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Unfunded Liability at June 30, 1998 Totals $1,624 million
New benefit formula
New defined contribution Optional Retirement Plan
This digest covers our financial audit of the System for the year ended June 30, 1998. A compliance audit covering the year ending June 30, 1998 is being issued separately.
UNDERFUNDING OF THE SYSTEM
The actuarial accrued liability was valued at $11,416 million at June 30, 1998. The actuarial value of assets (at market) totaled approximately $9,792 million at June 30, 1998. The difference between the liability and the assets of $1,624 million reflects the unfunded liability of the System at June 30, 1998. The State Universities Retirement System had a funded ratio of 85.8% at June 30, 1998.
BENEFIT RATE CHANGE
On July 7, 1997, Governor Edgar signed Public Act 90-0065 which contained numerous provisions affecting the System. The most significant change involved the System's transition from a step rate retirement benefit formula to a flat rate retirement benefit formula. The increased retirement benefit formula is applicable to all eligible members with a retirement effective date on and after January 1, 1998.
OPTIONAL RETIREMENT PLAN
On August 16, 1997, Governor Edgar signed Public Act 90-448 to establish a defined contribution Optional Retirement Plan (ORP). In addition, an alternative defined benefit program known as "Portable SURS" was established. These changes allow SURS members more choice in benefits offered, and also gives more freedom to assume an increased level of responsibility in the planning and management of their retirement assets.
Our auditors state that the June 30, 1998 financial statements of the System are fairly presented in all material respects.
SPECIAL ASSISTANT AUDITORS
Arthur Andersen LLP were our special assistant auditors for this audit.