REPORT DIGEST

 

TEACHERSí RETIREMENT SYSTEM

 

COMPLIANCE EXAMINATION

For the Year Ended:

June 30, 2004

 

Summary of Findings:

 

Total findings this report††††††††††† 0

Total findings last report††††††††††† 0

Repeated findings††††††             † 0

 

Release Date:

April 28, 2005

 

 

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 is also available on

the worldwide web at

http://www.state.il.us/auditor

 

INTRODUCTION

††††† This digest covers our compliance examination of the System for the year ended June 30, 2004.A financial audit covering the year ending June 30, 2004 was issued separately.

 

††††† There were no material findings of noncompliance disclosed during our testing.We commend the System for maintaining effective internal controls.

 

PENSION BONDS

†††† On April 7, 2003, Governor Rod Blagojevich signed House Bill 2660 into law as Public Act 93-0002.This new law authorized the state of Illinois to issue $10 billion of General Obligation Bonds for the purpose of making contributions to designated retirement systems, which included the Teachersí Retirement System.††

 

†††† On July 1, 2003, the Teachersí Retirement System received an allocation of $4,330,373,948 from the pension bond obligation proceeds.The Teachersí Retirement System Board of Trustees initially approved allocating the pension obligation bond proceeds as follows: 51%U.S. equities, 31% fixed income and 18% to international equities.

 

†††† At June 30, 2004 the pension bond proceeds were allocated as follows: 52.3% U.S. equities, 19% international equities, 28.3% fixed income, .4% private equities.There was also less than 1% of the bond proceeds invested in both real estate and short-term investments.The pension bond proceeds earned an annual rate of return during fiscal year 2004 of 15.4%, net of fees.†††††

 

††† AUDITORSí OPINION

††††† We conducted a compliance attestation examination of the System for the year ended June 30, 2004 as required by the Illinois State Auditing Act.A financial audit covering the year ending June 30, 2004 was issued separately.

 

 

 

†† __________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:RPU:pp

 

SPECIAL ASSISTANT AUDITORS

 

††††† McGladrey & Pullen LLP were our special assistant auditors for this audit.

 

{Financial Data and Activity Measures are summarized on the reverse page.}

 


TEACHERS' RETIREMENT SYSTEM OF ILLINOIS

INFORMATION FROM FINANCIAL AUDIT AND COMPLIANCE EXAMINATION

YEAR ENDED JUNE 30, 2004

 

OPERATING STATEMENT ANALYSIS

FY 2004

FY 2003

Revenues: Contributions - Members......................

Contributions - State of Illinois..............................

Contributions - School Districts............................

†††††††††††  Total Contributions...................................

  Investment Income - Appreciation in Fair Value....

  Investment Income - Income From Investments....

             Total Investment Income...........................

††††††††††††††† Investment Expense................................

††††††††††† †††††††† Total Revenues..................................

Expenses: Total Benefits.....................................................

††††††††††††††† Refunds and Administrative Expenses.......

†††††† †††††††††††† Total Expenses...................................

Excess of Revenue over Expenses............................

$†††† 768,661,300 

5,361,851,773

††† 127,573,465 

$6,258,086,538 

3,873,564,792

†††† 740,823,119

4,614,387,911

†††† 128,658,566 

$10,743,815,883 

$2,262,329,479

†††††† 61,580,190††

$2,323,909,669

$8,419,906,214

$†† 732,020,451

929,709,762

†††† 91,552,463 

$1,753,282,676††

467,463,329

†† 708,800,750

1,176,264,079

†† 115,411,968

$2,814,134,787 

$1,998,622,284

†††† 56,974,144 

$2,055,596,428

$†† 758,538,359

INVESTMENT PORTFOLIO ANALYSIS - Fair Value

JUNE 30, 2004

JUNE 30, 2003

Total Government Obligations................................

Total Corporate Obligations..................................

International Notes.............................................

Preferred Stock (U.S. & International Combined)....

Common Stock - U.S............................................

Common Stock - International................................

Short Term Investments........................................

Real Estate Investments.........................................

Private Equity.....................................................

Foreign Currency..................................................

†††††† Total Investment Portfolio.............................

$ 5,699,920,106

3,047,586,076

341,939,109

170,070,366

13,185,157,414

5,249,363,442

1,036,863,444

2,680,788,703

840,390,782

†††††† 24,999,284

$32,277,078,726

$4,221,372,131

2,806,907,117

286,570,409

122,216,597

9,247,447,414

3,279,688,612

1,032,463,461

2,412,293,598

668,389,537

†††††† 23,905,527 

$24,101,254,403

ADMINISTRATIVE EXPENSES

FY 2004

FY 2003

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.................................

$ 9,855,223

981,402

436,283

503,353

792,565

435,978

182,991

372,751

†††† 0 

$13,560,546

$9,499,683

1,385,493

488,524

553,562

716,257

488,669

194,205

532,511

††††††††††† 498 

$13,859,402

SELECTED ACCOUNT BALANCES

JUNE 30, 2004

JUNE 30, 2003

Cash............................................................................

Receivables..................................................................

Accrued Investment Income Receivable..........................

Investments...............................................................

Collateral from Securities Lending............................

Prepaid Expenses..............................................

Property and Equipment.........................................

Total Assets........................................................

Total Liabilities......................................................

Net Assets Held in Trust for Pension Benefits........

Actuarial Accrued Liability.................................

Unfunded Actuarial Accrued Liability...................

$††††††††† 4,269,329 

120,245,572

230,705,401

32,046,373,325

3,466,114,601

2,774,741

 2,273,510 

$35,872,756,479

(4,328,027,194)

$31,544,729,285

(50,947,451,000) 

$(19,402,721,715)

$†††††††††† 3,651,963 

118,918,372

165,638,540

23,935,615,863

2,154,422,658

2,212,894††††††††2,630,930 

$26,383,091,220††

(3,258,268,149) 

$23,124,823,071††

(46,933,432,000)††

$(23,808,608,929)

SUPPLEMENTARY INFORMATION

FY 2004

FY 2003

Total investment manager fees.............................................

Total time weighted return on investments............................

Average Number of System Employees...............................

Number of Retirement Annuitants........................................

Total Brokerage Commissions Paid......................................

$94,549,085

16.5%

165

67,950

$20,544,760

$72,125,033

4.9%

163

64,702

$20,340,971

EXECUTIVE DIRECTOR

 

 

During Audit Period:Jon Bauman

Currently: Jon Bauman