Report to the Audit Committee of the Board of Trustees

              OKLAHOMA PUBLIC EMPLOYEES
RETIREMENT SYSTEM
Audit Committee Presentation
June 30, 2011
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT SYSTEM
Table of Contents
I. Required Communications
1. Statement on Auditing Standard No. 114 Communication (Pre-audit)
2. Arrangement Letter
3. Statement on Auditing Standard No. 114 Communication (Post-audit)
Financial Statements
II. Oklahoma Public Employees Retirement Plan (OPERP)
III. Uniform Retirement System for Justices and Judges (JRS)
IV. Oklahoma State Employees Deferred Compensation Plan (DCP)
V. Oklahoma State Employees Deferred Savings Incentive Plan (DSIP)
I. Required Communications
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
UNIFORM RETIREMENT SYSTEM FOR JUSTICES AND JUDGES
OKLAHOMA STATE EMPLOYEES
DEFERRED COMPENSATION PLAN
OKLAHOMA STATE EMPLOYEES
DEFERRED SAVINGS INCENTIVE PLAN
Administered by the Oklahoma Public Employees Retirement System
Report to the Audit Committee
of the Board of Trustees
June 30, 2011
TAB 1
April 11, 2011
Audit Committee
Oklahoma Public Employees’ Retirement System
Oklahoma City, Oklahoma
We are pleased to submit the following information about our June 30, 2011 audit plan,
including the planned scope and timing of our audit, and overall audit approach for Oklahoma
Public Employees’ Retirement System (“the System”). We believe our audit plan will satisfy our
primary objective of rendering a report on the financial statements of the System as of June 30,
2011 and for the year then ended.
Our engagement will include the issuance of audit opinions on the following:
• Oklahoma Public Employees Retirement Plan (“OPERP”)
• Uniform Retirement System for Justices and Judges (“JRS”)
• Oklahoma State Employees Deferred Compensation Plan (“DCP”)
• Oklahoma State Employees Deferred Savings Incentive Plan (“DSIP”)
Communication
Effective two-way communication between our Firm and the members of the audit committee is
important to understanding matters related to the audit and in developing a constructive
working relationship.
Your insights may assist us in understanding the System and its environment, in identifying
appropriate sources of audit evidence, and in providing information about specific transactions
or events. We will discuss with you your oversight of the effectiveness of internal control and
any areas where you request additional procedures to be undertaken. We expect that you will
timely communicate with us any matters you consider relevant to the audit. Such matters might
include strategic decisions that may significantly affect the nature, timing, and extent of audit
procedures, your suspicion or detection of fraud, or any concerns you may have about the
integrity or competence of senior management.
We will timely communicate to you any fraud involving senior management and other fraud
that causes a material misstatement of the financial statements, illegal acts that come to our
attention, and disagreements with management and other serious difficulties encountered in
performing the audit.
We also will communicate to you and to management any significant deficiencies or material
weaknesses in internal control that become known to us during the course of the audit. Other
matters arising from the audit that are, in our professional judgment, significant and relevant to
you in your oversight of the financial reporting process will be communicated to you in writing
after the audit.
Independence
Our independence policies and procedures are designed to provide reasonable assurance that
our firm and its personnel comply with applicable professional independence standards. Our
policies address financial interests, business and family relationships, and non-audit services
that may be thought to bear on independence. For example, without our permission no partner
or professional employee of Cole & Reed is permitted to own any direct financial interest or a
material indirect financial interest in a client or any affiliates of a client. Also, if an immediate
family member or close relative of a partner or professional employee is employed by a client in
a key position, the incident must be reported and resolved in accordance with Firm policy. In
addition, our policies restrict certain non-audit services that may be provided by Cole & Reed,
and require audit clients to accept certain responsibilities in connection with the provision of
permitted non-attest services.
Engagement Objectives
Our primary objective is to conduct our audit in accordance with auditing standards generally
accepted in the United States of America which may enable us to express an opinion as to
whether the financial statements are fairly presented, in all material respects, in accordance with
accounting principles generally accepted in the United States of America. Our audit is planned
to provide reasonable, not absolute, assurance that the financial statements are free of material
misstatement, whether caused by error, fraudulent financial reporting or misappropriation of
assets. Because the determination of abuse is subjective, Government Auditing Standards do not
expect us to provide reasonable assurance of detecting abuse. We will also conduct an audit so
as to satisfy the requirements of Government Auditing Standards issued by the Comptroller
General of the United States.
Audit Planning Process
Our audit approach places a strong emphasis on obtaining an understanding of how your entity
functions. This enables us to identify key audit components and tailor our procedures to the
unique aspects of your entity. The development of a specific audit plan will begin by meeting
with you and with management to obtain an understanding of business objectives, strategies,
risks, and performance.
We will obtain an understanding of internal control to assess the impact of internal control on
determining the nature, timing and extent of audit procedures, and we will establish an overall
materiality limit for audit purposes. We will conduct formal discussions among engagement
team members to consider how and where your financial statements might be susceptible to
material misstatement due to fraud or error.
We will use this knowledge and understanding, together with other factors, to first assess the
risk that errors or fraud may cause a material misstatement at the financial statement level. The
assessment of the risks of material misstatement at the financial statement level provides us
with parameters within which to design the audit procedures for specific account balances and
classes of transactions. Our risk assessment process at the account-balance or class-of
transactions level consists of:
• An assessment of inherent risk (the susceptibility of an assertion relating to an account
balance or class of transactions to a material misstatement, assuming there are no related
controls); and
• An evaluation of the design effectiveness of internal control over financial reporting and
our assessment of control risk (the risk that a material misstatement could occur in an
assertion and not be prevented or detected on a timely basis by the System’s internal
control).
We will then determine the nature, timing and extent of tests of controls and substantive
procedures necessary given the risks identified and the controls as we understand them.
The Concept of Materiality in Planning and Executing the Audit
In planning the audit, the materiality limit is viewed as the maximum aggregate amount of
misstatements, which if detected and not corrected, would cause us to modify our opinion on
the financial statements. The materiality limit is an allowance not only for misstatements that
will be detected and not corrected but also for misstatements that may not be detected by the
audit. Our assessment of materiality throughout the audit will be based on both quantitative
and qualitative considerations. Because of the interaction of quantitative and qualitative
considerations, misstatements of a relatively small amount could have a material effect on the
current financial statements as well as financial statements of future periods. At the end of the
audit, we will inform you of all individual unrecorded misstatements aggregated by us in
connection with our evaluation of our audit test results.
Audit Approach
Our audit approach includes obtaining and updating an understanding of:
• The System’s operations. This understanding allows us to concentrate audit efforts on
those aspects of the System that are significant to the financial statements.
• Internal control and its component elements. We will make a preliminary assessment of
control risk and anticipate that we will assess control risk below the maximum for several
transaction cycles, including Investments, Contributions, and Distributions.
• Changes to the System’s significant information systems during the last year.
• Fraud risk factors within the System which may be indicative of either fraudulent financial
reporting, noncompliance or misappropriation of assets.
• The cumulative audit knowledge we have gained from previous years' audits.
• New technical accounting and financial reporting requirements that will impact
recognition, measurement or disclosure in the June 30, 2011 financial statements.
Internal Control and Compliance
Our review and understanding of the System’s system of internal control is not undertaken for
the purpose of expressing an opinion on the effectiveness of its internal control. Rather, it is to
assess the impact of internal control on determining the nature, timing and extent of auditing
procedures. Recommendations for improving internal control that come to our attention will be
summarized for discussion with management and the audit committee.
We will issue a report on internal control related to the financial statements. This report
describes the scope of testing of internal control and the results of our tests of internal controls.
Our reports on internal control will include any significant deficiencies and material
weaknesses in the system of which we become aware as a result of obtaining an understanding
of internal control and performing tests of internal control consistent with the requirements of
the standards identified above.
We will issue a report on compliance with laws, regulations, and the provisions of contracts or
grant agreements. In our report, we will report on any noncompliance which could have a
material effect on the financial statements. Our report on compliance will address material
errors, fraud, abuse, violations of compliance requirements and other responsibilities imposed
by state and Federal statutes and regulations and assumed contracts; and any state or Federal
grant, entitlement or loan program questioned costs of which we become aware, consistent with
the requirements of the standards identified above. Any items of noncompliance that are not
considered material to the financial statements will be reported in a separate letter to the Board
of Trustees.
Using the Work of Internal Auditors
As part of our understanding of internal control, we will obtain and document an
understanding of your internal audit function. We will read relevant internal audit reports
issued during the year to determine whether such reports indicate a source of potential error or
fraud that would require a response when designing our audit procedures. The work of an
internal auditor cannot be substituted for the work of the external auditor. We may, however,
alter the nature, timing and extent of our audit procedures based upon the results of the internal
auditor's work.
Timing of Procedures
We have scheduled preliminary audit fieldwork for May 2011 with final fieldwork commencing
in the latter part of August 2011. We expect to issue our reports on the audited financial
statements in mid-October 2011. Management's adherence to its closing schedule and timely
completion of information used by us in performance of the audit is essential to meeting this
schedule and completing our audit on a timely basis.
Closing
This letter is intended solely for the information and use of the members of the audit committee
of the Oklahoma Public Employees’ Retirement System ands is not intended to be and should
not be used by anyone other than the specified parties.
We will be pleased to respond to any questions you have about the foregoing. We appreciate
the opportunity to be of service to the System.
Very truly yours,
_______________________________
Mike Gibson, Partner
Cole & Reed P.C.
Mike Gibson Digitally signed by Mike Gibson
DN: cn=Mike Gibson, o=Cole & Reed, ou,
email=mgibson@coleandreed.com, c=US
Date: 2011.04.11 16:34:47 -05'00'
TAB 2
TAB 3
1
Audit Committee of
Oklahoma Public Employees Retirement System
5801 N. Broadway Extension, Suite 400
Oklahoma City, OK 73118
We have audited the financial statements of the Oklahoma Public Employees Retirement Plan
(OPERP), the Uniform Retirement System for Justices and Judges (URSJJ), the Oklahoma State
Employees Deferred Compensation Plan (DCP) and the Oklahoma State Employees Deferred
Savings Incentive Plan (SIP), (collectively referred to as the Plans) administered by the
Oklahoma Public Employees Retirement System (the System), for the year ended June 30, 2011,
and have issued our reports thereon dated October 20, 2011. Professional standards require that
we provide you with the following information related to our audits.
Our Responsibility under Auditing Standards Generally Accepted in the United States and
Government Auditing Standards
As stated in our engagement letter dated April 11, 2011, our responsibility, as described by
professional standards, is to plan and perform our audits to obtain reasonable, but not absolute,
assurance about whether the financial statements are free of material misstatement and are
fairly presented in accordance with accounting principles generally accepted in the United
States of America. Because of the concept of reasonable assurance and because we did not
perform a detailed examination of all transactions, there is a risk that material errors, fraud, or
other illegal acts, may exist and not be detected by us.
As part of our audits, we considered the Plans’ internal controls. Such considerations were
solely for the purpose of determining our audit procedures and not to provide any assurance
concerning such internal control.
