REPORT DIGEST

STATE UNIVERSITIES RETIREMENT SYSTEM

FINANCIAL AUDIT

For the Year Ended:

June 30, 2007

Release Date:

January 3, 2008

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

http://www.auditor.illinois.gov

SYNOPSIS

¨ The unfunded liability of the System was $7,376 million at June 30, 2007. The System’s funded ratio at that date was 68.4%.

¨ 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.

STATE UNIVERSITIES RETIREMENT SYSTEM

FINANCIAL AUDIT

Year Ended June 30, 2007

FINANCIAL OPERATIONS	FY 2007	FY 2006
Additions Contributions Participants.............................................. Employer................................................. Total Contributions............................. Investment Income Net appreciation in fair market value......... Interest.................................................... Dividends................................................. Securities lending...................................... Less: Investment expense........................ Net Investment Income...................... Total Additions............................ Deductions Benefits.......................................................... Refunds of contributions................................. Bond interest expense.................................... Administrative expense................................... Total Deductions.......................... Net Increase........................................................	$303,992,601 294,451,464 $598,444,065 $2,249,927,509 225,548,765 155,508,304 4,958,036 (38,111,626) $2,597,830,988 $3,196,275,053 $1,180,574,674 53,407,456 - 11,704,567 $1,245,686,697 $1,950,588,356	$292,392,188 209,651,367 $502,043,555 $1,281,932,946 183,792,025 126,245,756 4,525,486 (29,685,842) $1,566,810,371 $2,068,853,926 $1,086,565,418 51,422,635 179,640 11,982,284 $1,150,149,977 $918,703,949
INVESTMENT PORTFOLIO ANALYSIS (Fair Value)	JUNE 30, 2007	JUNE 30, 2006
Equities Fixed income....................................................... Real estate........................................................... Mutual funds and variable annuities....................... Total .............................................................	$10,242,225,544 5,180,583,996 328,033,841 533,000,506 $16,283,843,887	$9,692,422,530 3,816,079,807 131,569,925 405,332,778 $14,045,405,040
FUNDING PROGRESS (millions)	June 30, 2007	June 30, 2006
Actuarial Accrued Liability................................... Actuarial Value of Assets..................................... Unfunded Actuarial Accrued Liability.................... Funded Ratio.......................................................	$23,362.1 15,985.7 $7,376.4 68.4%	$21,688.9 14,175.1 $7,513.8 65.4%
SUPPLEMENTARY INFORMATION	June 30, 2007	June 30, 2006
Benefit recipients.................................................. Active members................................................... Inactive members................................................. Total..............................................................	43,443 81,691 75,261 200,395	41,667 80,869 72,606 195,142
EXECUTIVE DIRECTOR
During Audit Period: Dan M. Slack Currently: Dan M. Slack

Unfunded Liability at June 30, 2007 totals $7,376 million

State contributions were reduced for fiscal year 2007

INTRODUCTION

This digest covers our financial audit of the System for the year ended June 30, 2007. A compliance examination report covering the year ending June 30, 2007 will be issued separately.

UNDERFUNDING OF THE SYSTEM

The actuarial accrued liability was valued at $23,362 million at June 30, 2007. The actuarial value of assets (at market) totaled approximately $15,986 million at June 30, 2007. The difference between the liability and the assets of $7,376 million reflects the unfunded liability of the System at June 30, 2007. The State Universities Retirement System had a funded ratio of 68.4% at June 30, 2007.

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 previous funding formula. State contributions for fiscal year 2006 were reduced approximately $158 million and were reduced approximately $140 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, 2007 financial statements of the System are fairly presented in all material respects.

_____________________________________

WILLIAM G. HOLLAND, Auditor General

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SPECIAL ASSISTANT AUDITORS

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

JUNE 30, 2007

JUNE 30, 2006

June 30, 2007

June 30, 2006

INTRODUCTION