Illinois's $28.6 Billion Pension Pool Had a $99 Million Gap
Summary
The Illinois State Board of Investment, which manages $28.6 billion for three state pension systems and a state trust fund, booked an uncorrected $99.1 million misstatement in its FY2025 books after payables and receivables for investment trades stopped matching its own custodian's records -- a finding state auditors call a material weakness even as ISBI cleared four other control findings from its prior review.
What ISBI oversees
ISBI was created in 1969 to manage the pooled assets of the General Assembly Retirement System, the Judges' Retirement System, and the State Employees' Retirement System of Illinois⧉; in 2007 lawmakers added the Illinois Power Agency Trust Fund to its portfolio. By the close of FY2025 that pool held $28.58 billion in net position⧉, up from $26.17 billion a year earlier on the back of a 9.7% investment gain. It is a separate fund from the pension systems' own benefit-administration offices, and separate from municipal funds like Chicago's -- ISBI's job is narrower: invest the money and account for it accurately.
View data as table
| ISBI Member System | $98,910,967 |
|---|---|
| Illinois Power Agency Trust Fund | $161,192 |
| Total uncorrected misstatement | $99,072,159 |
Four findings cleared, one new one -- on reconciliation
The same examination closed out four findings⧉ carried over from ISBI's 2023 compliance review: gaps in cybersecurity program controls, in reviewing service providers' own controls, in computer security generally, and -- notably -- "insufficient controls over monthly reconciliations" of ISBI's internal records against the state Comptroller's reports. Auditors found all four resolved. But in the same two-year window, a different reconciliation problem emerged as the fund's sole new finding: ISBI's internal ledger for investment purchases and sales stopped matching the balances its custodian reported, and nobody caught it before the audit did.
ISBI agrees on the number, not the diagnosis
ISBI's management response⧉ accepts the dollar figures but disputes the auditors' framing. The fund says its practice of balancing quarterly portfolio movements through a single ledger line "has existed throughout the duration of ISBI's relationship with its asset custodian, which began in 2017," and "has never been identified as an issue in any prior financial audit." ISBI attributes the specific $99.1 million gap to a ledger-system change at its custodian that its own staff missed. It has agreed to change its reporting process and start supplying auditors a reconciliation of the balance going forward -- without conceding the underlying practice was ever an improper control.
The takeaway
- Illinois's $28.6 billion pension-investment pool carried a $99.1 million uncorrected misstatement in its FY2025 books, per a July 2026 state compliance examination -- money that had stopped reconciling between ISBI's internal ledger and its own asset custodian's records.
- Nearly all of it, $98.9 million, landed in the pooled assets of three state retirement systems -- General Assembly, Judges', and State Employees' -- with the remaining $161,192 in the smaller Illinois Power Agency Trust Fund.
- The finding earned ISBI a modified compliance opinion and a material-weakness rating, even as the fund cleared four other findings from its 2023 review, including one specifically about insufficient monthly-reconciliation controls.
- ISBI accepts the dollar figures but disputes that its practice was ever an improper control, saying the underlying ledger variance dates to a custodian relationship that began in 2017 and was never flagged before this audit -- while agreeing to change its process going forward.
- No prior BlackLeaf coverage of Illinois's Auditor General has touched ISBI; the office's only other article on this site examined Department of Corrections overtime, an unrelated agency.
Every dollar figure and finding-count in this piece comes from two Illinois Office of the Auditor General reports read in full: the State Compliance Examination for the two years ended June 30, 2025 (released July 14, 2026) and the FY2025 financial audit (released March 26, 2026), both performed by RSM US LLP as Special Assistant Auditors and hosted directly on auditor.illinois.gov. Both PDFs were captured to the Wayback Machine at read time; see source.json for locators. A blind adversarial verifier, working from the same public documents with no access to this draft, independently checked every itemized fact; see verification.json.
Sources(2) ▾
- Illinois Office of the Auditor General (RSM US LLP, Special Assistant Auditors), Illinois State Board of Investment (An Internal Investment Pool of the State of Illinois) — State Compliance Examination for the Two Years Ended June 30, 2025 (2026-07-14) — The statutory State Compliance Examination of the Illinois State Board of Investment (ISBI) for the two years ended June 30, 2025, performed by RSM US LLP as Special Assistant Auditors for Illinois Auditor General Frank J. Mautino, released July 14, 2026. It carries a modified opinion on internal control over compliance, sets out the single current finding (2025-001, an uncorrected $99,072,159 misstatement from unreconciled investment payables/receivables) as a material weakness and material noncompliance, and lists the four FY2023 findings ISBI cleared in the same cycle -- the source for every dollar figure, finding count, and audit-history detail in this piece. auditor.illinois.gov · original document
- Illinois Office of the Auditor General (RSM US LLP, Special Assistant Auditors), Illinois State Board of Investment (An Internal Investment Pool of the State of Illinois) — Financial Audit for the Year Ended June 30, 2025 (2026-03-26) — ISBI's audited financial statements for FY2025, including the same Finding 2025-001 (unmodified opinion on the financial statements themselves, material weakness on internal control), the Management's Discussion and Analysis giving ISBI's total net position ($28.58 billion at June 30, 2025, versus $26.17 billion a year earlier) and its statutory role managing the General Assembly, Judges', and State Employees' Retirement Systems plus the Illinois Power Agency Trust Fund -- the source for the net-position figures and ISBI's institutional description in this piece. auditor.illinois.gov · original document
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The Illinois State Board of Investment (ISBI)⧉ -- the pooled investment fund that manages the assets of three state pension systems and a state trust fund -- carried an uncorrected misstatement of $99,072,159 in its books for the year ended June 30, 2025, according to a compliance examination the Illinois Office of the Auditor General released July 14, 2026. The gap traces to investment payables and receivables that stopped reconciling with the records kept by ISBI's own asset custodian. Auditors rate it a material weakness in internal control and material noncompliance -- the fund's only new finding in the two-year examination cycle.