As part of obtaining reasonable assurance about whether the financial statements are free of
material misstatement, we performed tests of the Plans’ compliance with certain provisions of
laws, regulations, and contracts. However, the objective of our tests was not to provide an
opinion on compliance with such provisions.
Significant Accounting Policies
Management has the responsibility for selection and use of appropriate accounting policies. In
accordance with the terms of our engagement letter, we will advise management about the
appropriateness of accounting policies and their application. The significant accounting policies
for OPERP and URSJJ are described in Note 1 of their respective financial statements. The
significant accounting policies for DCP and SIP are described in Note 2 of their respective
financial statements.
2
We noted no transactions entered into by the Plans during the year that were both significant and
unusual and, of which, under professional standards, we are required to inform you, or
transactions for which there is a lack of authoritative guidance or consensus.
Management Judgments and Accounting Estimates
Accounting estimates are an integral part of the financial statements and supplemental schedules
prepared by management and are based on management’s knowledge and experience about past
and current events and assumptions about future events. Certain accounting estimates and
assumptions are particularly sensitive because of their significance to the financial statements and
supplemental schedules, and because of the possibility that future events affecting them may
differ significantly from those expected.
Significant Audit Adjustments
For purposes of this letter, professional standards define a significant audit adjustment as a
proposed correction of the financial statements that, in our judgment, may have not been detected
except through our auditing procedures. These adjustments may include those proposed by us
but not recorded by the Plans that could potentially cause future financial statements to be
materially misstated, even though we have concluded that such adjustments are not material to
the current financial statements. We proposed no audit adjustments as part of our audits.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a
matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting,
or auditing matter that could be significant to the financial statements or the auditor’s report. We
are pleased to report that no such disagreements arose during the course of our audits.
Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a “second opinion” in certain situations. If a consultation
involves application of an accounting principle to the governmental unit’s general purpose
financial statements or a determination of the type of auditors’ opinion that may be expressed on
those statements, our professional standards require the consulting accountant to check with us to
determine that the consultant has all relevant facts. To our knowledge, there were no such
consultations with other accountants.
Issues Discussed Prior to Retention of Independent Auditors
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management prior to retention as the Plans’ auditors. However, these
discussions occurred in the normal course of our professional relationship and our responses
were not a condition to our retention.
3
Difficulties Encountered in Performing the Audits
We encountered no difficulties in dealing with management in preparation of the financial
statements in performing and completing our audits.
Management Representations
Management communicated certain representations to us in letters dated October 20, 2011.
Copies of these letters are available upon request.
Independence
Our professional standards specify that we communicate to you in writing, at least annually, all
independence-related relationships between our firm and the Plans and provide confirmation that
we are independent accountants with respect to the Plans.
We hereby confirm that as of October 20, 2011, we are independent accountants with respect to
the Plans under all relevant professional and regulatory standards.
* * * * * * * * * * * * * * * * * * * * *
This information is intended solely for the use of the Audit Committee, the Board of Trustees, and
management, and is not intended to be and should not be used by anyone other than these
specified parties.
Oklahoma City, Oklahoma
October 20, 2011
II. OPERP
Oklahoma Public Employees Retirement Plan
ADMINISTERED BY THE OKLAHOMA PUBLIC EMPLOYEES RETIREMENT SYSTEM
Financial Statements
June 30, 2011 and 2010
(With Independent Auditors’ Report Thereon)
1
Independent Auditors’ Report
Board of Trustees
Oklahoma Public Employees Retirement System:
We have audited the accompanying statements of plan net assets of the Oklahoma Public Employees Retirement
Plan (the Plan), a component unit of the state of Oklahoma, as of June 30, 2011 and 2010, and the related
statements of changes in plan net assets for the years then ended. These financial statements are the
responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in the Government Auditing Standards, issued by the
Comptroller General of the United States of America. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets of
the Plan at June 30, 2011 and 2010, and the changes in its net assets for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued a report dated October 20, 2011, on our
consideration of the Plan’s internal control over financial reporting and our tests of its compliance with certain
provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is
to describe the scope of our testing of internal control over financial reporting and compliance and the results of
that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing Standards and should be
considered in assessing the results of our audit.
Management’s Discussion and Analysis and the schedules of funding progress and employers’ contributions in
schedule 1 are not a required part of the basic financial statements but are supplementary information required by
accounting principles generally accepted in the United States of America. We have applied certain limited
procedures, which consisted principally of inquiries of management regarding the methods of measurement and
presentation of the required supplementary information. However, we did not audit the information and express
no opinion on it.
2
Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole.
The information included in schedules 2 through 4 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
Oklahoma City, Oklahoma
October 20, 2011
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
3
Management’s Discussion and Analysis
As management of the Oklahoma Public Employees Retirement System (the Plan) we offer readers of the Plan’s financial
statements this narrative overview and analysis of the financial activities of the Plan for the fiscal years ended June 30, 2011
and 2010.
Financial Highlights
 The net assets held in trust for pension benefits totaled approximately $6.8 billion at June 30, 2011 compared to $5.8
billion at June 30, 2010 and $5.2 billion at June 30, 2009. The net assets are available for payment of monthly
retirement benefits and other qualified distributions to the Plan’s participants. The increase of $1.0 billion and increase
of $0.6 billion of the respective years resulted primarily from the changes in the fair value of the Plan’s investments due
to volatile equity markets.
 At June 30, 2011 and 2010 the total number of members participating in the Plan decreased 2.6% and decreased 1.0%,
respectively. Membership was 75,491 at June 30, 2011 and 77,503 at June 30, 2010. The number of retirees decreased
by 2.6% as of June 30, 2011 and increased by 3.9% as of June 30, 2010. The total number of retirees was 29,418 at June
30, 2011 and 28,009 at June 30, 2010.
 The funded ratio of the Plan was 80.7% at June 30, 2011 compared to 66.0% at June 30, 2010. The key items
responsible for the change in the funded status were the removal of the COLA assumption and reserve of $1,702.7
million and a liability gain of $153.1 million resulting from an actuarial accrued liability that was lower than expected.
The funded ratio of the Plan was 66.8% at June 30, 2009.
Overview of the Financial Statements
The Plan is a multiple‐employer, cost‐sharing public employee retirement plan, which is a defined benefit pension plan. The
Plan covers substantially all employees of the state of Oklahoma (the State) except those covered by six other plans
sponsored by the State and also covers employees of participating counties and local agencies. For the majority of the
Plan’s members, benefits are determined at 2% of the average highest thirty‐six months’ annual covered compensation
multiplied by the number of years of credited service. Normal retirement age under the Plan is 62 or when the sum of the
member’s age and years of credited service equals or exceeds 80 (90 for anyone who became a member after June 30,
1992). Members become eligible to vest fully upon termination of employment after attaining eight years of credited
service or the members’ contributions may be withdrawn upon termination of employment.
The Plan’s financial statements are comprised of a Statement of Plan Net Assets, a Statement of Changes in Plan Net Assets,
and Notes to Financial Statements. Also included is certain required supplementary and supplementary information.
The Plan is administered by the Oklahoma Public Employees Retirement System, a component unit of the State, which
together with other similar funds comprise the fiduciary‐pension trust funds of the State.
The notes to financial statements provide additional information that is essential to a full understanding of the data
provided in the financial statements.
The required supplementary information presents a schedule of funding progress and a schedule of employer contributions.
Schedules of certain expenses and fees paid are presented as supplementary information.
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Management’s Discussion and Analysis (continued)
4
Financial Analysis
The following are the condensed Schedules of Plan Net Assets and Changes in Plan Net Assets for the Oklahoma Public
Employees Retirement Plan for the fiscal years ended June 30, 2011, 2010, and 2009.
Condensed Schedule of Plan Net Assets
($ millions)
2011 2010 2009
Cash and cash equivalents $ 174.9 $ 157.4 $ 64.6
Receivables 360.1 307.8 471.3
Investments 6,875.9 5,766.9 5 ,220.6
Securities lending collateral 725.6 615.5 785.1
Property and equipment 0.8 0.7 0.4
Other assets 0.2 0.2 0.1
Total assets 8,137.5 6,848.5 6 ,542.1
Other liabilities 570.9 458.6 572.7
Securities lending collateral 725.6 615.5 795.9
Total liabilities 1,296.5 1,074.1 1 ,368.6
Ending net assets held in trust for benefits $ 6,841.0$ 5,774.4$ 5 ,173.5
June 30,
Condensed Schedules of Changes in Plan Net Assets
($ millions)
2011 2010 2009
Member contributions $ 66.4 $ 69.0 $ 68.7
State and local agency contributions 252.9 259.8 243.0
Net investment income (loss) 1 ,226.7 716.9 ( 967.3)
Total additions 1,546.0 1,045.7 ( 655.6)
Retirement, death and survivor benefits 462.1 429.3 410.0
Refunds and withdrawals 12.6 11.0 11.5
Administrative expenses 4.7 4.5 4.6
Total deductions 479.4 444.8 426.1
Total changes in plan net assets $ 1 ,066.6 $ 600.9 $ (1,081.7)
June 30,
For the year ended June 30, 2011 plan net assets increased $1,066.6 million or 18.5%. Total assets increased $1.3 billion or
18.8% due to a 18.8% increase in pending sales of securities, a 17.0% increase in receivables, a 19.2% increase in
investments and a 17.9% increase in securities lending collateral. Total liabilities increased $222.5 million or 20.7% due to a
17.9% increase in the securities lending collateral liability and a 24.5% increase in other liabilities.
Fiscal year 2010 showed a $500.3 million increase in total additions and a $34.5 million increase in total deductions.
Compared to the prior year, the increase in additions was due to increases of $509.8 million in the net appreciation of
assets partially offset by a $9.5 million decrease in contributions. Deductions increased 7.8% due to the $32.8 million
increase in retirement, death and survivor benefits.
For the year ended June 30, 2010 plan net assets increased $600.9 million or 11.6%. Total assets increased $306.3 million or
4.7% due to a 10.5% increase in investments offset by a 22.7% decrease in securities lending collateral, a 37.4% decrease in
pending sales of securities, and a 34.7% decrease in receivables. Total liabilities decreased $294.5 million or 21.5% due to a
22.7% decrease in the securities lending collateral liability and a 19.9% decrease in other liabilities.
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Management’s Discussion and Analysis (continued)
5
Fiscal year 2010 showed a $1.7 billion increase in total additions and a $18.7 million increase in total deductions. Compared
to the prior year, the increase in additions was due to increases of $1.7 billion in the net appreciation of assets and $17.1
million in contributions. Deductions increased 4.4% due to the $19.2 million increase in retirement, death and survivor
benefits.
Additions to Plan Net Assets
For the year ended June 30, 2011 total additions to plan net assets increased $500.3 million from the prior year. The net
change in the fair value of investments of $509.8 million was the result the rebounding market in all asset classes. Interest
income decreased $7.1 million or 9.3%, and dividend income increased $5.3 million or 14.9%. Securities lending net income
increased $0.3 million or 18.8%. Contributions were $9.5 million or 2.9% lower than the prior year in spite of increased
employer contribution rates for local government. The decrease is primarily due to a reduction in the number of active
plan participants as a result of the Voluntary Buyout Offer Bill of 2010.
