REPORT DIGEST

REPORT DIGEST

TEACHERS’

RETIREMENT SYSTEM

OF THE STATE OF ILLINOIS

FINANCIAL AUDIT

For the Year Ended:

June 30, 2008

Release Date:

January 15, 2009

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

INTRODUCTION

This digest covers our financial audit of the Teachers’ Retirement System of the State of Illinois (System) for the year ended June 30, 2008. A report on the results of our compliance attestation examination for the year ending June 30, 2008 is being issued separately.

UNDERFUNDING OF THE SYSTEM

The actuarial accrued liability was valued at $68.6 billion at June 30, 2008. The actuarial value of assets (at fair value) totaled approximately $38.4 billion at June 30, 2008. The difference between the liability and the assets of $30.2 billion reflects the unfunded liability of the System at June 30, 2008. The System had a funded ratio of 56.0% at June 30, 2008.

SUBSEQUENT EVENT

Subsequent to the System’s June 30, 2008 fiscal year end the investment portfolio experienced a significant decline due to unprecedented unfavorable market conditions. Based on unaudited information provided by the System the investment portfolio declined approximately $10 billion from the June 30, 2008 balances based on the readily determinable market values provided by the System at November 30, 2008.

AUDITORS' OPINION

Our auditors state the June 30, 2008 financial statements of the System are fairly presented.

____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:RPU:pp

SPECIAL ASSISTANT AUDITORS

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

{Financial data is summarized on the reverse page.}

TEACHERS' RETIREMENT SYSTEM OF ILLINOIS

FINANCIAL AUDIT

FOR THE YEAR ENDED JUNE 30, 2008

OPERATING STATEMENT ANALYSIS	FY 2008	FY 2007
REVENUES: Contributions - Members............................................... Contributions - State of Illinois....................................... Contributions - School Districts / Employers................... Total Contributions..................................................... Investment Income – Increase / (Decrease) in Fair Value Investment Income - Income From Investments............. Investment Expense.................................................... Total Investment Income / (Loss)................................ Total Revenues........................................................ EXPENSES: Benefits........................................................................ Refunds....................................................................... Administrative Expenses................................................ Total Expenses......................................................... Revenue Over / (Under) Expenses.................................	$ 865,400,168 1,041,114,825 130,673,629 $ 2,037,188,622 (3,235,738,717) 1,409,751,363 (188,915,012) $(2,014,902,366) $ 22,286,256 $ 3,423,981,732 60,285,624 16,613,364 $ 3,500,880,720 $(3,478,594,464)	$ 826,249,007 737,670,628 115,915,040 $1,679,834,675 5,597,334,135 1,564,003,346 (330,013,045) $7,161,337,481 $8,511,159,111 $3,111,752,675 59,731,909 15,246,203 $3,186,730,787 $5,324,428,324
INVESTMENT PORTFOLIO ANALYSIS - Fair Value	JUNE 30, 2008	JUNE 30, 2007
Fixed Income.................................................................................... Equities............................................................................................. Real Estate....................................................................................... Short Term Investments..................................................................... Private Equity.................................................................................... Real Return....................................................................................... Absolute Return................................................................................ Foreign Currency............................................................................... Derivatives........................................................................................ Total Investment Portfolio..................................................................	$ 8,970,063,123 19,343,733,243 4,794,916,293 1,043,222,891 2,399,224,145 2,118,735,890 504,224,094 60,605,839 (25,678,522) $39,209,046,996	$10,140,998,668 23,487,980,117 4,693,519,131 1,196,341,853 1,894,311,762 0 490,000,000 49,081,933 847,479 $41,953,080,943
ADMINISTRATIVE EXPENSES	FY 2008	FY 2007
Personal Services.............................................................................. Professional Services......................................................................... Postage............................................................................................. Machine Repair and Rental................................................................ Other Contractual Services................................................................ Commodities..................................................................................... Occupancy Expense.......................................................................... Provision for Depreciation.................................................................. Loss on Disposal of Equipment........................................................... Total Administrative Expenses....................................................	$12,190,988 1,164,400 481,642 660,156 1,062,093 457,052 210,654 386165 214 $16,613,364	$11,350,376 911,832 407,568 593,364 1,024,358 447,519 173,508 336,969 709 $15,246,203
SELECTED ACCOUNT BALANCES	JUNE 30, 2008	JUNE 30, 2007
Cash................................................................................................. Total Accounts Receivable & Prepaid Expenses................................. Property and Equipment, net............................................................... Benefits and Refunds Payable............................................................ Administrative and Investment Expenses Payable................................ Payable to Brokers for Unsettled Trades, net......................................	$3,668,043 $404,110,007 $2,548,814 $3,996,767 $148,806,825 $1,035,846,981	$3,548,548 $385,352,096 $2,391,619 $7,664,796 $134,210,939 $293,179,720
FUNDING PROGRESS	JUNE 30, 2008	JUNE 30, 2007
Actuarial Accrued Liability................................................................... Actuarial Value of Assets.................................................................... Unfunded Actuarial Accrued Liability................................................... Funded Ratio.......................................................................................	$68,632,367,000 38,430,723,000 $30,201,644,000 56.0%	$65,648,395,000 41,909,318,000 $23,739,077,000 63.8%
EXECUTIVE DIRECTOR
During Engagement Period: Jon Bauman Currently: Jon Bauman

UNDERFUNDING OF THE SYSTEM

FOR THE YEAR ENDED JUNE 30, 2008

FUNDING PROGRESS

JUNE 30, 2008

JUNE 30, 2007

EXECUTIVE DIRECTOR