Comprehensive Annual Financial Report - Minnesota State ...

Management Discussion
and Analysis
As management of Minnesota’s Public
Employees Retirement Association (PERA), we
present this discussion and analysis of the financial
activities for the year ended June 30, 2012
(FY12). This narrative is intended to supplement
the financial statements which follow this discussion,
and should be read in conjunction with the
transmittal letter, which begins on page 5 of this
annual report.
Overview of the Financial Statements
This Comprehensive Annual Financial Report
(CAFR) contains two basic financial statements: the
Statement of Plan Net Assets and the Statement of
Changes in Plan Net Assets. These financial statements,
in conjunction with the accompanying Notes
to the Financial Statements, report information about
PERA’s financial condition in an attempt to answer the
question: “Is PERA better off or worse off as a result of
this year’s activities?” These statements are prepared
using the accrual basis of accounting as is required
by generally accepted accounting principles laid out
in statements issued by the Government Accounting
Standards Board (GASB).
The Statement of Plan Net Assets provides a snapshot
of account balances at year-end. It reports the
assets available for future payments to benefit recipients,
along with any liabilities that are owed as of the
18
Net Assets—Defined Benefit Plans (dollars in thousands)
Public Employees
Retirement Association
of Minnesota
statement date. The difference between assets and
liabilities, called “Net Assets,” represents the value of
assets held in trust for future benefit payments. Over
time, increases and decreases in Net Assets can be one
measurement of whether PERA’s financial position is
increasing or decreasing.
The Statement of Changes in Plan Net Assets, on the
other hand, shows additions and deductions to Net
Assets during the year. The increase or decrease in Net
Assets reflects the change in Net Assets found on the
Statement of Plan Net Assets from the prior year to the
current year.
The Notes to the Financial Statements are an integral
part of the financial statements and provide additional
information that is essential for a comprehensive understanding
of the data provided in the financial statements.
The Notes describe the accounting and administrative
policies under which PERA operates, and provide
additional levels of detail for selected financial statement
items.
These financial statements should be reviewed along
with the Schedule of Funding Progress and Schedule
of Employer Contributions to determine whether PERA
is becoming financially stronger or weaker over time.
PERA’s funding objective is to meet long-term benefit
obligations through contributions received and the
income derived by investing those contributions during
the working career of our members. These two schedules,
created by an actuary, show the ratio of the actuarial
value of assets to the actuarial accrued liability, and to
what extent contributions needed to fully fund the plan
are being received.
GERF PEPFF PECF
Assets
2012 2011 2012 2011 2012 2011
Cash & Receivables $ 25,217 $ 18,590 $ 13,605 $ 3,106 $ 654 $ 539
Investments 13,554,971 13,601,307 5,766,225 5,319,671 304,984 280,177
Securities Lending Collateral 1,232,119 931,212 524,144 364,638 27,666 19,105
Capital Assets & Other 8,745 9,111 0 0 0 0
Total Assets $14,821,052 $14,560,220 $6,303,974 $5,687,415 $333,304 $299,821
Liabilities
Accounts Payable $ 1,633 $ 2,474 $ 7,783 $ 5,745 $ 230 $ 685
Accrued Compensated Absences 944 931 0 0 0 0
Accrued OPEB Liability 51 64 0 0 0 0
Securities Lending Collateral 1,232,119 931,212 524,144 364,638 27,666 19,105
Bonds Payable 8,652 8,917 0 0 0 0
Total Liabilities $ 1,243,399 $ 943,598 $ 531,927 $ 370,383 $ 27,896 $ 19,790
Total Net Assets $13,577,653 $13,616,622 $5,772,047 $5,317,032 $305,408 $280,031