For the year ended June 30, 2010 total additions to plan net assets increased $1.7 billion from the prior year. The net change
in the fair value of investments of $1.7 billion was the result the rebounding market in all asset classes. Interest income
decreased $30.4 million or 28.5%, and dividend income increased $2.1 million or 6.3%. Securities lending net income
increased $7.2 million or 126.9% only due to the elimination of the securities lending collateral deficiency incurred in the
prior year. Contributions were $17.1 million or 5.5% higher than the prior year due to increased employer contribution rates.
2011 2010 2009
Member contributions $66,431 $69,041 $68,713
State and local agency contributions 252,905 259,779 243,022
Net appreciation (depreciation) 1,122,811 610,536 (1,096,980)
Interest, dividends, and other investment
income 109,515 111,365 141,073
Investment expenses (7,466) (6,544) (5,630)
Securities lending income (loss) 1,826 1,537 (5,712)
$(1,500,000)
$(1,000,000)
$(500,000)
$‐
$500,000
$1,000,000
$1,500,000
Additions to Plan Net Assets
Comparative Data for Fiscal Years Ended June 30, 2011, 2010, and 2009
($ thousands)
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Management’s Discussion and Analysis (continued)
6
Deductions to Plan Net Assets
For the year ended June 30, 2011 total deductions increased $34.5 million or 7.8% from the prior year. Retirement, death
and survivor benefits increased $32.8 million or 7.6% due to a 5.0% increase in the number of retirees at year end and a
2.3% increase in the average benefit. Refunds and withdrawals increased $1.6 million or 14.5% as more participants
withdrew contributions during fiscal 2011. The 2.7% increase in administrative costs was primarily due to the increase in
the allocation rate and personnel costs.
For the year ended June 30, 2010 total deductions increased $18.7 million or 4.4% from the prior year. Retirement, death
and survivor benefits increased $19.2 million or 4.7% due to a 3.9% increase in the number of retirees at year end and a
1.7% increase in the average benefit. Refunds and withdrawals decreased $0.5 million or 4.0% as fewer participants
withdrew contributions during fiscal 2010. The 1.0% decrease in administrative costs was primarily due to the
reclassification and capitalization of payroll costs for internally generated computer software.
2011 2010 2009
Retirement, death and survivor
benefits
$462,062 $429,260 $410,037
Refunds and withdrawals 12,657 11,058 11,516
Administrative expenses 4,681 4,556 4,603
$‐
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
Deductions to Plan Net Assets
Comparative Data for Fiscal Years Ended June 30, 2011, 2010, and 2009
($ thousands)
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Management’s Discussion and Analysis (continued)
7
Investments
The investment portfolio is reported in the chart below by the asset class of the investment managers’ portfolios which
includes the cash and cash equivalents in those portfolios. A summary of the Plan’s cash, cash equivalents, and investments
for fiscal years ended June 30, 2011, 2010, and 2009 is as follows:
Cash, Cash Equivalents, and Investment Portfolio
($ millions) June 30,
2011 2010 2009
Fixed income $ 2,471.2 $ 2,376.8 $ 2,046.2
U.S. equities 2,881.1 2,218.9 2,032.0
International equities 1,681.6 1,297.9 1,178.9
Other 15.7 28.6 27.3
Total managed investments 7,049.6 5,922.2 5,284.4
Cash equivalents on deposit with State 1.2 2.0 0.8
Securities lending collateral 725.6 615.5 785.1
Total cash, cash equivalents,
and investments $ 7,776.4 $ 6,539.7 $ 6,070.3
The increase in the Plan’s managed investments is reflective of the increase in all markets for the year. The Plan’s overall
return for the year ended June 30, 2011 was 21.2%. A 4.6% return for the fixed income component exceeded the market
trend for the asset class. U.S. equities showed a return of 32.2%, and international equities showed a return of 30.0%.
Domestic small cap equities were increased $135.3 million during the year due to a reallocation of $96.8 million from large
cap equities and $22.0 million from fixed income. Amounts of $95.0 million of U.S. equities and $46.7 million of fixed
income were used to supplement the cash requirements of monthly retiree benefit payments. The change in securities
lending collateral is dependent on the securities loaned by the Plan’s master custodian at year end.
At June, 30, 2011 the distribution of the Plan’s investments including accrued income and pending trades was as follows:
Other
0.2%
Fixed Income
32.8%
U.S. Equities
42.3%
International
Equities
24.7%
2011
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Management’s Discussion and Analysis (continued)
8
For the year ended June 30, 2010 the increase in the Plan’s managed investments is reflective of the increase in all markets
for the year. The Plan’s overall return was 13.8%. A 12.9% return for the fixed income component exceeded the market
trend for the asset class. U.S. equities showed a return of 16.4%, and international equities showed a return of 10.0%.
Fixed income holdings were increased $135.0 million during the year due to a reallocation from domestic equities. Another
$16.5 million of U.S. equities and $128.5 million of fixed income were used to supplement the cash requirements of
monthly retiree benefit payments. The change in securities lending collateral is dependent on the securities loaned by the
Plan’s master custodian at year end.
At June, 30, 2010 the distribution of the Plan’s investments including accrued income and pending trades was as follows:
Economic Factors
Funding
A measure of the adequacy of a pension’s funding status is when it has enough money in reserve to meet all expected
future obligations to participants. The funded ratios of the Plan at June 30 for the current and two preceding fiscal years
were as follows:
2011 2010 2009
80.7% 66.0% 66.8%
Plan Amendments
Plan provision changes were enacted by the State Legislature during the session ended in May 2010. The changes include
adjustments to the retirement age requirements, changes in participation requirements for elected officials, changes to the
funding of cost of living adjustments, an extension of the voluntary buyout fund created to provide budget relief to state
agencies, and a clarification on procedures for administrative hearings and appeals.
Other
0.5%
Fixed Income
38.4%
U.S. Equities
38.5%
International
Equities
22.6%
2010
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Management’s Discussion and Analysis (continued)
9
Other
Other than changes in the fair value of Plan assets as may be impacted by the equity and bond markets, no other matters
are known by management to have a significant impact on the operations or financial position of the Plan.
Requests for Information
This financial report is designed to provide a general overview of the Plan’s finances for all those with an interest. Questions
concerning any of the information provided in this report or requests for additional financial information should be
addressed to the Financial Reporting Division, OPERS, P.O. Box 53007, Oklahoma City, Oklahoma 73152‐3007.
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Statements of Plan Net Assets
June 30, 2011 and 2010
Assets 2011 2010
Cash equivalents $ 174,890,095 $ 157,359,942
Receivables:
Member contributions 3,077,652 3,201,144
State and local agency contributions 10,884,088 11,241,230
Due from brokers for securities sold 330,608,855 278,378,484
Accrued interest and dividends 15,493,674 14,990,441
Total receivables 360,064,269 307,811,299
Investments, at fair value:
Short‐term investments 39,569,804 24,823,239
Government obligations 1,435,424,873 1,321,207,854
Corporate bonds 854,458,642 924,072,479
Domestic equities 2,859,836,292 2,197,488,032
International equities 1,686,604,195 1,299,271,431
Securities lending collateral 725,638,216 615,487,747
Total investments 7,601,532,022 6,382,350,782
Property and equipment, at cost, net of accumulated
depreciation of $1,233,228 in 2011 and $1,090,492 in 2010 818,679 668,540
Other assets 226,641 257,587
Total assets 8,137,531,706 6,848,448,150
Liabilities
Due to brokers and investment managers 570,891,721 458,581,140
Securities lending collateral 725,638,216 615,487,747
Total liabilities 1,296,529,937 1,074,068,887
Net assets held in trust for pension benefits $ 6,841,001,769 $ 5,774,379,263
See accompanying notes to financial statements.
10
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Statements of Changes in Plan Net Assets
Years Ended June 30, 2011 and 2010
Additions: 2011 2010
Contributions:
Members $ 66,431,434 $ 69,041,436
State and local agencies 252,904,579 259,779,236
Total contributions 319,336,013 328,820,672
Investment income:
From investing activities:
Net appreciation in fair value of investments 1,122,811,032 610,536,132
Interest 69,039,631 76,143,014
Dividends 40,475,599 35,222,195
Total investment income 1,232,326,262 721,901,341
Less – Investment expenses (7,466,011) (6,543,751)
Income from investing activities 1,224,860,251 715,357,590
From securities lending activities:
Securities lending income 2,381,383 2,426,231
Securities lending expenses:
Borrower rebates (232,771) (532,630)
Management fees (322,370) (356,110)
Income from securities lending activities 1,826,242 1,537,491
Net investment income 1,226,686,493 716,895,081
Total additions 1,546,022,506 1,045,715,753
Deductions:
Retirement, death and survivor benefits 462,062,563 429,260,056
Refunds and withdrawals 12,656,758 11,058,379
Administrative expenses 4,680,679 4,555,833
Total deductions 479,400,000 444,874,268
Net increase 1,066,622,506 600,841,485
Net assets held in trust for pension benefits:
Beginning of year 5,774,379,263 5,173,537,778
End of year $ 6,841,001,769 $ 5,774,379,263
See accompanying notes to financial statements.
11
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
12
Notes to Financial Statements
June 30, 2011 and 2010
(1) Summary of Significant Accounting Policies
The following are the significant accounting policies followed by the Oklahoma Public Employees Retirement Plan
(the Plan).
(a) Basis of Accounting
The financial statements are prepared using the economic resources measurement focus and the accrual basis
of accounting under which expenses are recorded when the liability is incurred, revenues are recorded in the
accounting period in which they are earned and become measurable, and investment purchases and sales are
recorded as of their trade dates. Member and employer contributions are established by statute as a
percentage of salaries and are recognized when due, pursuant to formal commitments, as well as statutory or
contractual requirements. Benefits and refunds are recognized when due and payable in accordance with the
terms of the Plan.
The Plan, together with other similar fiduciary – pension trust funds of the state of Oklahoma (the State), is a
component unit of the State. The Plan is administered by the Oklahoma Public Employees Retirement System
(OPERS). As set forth in Title 74, of the Oklahoma Statutes, at Section 921, administrative expenses are paid
with funds provided by operations of the Plan.
(b) Investments
The Plan is authorized to invest in eligible investments as approved by the Board of Trustees (the Board) as set
forth in its investment policy.
Plan investments are reported at fair value. Short‐term investments include bills and notes, commercial paper
and international foreign currency contracts valued at fair value. Debt and equity securities are reported at
fair value, as determined by the Plan’s custodial agent, using pricing services or prices quoted by independent
brokers based on the latest reported sales prices at current exchange rates for securities traded on national or
international exchanges. The fair value of the pro rata share of units owned by the Plan in equity index and
commingled trust funds is determined by the respective fund trustee based on quoted sales prices of the
underlying securities.
Net investment income (loss) includes net appreciation (depreciation) in the fair value of investments, interest
income, dividend income, securities lending income and expenses, and investment expenses, which includes
investment management and custodial fees and all other significant investment related costs. Foreign
currency translation gains and losses are reflected in the net appreciation (depreciation) in the fair value of
investments.
