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REPORT DIGEST STATE EMPLOYEES’ RETIREMENT SYSTEM OF ILLINOIS COMPLIANCE
EXAMINATION For the Year Ended: June 30, 2006 Summary of Findings: This report 1 Prior report 1 Repeated findings 0 Release Date: April 17, 2007
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.auditor.illinois.gov |
SYNOPSIS ¨ Statements of Economic Interests have not been filed for all System employees having responsibility for formulation, negotiation, issuance or execution of contracts. {Financial Information and Activity Measures are summarized on the reverse page.} |
STATE EMPLOYEES' RETIREMENT
SYSTEM OF ILLINOIS
INFORMATION
FROM COMPLIANCE EXAMINATION
YEAR
ENDED JUNE 30, 2006
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OPERATING STATEMENT ANALYSIS |
FY 2006
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FY 2005
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Contributions - State agencies & appropriations.... Total Contributions............................................... Net investment income.................................................. Net
appreciation in fair value of investments............ Interest
earned on cash balances................................ Total Revenue ....................................................... EXPENSES: Benefits - Retirement annuities......................................... Benefits -
Survivors' annuities......................................... Benefits - Disability benefits............................................ Benefits - Lump-sum benefits.......................................... Total Benefits............................................................ Refunds................................................................................ Administration.................................................................... Total Expenses.......................................................... Excess of revenue over
expenses.................................... |
$ 214,108,896
210,499,791 $
424,608,687 264,013,416 840,493,512 8,724,784 $1,537,840,399 $ 985,503,023 61,100,647 40,271,558 23,710,733 $1,110,585,961 13,410,048 8,139,278 $1,132,135,287 $ 405,705,112 |
$ 209,334,207
427,434,612 $ 636,768,819 227,422,797 721,856,118 4,300,338 $1,590,348,072 $ 935,677,837 57,542,913 36,828,758 33,920,915 $1,063,970,423 14,105,301 8,311,269 $1,086,386,993 $ 503,961,079 |
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FY 2006
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FY 2005
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$10,271,356,795 (721,000,000) $
9,550,356,795 292,393,986
(28,380,570) $ 264,013,416 734,112,782 106,380,730 $ 840,493,512 $ 1,104,506,928 $10,654,863,723 |
$
9,840,077,880 (518,000,000) $
9,322,077,880 250,491,153
(23,068,356) $ 227,422,797 476,037,549 245,818,569 $
721,856,118 $ 949,278,915 $10,271,356,795 |
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iNVESTMENTS USED FOR Benefits and Expenses |
FY 2006 |
FY 2005 |
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State
agencies & appropriations....................
Total Contributions (5)............................... DEDUCTIONS:
Benefits..................................................................... Refunds.................................................................. Administration...................................................... Total Deductions (6).................................... Investments used to Pay
Benefits and Expenses) (5)-(6)...................... |
$ 214,108,896 210,499,791 $ 424,608,687 $1,110,585,961 13,410,048 8,139,278 $1,132,135,287 $(707,526,600) |
$ 209,334,207 427,434,612 $ 636,768,819 $1,063,970,423 14,105,301 8,311,269 $1,086,386,993 $(449,618,174) |
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SUPPLEMENTARY
INFORMATION |
FY 2006
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FY 2005
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Number of System
employees.................................................................... Retirees and beneficiaries currently receiving
benefits (unaudited).... Total members (unaudited)......................................................................... Total
active members (unaudited)............................................................. Total
return on investments (unaudited)................................................. |
82 54,868 89,447 68,075 11.0% |
81 54,828 91,423 69,163 10.1% |
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EXECUTIVE SECRETARY
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During Audit Period: Robert V. Knox (Until May 31, 2006); Tim
Blair, Acting (beginning June 1, 2006) Currently: Tim Blair, Acting |
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Two employees
failed to file Statements of Economic Interests
Funding legislation
was changed to reduce the required State contributions |
INTRODUCTION This
digest covers our compliance examination of the State Employees’ Retirement
System (System) for the year ended June 30, 2006. A financial audit covering the year ending June 30, 2006 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.
FINDING,
CONCLUSION, AND RECOMMENDATION
Statements
of economic interests not filed for required employees
During our testing, we
noted two employees had not filed Statements of Economic Interests as of
either May 1, 2005 or May 1, 2006.
Both of these individuals’ either have responsibilities that require
them to be, or have potential to be involved in having direct responsibility for the
formulation, negotiation, issuance or execution of contracts. The Illinois Governmental Ethics Act requires State
employees who have direct supervisory authority over, or direct
responsibility for the formulation, negotiation, issuance or execution of
contracts entered into by the State in the amount of $5,000 or more to file a
verified written Statement of Economic Interests. System management indicated the required Statements of Economic Interests were not filed with the Secretary of State by all employees due to a difference in interpretation of the requirement. We recommended the two employees file
Statements of Economic Interests on an annual basis. We also recommended the System should
determine whether any other employees may be involved in the formulation or
negotiation of contracts. (Finding 1, page 9) System management agreed with our recommendation and
indicated they will implement the recommendation. FUNDING
LEGISLATION
In June 2005, Public Act 94-0004 became
law. This legislation further
modified the funding plan of the System by reducing the amount of required
employer contributions for fiscal year 2006 and 2007 that would have
otherwise been required under the previous funding legislation. The State
contributions decreased approximately $217 million from $427 million in
fiscal year 2005 to $210 million in fiscal year 2006. The required State
contributions for fiscal years 2008 through 2010 will then be increased
incrementally as a percentage of the participant payroll so that by fiscal
year 2011 the State is contributing at the required level contribution rate
to achieve the financing objective of a 90% funded status by the end of
fiscal year 2045. AUDITORS’ OPINION We conducted a compliance attestation
examination of the System for the year ended June 30, 2006 as required by the
Illinois State Auditing Act. ____________________________________ WILLIAM
G. HOLLAND, Auditor General WGH:RPU:pp SPECIAL ASSISTANT AUDITORS
McGladrey & Pullen, LLP were our special assistant auditors for this engagement. |
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