Vol. 17, No. 3

2 InvestmentUpdate,BenefitPaymentSchedule

3 NewBoardofTrustees:JudyParker,Interim ExecutiveDirector,LegislativeSummary 4-5 MeettheNewSURSBoardofTrustees

6 NewBoardContinued

7 ATributetoJeannieRennels,EmployeeoftheYear2008:MindyInman,EmployeeoftheYear2009:SharonIngrum,SURSMemberWebsite

Fall 2009

Pension Modernization Task ForceThe Illinois Pension Modernization Task Force was cre-ated by House Joint Resolution 65 of the 96th General Assembly. Comprised of 19 members, 11 of whom are appointed by the Governor and 8 of whom are appointed by legislative leaders, the Task Force is required to hold at least one hearing a month between June and October of 2009. The Task Force will review and analyze:

• The level of the current pension benefit structure in Il-linois as it compares to other states in the geographical region and to other states that have systems that are not coordinated with Social Security. • The public policy implications of changing pension ben-efits on the state’s ability to attract and retain public em-ployees, teachers, and university professionals.

• The level of benefit programs currently being offered in the private sector of our state.

• The long term costs of our current systems including the expected increase in benefit payments, the effects of continued under performance in the funds’ investment portfolio, and the effects of increasing life expectancies on our state-funded systems.

Since July 1st, I have served as the Chairwoman of the SURS Board of Trustees as the composition of the board changed. Since February 2007, I have also had the privilege to serve as Chairwoman of the Board of Higher Education. In that capacity, I have learned about the important role that higher education plays in the economic well-being of the state of Illinois and its citizens. I am also acutely aware of the underfunding of higher education in general and, more specifically, the underfunding of the state retirement system. Consequently, I strongly believe that it must be a top SURS priority that we educate legislators on the importance of funding higher education and its retirement system. Another priority of the SURS Board of Trustees is to complete the search for a new Executive Director. The new board reinitiated the search that had been started by EFL Associates earlier this year, but was postponed because the board was changing. In September, the new board established a search committee and, in October, the committee met to review an initial slate of candidates. The search committee expects to bring the semi-finalists to the full board for interviews at the December meeting. It is our expectation that the new Executive Director will be in place early in 2010. On behalf of the SURS Board of Trustees, I want to thank Judith Parker for her hard work and commitment carrying out the role of Interim Executive Director. The newly constituted board is comprised of a strong team of trustees with unique experiences and expertise. The board is committed to serving to the best of our ability. As we move forward, the board and SURS staff will continue to act in accordance with the highest ethical standards. We will strive to uphold the SURS Mission, which is to provide SURS annuitants, participants, and their employers, in accordance with the state law, the best and most cost-effective benefit administration services in the United States; manage and invest the fund’s assets prudently; and endeavor to achieve and maintain a financially sound retirement system.

• Which pension benefits in Illinois should be modern-ized.

The Task Force will report its findings to the General As-sembly and the Governor. SURS has been closely moni-toring the outcomes of these meetings. To learn more about the Task Force, visit www.illinois.gov/gov/pension-reform.

Dear SURS Members,By: Carrie Hightman, SURS Board Chairwoman

A Publication of the State Universities Retirement System of Illinois

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Investment UpdateFiscal Year 2009 Investment Results

The extraordinary turmoil witnessed in the finan-cial markets during the second half of 2008 con-tinued during the first half of calendar year 2009. Concerns over the economy and the health of the nation’s financial system translated into sharply lower stock prices around the world. Fortunately, world equity markets showed signs of recovery during the last four months of the fiscal year, al-though the recovery was not enough to erase the weakness of the first eight months. Although the SURS portfolio is broadly diversified, the portfo-lio was not immune to the effects of the declining markets. For the twelve months ending June 30, 2009, the investment portfolio returned -19.7%, net of investment management fees. Despite the diffi-cult year, the total portfolio outpaced the return of the policy portfolio benchmark by 40 basis points.

Even taking into account the steep declines experienced over the past 18 months, the long-term re-turn of the SURS portfolio remains solid. Over the 20 years ending June 30, 2009, the port-folio returned 7.3% annually, in excess of the 6.7% return of the policy benchmark. Some key statistics on the SURS investment portfolio as of June 30, 2009, are included below.

