REPORT DIGEST

 

TEACHERSí

RETIREMENT SYSTEM

OF THE STATE OF ILLINOIS

 

FINANCIAL AUDIT

For the Year Ended:

June 30, 2006

 

Release Date:

March 27, 2007 

 

 

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

 

 

 

 

 

 

 

 

 

 

SYNOPSIS

 

 

®       The unfunded liability of the Teachersí Retirement System of the State of Illinois (System) was $22,412 million at June 30, 2006.The Systemís funded ratio at that date was 62.0%.

 

®       Public Act 94-0004 became law on June 1, 2005 and modified the Employee Retirement Option (ERO), changed the member contribution rate, added new employer contributions and established specific dollar amounts to be contributed by the State for fiscal years 2006 and 2007 to the System.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

{Financial data is summarized on the reverse page.}

 

 

 

 

 

 

 

TEACHERS' RETIREMENT SYSTEM OF ILLINOIS

FINANCIAL AUDIT

FOR THE YEAR ENDED JUNE 30, 2006

 

OPERATING STATEMENT ANALYSIS

FY 2006

FY 2005

REVENUES: Contributions - Members..................................

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

†††††††††††††††††† Contributions - School Districts / Employers........

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

†††††††††††††††††† Investment Income - Appreciation in Fair Value.

†††††††††††††††††† Investment Income - Income From Investments..

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

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

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

EXPENSES: Benefits...........................................................

††††††† †††††††††††† Refunds..........................................................

†† Administrative Expenses...................................

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

Revenue Over Expenses...................................

$†† 799,034,336

543,305,256

123,542,608 

$1,456,882,200

2,971,529,661

1,341,441,966 

$4,312,971,627

(319,681,747) 

$5,450,172,080

$2,877,230,697

57,967,063

 15,303,370 

$2,950,501,130

$2,499,670,950

$  761,790,009 

906,749,310 148,813,036 

$1,817,352,355 

2,569,878,360

†† 953,893,405 

$3,523,771,765

(193,732,607) 

$5,147,391,513 

$2,533,102,848

59,395,758

 14,403,715 

$2,606,902,321

$2,540,489,192

INVESTMENT PORTFOLIO ANALYSIS - Fair Value

JUNE 30, 2006

JUNE 30, 2005

Fixed Income........................................................................

Equities................................................................................

Real Estate...........................................................................

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

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

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

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

$10,537,985,786 

20,031,392,346

3,946,280,351

1,273,184,193

1,513,997,646 34,040,496 

$37,336,880,818

$10,325,741,083 

18,787,194,875

3,525,456,881

1,163,168,990

1,068,633,225

†††††† 28,166,730

$34,898,361,784

ADMINISTRATIVE EXPENSES

FY 2006

FY 2005

Personal Services.................................................................

Professional Services............................................................

Postage................................................................................

Machine Repair and Rental...................................................

Other Contractual Services....................................................

Commodities.........................................................................

Occupancy Expense.............................................................

Provision for Depreciation.....................................................

Gain / (Loss) on Disposal of Equipment..................................

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

$10,945,763 

1,015,544

505,394

876,807

1,028,647

457,939

169,096

303,203

 977 

$15,303,370

$10,787,362†††

981,768

452,629

462,559

765,214

506,844

172,652

277,617

 (2,930) 

$14,403,715

FUNDING PROGRESS

JUNE 30, 2006

JUNE 30, 2005

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

Actuarial Value of Assets........................................................

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

Funded Ratio...........................................................................

$58,996,913,000

36,584,889,000

$22,412,024,000

62.0%

$56,075,029,000

34,085,218,000

$21,989,811,000

60.8%

EXECUTIVE DIRECTOR

 

 

During Engagement Period: Jon Bauman

Currently:Jon Bauman



 

 

 

 

 

 

 

 

Unfunded liability at June 30, 2006 totals $22,412 million

 

 

 

 

 

 

 


State contributions were reduced for fiscal year 2006

 

INTRODUCTION

 

††††† This digest covers our financial audit of the System for the year ended June 30, 2006.A report on the results of our compliance attestation examination for the year ending June 30, 2006 is being issued separately.

 

UNDERFUNDING OF THE SYSTEM

 

††††† The actuarial accrued liability was valued at $58,997 million at June 30, 2006.The actuarial value of assets (at fair value) totaled approximately $36,585 million at June 30, 2006.The difference between the liability and the assets of $22,412 million reflects the unfunded liability of the System at June 30, 2006.The System had a funded ratio of 62.0% at June 30, 2006.

 

LEGISLATION AFFECTING THE SYSTEM

 

†††† Public Act 94-0004 became law June 1, 2005 and affected the System by modifying the Employee Retirement Option (ERO), changing the member contribution rate and adding new employer contributions.†† 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 required contributions will be higher in future years to make up for the two-year funding reduction, as the overall goal of 90% funding in year 2045 is unchanged.†††††††††††

 

††† The System has calculated the amount to be contributed by the State for fiscal years 2007 to be approximately 50% of what would have been contributed under the previous funding formula.State contributions for fiscal year 2007 will be reduced approximately $497.6 million.

 

AUDITORS' OPINION

 

††††† Our auditors state the June 30, 2006 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.