Office of the Legislative Auditor - Financial Audit Division
Minnesota State Board of Investment
Fiscal Year Ended June 30, 1999
Key Finding and Recommendation:
The statutory basis SBI has used to calculate participation in the Post Retirement Investment Fund (Post Fund) should not be used as a basis for allocating retirement fund assets to participants for financial reporting purposes. Using fair value (market value) to allocate the Post Fund investments to participants at June 30, 1999, could have resulted in a reallocation of retirement fund assets of up to $30 million for certain retirement funds. We recommended that SBI work with the Department of Finance and the state's retirement fund administrators to develop a method of calculating participation in the Post Fund for financial reporting purposes that uses fair value accounting as a basis for the allocation. (Finding 1, page 3)
SBI agreed to work with the Department of Finance and retirement fund administrators to develop the methodology required to allocate the Post Fund investments to participants based on fair value.
The Minnesota State Board of Investment (SBI) administers the investment of state funds and retirement fund assets of the Minnesota State Retirement System, Teachers Retirement Association, and the Public Employees Retirement Association. SBI also administers investments for other state agencies, including invested treasurer's cash, which is the idle cash in state accounts. At June 30, 1999, SBI administered over $50 billion in state assets.