• Total combined fund assets in the defined benefit and defined contribution plans exceeded $11.6 billion.

• The System’s funding ratio decreased on a market value basis from 58.5% at the end of fiscal year 2008 to 41.9% at the end of fiscal year 2009. During the past year, the asset valuation method has changed. Effective with the valuation as of June 30, 2009, a five-year smoothing method is used, which results in a funding ratio of 54.3% at the end of fiscal year 2009. • The Self-Managed Plan (SMP) celebrated its eleventh year of existence and is currently valued at over $530 million in assets.

SURS completed several noteworthy projects in the past year, primarily designed to provide addi-tional diversification to the portfolio. Additional funding was provided to the global equity portfo-lio, with four new global equity specialists hired to implement the mandate. In addition, SURS modest-ly increased its exposure to direct real estate. The Manager Development Program (MDP), focusing on emerging, minority- and women-owned firms, was also expanded in the past year. Five deserving in-vestment managers earned additional allocations and four additional firms were hired to manage assets for SURS. In addition, a search for a real estate manager for the MDP was recently completed. Upcom-ing searches in the MDP will focus on U.S. equity and Treasury Inflation Protected Securities (TIPS).

In these difficult times, SURS continues to focus on the long-term. The portfolio is profes-sionally and prudently managed and is structured to provide attractive rates of return at reason-able levels of risk over time. The portfolio’s diversification is the best defense against volatile markets and SURS is taking steps to further increase the diversification of the portfolio by gradually in-creasing exposure to real estate and, potentially, infrastructure investments over the coming 12 to 24 months. Despite the weakness in the financial markets and the System’s funding ratio, it is important to remem-ber that your pension benefits are secure and are guaranteed by the State Constitution. We strive to make SURS the best and most cost-effective benefit administration service provider in the United States.

Benefit Payment ScheduleOn the first working day of the month, all electronic fund transfers (EFTs) for disability retirement allowances, retirees, survivors, beneficiary annuitants, and reversionary annuities are made. Dates for these payments are: No-vember 2, 2009, December 1, 2009, January 4, 2010, February 1, 2010, March 1, 2010, April 1, 2010, May 3, 2010, June 1, 2010, July 1, 2010, August 2, 2010, September 1, 2010, October 1, 2010, November 1, 2010, December 1, 2010, and January 3, 2011.

AssetsandliabilitiesareestimatedandunauditedthroughJune30,2009.

(continued on page 3)

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By: Judith Parker, Interim Executive DirectorNew Board of Trustees

Judy Parker has been the Associate Executive Director since September 2007 and has been serving as inter-im Executive Director since Dan Slack’s departure in January 2009. Prior to that, she was the SURS Deputy Director of Member Services for 16 years. Before her career at SURS, she held the positions of Interim Ben-efits Manager, Benefits Counselor, and Payroll Clerk at Illinois State University. Parker has a Bachelor of Arts from Eastern Illinois University.

On April 3, 2009, Governor Quinn signed Public Act 96-0006 into law. This legislation, among other things, eliminated the Governor-appointed SURS Board of Trustees and called for a new board comprised of 11 trustees: four appointed by the Governor, four contrib-uting members elected by the contributing members of the System, and two annuitants elected by the annui-tants of the System. The president of the SURS Board of Trustees would now be the Chairperson of the Illi-nois Board of Higher Education, Carrie Hightman.

There were a number of legislative bills affecting SURS that were introduced this spring. Among the most im-portant was P.A. 96-0043 that will, for the most part, provide SURS with the full certified state contribution for FY 2010.

Signed into law on July 15, 2009, P.A. 96-0043 autho-rized the state of Illinois to sell 3.4 billion dollars in General Obligation Bonds with the proceeds payable to the five state retirement systems to pay the state’s FY 2010 state contribution. The bonds will be payable within five years of the date they are issued.