The Plan’s international investment managers may enter into forward foreign exchange contracts to protect
against fluctuation in exchange rates between the trade date and the settlement date of foreign investment
transactions. Any gains and losses on these contracts are included in income in the period in which the
exchange rates change.
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Notes to Financial Statements (continued)
13
The Plan’s investment policy provides for investments in combinations of stocks, bonds, fixed income
securities and other investment securities along with investments in commingled, mutual and index funds.
Investment securities and investment securities underlying commingled or mutual fund investments are
exposed to various risks, such as interest rate and credit risks. Due to the risks associated with certain
investment securities, it is at least reasonably possible that changes in the values of investment securities may
occur in the near term and those changes could materially affect the amounts reported in the statement of
plan net assets.
(c) Property and Equipment
Property and equipment with an initial cost of $100 and an estimated useful life of at least three years are
considered capital assets. Property and equipment are carried at cost, less accumulated depreciation. Costs of
additions are capitalized as are the costs of internally generated computer software. Maintenance and repairs
are charged to expense as incurred. Depreciation is calculated using the straight‐line method over the
estimated useful lives of the related assets, as follows:
Furniture and equipment 10‐15 years
Computer equipment 3‐5 years
(d) Use of Estimates
The preparation of the Plan’s financial statements, in conformity with U.S. generally accepted accounting
principles, requires the Plan administrator to make significant estimates and assumptions that affect the
reported amounts of net assets held in trust for pension benefits at the date of the financial statements and
the actuarial information included in Note (5) Funded Status and Actuarial Information and the required
supplementary information (RSI) as of the benefit information date, the changes in Plan net assets during the
reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the
financial statements. Actual results could differ from those estimates.
(e) Reclassifications
Certain amounts in prior‐year financial statements have been reclassified to conform with the current year
presentation.
(2) Plan Description and Contribution Information
The following brief description of the Plan is provided for general information purposes only. Participants should refer
to Title 74 of the Oklahoma Statutes, Sections 901 through 932 and 935, as amended, for more complete information.
(a) General
The Plan is a multiple‐employer, cost‐sharing public employee retirement plan, which is a defined benefit
pension plan covering substantially all state employees except employees covered by six other plans
sponsored by the State. It also covers employees of participating county and local agencies. Agencies and/or
participants not included in the Plan are as follows: teachers, municipal police, municipal firefighters, judicial,
wildlife, and state law enforcement.
The supervisory authority for the management and operation of the Plan is the Board, which acts as a
fiduciary for investment of the funds and the application of Plan interpretations.
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Notes to Financial Statements (continued)
14
At June 30 the Plan’s membership consisted of:
2011 2010
Retirees and beneficiaries currently receiving benefits 29,418 28,009
Terminated vested participants 5,522 5,560
Active participants 40,551 43,934
Total 75,491 77,503
For purposes of the discussion on benefits and contributions, the members are described in the following
categories: hazardous duty members, which includes certain employees of the Department of Corrections
who are classified as correction officers, probation and parole officers and fugitive apprehension agents along
with Oklahoma Military Department firefighters; elected officials, which includes elected officials who serve
the State and participating counties; and State, county and local agency employees, which includes all other
employees previously described. If the member category is not specifically identified, the attributes of the Plan
discussed apply to all members.
(b) Benefits
Members qualify for full retirement benefits at their specified normal retirement age or, for any person who
became a member prior to July 1, 1992, when the sum of the member’s age and years of credited service
equals or exceeds 80 (Rule of 80), and for any person who became a member after June 30, 1992, when the
member’s age and years of credited service equals or exceeds 90 (Rule of 90).
Normal retirement date is further qualified to require that all members employed on or after January 1, 1983,
must have six or more years of full‐time equivalent employment with a participating employer before being
eligible to receive benefits. Credited service is the sum of participating and prior service. Prior service includes
nonparticipating service before January 1, 1975, or the entry date of the employer and active wartime military
service.
A member with a minimum of ten years of participating service may elect early retirement with reduced
benefits beginning at age 55.
Disability retirement benefits are available for members having eight years of credited service whose disability
status has been certified as being within one year of the last day on the job by the Social Security
Administration. Disability retirement benefits are determined in the same manner as retirement benefits, but
payable immediately without an actuarial reduction.
The following are various benefit attributes for each member category:
State, County and Local Agency Employees
Benefits are determined at 2% of the average annual salary received during the highest thirty‐six months
of the last ten years of participating service, but not to exceed the applicable annual salary cap, multiplied
by the number of years of credited service. Normal retirement age under the Plan is 62 or Rule of 80/90.
Members who elect to pay the additional contribution rate, which became available in January 2004, will
receive benefits using a 2.5% computation factor for each full year the additional contributions are made.
In 2004 legislation was enacted to provide an increased benefit to retiring members who were not yet
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Notes to Financial Statements (continued)
15
eligible for Medicare. The Medicare Gap benefit option became available to members under age 65 who
retired on or after May 1, 2006. Members may elect to receive a temporary increased benefit to cover the
cost of health insurance premiums until the member is eligible to receive Medicare. After the member
becomes eligible for Medicare, the retirement benefit will be permanently reduced by an actuarially
determined amount. The option is irrevocable, must be chosen prior to retirement, and is structured to
have a neutral actuarial cost to the Plan.
Members become eligible to vest fully upon termination of employment after attaining eight years of
credited service, or the members’ contributions may be withdrawn upon termination of employment.
Elected Officials
Benefits are determined as the greater of the calculation described in the preceding section or, based on
the official’s contribution election, either 1.9% or 4.0% of the highest annual covered compensation
received as an elected official, but not to exceed the applicable annual salary cap, multiplied by the number
of years of credited service. Normal retirement age under the Plan is 60 or Rule of 80. Members become
eligible to vest fully upon termination of employment after attaining six years of participating service as an
elected official, or the members’ contributions may be withdrawn upon termination of employment.
Hazardous Duty Members
Benefits are determined at (a) 2.5% of the final average compensation up to the applicable annual salary
cap multiplied by the number of years of service as a hazardous duty member not to exceed 20 years and
(b) 2.0% of the final average compensation multiplied by the number of years of service in excess of 20
years and any other years of service creditable. Normal retirement age under the Plan is 62 or at
completion of 20 years of creditable service as a hazardous duty member or Rule of 80/90. Military
Department firefighters are not restricted to a maximum of 20 years of hazardous duty for the 2.5%
computation.
However, members who contributed prior to July 1, 1990 but do not qualify for normal retirement as a
hazardous duty member shall receive benefits computed at 2.5% of the final compensation for those full
time years as a hazardous duty member after July 1, 1990, 2.25% before July 1, 1990, and 2.0% for all
other years of credited service. Members become eligible to vest fully after 20 years of full time service as
a hazardous duty member.
Upon the death of an active member, the accumulated contributions of the member are paid to the member’s
named beneficiary(ies) in a single lump sum payment. If a retired member elected a joint annuitant survivor
option or an active member was eligible to retire with either reduced or unreduced benefits or eligible to vest
the retirement benefit at the time of death, benefits can be paid in monthly payments over the life of the
spouse if the spouse so elects.
Benefits are payable to the surviving spouse of an elected official only if the elected official had at least six
years of participating elected service and was married at least three years immediately preceding death.
Survivor benefits are terminated upon death of the named survivor and, for elected officials, remarriage of the
surviving spouse. Upon the death of a retired member, with no survivor benefits payable, the member’s
beneficiary(ies) are paid the excess, if any, of the member’s accumulated contributions over the sum of all
retirement benefit payments made.
Upon the death of a retired member, the Plan will pay a $5,000 death benefit to the member’s beneficiary or
estate of the member if there is no living beneficiary. The death benefit will be paid in addition to any excess
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Notes to Financial Statements (continued)
16
employee contributions or survivor benefits due to the beneficiary. Death benefits paid for the years ended
June 30, 2011 and 2010 totaled approximately $4,436,000 and $4,466,000, respectively.
Legislation was enacted in 1999, which provided a limited additional benefit for certain terminated members
eligible to vest as of July 1, 1998. This limited benefit is payable as an additional $200 monthly benefit upon
the member’s retirement up to the total amount of certain excess contributions paid by the participant to the
Plan. In April 2001 limited benefit payments began for qualified retired members. The estimated liability for
future payments of the limited benefit of approximately $0.8 million has been included in the calculation of
the actuarial liability of the Plan at June 30, 2011 and 2010.
(c) Contributions
The contribution rates for each member category of the Plan are established by the Oklahoma Legislature
after recommendation by the Board based on an actuarial calculation, which is performed to determine the
adequacy of such contribution rates.
Each member participates based on their qualifying gross salary earned, excluding overtime. There is no cap
on the qualifying gross salary earned, subject to Internal Revenue Service (IRS) limitations on compensation.
The following contribution rates were in effect:
State, County, and Local Agency Employees
For 2011 and 2010, state agency employers contributed 15.5% on all salary, and state employees
contributed 3.5% on all salary.
For 2011 contributions of participating county and local agencies totaled 20.0% of salary composed of a
minimum employee contribution rate of 3.5% up to a maximum of 8.5% and a minimum employer
contribution rate of 11.5% up to a maximum of 16.5%. For 2010 contributions of participating county and
local agencies totaled 19.0% of salary composed of a minimum employee contribution rate of 3.5% up to
a maximum of 8.5% and a minimum employer contribution rate of 10.5% up to a maximum of 15.5%.
Members have the option to elect to increase the benefit computation factor for all future service from
2.0% to 2.5%. The election is irrevocable, binding for all future employment under OPERS, and applies only
to full years of service. Those who make the election pay the standard contribution rate plus an additional
contribution rate, 2.91% which is actuarially determined. The election is available for all state, county and
local government employees, except for elected officials and hazardous duty members.
Elected Officials
Elected officials’ employee contributions are based on the maximum compensation levels set for all
members, and the participating employers are required to contribute on the elected officials’ covered
salary using the same percentage and limits as applicable for state agencies. Elected officials must select
an employee contribution rate of 4.5%, 6.0%, 7.5%, 8.5%, 9.0% or 10.0%.
Effective July 1, 1999, elected officials must affirmatively elect or decline participation in the Plan within
90 days after taking office. This decision is irrevocable and failure of an elected official to decline to
participate in the Plan will be deemed as an irrevocable election to participate and contribute at the
highest rate (currently 10%). All current elected officials who had not elected to participate in the Plan
must have either elected, including selecting a contribution rate, or declined to participate in the Plan on
or before December 1, 1999.
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Notes to Financial Statements (continued)
17
Effective November 1, 2010 elected officials who are first elected or appointed to an elected office may
select one of two benefit computation factors ‐ 1.9% or 4.0% ‐ with the respective employee contribution
rates of 4.5% or 10.0%.
Hazardous Duty Members
For 2011 and 2010 hazardous duty members contributed 8% and their employer agencies contributed
15.5% on all salary.
Effective July 1, 2010 the contribution rates increase as follows:
The state agency employer contribution rate will increase to 16.5% for the year ended June 30, 2012 and each
year thereafter.
