Corporate
Obligations.............................................................. Common Stock & Equity Funds............................................... Preferred Stock....................................................................... Foreign Equity Securities.......................................................... Hedge Funds........................................................................... Real Estate Investments............................................................ Private Equity.......................................................................... Money Market Instruments...................................................... Infrastructure Funds................................................................. Forward Foreign Currency Contracts......................................
Total Investment Portfolio................................................... Other ISBI Assets Less Liabilities............................................
ISBI Net Assets................................................................ Investments owned by other retirement systems,
SERS & JRS..
General Assembly Retirement System Investments............... |
$ 1,184,275,884 72,189,687 1,228,970,012 6,059,409,027 1,865,020 1,365,647,941 496,404,578 1,189,614,911 563,366,021 535,699,912 108,436,449 (108,696) $12,805,770,746
(253,574,585) $12,552,196,161 (12,468,331,219) $ 83,864,942 |
$ 1,110,919,988 104,455,671 1,382,574,163 5,369,124,032 1,057,334 1,113,268,102 416,462,183 1,134,025,154 482,264,036 320,641,552 0 26,145 $11,434,818,360
(118,333,506) $11,316,484,854 (11,237,468,113) $
79,016,741 |
|
ADMINISTRATIVE EXPENSES |
FY
2007 |
FY
2006 |
|
Retirement, Insurance & Social Security................................... Contractual Services................................................................ Electronic Data Processing....................................................... Printing.................................................................................... Telecommunication.................................................................. Travel...................................................................................... Commodities........................................................................... Operation of Automotive Equipment........................................ Provision for Depreciation........................................................ Total Administrative Expenses.......................................... |
$ 96,923 41,553 76,276 4,663 1,408 993 886 273 314 1,106 (4,062) $220,333 |
$172,579 61,091 65,571 5,380 1,570 1,443 1,608 401 0 832 (5,752) $304,723 |
FUNDING PROGRESS
|
JUNE 30, 2007
|
JUNE 30, 2006
|
|
Actuarial Accrued Liability......................................................... Actuarial Value of Assets........................................................... Unfunded Actuarial Accrued Liability......................................... Funded Ratio............................................................................. |
$231,913,988 87,182,175 $144,731,813 37.6% |
$221,713,300 82,254,832 $139,458,468 37.1% |
EXECUTIVE SECRETARY
|
|
|
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During Engagement Period: Tim Blair, Acting Currently: Tim Blair, Acting |
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Unfunded liability at June 30, 2007 totals $144.7 million
Lack of segregation of duties identified in
approving and paying of contracts
State
contributions for fiscal year 2007 were based on a statutorily set amount |
INTRODUCTION
This digest covers our
financial audit of the General Assembly Retirement System, State of Illinois
(System) for the year ended June 30, 2007.
A report on the results of our compliance attestation examination for
the year ending June 30, 2007 is being issued separately. UNDERFUNDING OF THE SYSTEM
The actuarial accrued
liability was valued at $231.9 million at June 30, 2007. The actuarial value of assets (at fair
value) totaled approximately $87.2 million at June 30, 2007. The difference between the liability and
the assets of $144.7 million reflects the unfunded liability of the System at
June 30, 2007. The System had a
funded ratio of 37.6% at June 30, 2007. FINDING,
RECOMMENDATION AND SYSTEM RESPONSE
The System did not have an adequate
segregation of duties for the approval and payment of contracts. During our testing of contractual
expenditures, we identified 2 out of 3 contracts (66%), totaling $25,000,
where the Administrative Services Manager signed off for both his position
and also for the Executive Secretary indicating approval of the
contract. In
addition, we found the Administrative Services Manager approved the invoice
vouchers for payment on both of the contracts noted as exceptions. System management indicated
they were not aware of the lack of segregation of duties when the
Administrative Services Manager approves / signs for himself and the
Executive Secretary on contracts and payments. Because of the
significance of the lack of segregation of duties noted, we are considering
this to be a significant deficiency in the design of the System’s internal
control.
We recommended someone
other than the Administrative Services Manager review and sign for the
Executive Secretary in those instances when the Executive Secretary is
unavailable to approve contracts and payments when both the Administrative
Services Manager and Executive Secretary signatures are required. (Finding
07-1, page 22) System management concurred
with the recommendation.
LEGISLATION AFFECTING THE SYSTEM
Public Act 94-0004 (Act) became law June 1, 2005 and
established specific dollar amounts to be contributed to the System by the
State for fiscal years 2006 and 2007 as opposed to the State contribution
being calculated based on the existing funding formula. The System calculated that the State
contribution was reduced approximately $1.1 million for fiscal year 2007 as
compared to what would have been required under the funding formula. State required contributions will be
higher in future years to make up for the two-year funding reduction, as the
overall goal of 90% funding in fiscal year 2045 was unchanged by the Act.
AUDITORS'
OPINION Our auditors state the June 30, 2007
financial statements of the System are fairly presented. ____________________________________ WILLIAM G. HOLLAND, Auditor General WGH:RPU:pp SPECIAL
ASSISTANT AUDITORS McGladrey
& Pullen LLP were our special assistant auditors for this audit. |