The total state contribution for FY 2010 to be received by SURS is $702,514,000, less; • The pro rata share of bond sale expenses• Any amounts received from the general revenue fund• Any reduction in bond proceeds due to the issuance of discounted bonds

The contribution that SURS will receive from the bond sale is in accordance with the contribution requirement outlined in the 50-year funding program under which the retirement systems have been funded since fiscal year 1996. The following also passed during the spring session:

Legislative SummaryPublic Act 96-542: Effective January 1, 2010, this amends the Open Meetings Act and the Freedom of Information Act (FOIA). It requires training for appro-priate public body personnel and created a position of “Public Access Counselor” (PAC). It also established that all records in the custody or possession of a public body are open to inspection. Public Act 96-543: Effective August 17, 2009, estab-lished the Gubernatorial Boards and Commissions Act, which covers the governing boards of the statewide re-tirement systems.Public Act 96-555: Effective August 18, 2009, this act amended the State Ethics Act by broadening the defi-nition of “prohibited source,” changed ethics training requirements, and prohibited offers in exchange for po-litical contributions. Public Act 96-753: Effective August 18, 2009, this technical corrections bill amended the Illinois Pension Code to allow for rollovers of after tax contributions to the retirement system. Public Act 96-753: Effective August 25, 2009, this act is also known as the “Invest in Illinois” bill. It required that SURS and other state funds “must make reason-able efforts to invest in economic opportunity invest-ments.”

After submitting petitions to be considered for the po-sition, 7 annuitants and 11 contributing members ran for election. Ballots were mailed to all SURS members and were tabulated on June 17, 2009. The results of the election were announced the following day. The elected board members include Jeffrey Beaulieu, John Engstrom, J. Fred Giertz, Dorinda Miller, Antonio Vasquez, and Mitchell Vogel. The trustees appointed by the Governor are Matthew Berns, Patricia Cassidy, Ste-ven Rogers, and Marva Williams. Incumbent members Antonio Vasquez, Mitchell Vogel, and Marva Williams bring their experience to the group, as well as J. Fred Giertz, who was a former member of the board from 1995 until 2005.

More detailed information on each board member can be found on pages 4-6. The new board participated in an orientation in July and has been conducting the reg-ularly scheduled meetings for both the board and its committees.

On the last working day of the month, all paper checks and statements are mailed and disability EFTs are depos-ited. Dates for these payments are: November 30, 2009, December 31, 2009, January 29, 2010, February 26, 2010, March 31, 2010, April 30, 2010, May 28, 2010, June 30, 2010, July 30, 2010, August 31, 2010, September 30, 2010, October 29, 2010, November 30, 2010, December 31, 2010, and January 31, 2011.

Around the 15th of the month, SURS submits a pre-notification to the financial institutions receiving EFTs, allow-ing them to list any corrections in account transmittal information to us. Any direct deposit changes received at SURS after the pre-notification is processed will result in a paper check being mailed directly to the bank for the first month.

(continued from page 2)Benefit Payment Schedule

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Meet the SURS Board of TrusteesCarrie Hightman, ChairwomanCarrie Hightman is Executive Vice President and Chief Legal Officer for NiSource Inc., a Fortune 500 energy firm. Prior to joining NiSource, Hightman served as President of AT&T Illinois (formerly SBC).

Prior to joining AT&T, Hightman practiced telecommunications and energy law for more than 17 years. She was a partner in the Chicago law firm of Schiff Hardin, where she led its Energy, Telecommunications, and Public Utilities practice group. Hightman is Vice Chair of the Tele-communications Committee of the Public Utility, Communications, and Transportation Law Section of the American Bar Association and past Chair of the Public Utility Law Section of the Chicago Bar Association.

Hightman earned her B.A. from the University of Illinois and her J.D. from Florida State Uni-versity. In February 2007, Hightman was appointed Chair of the Illinois Board of Higher Edu-cation and the State Universities Retirement System of Illinois. She also serves on the boards of the Lyric Opera of Chicago, Chicago Urban League, the Abraham Lincoln Presidential Library Foundation and the Chicago Area Foundation for Legal Services.

Jeffrey BeaulieuJeffrey Beaulieu is an Associate Professor and Interim Chair of Agribusiness Economics in The College of Agricultural Sciences at Southern Illinois University at Carbondale (SIUC) and has been on staff since 1984. He received his undergraduate degree in Economics from Loyola University in Chicago. He obtained a Ph.D. in Economics by Iowa State University with spe-cializations in agricultural marketing and statistics.