(d) Participating Employers
At June 30, the number of participating employers was as follows:
(3) Cash and Cash Equivalents
Cash and cash equivalents represent short‐term investment funds held by the Office of the State Treasurer (State
Treasurer) and the Plan’s custodial agent, and foreign currency.
At June 30 cash and cash equivalents were
2011 2010
Cash equivalents
State Treasurer $ 1,276,210 $ 1,979,498
Custodial agent 171,571,209 154,637,315
Foreign currency 2,042,676 743,129
Total cash and cash equivalents $ 174,890,095 $ 157,359,942
Cash is deposited to OK INVEST, an internal investment pool of the State Treasurer with holdings limited to
obligations of the U.S. Government, its agencies and instrumentalities, agency senior debt and mortgage‐backed
pass‐through securities, tri‐party repurchase agreements, money market mutual funds, collateralized certificates of
deposit, commercial paper, obligations of state and local governments and State of Israel Bonds. Participants are
limited to qualifying agencies and funds within the State’s reporting entity, and each participant maintains an
interest in the underlying investments of OK INVEST and shares the risk of loss on the funds in proportion to the
respective investment in the funds. The custodial agent cash equivalents consist of temporary investments in
commingled trust funds of the Plan’s custodial agent. The funds are composed of high‐grade money market
2011 2010
State agencies 126 124
County governments 75 75
Local government towns and cities 28 28
Other local governmental units 57 52
Total 286 279
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Notes to Financial Statements (continued)
18
instruments with short maturities. Each participant in the funds shares the risk of loss on the funds in proportion to
the respective investment in the funds.
Deposits are exposed to custodial credit risk if they are not covered by depository insurance and the deposits are
uncollateralized, collateralized with securities held by the pledging financial institution, or collateralized with
securities held by the pledging financial institution’s trust department or agency but not in the depositor‐government’s
name. At June 30, 2011 and 2010 the cash equivalents in OK INVEST and the Plan’s custodial agent
cash equivalents were not exposed to custodial credit risk because their existence cannot be evidenced by securities
that exist in physical or book entry form.
At June 30, 2011, as a result of outstanding checks, the Plan’s carrying amount in OK INVEST totaled $1,276,210 and
the bank balances totaled $9,269,403. At June 30, 2010, as a result of outstanding checks, the Plan’s carrying amount
in OK INVEST totaled $1,979,498 and the bank balances totaled $9,862,294. At June 30, 2011 and 2010 the carrying
amounts of the Plan’s custodial agent cash equivalents were the same as the bank balances, $171,571,209 and
$154,637,315, respectively.
The Plan hold foreign currency in banks outside the United States as a result of transactions of international
investment managers. The foreign currency is in accounts in the name of the Plan’s custodial agent and is
uncollateralized, and the Plan is exposed to custodial credit risk. At June 30, 2011 and 2010 the foreign currency
holdings were $2,042,676 and $743,129, respectively. The Plan’s exposure to foreign currency risk is detailed in the
section entitled Investments, Foreign Currency Risk.
(3) Investments
(a) General
The OPERS Statement of Investment Policy states that the Board believes that Plan assets should be managed
in a fashion that reflects the Plan’s unique liabilities and funding resources, incorporating accepted investment
theory and reliable empirical evidence. Specifically, the Board has adopted the following principles:
 Asset allocation is the key determinant of return and, therefore, commitments to asset allocation
targets will be maintained through a disciplined rebalancing program.
 Diversification, both by and within asset classes, is the primary risk control element.
 Passive fund portfolios are suitable investment strategies, especially in highly efficient markets. These
index funds which are externally managed by professional investment management firms selected
through due diligence of the Board are deemed to be actively managed accounts within the meaning
of Section 909.1(D) of Title 74 of the Oklahoma Statutes.
At June 30, 2011 and 2010 the asset allocation guidelines established by policy were U.S. equities – 40%,
international equities – 24%, and domestic fixed income – 36%. The guidelines also establish minimum and
maximum percentages for each asset class allocation, and when allocations move outside these limits,
portfolios are rebalanced.
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Notes to Financial Statements (continued)
19
The fair value of investments held by the Plan at June 30 was as follows:
2011 2010
U.S. Treasury notes/bonds $ 310,627,697 $ 4 05,066,213
U.S. Treasury strips 103,521,994 1 41,300,079
U.S. TIPS index fund 217,029,797 2 01,263,717
Government agencies 148,068,004 1 52,001,753
Government mortgage‐backed securities 647,145,562 3 88,548,756
Municipal bonds 13,381,666 43,466,130
Corporate bonds 545,957,803 5 45,680,796
Asset‐backed securities 157,360,480 1 74,111,214
Commercial mortgage‐backed securities 130,337,416 1 39,697,741
Non government backed collateralized mortgage obligations 56,106,508 78,969,685
Domestic equities 1,183,856,294 8 74,783,387
U.S. equity index fund 1,675,979,998 1,322,704,645
International equities 576,635,456 4 47,399,131
International equity index funds 1,109,885,131 8 51,869,788
Securities lending collateral 725,638,216 6 15,487,747
Total investments $ 7,601,532,022 $ 6,382,350,782
The Plan participates in a fixed income and international and domestic equity index funds managed by BlackRock
Institutional Trust Company, N.A. (BTC). Prior to December 2009 international and domestic equity index
funds were managed by Barclays Global Investors, N.A. (BGI). BTC, a subsidiary of BlackRock Inc., is a national
banking association and operates as a limited purpose trust company. Its primary regulator is the Office of the
Comptroller of the Currency (OCC), the agency of the U.S. Treasury Department that regulates United States
national banks. BGI, a wholly owned subsidiary of Barclays Bank PLC. (Barclays), operated as a limited purpose
trust company, and its primary regulator was the OCC. In December 2009 BlackRock, Inc. acquired from
Barclays all of the outstanding equity interests of subsidiaries of Barclays conducting the business of BGI. Each
fund is a collective fund which is a group trust and an entity separate from the manager, (BTC and prior to
December 2009 BGI), other funds, and the investing participants. BTC, and prior to December 2009 BGI, is
trustee of each of the collective fund trusts and holds legal title to each trust’s assets for the exclusive benefit
of the Plan. The fair value of the Plan’s position in the pool is the same as the value of the pool shares. As of
June 30, 2011, the Plan was invested in four domestic equity index funds, two international equity index funds
and a fixed income index fund. In 2010 the Plan invested in a domestic equity index fund, three international
equity index funds and a fixed income index fund. The Plan shares the risk of loss in these funds with other
participants in proportion to its respective investment. Because the Plan does not own any specific identifiable
investment securities of these funds, the risk associated with any derivative investments held in these funds is
not apparent. The degree of risk depends on the underlying portfolios of the funds, which were selected by
the Plan in accordance with its investment policy guidelines including risk assessment.
The international funds invest primarily in equity securities of entities outside the United States and may enter
into forward contracts to purchase or sell securities at specified dates in the future at a guaranteed price in a
foreign currency to protect against fluctuations in exchange rates of foreign currency.
(b) Securities Lending
The Plan’s investment policy provides for its participation in a securities lending program. The program is
administered by the Plan’s master custodian and there are no restrictions on the amount of loans that can be
made. During 2011 and 2010 the types of securities loaned were primarily U.S. Government and corporate
bonds, domestic equity securities, and international equity securities. Certain securities of the Plan are loaned
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Notes to Financial Statements (continued)
20
to participating brokers, who must provide collateral in the form of cash, U.S. Treasury or Government Agency
securities, or letters of credit issued by approved banks.
Under the terms of the securities lending agreement, collateral is required to be provided in the amount of
102% of the fair value of U.S. securities loaned, and 105% of the fair value of non‐U.S. securities loaned. At
June 30, 2011 and 2010 the Plan had no credit risk exposure to borrowers because the amounts the Plan owes
the borrowers exceed the amounts the borrowers owe the Plan. The securities on loan at June 30, 2011 and
2010 were $706,274,811 and $595,667,637, respectively, and the collateral received for those securities on
loan was $725,638,216 and $615,487,747, respectively. The master custodian provides for full indemnification
to the Plan for any losses that might occur in the program due to the failure of a broker to return a security
that was borrowed (and if the collateral is inadequate to replace the securities lent) or failure to pay the Plan
for income of the securities while on loan. The Plan cannot pledge or sell collateral securities unless the
borrower defaults. The loan premium paid by the borrower of the securities is apportioned between the Plan
and its custodial agent in accordance with the securities lending agreement. All securities loans can be
terminated on demand by either the lender or the borrower.
The securities lending agreement provides that cash collateral be invested in the custodial agent’s short‐term
investment pool and sets forth credit quality standards, acceptable investments, diversification standards, and
maturity and liquidity constraints for the investment fund. The Plan’s investment guidelines do not require a
matching of investment maturities with loan maturities, but do establish minimum levels of liquidity and other
investment restrictions designed to minimize the interest rate risk associated with not matching the maturities of
the investments with the loans. At June 30, 2011 and 2010 the cash collateral investments had an average
weighted maturity of 21 and 24 days, respectively, and the relationship between the maturities of the
custodial agent’s investment pool and the Plan’s loans is affected by the maturities of the securities loans made by
other entities that use the agent’s pool, which the Plan cannot determine. The Plan’s non‐cash collateral is
represented by its allocated share of a pool administered by the agent for the Plan and other pool
participants.
(c) Credit Risk
Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations.
The Plan’s investment guidelines provide for the domestic fixed income managers to follow one of three
investment styles and specify quality guidelines for each.
The Core manager will invest in a broadly diversified portfolio with characteristics similar to a broad fixed
income market index such as the Barclays Capital Aggregate Bond Index. The total portfolio minimum quality
should be A as rated by Standard and Poor’s Corporation (S&P). The portfolio should be made up of
investment grade securities only, with a minimum quality rating for any issue of BBB‐ (S&P) or its equivalent
rating by at least one Nationally Recognized Statistical Rating Organization (NASRO). In the event that a credit
rating is downgraded below this minimum, the investment manager shall immediately notify OPERS staff and
provide an evaluation and recommended course of action.
The Core plus manager will invest in a broadly diversified portfolio with characteristics similar to the Core
manager and will add a “plus” of limited exposure to high yield. The total portfolio minimum quality should be
A as rated by S&P. No more than 20% of the portfolio shall be in noninvestment grade issues. The minimum
quality rating for any issue is B (S&P) or its equivalent rating by at least one NASRO and no more than 5% of a
portfolio shall be invested in issues rated below BB (S&P) or its equivalent rating by at least one NASRO. In the
event that a credit rating is downgraded below this minimum, the investment manager shall immediately
notify OPERS staff and provide an evaluation and recommended course of action.
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Notes to Financial Statements (continued)
21
The Interest Rate Anticipator manager follows a style that seeks to correctly forecast the long term trend in
interest rates and adjust the portfolio duration accordingly. The total portfolio minimum quality should be A as
rated by S&P, and the portfolio should be made up of investment grade securities only.
