REPORT DIGEST STATE EMPLOYEES’ RETIREMENT SYSTEM OF ILLINOIS FINANCIAL AUDIT For the Year Ended: June 30, 2006 Release Date:
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 ¨
The unfunded liability of the State Employees’ Retirement System of
Illinois (System) was $9,974.7 million at June 30, 2006. The System’s funded ratio at that date was
52.2%. ¨
Public Act 94-0004 (Act)
became law on June 1, 2005 and established specific dollar amounts to be
contributed to the System by the State for fiscal years 2006 and 2007. In addition, the Act requires all new
benefit increases to be fully funded by an identified funding source. The Act
went on to set expiration periods for all new benefits if not reauthorized by
law. {Financial data is summarized on the reverse page} |
STATE EMPLOYEES’ RETIREMENT SYSTEM OF ILLINOIS
FINANCIAL
AUDIT
OPERATING
STATEMENT ANALYSIS |
FY
2006 |
FY
2005 |
REVENUES:
Contributions - Participants.............................
Contributions - State Agencies &
Appropriations
Total Contributions..........................................
Investment Income - Appreciation in Fair
Value... Investment Income – Net Investments Income...
Interest Earned on Cash Balances......................
Total Revenues...............................................
EXPENSES:
Benefits...........................................................
Refunds............................................................
Administrative Expenses.....................................
Total Expenses..............................................
Revenue Over Expenses....................................
|
$ 214,108,896 210,499,791 $
424,608,687
840,493,512
264,013,416 8,724,784 $1,537,840,399 $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
721,856,118
227,422,797 4,300,338 $1,590,348,072 $1,063,970,423 14,105,301 8,311,269 $1,086,386,993 $
503,961,079 |
INVESTMENT
SUMMARY – (All investments held in the
Illinois State Board of Investment commingled fund at fair value) |
JUNE
30, 2006 |
JUNE
30, 2005 |
Foreign Obligations..................................................................
Corporate Obligations..............................................................
Convertible Bonds...................................................................
Common Stock & Equity Funds...............................................
Preferred Stock.......................................................................
Foreign Equity Securities..........................................................
Hedge Funds...........................................................................
Real Estate Investments............................................................
Private Equity..........................................................................
Money Market Instruments......................................................
Forward Foreign Currency Contracts......................................
Total Investment Portfolio...................................................
Investments owned by other retirement systems,
JRS & GARS.
State Employees’ Retirement System Investments................
|
$ 1,110,919,988
104,455,671
1,382,574,163
0
5,369,124,032 1,057,334
1,113,268,102
416,462,183
1,134,025,154
482,264,036
320,641,552
26,145 $11,434,818,360
(779,954,637) $10,654,863,723 |
$ 1,130,079,107
88,970,486
1,643,935,794
1,404,244
5,529,033,328 1,593,391
1,035,874,373
0
778,951,123
466,871,030
283,461,008
(497,874) $10,959,676,010
(688,319,215) $10,271,356,795 |
ADMINISTRATIVE EXPENSES |
FY
2006 |
FY
2005 |
Retirement, Insurance & Social Security................................... Contractual Services................................................................ Electronic Data Processing....................................................... Printing.................................................................................... Telecommunication.................................................................. Travel...................................................................................... Commodities........................................................................... Provision for Depreciation........................................................ Automotive.............................................................................. Other Expenses (Net).............................................................. Total Administrative Expenses.......................................... |
$3,235,537 1,471,229 1,352,042 1,570,156 55,944 61,765 45,970 21,844 269,841 20,535
34,415 $8,139,278 |
$3,119,207 1,656,566 1,352,284 1,724,842 65,592 63,012 49,509 25,081 242,571 20,615 (8,010) $8,311,269 |
FUNDING PROGRESS
|
JUNE 30, 2006
|
JUNE 30, 2005
|
Actuarial Accrued Liability......................................................... Actuarial Value of Assets........................................................... Unfunded Actuarial Accrued Liability......................................... Funded Ratio............................................................................. |
$20,874,541,910
10,899,853,065 $ 9,974,688,845 52.2% |
$19,304,646,648
10,494,147,953 $ 8,810,498,695 54.4% |
EXECUTIVE SECRETARY
|
|
|
During Engagement Period: Robert Knox (until May 31, 2006); Tim Blair, Acting (beginning June 2006) Currently: Tim Blair, Acting |
Unfunded liability at June 30, 2006 totals $9,974.7 million State
contributions will be reduced for fiscal year 2007 as a result of Public Act
94-0004 |
INTRODUCTION
This
digest covers our financial audit of the State Employees’ Retirement System
of Illinois (System) for the year ended June 30, 2006. A report on the results of our compliance
attestation examination for the year ending June 30, 2006 is being issued
separately.
UNDERFUNDING OF THE SYSTEM
The
actuarial accrued liability was valued at $20,874.5 million at June 30,
2006. The actuarial value of assets
(at fair value) totaled approximately $10,899.8 million at June 30, 2006. The difference between the liability and
the assets of $9,974.7 million reflects the unfunded liability of the System
at June 30, 2006. The System had a
funded ratio of 52.2% at June 30, 2006.
LEGISLATION
AFFECTING THE SYSTEM
Public Act 94-0004 (Act) became law June 1, 2005 and established
specific dollar amounts to be contributed to the System by the State for
fiscal years 2006 and 2007 as opposed to the State contribution being
calculated based on the existing funding formula. In addition, the Act requires all new benefit increases to be
fully funded by an identified funding source. The Act went on to set
expiration periods for all new benefits if not reauthorized by law. The System has calculated the State
contribution will be reduced approximately $419.0 million for fiscal year
2007 as compared to what would have been required under the funding
formula. State required contributions
will be higher in future years to make up for the two-year funding reduction,
as the overall goal of 90% funding in fiscal year 2045 was unchanged by the
Act.
AUDITORS' OPINION Our auditors state the
June 30, 2006 financial statements of the System are fairly presented.
____________________________________
WILLIAM G. HOLLAND, Auditor General WGH:RPU:pp SPECIAL ASSISTANT AUDITORS
McGladrey & Pullen LLP were our special assistant
auditors for this audit. |