Beaulieu currently chairs the SIUC University Joint Benefits Committee upon which he has served since 2003. This committee monitors the retirement and health benefits of the SIUC community. Beaulieu is chair of the Illinois Education Association’s Higher Education Council and also serves upon the Association’s Board of Directors and Executive Committee.

Mitchell Vogel, Vice ChairmanMitchell Vogel served as President of University Professionals of Illinois Local 4100 of the American Federation of Teachers for over 17 years and was also Vice–President of the Illinois Federation of Teachers. He was a member of the national AFT’s Higher Education Council, as well as Editor in Chief of American Academic: A Journal of the American Federation of Teachers. He also served as Chair of the Educational Leadership Department and Chair of the Faculty Assembly.

Vogel taught courses in teacher education and school administration at Northeastern Illinois University. He also conducted and published research in public administration, school-com-munity relations, and school finance. He is currently Chair of the Board of Directors Illinois Citizen Action, the largest grassroots coalition in Illinois, as well as Vice-Chair of the Chicago Jewish Labor Committee. He received both the Kellogg and Danforth Awards for Teaching and Scholarship. Vogel served as president of the SURS Board of Trustees for four years.

Antonio Vasquez, TreasurerAntonio Vasquez is a Lecturer of Economics at Wilbur Wright College in Chicago, Illinois. Prior to that, he lectured at Harold Washington College, Center for Distance Learning, the Uni-versity of Illinois at Chicago, and Northeastern Illinois University.

Vasquez obtained his B.A. from DePaul University and his M.A. from the University of Illi-nois at Chicago. He is currently enrolled in a Ph.D. program in Disability Studies. Vasquez is a member of the American Economics Association, Society for Community Research & Action, and the Association on Higher Education and Disability.

Vasquez works in the Hispanic community with El Valor in developing entrepreneurial oppor-tunities for artists with disabilities. Vasquez is a member of the Center for Capacity Building on Minorities with Disabilities Research (CBMDR) team at the University of Illinois at Chicago.

5(continued on next page)

Trisha CassidyTrisha Cassidy was appointed President, Gottlieb Memorial Hospital and Senior Vice President, Strategy, Loyola University Health System (LUHS) in July 2009. Prior to this appointment, she served LUHS in many capacities: Senior Vice President of System Development and Strategy (1998-2009) Vice President for Managed Care for the Health System (1998), Associate Vice President of Provider Relations (1995-1998), Director of Provider Contracting (1992-1995), and Manager of Provider Contracting (1990-1992).

Prior to coming to Loyola, Cassidy spent four years working for U.S. Healthcare and Lincoln National Insurance Companies and one year at Dimensional Marketing, a medically focused advertising agency in Chicago. Cassidy serves on the board of directors at RML Specialty Hos-pital and Leaders Bank. She holds an honorary appointment on the faculty of Loyola University Chicago Marcella Niehoff School of Nursing and is a co-course director at Loyola University Chicago Stritch School of Medicine. Cassidy is a cum laude graduate of the University of Il-linois and received her MBA from Loyola University Chicago.

John EngstromJohn H. Engstrom, CPA, CGFM, is KPMG Professor Emeritus of Accountancy at Northern Il-linois University. His teaching and research specialty is governmental and not-for-profit account-ing. He was co-author of one of the leading textbooks in the field, Essentials of Accounting and Not-for-Profit Accounting and author of numerous articles on governmental accounting and auditing in leading journals.

During his career, Engstrom was a member of the Governmental Accounting Standards Advisory Council, the U.S. Comptroller General’s Advisory Council on Government Auditing Standards, the American Institute of Certified Public Accountants (AICPA) Governmental Accounting and Auditing Committee, the AICPA Not-for-Profit Organizations Committee, and related commit-tees for the Illinois Society of CPA’s.

Prior to his academic career, Engstrom was a financial manager in the University of Tennessee System administration and served as Vice Chancellor for Business and Finance at The University of Tennessee at Martin. Residing in Sycamore, Dr. Engstrom is married with five children and stepchildren, fourteen grandchildren, and one great-grandchild.

