REPORT DIGEST

STATE UNIVERSITIES RETIREMENT SYSTEM

Financial Audit

For the Year Ended June 30, 2010

Summary of Findings:

Total this audit: 0

Total last audit: 2

Repeated from last audit: 0

Release Date: January 12, 2011

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 Full Report are also available on the worldwide web at www.auditor.illinois.gov

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INTRODUCTION

This digest covers our financial audit of the System for the year ended June 30, 2010. A compliance examination report covering the year ending June 30, 2010 will be issued separately.

UNDERFUNDING OF THE SYSTEM

The actuarial accrued liability was valued at $30.1 billion at June 30, 2010. The actuarial value of assets (at smoothed value) totaled approximately $14.0 billion at June 30, 2010. The method for determining the actuarial value of assets was changed beginning with the June 30, 2009 valuation. The method was changed from the market value to a smoothed value where the actuarial gains or losses for each year are recognized in equal amounts over the ensuing five-year period.

The difference between the actuarial accrued liability and the actuarial value of assets of $16.1 billion reflects the unfunded liability of the System at June 30, 2010. The System had a funded ratio (at smoothed value) of 46.4% at June 30, 2010. When using the market value, the System would have a funded ratio of 40.2%.

AUDITORS’ OPINION

Our auditors state the June 30, 2010 financial statements of the State Universities Retirement System are presented fairly in all material respects.

WILLIAM G. HOLLAND

Auditor General

WGH:TLK:PP

SPECIAL ASSISTANT AUDITORS

McGladrey & Pullen LLP were our Special Assistant Auditors for this engagement.