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Unfunded Liability at June 30, 1998 Totals $9,942 million
Flat Rate Benefit Formula of 2.2% Beginning July 1, 1998
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 will be issued separately.
UNDERFUNDING OF THE SYSTEM
The actuarial accrued liability was valued at $29,908 million at June 30, 1998. The actuarial value of assets (at market) totaled approximately $19,966 million at June 30, 1998. The difference between the liability and the assets of $9,942 million reflects the unfunded liability of the System at June 30, 1998. The Teachers' Retirement System had a funded ratio of 66.8% at June 30, 1998.
BENEFIT RATE CHANGE
On May 27, 1998, Governor Edgar signed into law Public Act 90-0582, which changed the rate at which TRS members accrue benefits beginning July 1, 1998, from a graduated rate to a flat rate formula equal to 2.2% of final average salary. Effective July 1, 1998, member contributions will increase 1% from 8% to 9% of salary. Employers are required, effective July 1, 1998, to make a new employer contribution equal to 0.3% of their TRS payroll in FY99 and 0.58% of their TRS payroll in FY2000 and subsequent years. Minimum State contribution rates are specified in the statute which include .576% of covered payroll in FY99 and .620% of covered payroll in FY2000 and subsequent years in addition to increases under the 50 year funding plan.
Our auditors state that the June 30, 1998 financial statements of the System are fairly presented.
SPECIAL ASSISTANT AUDITORS
KPMG Peat Marwick were our special assistant auditors for this audit.