J. Fred GiertzJ. Fred Giertz is a professor and head of the Department of Economics and member of the Institute of Government and Public Affairs at the University of Illinois at Urbana-Champaign. He has been at the University of Illinois since 1980. He received his Ph. D. in Economics from Northwestern University in Evanston, Illinois, in 1970. Giertz follows general macroeconomic issues, especially as they impact Illinois. He also writes frequently on the Illinois budget and general economic issues in publications such as State Tax Notes and the Central Illinois Business Magazine and compiles the U of I Flash Index, a monthly indicator of the Illinois economy. Several recent articles have appeared in the National Tax Journal. Since 2000, he has served as the Executive Director of the National Tax Association, a 1,200 member organization of tax professionals located in Washington, D. C.

Matthew BernsMatthew Berns is the Vice President for Legal and Regulatory Affairs at Hu-Friedy Mfg., leading global manufacture of dental hand instruments, based in Illinois. He earned his undergraduate degree in finance at the University of Illinois at Champaign and his law degree at the University of Michigan, Ann Arbor.

Berns is an attorney and has spent the bulk of his career as in-house counsel to leading companies in the telecommunications and manufacturing sectors. Berns began his career in public service, as a policy advisor in the office of then Illinois Treasurer Pat Quinn. Berns is active with his local American Youth Soccer Organization as a coach to his children’s teams.

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Marva WilliamsMarva Williams has served as a Senior Program Officer for Chicago Local Initiatives Support Corporation since June 2007. She is responsible for planning and implementing programs and services for the Great Neighborhoods Program.

Williams serves as a program officer in four Chicago communities participating in the New Communities Program, a comprehensive community development initiative.

From 1996-2007, Williams was the Senior Vice President of the Woodstock Institute. She is also the coordinator of the CRA Coalition. She is a member of the Community Advisory Coun-cil of the Federal Reserve Bank, and is a volunteer with the North Side Community Federal Credit Union. Williams is a member of the National Partnership on Financial Education, which is convened by the Consumer Federation of America, and has served as an adjunct lecturer at University of Illinois at Chicago (UIC) College of Urban Planning and Policy Analysis.

Williams was selected by LaSalle Bank to receive the 2004 Tom Gobby Community Leadership Award for her commit-ment to helping lower-income households access the financial mainstream and develop assets. She was recognized by National Center of Poverty Law for her work on financial literacy and by Illinois Representative Eddie Washington for supporting the establishment of a state community reinvestment policy.

Williams holds a Master of Urban and Regional Planning from the University of Pittsburgh and a Ph.D. in Urban Plan-ning and Public Policy from Rutgers University’s Bloustein School of Planning and Public Policy.

Steven RogersSteven Rogers is the Gordon and Llura Gund Family Distinguished Professor of Entrepreneur-ship. He teaches Entrepreneurial Finance at Kellogg and is the Director of the Larry and Carol Levy Institute for Entrepreneurial Practice. Before joining the Kellogg Faculty, he owned and operated two manufacturing firms and one retail operation. Prior to becoming an entrepreneur, Rogers worked at Bain and Company Consulting firm, Cummins Engine Company, and UNC Ventures, a venture capital firm.

Rogers has received numerous teaching awards, including the 1996 and 2005 Lawrence G. Lavengood Outstanding Professor of the Year. He has received the Outstanding Professor Award for the Executive Program 19 times.

Rogers currently serves on the Advisory Board of Private Equity firm OCA Ventures. He also serves on the Board of Directors of SC Johnson Wax, W.S. Darley & Company, SuperValu (NYSE), Oakmark Mutual Funds, and AMCORE Financial (Nasdaq). He is a member of JP Morgan Chase’s Capital Investment Committee. His non-profit work includes board membership for the A Better Chance Program and Urban Prep High School. Professor Rogers is also a former Trustee of Williams College and a former member of the Harvard Business School Visiting Com-mittee.

In 2000, he received the “Bicentennial Medal for Distinguished Achievement” by an alum from Williams College. In 2005, he received the “Bert King Award for Service” from the African American Student Union of Harvard Business School. In 2005, he also was selected as “Chicago United’s Business Leader of Color.” In 2006, he was selected as one of the “100 Men Impacting Supplier Diversity.” In 2002 Professor Rogers published his first book, The Entrepreneur’s Guide to Finance and Business. He has an MBA from Harvard Business School and a B.A. from Williams College.

