To the Honorable, the Assembly:
We have audited the financial statements of WHA Radio and Television, which are public telecommunications entities operated by the University of Wisconsin-Extension, for the period July 1, 1996 through June 30, 1997 and have issued our reports on these statements, dated December 9, 1997.
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The audit was requested by the University of Wisconsin-Extension to fulfill audit requirements of the Corporation for Public Broadcasting. The Corporation requires audited financial statements of public broadcasting entities and certifications of these entities' non-federal revenue sources in determining future funding levels. The audit reports include no major findings, conclusions, or recommendations.
Copies of the audit report have been distributed to members of the Joint Legislative Audit Committee and those required by law to receive them. If you are interested in receiving a copy of this report, please contact our office and request report number 97-26 and 97-27.
Sincerely,
Dale Cattanach
State Auditor
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State of Wisconsin
Investment Board
Madison
December 30, 1997
To the Honorable, the Legislature:
Attached is the Investment Board's annual report to the Legislature on investment goals and long-term strategies, as provided under section
25.17(14g) of the Statutes. Objectives for each of the major funds managed by SWIB are described and significant changes since our last report are noted.
The Board currently manages over $48.2 billion for the Wisconsin Retirement System (WRS), the tenth largest US public pension fund and the 21st largest public or private pension fund in the world. The Board also manages over $4.8 billion in cash balances of state agencies and local governments in the State Investment Fund (SIF). Cash balances of the WRS are also managed in SIF.
Our investment objectives remain fundamentally the same from year-to-year. A long-term focus guides the investment strategy for the Retirement System trust funds, in keeping with their long-term obligations. The SIF emphasizes safety of principal and liquidity, commensurate with a reasonable rate of return.
Key points of note in this report:
Wisconsin Retirement System Trust Funds
* The basic investment objective for th Fixed (or balanced) Retirement Fund is to achieve an average 8% annual return over the long-term. This month, the Employe Trust Funds Board approved the actuary's recommendation to increase the expected spread between salary inflation and investment return from 2.7% to 3.2%. This will result in a relative increase in the portion of liabilities funded from investment returns. In June 1998, the ETF Board may consider reductions in contribution rates based on investment returns for 1997.
* The assets of the Fixed Fund are diversified among various markets in order to produce needed rates of return over the long-term and to manage risk. The overall asset mix for the Fixed Fund is similar to what is typical for other large public pension funds.
* Due to the run-up in the domestic stock market, we moved some funds from stocks to bonds in 1997 in order to achieve the strategic targets for these assets. Together, domestic and international stocks continue to represent about 55% of Fund assets.
* We have shifted a portion of our large-company domestic stock portfolio from active management to an S&P 500 index fund. This enables us to direct more of our analytical resources to the small and mid-size companies where there are greater opportunities to add value with active management. The use of index funds also facilitates rebalancing among asset classes.
* Trustees and staff are engaged in a major planning exercise to examine the funding needs of the WRS and investment market trends over the next five to ten years. With the assistance of outside experts we are reviewing where investment managers are most likely to add value in the markets of the future. By the fall of 1998, we expect to complete an assessment of the implications for SWIB.
State Investment Fund
* The State Investment Fund (SIF) continues to maintain a short average maturity because the current market offers relatively little added return for investments of longer maturity. Interest rates for 81% of the portfolio reset within three months or less. This strategy has served the Fund well over the last several years.
* We restructured the Wisconsin Certificate of Deposit Program to make it more attractive to Wisconsin financial institutions. Because of these changes, participation has grown from 20 banks with $54 million in CDs to over 121 banks with over $239 million in outstanding CDs purchased by SWIB.
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With the assistance of the UW Survey Research Laboratory, we surveyed WRS members and local governments participating in SIF. These surveys are helping us to improve services and to better understand the types of information participants want to receive from SWIB about the management of their funds.
By March 31 we will submit our annual investment performance report to you. Please feel free to contact me if you have any questions about this report of other matters.
Sincerely,
Patricia Lipton
Executive Director, SWIB
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REFERENCE BUREAU CORRECTIONS
Assembly Amendment 1 to Assembly Bill 579
1. Page 2, line 5: delete the quotation mark and last period.
