A Report on the Audit of the Teacher Retirement System's Fiscal Year 2006 Financial Statements
December 2006
Report Number 07-006
Overall Conclusion
In our audit report dated November 7, 2006, we concluded that the Teacher Retirement System's (System) basic financial statements for fiscal year 2006 were materially correct and presented in accordance with accounting principles generally accepted in the United States of America.
Conducting our audit of the System's financial statements enabled us to obtain information on the pension plan's actuarial funding status. The plan's funded ratio (the ratio of actuarial assets to actuarial liabilities) improved slightly to 87.3 percent at the end of fiscal year 2006 (this ratio was 87.1 percent at the end of fiscal year 2005). However, the plan's unfunded actuarial accrued liability (UAAL), which represents the deficit of the plan's actuarial assets compared with its actuarial liabilities, grew by $0.5 billion to $13.7 billion.
At the end of fiscal year 2006, the plan's net assets exceeded $100 billion for the first time in history. In addition, the rate of annual required contribution of the State for fiscal year 2007 (the contribution rate that is needed to eliminate the actuarial funding deficit within the next 30 years) has decreased to 7.02 percent of pay from the previous year's 7.19 percent.
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