For the Year Ended:
State of Illinois
WILLIAM G. HOLLAND
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(217)782-6046 or TDD (217) 524-4646
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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
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 Systems financial statements or its net assets. As a result of the adoption of these standards the System now presents a section on Managements Discussion and Analysis which precedes the financial statements.
Our auditors state that the June 30, 2002 financial statements of the System are fairly presented.
WILLIAM G. HOLLAND, Auditor General
SPECIAL ASSISTANT AUDITORS