REPORT DIGEST
TEACHERS’ RETIREMENT SYSTEM OF
THE STATE OF ILLINOIS
FINANCIAL AUDIT
For the Year Ended: June 30, 2011
Release Date: January 11, 2012
Summary of Findings:
Total this audit: 1
Total last audit: 1
Repeated from last audit: 1
State of Illinois, Office of the Auditor General
WILLIAM G. HOLLAND, AUDITOR GENERAL
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(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 statement audit of
Teachers’ Retirement System of the State of Illinois (System) for the year
ended June 30, 2011. A report on the
results of the compliance examination covering the year ended June 30, 2011
will be issued in a separate report at a later date.
FUNDED RATIO
The actuarial accrued liability was valued at $81.3 billion
at June 30, 2011. The actuarial value of
assets (at smoothed value) totaled approximately $37.8 billion at June 30,
2011. The method for determining the
actuarial value of the 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 investment 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 $43.5 billion reflects the unfunded liability
of the System at June 30, 2011. The
System had a funded ratio (at smoothed value) of 46.5% at June 30, 2011. When using the market value the System would
have had a funded ratio of 46.1% at June 30, 2011.
LEGISLATIVE CHANGE TO PENSION CODE
Public Act 96-0889, which was signed into law April 2010,
adds a new section to the Pension Code that applies different benefits to
anyone first hired in a position covered by the System on or after January 1,
2011. Changes in the pension law include
raising the minimum eligibility to draw a retirement benefit to age 67 with 10
years of service, initiating a cap on the salaries used to calculate retirement
benefits, and limiting cost-of-living annuity adjustments to of the lesser of 3% or ˝ of the annual increase in the Consumer
Price Index, not compounded. The pension
law changes do not apply to anyone who has System service prior to January 1,
2011.
MARKET VALUE DECLINE
The System had a decline in its investment portfolio
subsequent to June 30, 2011. As of
October 31, 2011, the System had incurred an approximate $2.004 billion (5.4%)
decrease in its investment portfolio since June 30, 2011 due to a worldwide
economic slowdown.
AUDITORS’ OPINION
The auditors stated the financial statements of the
Teachers’ Retirement System of the State of Illinois as of June 30, 2011, and
for the year then ended, are fairly stated in all material respects.
WILLIAM G. HOLLAND
Auditor General
WGH:RPU:pp
SPECIAL ASSISTANT AUDITORS
Our special assistant auditors for this audit were McGladrey & Pullen LLP.