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REPORT DIGEST STATE EMPLOYEES’ RETIREMENT SYSTEM OF ILLINOIS COMPLIANCE
EXAMINATION For the Year Ended: June 30, 2004 Summary of Findings: Total this report 2 Total prior report 1 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
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SYNOPSIS ¨ The System was not maintaining time sheets for its employees in compliance with the State Officials and Employees Ethics Act.
{Financial Information and Activity Measurers are summarized on the reverse page.} |
STATE EMPLOYEES' RETIREMENT
SYSTEM OF ILLINOIS
INFORMATION
FROM FINANCIAL AUDIT AND COMPLIANCE EXAMINATION
YEAR ENDED JUNE 30, 2004
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OPERATING STATEMENT ANALYSIS |
FY 2004 |
FY 2003 |
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Contributions - State
agencies & appropriations 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........................... Benefits - Disability
benefits.............................. Benefits - Lump-sum death benefits................... Total Benefits............................................ Refunds.......................................................... Administration................................................. Total Expenses.......................................... Revenues
over (under) expenses....................... |
$ 199,826,465 1,864,673,411 $2,064,499,876 159,147,084 1,261,941,570 823,886 $3,486,412,416 $ 879,638,039 54,186,031 33,482,302 10,894,638 $ 978,201,010 12,442,600 7,693,348
$ 998,336,958 $2,488,075,458 |
$ 285,209,344 396,067,236 $ 681,276,580 163,852,238 (150,507,775) 1,675,301 $ 696,296,344 $ 733,969,930 50,724,761 32,868,545 13,923,360 $ 831,486,596 28,369,787 8,221,236 $ 868,077,619 $(171,781,275) |
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FY
2004
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FY
2003
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$7,436,093,948 982,895,278 $8,418,989,226 176,024,267 (16,877,183) $ 159,147,084 687,466,890 574,474,680 $1,261,941,570 $1,421,088,654 $9,840,077,880 |
$7,543,749,485 (121,000,000) $7,422,749,485 179,817,518 (15,965,280) $ 163,852,238 (579,743,925) 429,236,150 $(150,507,775) $ 13,344,463 $7,436,093,948 |
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SELECTED ACCOUNT BALANCES |
JUNE 30, 2004 |
JUNE 30, 2003 |
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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................................................................ |
$ 66,642,027 85,035,275 9,840,077,880 3,152,081 (4,720,389) $ 9,990,186,874 (18,442,664,834) $
(8,452,477,960) |
$ 36,049,053 31,658,281 7,436,093,948 3,087,685
(4,777,551) $ 7,502,111,416 (17,593,980,039) $(10,091,868,623) |
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SUPPLEMENTARY INFORMATION |
FY 2004
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FY 2003
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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).................................. |
81 54,298 93,418 70,621 16.4% |
74 54,375 93,517 70,192 .3% |
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EXECUTIVE SECRETARY |
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During Audit
Period: Robert V. Knox Currently: Robert V. Knox |
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System
employees did not maintain time sheets as required by the Act System received
$1,385,895,278 from pension bond proceeds and forwarded it on to ISBI for
investment |
INTRODUCTION This
digest covers our compliance examination of the State Employees’ 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.
FINDINGS,
CONCLUSIONS, AND RECOMMENDATIONS
NONCOMPLIANCE WITH THE STATE
OFFICIALS AND EMPLOYEES ETHICS ACT The State Employees’ Retirement System (System) was not
maintaining time sheets for its employees in compliance with the State
Officials and Employees Ethics Act (Act).
Employees’ time was tracked using a “negative” timekeeping system
whereby the employee is assumed to be working unless noted otherwise. The Act requires the System to adopt personnel policies
consistent with the Act. The Act
notes policies shall require State employees to periodically submit time
sheets documenting the time spent each day on official State business. No time sheets documenting the time spent
each day on official State business were maintained. System officials stated they relied on advice from the
Governor’s Office staff who initially stated that agencies using the
Department of Central Management Services payroll system, which the System
uses, would be in compliance with the Act. We recommended the System amend its policies to require
employees to maintain time sheets in compliance with the Act. (Finding 04-2, page 9) System management concurred with the recommendation and indicated that the Department of Central Management Services has not yet implemented specific guidelines regarding the newly required time sheets. System management went on to note they would continue to pursue the development of a time keeping system that will comply with the new Act without being an onerous burden to the employees.
OTHER FINDING The other finding was less significant and is reportedly being given attention by the System. We will review the System’s progress toward the implementation of our recommendations in our next examination. Mr. Robert V. Knox, Executive Secretary provided the System’s response to the findings. 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 State Employees’ Retirement System. On
July 1, 2003, the System received an allocation of $1,385,895,278 from the
pension bond proceeds. The System
deposited the allocation into its master trust account with the Illinois
State Board of Investments 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. |
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