REPORT DIGEST

STATE EMPLOYEES’
RETIREMENT SYSTEM
OF ILLINOIS

FINANCIAL AUDIT

For the Year Ended:
June 30, 2002

Release Date:
January 15, 2003

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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
Attn: Records Manager
Iles Park Plaza
740 E. Ash Street
Springfield, IL 62703

(217)782-6046 or TDD (217) 524-4646

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 $6,617 million at June 30, 2002. The System’s funded ratio at that date was 53.7%.
  • Pursuant to the Illinois Pension Code, the Illinois State Board of Investment (ISBI) manages the investments of the System. The ISBI Commingled Fund had a decline in its investment portfolio subsequent to year-end due to turbulent market conditions. At September 30, 2002, the ISBI Commingled Fund had incurred an approximate $880 million (11.1%) decrease in its investment portfolio due to declines in the domestic and international equity markets.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unfunded Liability at June 30, 2002 Totals $6,617 million

 

 

 

 

$880 million decrease in the commingled investment portfolio from June 30, 2002 to September 30, 2002

 

 

 

 

 

 

INTRODUCTION

This digest covers our financial audit of the System for the year ended June 30, 2002. A compliance audit covering the year ending June 30, 2002 is being issued separately.

It should be noted that, pursuant to the Illinois Pension Code, the Illinois State Board of Investments manages the investments of the System.

UNDERFUNDING OF THE SYSTEM

The actuarial accrued liability was valued at $14,291 million at June 30, 2002. The actuarial value of assets (at market) totaled approximately $7,674 million at June 30, 2002. The difference between the liability and the assets of $6,617 million reflects the unfunded liability of the System at June 30, 2002. The State Employees’ Retirement System had a funded ratio of 53.7% at June 30, 2002.

MARKET VALUE DECLINE

The System had a decline in its investment portfolio subsequent to June 30, 2002. Pursuant to the Illinois Pension Code, the Illinois State Board of Investment (ISBI) manages the investments of the System. The ISBI Commingled Fund had a decline in its investment portfolio subsequent to year-end due to turbulent market conditions. At September 30, 2002, the ISBI Commingled Fund had incurred an approximate $880 million (11.1%) decrease in its investment portfolio due to declines in the domestic and international equity markets.

NEW ACCOUNTING PRONOUNCEMENTS

The System adopted Government Auditing Standard Board (GASB) Statements 34, 37 & 38. The adoption of these standards, effective July 1, 2001, had no impact on the System’s financial statements or its net assets. As a result of the adoption of these standards the System now presents a section on Management’s Discussion and Analysis which precedes the financial statements.

AUDITORS' OPINION

Our auditors state that the June 30, 2002 financial statements of the System are fairly presented.

WILLIAM G. HOLLAND, Auditor General

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