At June 30, 2011 the domestic fixed income portfolio consisted of a core fixed income portfolio, a core plus
fixed income portfolio and a rate anticipator portfolio including a U.S. TIPS Index fund. All components met
the stated policy restrictions except the core fixed income portfolio which held $18,121,029 in issues rated
below BBB‐ and the core plus fixed income portfolio which held $7,065,008 in issues rated below B. The Plan’s
investment managers have advised retention of the securities after having assessed their risk/reward profiles.
At June 30, 2010 the domestic fixed income portfolio consisted of a core fixed income portfolio, a core plus
fixed income portfolio and a rate anticipator portfolio including a U.S. TIPS Index fund. All components met
the stated policy restrictions except the core fixed income portfolio which held $29,294,343 in issues rated
below BBB‐ and the core plus fixed income portfolio which held $4,490,860 in issues rated below B. The Plan’s
investment managers have advised retention of the securities after having assessed their risk/reward profiles.
Investments issued by or explicitly guaranteed by the U.S. Government are not considered to have credit risk.
At June 30, 2011 the Plan held 22.1% of fixed income investments that were not considered to have credit risk
and 9.3% in a U.S. TIPS index fund made up of explicitly guaranteed U.S. Treasury Inflation‐Protected
Securities. At June 30, 2010 the Plan held 26.7% of fixed income investments that were not considered to
have credit risk and 8.9% in a U.S. TIPS index fund made up of explicitly guaranteed U.S. Treasury Inflation‐
Protected Securities.
The Plan’s exposure to credit risk at June 30, 2011 is presented below, in thousands, by investment category
as rated by S&P or Moody’s Investor Service.
Not Rated
or
Rating Not
AAA/Aaa AA/Aa A/A BBB/Baa BB/Ba B/B CCC/Caa Available Total
Government agencies $ 116,498 $ — $ 8,734 $ 5,908 $ — $ — $ — $ 16,103 $ 147,243
Government mortgage‐backed
securities 28,587 — — — — — — 519,501 548,088
Municipal bonds — 3,074 10,308 — — — — — 13,382
Corporate bonds 71,405 54,802 172,857 168,134 40,554 9,124 1,335 27,747 545,958
Asset‐backed securities 101,237 26,815 16,189 3,427 3,344 10 3,628 2,710 157,360
Commercial mortgage‐backed
securities 76,907 9,452 40,541 2,917 520 — — — 130,337
Non government backed
collateralized mortgage
obligations 40,985 — — 1,689 825 7,862 2,296 2,450 56,107
Total fixed income
securities exposed
to credit risk $ 435,619 $ 94,143 $ 248,629 $ 182,075 $ 45,243 $ 16,996 $ 7,259 $ 568,511 $ 1,598,475
Percent of total fixed
income portfolio 18.7% 4.0% 10.7% 7.8% 1.9% 0.7% 0.4% 24.4% 68.6%
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Notes to Financial Statements (continued)
22
The Plan’s exposure to credit risk at June 30, 2010 is presented below, in thousands, by investment category
as rated by S&P or Moody’s Investor Service.
Not Rated
or
Rating Not
AAA/Aaa AA/Aa A/A BBB/Baa BB/Ba B/B CCC/Caa Available Total
Government agencies $ 94,983 $ 16,650 $ 23,240 $ — $ — $ — $ — $ 15,771 $ 150,644
Government mortgage‐backed
securities — — — — — — — 328,973 328,973
Municipal bonds 1,984 11,728 23,353 4,726 — — — 1,675 43,466
Corporate bonds 95,300 93,316 157,041 152,941 25,843 7,512 — 13,728 545,681
Asset‐backed securities 138,655 12,788 11,152 2,279 3,440 — 4,104 1,693 174,111
Commercial mortgage‐backed
securities 107,032 6,356 26,310 — — — — — 139,698
Non government backed
collateralized mortgage
obligations 45,671 — 335 2,421 1,668 12,916 12,508 3,451 78,970
Total fixed income
securities exposed
to credit risk $ 483,625 $ 140,838 $ 241,431 $ 162,367 $ 30,951 $ 20,428 $ 16,612 $ 365,291 $ 1,461,543
Percent of total fixed
income portfolio 21.3% 6.2% 10.6% 7.2% 1.4% 0.9% 0.7% 16.1% 64.4%
The exposure to credit risk of the underlying investments of the Plan’s cash equivalents at June 30 is as follows:
Credit OK OK
Rating INVEST INVEST
AAA 79.8 % 22.1 % 87.1 % 31.2 %
AA 1.3 — 0.7 —
A1 6.9 77.9 6.3 68.8
BBB — — — —
BB — — — —
NR 12.0 — 5.9 —
100.0 % 100.0 % 100.0 % 100.0 %
2011 2010
Custodial
Agent
Custodial
Agent
(d) Interest Rate Risk
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment or
a deposit. Duration is a measure of a debt investment’s exposure to fair value changes arising from changing
interest rates based upon the present value of cash flows, weighted for those cash flows as a percentage of
the investment’s full price. Effective duration estimates the sensitivity of a bond’s price to interest rate
changes and makes assumptions regarding the most likely timing and amounts of variable cash flows arising
from investments such as callable bonds, collateralized mortgage obligations, and other mortgage‐backed
securities.
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Notes to Financial Statements (continued)
23
At June 30 the Plan’s exposure to interest rate risk as measured by effective duration is listed below by
investment category.
Effective Effective
Fair duration Fair duration
Value in years Value in years
U.S. Treasury notes/bonds $ 310,627,697 8.9 $ 405,066,213 10.5
U.S. Treasury strips 103,521,994 21.0 141,300,079 22.1
U.S. TIPS index fund 217,029,797 7.6 201,263,717 3.5
Government agencies 148,068,004 3.3 152,001,753 3.4
Government mortgage‐backed
securities 647,145,562 3.6 388,548,756 3.9
Municipal bonds 13,381,666 9.2 43,466,130 11.1
Corporate bonds 545,957,803 4.2 545,680,796 4.6
Asset‐backed securities 157,360,480 1.5 174,111,214 0.8
Commercial mortgage‐backed
securities 130,337,416 3.6 139,697,741 4.0
Non government backed
collateralized mortgage
obligations 56,106,508 1.6 78,969,685 2.1
Total fixed income $ 2,329,536,927 $ 2,270,106,084
Portfolio duration 5.4 6.2
2011 2010
The Plan does not have a formal investment policy on interest rate risk. Interest rate risk is controlled through
diversification of portfolio management styles.
Some investments’ sensitivity to changing interest rates may derive from prepayment options embedded in an
investment. Asset‐backed securities, mortgage‐backed securities, and collateralized mortgage obligations are
pass‐through securities that represent pooled debt obligations repackaged as securities that pass income and
principal from debtors through the intermediary to investors.
Asset‐backed securities are bonds or notes backed by loan paper or accounts receivable originated by banks,
credit card companies, or other providers of credit and often enhanced by a bank letter of credit or by
insurance coverage proved by an institution other than the issuer. At June 30, 2011 and 2010 the Plan held
$157,360,480 and $174,111,214, respectively, in asset‐backed securities.
Mortgage‐backed securities are securities backed by mortgages issued by public and private institutions. At
June 30, 2011 and 2010 the Plan held $647,145,562 and $388,548,756, respectively, in government mortgage‐backed
securities issued by the Federal Home Loan Mortgage Corporation (FHLMC), Government National
Mortgage Association (GNMA), and Federal National Mortgage Association (FNMA) as well as $130,337,416
and $139,697,741, respectively, in commercial mortgage‐backed securities.
Collateralized mortgage obligations (CMOs) are mortgage‐backed bonds that allocate mortgage cash flows
(interest and principal) into different maturity classes, called tranches. This is accomplished by dedicating
mortgage cash flows to specific tranches and paying each tranch off, in turn by prespecified rules. CMOs
provide investors with increased security about the life of their investment compared to purchasing a pass‐through
mortgage‐backed security. If mortgage rates drop (rise) sharply, prepayment rates will increase
(decrease), and CMO tranches may be repaid before (after) the expected maturity. At June 30, 2011 and 2010
the Plan held $56,106,508 and $78,969,685, respectively, in non government backed CMOs.
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Notes to Financial Statements (continued)
24
The exposure to interest rate risk of the underlying investments of the Plan’s cash equivalents at June 30 is as
follows:
2011 2010
Maturities
(in days)
0 ‐ 14 20.2 % 18.7 % 16.8 % 47.0 %
15 ‐ 30 0.8 14.7 0.8 18.0
31 ‐ 60 1.4 16.4 1.5 12.0
61 ‐ 90 1.3 24.8 1.5 15.7
91 ‐ 180 4.3 11.8 5.6 4.8
181 ‐ 364 3.9 13.6 8.7 2.5
365 ‐ 730 9.3 13.5
Over 730 58.8 51.6
100.0 % 100.0 % 100.0 % 100.0 %
OK
INVEST
Custodial
Agent
— —
— —
OK
INVEST
Custodial
Agent
(e) Foreign Currency Risk
Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an
investment or a deposit. The OPERS Statement of Investment Policy addresses foreign currency risk by stating
that the primary sources of value‐added for international equity investment managers will be issue and
country selection, with currency management focused on limiting losses due to fluctuations in currency
values.
