+REPORT DIGEST

STATE UNIVERSITIES RETIREMENT SYSTEM

COMPLIANCE EXAMINATION
FOR THE YEAR ENDED JUNE 30, 2020

Release Date:  February 10, 2021

FINDINGS THIS AUDIT:  1

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  1 -- 0 -- 1
Category 2:  0 -- 0 -- 0
Category 3:  0 -- 0 -- 0
TOTAL:  1 -- 0 -- 1

FINDINGS LAST AUDIT: 0

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 Universities
Retirement System (System) for the year
ended June 30, 2020.  A separate
Financial Audit as of and for the year
ending June 30, 2020, was previously
released on December 22, 2020.

SYNOPSIS

• (20-1) The System has not adopted
administrative rules regarding the
determination of whether any person is an
employee under §15-107 of the Illinois
Pension Code.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

Noncompliance with the Illinois Pension
Code

The State Universities Retirement System
(System) has not adopted administrative
rules regarding the determination of
whether any person is an employee under
§15-107 of the Illinois Pension Code
(Code) (40 ILCS 5/15-107).

During testing, we noted Public Act
99-0897, which was effective on January
1, 2017, amended the Code to require the
System adopt administrative rules
regarding the determination of whether a
person is an employee under §15-107.
Further, we noted the proper conclusion
of whether a person is an “employee”
under §15-107 determines whether that
person will participate in either the
System’s defined benefit pension plan or
self-managed plan (now known as the
Retirement Savings Plan).

The Code (40 ILCS 5/15-107) requires the
System’s Board of Trustees to promulgate
rules with respect to determining whether
any person is an employee within the
meaning of §15-107. (Finding 1, page 10).

We recommended the System’s Board of
Trustees promulgate  rules with respect
to determining whether any person is an
employee within the meaning of §15-107.

System officials agreed with the finding
and stated due to the complicated nature
of the rule, each employer having a
different policy, and competing
priorities, drafting the definition has
taken several years.  System officials
also stated there is a draft that has
been circulated for employer comment and
staff are currently working to have a
final draft rule in place by the end of
2021.

AUDITOR’S OPINION

The auditors stated the financial
statements of the System as of and for
the year ended June 30, 2020 are fairly
stated in all material respects.

ACCOUNTANT’S OPINION

The accountants conducted a compliance
examination of the System for the year
ended June 30, 2020, as required by the
Illinois State Auditing Act.  The
accountants qualified their report on
State compliance for Finding 2020-001.
Except for the noncompliance described in
this finding, the accountants stated the
System complied, in all material
respects, with the requirements described
in the report.

This compliance examination was conducted
by BKD, 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:TLK