REPORT DIGEST

JUDGES’ RETIREMENT SYSTEM OF ILLINOIS

COMPLIANCE EXAMINATION

For the Year Ended:

June 30, 2004

Summary of Findings:

Total findings this report            0

Total findings prior report          0

Repeated findings                      0

Release Date:

April 28, 2005 

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 is also available on

the worldwide web at

http://www.state.il.us/auditor

INTRODUCTION

      This digest covers our compliance examination of the Judges’ Retirement System (System) for the year ended June 30, 2004.  A financial audit covering the year ending June 30, 2004 was issued separately.

      It should be noted that, pursuant to the Illinois Pension Code, investments of the System are managed by the Illinois State Board of Investment.

      There were no material findings of noncompliance disclosed during our testing.  We commend the System for maintaining effective internal controls.

PENSION BONDS

     On April 7, 2003, Governor Rod Blagojevich signed House Bill 2660 into law as Public Act 93-0002.  This new law authorized the State of Illinois to issue $10 billion of General Obligation Bonds for the purpose of making contributions to designated retirement systems, which included the Judges Retirement System.  

     On July 1, 2003, the System received an allocation of $141,955,483 from the pension bond proceeds.  The System deposited the allocation into the master trust account with the Illinois State Board of Investments (Board) on July 2, 2003.  The Board estimated the return of the pension bond proceeds earned an annual rate of return of 15.39% during the year ended June 30, 2004.            

AUDITORS’ OPINION

      We conducted a compliance attestation examination of the System for the year ended June 30, 2004 as required by the Illinois State Auditing Act.  A financial audit covering the year ending June 30, 2004 was issued separately.

_____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:RPU:pp

SPECIAL ASSISTANT AUDITORS

      McGladrey & Pullen LLP were our special assistant auditors for this audit.

{Financial Information and Activity Measures are summarized on the reverse page.}

OPERATING STATEMENT ANALYSIS

FY 2004

FY 2003

REVENUES: Contributions – Participants.............................

Contributions – appropriations & other............

Total Contributions...................................

Net investment income...................................

Net appreciation  (depreciation) in fair

  value of investments.....................................

            Interest earned on cash balances.....................

                         Total Revenue.........................................

EXPENSES:  Benefits - Retirement annuities..........................      

Benefits - Survivors' annuities...........................

                             Total Benefits..........................................

Refunds...........................................................

            Administration..................................................

            Total Expenses..........................................

Revenues over (under) expenses......................

$  13,720,911 

178,593,095 

$192,314,006 

8,350,649

65,525,769

 136,396 

$266,326,820 

$  47,965,512  

  12,947,383 

$  60,912,895 

439,575

       448,087 

$  61,800,557 

$204,526,263

$  12,904,997

  31,440,10

$  44,345,10

7,045,74

(7,429,253)

       157,388

$  44,118,983 

$  44,507,057 

  12,207,50

$  56,714,562 

582,46

       427,686  

$  57,724,717

$(13,605,734

ANALYSIS OF PLAN INVESTMENTS

FY 2004

FY 2003

Balance at beginning of year, at fair value................................

Net cash transferred to (from) investments..............................

Net investments (1).......................................................

Investment income – interest, dividends and other...................

Investment expenses.............................................................

Net Investment income (2).............................................

Net realized gain (loss) on sale of investments........................

Net unrealized (loss) on investments......................................

Net appreciation (depreciation) in fair

  value of investments (3)...............................................

Total net investment income (loss) (4), (2) + (3)...............

Balance at end of year, at fair value (1) + (4)..................

$317,541,091 

 129,955,483

$447,496,574 

9,238,465

     (887,816)

$    8,350,649 

36,057,122

  29,468,647 

$  65,525,769

$  73,876,418

$521,372,992

$332,424,596 

 (14,500,000)

$317,924,596 

7,732,632

    (686,884)

$   7,045,748

(25,283,941)

  17,854,688

$ (7,429,253)

$    (383,505)

$317,541,091

SELECTED ACCOUNT BALANCES

JUNE 30, 2004

JUNE 30, 2003

Cash....................................................................................

Receivables..........................................................................

Investments, at fair value......................................................

Property and equipment, net of accumulated depreciation........

Liabilities..............................................................................

Net Assets Held in Trust for Benefits....................................

Actuarial Accrued Liability....................................................

Unfunded Liability................................................................

$  13,326,833 

536,406

521,372,992

1,704

          (658,112)

$    534,579,823  

$(1,156,092,951)

$   (621,513,128)

$ 7,324,152 

5,362,571

317,541,091

2,306

          (176,560)

$   330,053,560

$(1,076,231,965)

$   (746,178,405)

SUPPLEMENTARY INFORMATION

FY 2004

FY 2003

Number of System employees...............................................

Retirees and beneficiaries receiving benefits (unaudited).........

Total members (unaudited)...................................................

Total active members (unaudited)..........................................

Total return on investments (unaudited)..................................

7

873

941

906

16.4%

7

864

962

920

.3%

EXECUTIVE SECRETARY

During Audit Period:  Robert V. Knox

Currently:  Robert V. Knox