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Notes to Financial Statements (continued)
25
The Plan’s exposure to foreign currency risk by asset class at June 30, 2011 is as follows:
Short‐term
Currency Equities Investments Cash Total
Australian dollar $ 31,606,695 $ (17,221,573) $ — $ 14,385,122 0.8 %
Brazilian real 13,068,865 — 18 13,068,883 0.8
British pound sterling 89,139,145 (493,030) (3) 88,646,112 5.2
Canadian dollar 6,438,531 — — 6,438,531 0.4
Egyptian pound 224,927 — 5,488 230,415 0.0
Euro 183,954,065 — 399,290 184,353,355 10.9
Hong Kong dollar 26,993,235 199,157 141,589 27,333,981 1.6
Indonesian rupiah 4,839,767 — 27,250 4,867,017 0.3
Japanese yen 87,474,243 — 1,425,709 88,899,952 5.3
Malaysian ringgit 1,344,274 — — 1,344,274 0.1
Mexican peso 3,918,985 — — 3,918,985 0.2
New Zealand dollar 1,319,889 (162,578) — 1,157,311 0.1
Polish zloty 895,696 — — 895,696 0.1
Singapore dollar 15,110,583 — 25 15,110,608 0.9
South African rand 6,672,028 22,871 43,309 6,738,208 0.4
South Korean won 9,056,125 102,242 — 9,158,367 0.5
Swiss franc 22,566,138 (12,412,862) — 10,153,276 0.6
Thai baht 4,183,108 — — 4,183,108 0.2
Turkish lira 4,240,234 — 1 4,240,235 0.3
International portfolio
exposed to foreign
currency risk 513,046,533 (29,965,773) 2,042,676 485,123,436 28.7
International portfolio in
U.S. dollars 1,173,557,662 29,882,165 4,702,214 1,208,142,041 71.3
Total international
portfolio $ 1,686,604,195 $ (83,608) $ 6,744,890 $ 1,693,265,477 100.0 %
Percent
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Notes to Financial Statements (continued)
26
The Plan’s exposure to foreign currency risk by asset class at June 30, 2010 is as follows:
Short‐term
Currency Equities Investments Cash Total
Australian dollar $ 39,498,581 $ — $ 58 $ 39,498,639 3.0 %
Brazilian real 7,200,568 — 7 7,200,575 0.5
British pound sterling 65,400,483 — (6) 65,400,477 5.0
Canadian dollar 5,834,071 — — 5,834,071 0.4
Czech koruna 2,248,998 — — 2,248,998 0.2
Egyptian pound 306,856 — — 306,856 —
Euro 123,315,035 — 28,905 123,343,940 9.5
Hong Kong dollar 20,613,365 (323,740) 85,759 20,375,384 1.6
Indonesian rupiah 1,516,658 — — 1,516,658 0.1
Japanese yen 82,783,490 (255,228) 615,312 83,143,574 6.3
Malaysian ringgit 1,484,518 — — 1,484,518 0.1
Mexican peso 1,487,228 — 10,960 1,498,188 0.1
New Zealand dollar 1,991,651 — — 1,991,651 0.2
Polish zloty 667,032 — — 667,032 0.1
Singapore dollar 15,202,136 — 2,134 15,204,270 1.2
South African rand 4,272,913 — — 4,272,913 0.3
South Korean won 4,350,378 (63,653) — 4,286,725 0.3
Swiss franc 20,126,063 — — 20,126,063 1.5
Thai baht 2,093,000 — — 2,093,000 0.2
Turkish lira 3,906,058 282,530 — 4,188,588 0.3
International portfolio
exposed to foreign
currency risk 404,299,082 (360,091) 743,129 404,682,120 30.9
International portfolio in
U.S. dollars 894,972,349 357,579 11,710,301 907,040,229 69.1
Total international
portfolio $ 1,299,271,431 $ (2,512) $ 12,453,430 $ 1,311,722,349 100.0 %
Percent
The Plan’s actively‐managed international equity securities are recorded at fair value, which includes foreign
currency gains and losses attributable to fluctuations in the exchange rate between the foreign denominated
currency of the investment and the U.S. dollar. This translation gain or loss is calculated based on month‐end
exchange rates. Cumulative unrealized translation gains at June 30, 2011 and 2010 were approximately $66.3
million and $16.6 million, respectively.
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Notes to Financial Statements (continued)
27
(4) Funded Status and Actuarial Information
(a) Funded Status and Funding Progress
The funded status of the Plan as of June 30 is as follows:
Actuarial value of the assets (a) $ 6,598,627,939 $ 6,348,416,407
Actuarial accrued liability (AAL) (b) $ 8,179,767,661 $ 9,622,627,833
Total unfunded actuarial accrued
liability (UAAL) (b‐a) $ 1,581,139,722 $ 3,274,211,426
Funded ratio (a/b) 80.7 % 66.0 %
Covered payroll $ 1,570,500,148 $ 1,683,697,139
UAAL as a percentage of covered
payroll 100.7 % 194.5 %
2011 2010
The schedules of funding progress, presented as RSI following the notes to the financial statements, present
multiyear trend information about whether the actuarial values of plan assets are increasing or decreasing
over time relative to the AALs for benefits.
(b) Actuarial Methods and Assumptions
The information presented in the RSI was determined as part of the actuarial valuations at the dates
indicated. Additional information as of the latest actuarial valuation, June 30, 2011 is as follows:
Funding Method
Costs are developed using the entry age normal cost method (based on a level percentage of covered
payrolls). Under the method used for this plan, the accrued liability and the present value of future
normal costs are determined by summing the individual entry age results for each participant.
The normal cost is then determined in the aggregate by spreading the present value of future normal
costs as a level percentage of expected future covered payrolls. Entry age is defined as the first day
service is credited under the Plan.
Experience gains and losses, i.e., decreases or increases in accrued liabilities attributable to deviations in
experience from the actuarial assumptions, adjust the UAAL.
Asset Valuation Method
For actuarial purposes, assets are determined equal to the prior year’s actuarial value of assets plus cash
flows (excluding realized and unrealized gains or losses) for the year ended on the valuation date
assuming 7.5% interest return. Prior year’s unrecognized gains and losses are added to this amount to
develop expected actuarial value. The expected actuarial value is then compared to the market value of
the assets at the valuation date, and 20% of any gain (loss) for the last five years is added to the expected
actuarial value. The gain (loss) is amortized over five years with the actuarial value of the assets being
constrained to a range of 80% to 120% of the market value at the valuation date.
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Notes to Financial Statements (continued)
28
Amortization
The funding policy amortizes the UAAL on a level percent of payroll over a 20‐year closed period. At June
30, 2011 there are 14 years remaining to the amortization period. Prior to July 1, 2007 the funding policy
amortized the UAAL on the level dollar method, and the amortization period was 40 years from July 1,
1987.
Assumptions
Significant actuarial assumptions employed by the actuary for funding purposes as of June 30, 2011 and
2010 are as follows:
 Investment return – 7.5% compounded annually
 Salary increases – 4.9% to 8.8% per year
 Mortality rates – Active participants and nondisabled pensioners – RP‐2000 Mortality Table
projected to 2010 by Scale AA (disabled pensioners set forward 15 years)
 No annual post‐retirement benefit increases
 Assumed inflation rate – 3.0%
 Payroll growth – 4.0% per year
 Select period for the termination of employment assumptions – 10 years
(5) Federal Income Tax Status
Pursuant to a determination by the IRS, the Plan is qualified under the Internal Revenue Code of 1986, as amended
and, therefore, is exempt from federal income taxes. The latest determination letter is dated February 7, 2006 and
was a favorable determination for the Oklahoma Public Employees Retirement Plan. The Plan has been amended
since receiving the determination letter; however the plan administrator believes that the Plan is designed and is
currently being operated in substantial compliance with the applicable requirements of the Internal Revenue Code
and will retain its status as a qualified plan.
(6) Plan Amendments
The State Legislature enacted the following significant plan provisions during the session ended in May 2011:
(a) Changes to Retirement Age Requirements and Changes to Participation by Elected Officials
Under SB 794, the retirement age for all OPERS members hired on or after November 1, 2011, was increased
to age 65. Members hired on or after November 1, 2011, must also be at least age 60 to retire with 90 points.
These members may retire with full, unreduced benefits from OPERS when the sum of their age and years of
service in OPERS equals 90 or more and they are at least 60 years of age.
Also, under SB 794, the vesting period for elected officials first elected on or after November 1, 2011, was
increased to eight years of elected or appointed service. The retirement age for newly elected officials was
increased to age 65 with eight years of elected or appointed service, or age 62 with 10 years of elected or
appointed service. Newly elected officials will also contribute at the same rate and have their benefits
calculated using the same computation factor as other state and local government employees.
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Notes to Financial Statements (continued)
29
(b) Changes to Funding of Cost of Living Adjustments
Cost of living adjustments (COLAs) for retired OPERS members must be passed by the Legislature. Under HB
2132, COLAs are no longer considered “non‐fiscal retirement bills” in the Oklahoma Pension Legislation
Actuarial Analysis Act. This means COLAs must now be funded by the Legislature before they can be passed
into law. This bill becomes effective August 25, 2011.
(c) Voluntary Buyout Fund Extended
In May 2010, the State Legislature created the Voluntary Buyout Reimbursement Revolving Fund to provide
budget relief to state agencies and provide reimbursement to state agencies that offered voluntary buy‐out
benefits to retirement‐eligible employees. The deadline for state agencies to apply for these funds was
originally June 30, 2011. HB 2177 extended the deadline for application to June 30, 2012.
(d) Clarification on Administrative Hearings and Appeals
Existing law requires suits against OPERS be brought in Oklahoma County. SB 840 provides clarification on
appeals to administrative decisions by the OPERS Board. This bill brings the OPERS hearing procedures in line
with the Administrative Procedures Act including the appointment of hearing examiners.
(7) New Pronouncements
In December 2010, GASB issued Statement No. 62, Codification of Accounting and Financial Reporting Guidance
Contained in Pre‐November 30, 1989 FASB and AICPA Pronouncements (GASB 62) which is intended to enhance the
usefulness of its Codification by incorporating guidance that previously could only be found in certain FASB and
AICPA pronouncements. GASB 62 is effective for financial statements for periods beginning after December 15,
2011.
In June 2011, GASB issued Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows
of Resources, and Net Position (GASB 63) which provides financial reporting guidance for deferred outflows of
resources and deferred inflows of resources. Previous financial reporting standards do not include guidance for
reporting those financial statement elements, which are distinct from assets and liabilities. GASB 63 is effective for
financial statements for periods beginning after December 15, 2011.
In June 2011, GASB issued Statement No. 64, Derivative Instruments: Application of Hedge Accounting Termination
Provisions – An Amendment of GASB Statement No. 53 (GASB 64) which clarifies whether an effective hedging
relationship continues after the replacement of a swap counterparty or a swap counterparty’s credit support
provider. GASB 64 sets forth criteria that establish when the effective hedging relationship continues and hedge
accounting should continue to be applied. GASB 64 is effective for financial statements for periods beginning after
June 15, 2011.
OPERS is currently evaluating the effects the above GASB Pronouncements will have on its financial statements.
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Required Supplementary Information
30
(Unaudited)
June 30, 2011
Schedule 1
Schedule of Funding Progress
Actuarial UAAL as a
Actuarial Accrued Unfunded Percentage
Actuarial Value of Liability (AAL) AAL Funded Covered of Covered
Valuation Assets Entry Age (UAAL) Ratio Payroll Payroll
Date (a) (b) (b‐a) (a/b) (c) ((b‐a)/c)
6/30/2006 $5,654,276,043 $7,914,657,886 $2,260,381,843 71.4 % $1,568,350,023 144.1
6/30/2007 6,110,230,058 8,413,248,130 2,303,018,072 72.6 1,626,737,832 141.6
6/30/2008 6,491,928,362 8,894,287,254 2,402,358,892 73.0 1,682,663,413 142.8
6/30/2009 6,208,245,334 9,291,457,837 3,083,212,503 66.8 1,732,975,532 177.9
6/30/2010 6,348,416,407 9,622,627,833 3,274,211,426 66.0 1,683,697,139 194.5
6/30/2011 6,598,627,939 8,179,767,661 1,581,139,722 80.7 1,570,500,148 100.7
Schedule of Employer Contributions
Year Ended
June 30,
Annual
Required
Contribution
2006 $ 309,980,339 55.3 %
2007 338,550,016 58.4
2008 363,914,352 60.5
2009 323,104,773 75.2
2010 389,155,339 66.8
2011 402,011,633 62.9
Percentage
Contributed
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Supplementary Information
Schedule of Investment Expenses
Years Ended June 30, 2011 and 2010
Schedule 2
2011 2010
Investment management fees:
Fixed Income Managers:
BlackRock Institutional Trust Company, N.A. $ 1,111,269 $ 1,119,247
Hoisington Investment Management 332,247 448,730
Metropolitan West Asset Management, LLC 1,551,912 1,175,558
U.S. Equity Managers:
Aronson, Johnson, and Ortiz, LP 132,311 —
Barrow, Hanley, Mewhinney & Strauss, Inc. 640,381 486,451
BlackRock Institutional Trust Company, N.A. 124,233 147,336
DePrince Race & Zollo, Inc. 163,435 —
Mellon Capital Management 125,000 121,701
State Street Global Advisors 87,617 77,017
Turner Investment Partners, Inc. 158,951 256,611
UBS Global Asset Management 282,954 187,771
International Equity Managers:
BlackRock Institutional Trust Company, N.A. 525,753 512,387
Mondrian Investment Partners, Ltd 1,958,874 1,756,811
Total investment management fees 7,194,937 6,289,620
Investment consultant fees:
Strategic Investment Solutions, Inc. 242,134 225,189
Investment custodial fees:
Northern Trust Company 28,940 28,942
Total investment expenses $ 7,466,011 $ 6,543,751
See accompanying independent auditors’ report.
