REPORT DIGEST

STATE UNIVERSITIES RETIREMENT SYSTEM

FINANCIAL AUDIT

For the Year Ended:

June 30, 2005

Release Date:

March 1, 2006

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

SYNOPSIS

¨      The unfunded liability of the System was $7,000 million at June 30, 2005.  The System’s funded ratio at that date was 65.6%.

¨      Public Act 94-0004 became law on June 1, 2005 and modified several retirement benefit calculations for fiscal year 2006 and beyond and established specific dollar amounts to be contributed by the State for fiscal years 2006 and 2007 to the System.

Unfunded Liability at June 30, 2005 totals $7,000 million

State contributions will be reduced for fiscal year 2006 and 2007

INTRODUCTION

      This digest covers our financial audit of the System for the year ended June 30, 2005.  A compliance examination report covering the year ending June 30, 2005 will be issued separately. 

UNDERFUNDING OF THE SYSTEM

      The actuarial accrued liability was valued at $20,350 million at June 30, 2005.  The actuarial value of assets (at market) totaled approximately $13,350 million at June 30, 2005.  The difference between the liability and the assets of $7,000 million reflects the unfunded liability of the System at June 30, 2005.  The State Universities Retirement System had a funded ratio of 65.6% at June 30, 2005.

NEW LEGISLATION AFFECTING THE SYSTEM

      Public Act 94-0004 became law June 1, 2005 and affected the System by modifying several retirement benefit calculations for fiscal year 2006 and beyond.  In addition, the Act also established specific dollar amounts to be contributed by the State for fiscal years 2006 and 2007, as opposed to the State contribution being calculated based on the existing funding formula.  State contributions for fiscal year 2006 will be reduced approximately $200 million and approximately $180 million in fiscal year 2007.  State required contributions will be higher in future years to make up for the two-year funding reduction.

AUDITORS' OPINION

      Our auditors state the June 30, 2005 financial statements of the System are fairly presented in all material respects.

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WILLIAM G. HOLLAND, Auditor General

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SPECIAL ASSISTANT AUDITORS

      BKD, LLP were our special assistant auditors for this audit.