Dorinda MillerDorinda Miller has been employed at the University of Illinois at Urbana-Champaign for the past 21 years as a Staff Clerk. For the past six years, she has served as President of Local 3700 of the American Federation of State, County, and Municipal Employees (AFSCME), which rep-resents more than 1,800 university employees. She also serves as President of the Champaign County Central Labor Council.

Miller has served on the board of the Champaign County United Way and as the Labor Liaison Supervisor on the Red Cross National Disaster Response Team. In that capacity, she spent sev-eral weeks in New Orleans aiding in relief efforts in the wake of Hurricane Katrina.

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In this issue, SURS would like to include a tribute to our fellow co-work-er, Jeannie Rennels, who passed away on November 7, 2008. She started working for SURS in 1993 as a Benefits Counselor in the Call Center. While serving in this role, she received such member comments as, “Jean-nie exemplifies the true meaning of customer service. She is an asset to SURS.” In 1995, Jeannie moved to a support staff position in the Mailroom. She was always fast and efficient in getting all of our mail opened and sending it on to the correct department. She sent out UPS and Fed Ex packages and prepared the choice election and member guide packets that are sent out to our members every week. She also contributed to the mailing of monthly annuity checks.

In addition to making sure our members got the information they needed in a timely manner, she was always willing to help out her fellow co-workers, no matter what the cause. Co-workers were always greeted in the Mailroom with her smile, laughter, and positive attitude. Her presence is truly missed. Jeannie is survived by her husband, Don Rennels, and mother-in-law, Helen Rennels.

A Tribute To Jeannie Rennels

Mindy Inman has worked at SURS since 1988 and is curently the Chief Clerk in the Mailroom. Her friendly disposition, approachable demeanor, commitment to co-workers, and dedication to “getting the mail out” are qualities that make her a role model for the entire organization.

In recommending her for this award, SURS staff noted her positive, can-do attitude. Despite challenges brought about by illness and misfortune to her staff, Mindy did whatever it took to maintain an efficient, dependable operation.

At the same time, she went above and beyond in reaching out to her own staff both as a supervisor and friend to support their own personal needs while welcoming and training temporary staff and juggling her own duties to the benefit of the organization.

Employee of the Year 2008: Mindy Inman

SURS Member WebsiteVisit the new and improved SURS Member Website to check on your summary of benefits, view your employment and earnings history, update your personal information, and estimate your retirement. Go to www.surs.org and click on “Member Access” to register or log on.

Sharon Ingrum has worked at SURS since 2001 as a Business Analyst. Prior to that, she worked as a consultant for SURS for nine years. Her work ethic and commitment to co-workers are qualities that make her a role model for the entire organization.

She played a key role in the development of the Lump Sum Distribution Enhancement project. This project is one of the top three priorities for the organization and she has gone above and beyond to keep it on track.

Sharon has the ability to translate what the users need from this program and relay it to the programmers, as well as the ability to convey what in-formation the programmers need from the users to create the best product possible. Most importantly, she maintains a cheerful disposition even in the most stressful situations and has a pleasant attitude that makes it easy for her co-workers to ask for exactly what they need.

Employee of the Year 2009: Sharon Ingrum

from left: Dan Slack, former Executive Director, Mindy Inman, and Mitchell Vogel, former SURS Board president

from left: Sharon Ingrum and Judy Parker, Interim Executive Director

TheAdvocate is published by the State Universities Retirement System. We welcome your comments.

SURS BOARD OF TRUSTEES

Carrie Hightman, Chairwoman; Mitchell Vogel, Vice Chairman; Antonio Vasquez, Treasurer; Jeffrey Beaulieu, Matthew Berns, Patricia Cassidy, John Engstrom, J. Fred Giertz, Dorinda Miller, Steven Rogers, and Marva Williams.

Judith Parker, Interim Executive Director

Editor: Kendra Iffland

Printed by the authority of the State of Illinois

Please note that the State Universities Retirement System does not endorse any provider of financial advice. Members seeking financial advice or planning assistance

are encouraged to carefully select credentialed professionals.

Member Service Representative1–800–275–7877

217–378–8800 (Champaign-Urbana Area)

Internetwww.surs.org