REPORT DIGEST STATE EMPLOYEES’ RETIREMENT SYSTEM COMPLIANCE EXAMINATION FOR THE YEAR ENDED JUNE 30, 2018 Release Date: April 18, 2019 FINDINGS THIS AUDIT: 1 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 0 -- 0 -- 0 Category 2: 0 -- 1 -- 1 Category 3: 0 -- 0 -- 0 TOTAL: 0 -- 1 -- 1 FINDINGS LAST AUDIT: 3 Category 1: Findings that are material weaknesses in internal control and/or a qualification on compliance with State laws and regulations (material noncompliance). Category 2: Findings that are significant deficiencies in internal control and noncompliance with State laws and regulations. Category 3: Findings that have no internal control issues but are in noncompliance with State laws and regulations. State of Illinois, Office of the Auditor General FRANK J. MAUTINO, 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 Full Report are also available on the worldwide web at www.auditor.illinois.gov INTRODUCTION This digest covers our Compliance Examination of the State Employees’ Retirement System for the year ended June 30, 2018. A separate Financial Audit as of and for the year ending June 30, 2018, was previously released on January 23, 2019. In total, this report contains 1 finding, which was not reported in the Financial Audit. SYNOPSIS • (18-1) The State Employees’ Retirement System of the State of Illinois has had a vacancy in one of its thirteen required trustees of the Board for more than three years as of the end of fieldwork on November 16, 2018. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS BOARD OF TRUSTEE VACANCY The State Employees’ Retirement System of the State of Illinois (System) has had a vacancy in one of its thirteen required trustees of the Board for more than three years as of the end of fieldwork on November 16, 2018. During the current compliance examination, the auditors noted that a Board member resigned from the Board on October 15, 2015. The System’s Executive Secretary informed the Board of the resignation on that same day. In addition, on November 4, 2015 the Executive Secretary communicated this vacancy to the Governor’s Office via email requesting that the vacancy be filled. As of the end of fieldwork on November 16, 2018 the vacancy had not been filled and there has been no further follow-up communications with the Governor’s Office by the System. (Finding 1, pages 10-11) This finding has been repeated since 2016. We recommended the System continue to communicate with the Governor’s Office in order to fill the vacancy in its Board of Trustees. We further recommended the communications be documented. System officials accepted the finding and noted that the Board does not have statutory authority to make such an appointment to fill the vacancy. System officials also indicated they have contacted the new administration to inform them of the vacancy. (For the previous Department response, see Digest Footnote #1.) ACCOUNTANT’S OPINION The accountants conducted a compliance examination of the State Employees’ Retirement System for the year ended June 30, 2018, as required by the Illinois State Auditing Act. The accountants stated the State Employees’ Retirement System complied, in all material respects, with the requirements described in the report. This State compliance examination was conducted by RSM US LLP. JANE CLARK Division Director This report is transmitted in accordance with Section 3-14 of the Illinois State Auditing Act. FRANK J. MAUTINO Auditor General FJM:JAF DIGEST FOOTNOTES #1 – Board of Trustees Vacancy The System accepts the finding, but understandably this is an issue in which the System cannot unilaterally remedy. System management will communicate with the Office of the Governor to seek an appointment which will fully staff the Board.