REPORT DIGEST

STATE UNIVERSITIES RETIREMENT SYSTEM

FINANCIAL AUDIT

For the Year Ended:

June 30, 2004

Release Date:

February 2, 2005

State of Illinois

Office of the Auditor General

WILLIAM G. HOLLAND

AUDITOR GENERAL

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Office of the Auditor General

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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

SYNOPSIS

¨      The unfunded liability of the System was $6,492 million at June 30, 2004.  The System’s funded ratio at that date was 66%.

¨      Approximately $1.4 billion of bond proceeds were deposited in the System's investment account on July 2, 2003 as a result of P.A. 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.

Unfunded Liability at June 30, 2004 totals $6,492 million

$1.4 billion of bond proceeds deposited in System's investment account on July 2, 2003

INTRODUCTION

      This digest covers our financial audit of the System for the year ended June 30, 2004.  A compliance examination report covering the year ending June 30, 2004 will be issued separately. 

UNDERFUNDING OF THE SYSTEM

      The actuarial accrued liability was valued at $19,078 million at June 30, 2004.  The actuarial value of assets (at market) totaled approximately $12,586 million at June 30, 2004.  The difference between the liability and the assets of $6,492 million reflects the unfunded liability of the System at June 30, 2004.  The State Universities Retirement System had a funded ratio of 66% at June 30, 2004.

PENSION BOND FUNDING

      In fiscal year 2003, Governor Rod Blagojevich and the General Assembly agreed to issue $10 billion of General Obligation Bonds for the purpose of making contributions to designated retirement systems.  The State Universities Retirement System was one of the designated retirement systems.

      The State Universities Retirement System received an allocation of bond proceeds equal to $1,431,994,224 on July 1, 2003.  The monies were deposited into its Master Trust account with The Northern Trust on July 2, 2003.

AUDITORS' OPINION

      Our auditors state the June 30, 2004 financial statements of the System are fairly presented in all material respects.

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WILLIAM G. HOLLAND, Auditor General

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SPECIAL ASSISTANT AUDITORS

      BKD, LLP were our special assistant auditors for this audit.