31
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Supplementary Information
Schedule of Adminstrative Expenses
Years Ended June 30, 2011 and 2010
Schedule 3
2011 2010
Staff salaries $ 2,590,863 $ 2,474,150
Social Security 190,661 183,561
Retirement 421,664 403,269
Insurance 589,537 525,218
Temporary employees 149,594 148,188
Total personnel services 3,942,319 3,734,386
Actuarial 101,967 135,867
Audit 129,715 175,803
Legal 29,247 61,022
Administrative 52,600 73,134
Total professional services 313,529 445,826
Printing 111,570 108,236
Telephone 19,780 21,647
Postage and mailing expenses 114,572 144,409
Travel 37,137 27,624
Total communication 283,059 301,916
Office space 183,239 200,102
Equipment leasing 42,519 42,854
Total rentals 225,758 242,956
Supplies 37,641 40,295
Maintenance 83,027 76,824
Depreciation 204,632 147,415
Other 154,243 169,189
Total miscellaneous 479,543 433,723
Total administrative expenses 5,244,208 5,158,807
Administrative expenses allocated
Uniform Retirement System for Justices and Judges (URSJJ) (118,765) (114,663)
Oklahoma State Employees Deferred Compensation Plan (DCP) (356,095) (393,038)
Oklahoma State Employees Deferred Savings Incentive Plan (SIP) (88,669) (95,273)
Total administrative expenses allocated (563,529) (602,974)
Net administrative expenses $ 4,680,679 $ 4,555,833
Note to Schedule of Administrative Expenses
See accompanying independent auditors’ report.
Administrative overhead expenses, including personnel and other supporting services costs, which are paid for by
the Plan, are allocated to three other retirement funds also administered by OPERS. The allocation is based on
OPERS’ estimate of the cost of service provided by the Plan to the other funds.
32
OKLAHOMA PUBLIC EMPLOYEES RETIREMENT PLAN
Administered by the Oklahoma Public Employees Retirement System
Supplementary Information
Schedule of Professional/Consultant Fees
Years Ended June 30, 2011 and 2010
Schedule 4
2011 2010
Professional/Consultant Service
Cavanaugh Macdonald Consulting, Inc. Actuarial $ 79,167 $ —
Milliman, Inc. Actuarial 22,800 135,867
Cole & Reed PC External Auditor 79,300 77,000
Finely & Cook, PLLC Internal Auditor 50,415 98,803
Ice Miller LLP Legal 11,619 30,686
Phillips Murrah, P.C. Legal 7,778 25,346
Lee Slater, Attorney at Law Hearings Examiner — 3,040
Michael Mitchelson Hearings Examiner 50 —
Slater & Denny Hearings Examiner 9,800 1,950
Performance Measurement
CEM Benchmarking, Inc. Consulting 35,000 35,000
EFL Associates, Inc. Executive Search — 33,134
Principal Technologies, Inc. Executive Search 12,600 —
Glass Lewis & Co. Proxy Services 5,000 5,000
$ 313,529 $ 445,826
See accompanying independent auditors’ report.
33
34
Independent Auditors’ Report on Internal Control over Financial Reporting
and on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards
Board of Trustees
Oklahoma Public Employees Retirement Plan:
We have audited the financial statements of the Oklahoma Public Employees Retirement Plan (the Plan), which is a
component unit of the state of Oklahoma, as of and for the year ended June 30, 2011, and have issued our report
thereon dated October 20, 2011, which includes explanatory paragraphs related to required supplementary
information and other supplementary information. We conducted our audit in accordance with U.S. generally
accepted auditing standards and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States.
Internal Control over Financial Reporting
In planning and performing our audit, we considered the Plan’s internal control over financial reporting as a basis
for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but
not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial
reporting. Accordingly, we do not express an opinion of the effectiveness of the Plan’s internal control over
financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct
misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal
control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements
will not be prevented, or detected and corrected on a timely basis.
Our consideration of internal control over financial reporting was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over financial
reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any
deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined
above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Plan’s financial statements are free of material
misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and
grant agreements, noncompliance with which could have a direct and material effect on the determination of
financial statement amounts. However, providing an opinion on compliance with those provisions was not an
objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no
instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
35
This report is intended solely for the information and use of the Board of Trustees, the Oklahoma State Auditor
and Inspector, and management and is not intended to be and should not be used by anyone other than these
specified parties.
Oklahoma City, Oklahoma
October 20, 2011
III. JRS
Uniform Retirement System for Justices and Judges
ADMINISTERED BY THE OKLAHOMA PUBLIC EMPLOYEES RETIREMENT SYSTEM
Financial Statements
June 30, 2011 and 2010
(With Independent Auditors’ Report Thereon)
1
Independent Auditors’ Report
Board of Trustees
Uniform Retirement System for Justices and Judges:
We have audited the accompanying statements of plan net assets of the Uniform Retirement System for Justices
and Judges (the Plan), a component unit of the state of Oklahoma, as of June 30, 2011 and 2010, and the related
statements of changes in plan net assets for the years then ended. These financial statements are the
responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in the Government Auditing Standards, issued by the
Comptroller General of the United States of America. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets of
the Plan at June 30, 2011 and 2010, and the changes in its net assets for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued a report dated October 20, 2011, on our
consideration of the Plan’s internal control over financial reporting and our tests of its compliance with certain
provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is
to describe the scope of our testing of internal control over financial reporting and compliance and the results of
that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing Standards and should be
considered in assessing the results of our audit.
Management’s Discussion and Analysis and the schedules of funding progress and employers’ contributions in
schedule 1 are not a required part of the basic financial statements but are supplementary information required by
accounting principles generally accepted in the United States of America. We have applied certain limited
procedures, which consisted principally of inquiries of management regarding the methods of measurement and
presentation of the required supplementary information. However, we did not audit the information and express
no opinion on it.
2
Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole.
The information included in schedules 2 through 4 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. The information included in schedules 2 through 4 has been
subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial statements taken as a whole.
Oklahoma City, Oklahoma
October 20, 2011
UNIFORM RETIREMENT SYSTEM FOR JUSTICES AND JUDGES
Administered by the Oklahoma Public Employees Retirement System
3
Management’s Discussion and Analysis
As management of the Uniform Retirement System for Justices and Judges (the Plan) we offer readers of the Plan’s financial
statements this narrative overview and analysis of the financial activities of the Plan for the fiscal years ended June 30, 2011
and 2010.
Financial Highlights
 The net assets held in trust for pension benefits totaled approximately $248.2 million at June 30, 2011 compared to
$211.2 million at June 30, 2010 and $184.6 million at June 30, 2009. The net assets are available for payment of
monthly retirement benefits and other qualified distributions to the Plan’s participants. The increase of $37.0 million
and increase of $26.6 million of the respective years have resulted primarily from the changes in the fair value of the
Plan’s investments due to volatile equity markets.
 At June 30, 2011 the total number of members participating in the Plan was 519 compared to 493 at June 30, 2010 and
487 at June 30, 2009. The total number of retirees was 235 and 210 at June 30, 2011 and 2010 showing a 11.9% and
5.0% increase for each respective year. At June 30, 2009 the total number of retirees was 200.
 At June 30, 2011 the actuarial value of assets was $237.6 million, and the actuarial accrued liability was $246.8 million
producing a funded ratio of 96.3% compared to 81.3% at June 30, 2010. The key items responsible for the change in the
funded status were a liability loss of $0.6 million which resulted in an actuarial accrued liability that was higher than
expected and the effect ($2.1 million) of contributions of less than the actuarial rate. These were offset by a return on
actuarial value of assets of 4.0%. The funded ratio at June 30, 2009 was 84.8%.
Overview of the Financial Statements
The Plan is a single‐employer, public employee retirement plan, which is a defined benefit pension plan. The Plan covers all
Justices and Judges of the Oklahoma Supreme Court, Court of Criminal Appeals, Workers’ Compensation Court, Court of
Appeals, and District Courts. Benefits are determined at 4% of the average monthly compensation received as a justice or
judge based on the highest thirty‐six months of compensation multiplied by the number of years of credited service, not to
exceed 100% of the retiree’s average monthly salary received as a justice and judge for the highest thirty‐six months of
compensation. Normal retirement ages under the Plan are 60 with 10 years of judicial service, 65 with 8 years of judicial
service or when the sum of the member’s age and years of credited service equals or exceeds 80 (Rule of 80). Members
become eligible to vest fully upon termination of employment after attaining eight years of service as a justice or judge or
the members’ contributions may be withdrawn upon termination of employment.
The Plan’s financial statements are comprised of a Statement of Plan Net Assets, a Statement of Changes in Plan Net Assets,
and Notes to Financial Statements. Also included is certain required supplementary and supplementary information.
The Plan is a component unit of the state of Oklahoma (the State) and is administered by the Oklahoma Public Employees
Retirement System, a component unit of the State, which together with the Plan and other similar funds comprise the
fiduciary‐pension trust funds of the State.
The statement of plan net assets presents information on the Plan’s assets and liabilities and the resulting net assets held in
trust for pension benefits. This statement reflects the Plan’s investments, at fair value, along with cash and cash equivalents,
receivables and other assets and liabilities.
The statement of changes in plan net assets presents information showing how the Plan’s net assets held in trust for
pension benefits changed during the years ended June 30, 2011 and 2010. It reflects contributions by members and
participating employers along with deductions for retirement benefits, refunds and withdrawals, and administrative
UNIFORM RETIREMENT SYSTEM FOR JUSTICES AND JUDGES
Administered by the Oklahoma Public Employees Retirement System
Management’s Discussion and Analysis (continued)
4
expenses. Investment income during the period is also presented showing income from investing and securities lending
activities.
The notes to financial statements provide additional information that is essential to a full understanding of the data
provided in the financial statements.
The required supplementary information presents a schedule of funding progress and a schedule of employer contributions.
Schedules of certain expenses and fees paid are presented as supplementary information.
Financial Analysis
The following are the condensed Schedules of Plan Net Assets and Changes in Plan Net Assets for the Uniform Retirement
System for Justices and Judges for the fiscal years ended June 30, 2011, 2010, and 2009.
Condensed Schedules of Plan Net Assets
($ millions)
June 30,
2011 2010 2009
Cash equivalents $ 5.0 $ 3.0 $ 1 .2
Receivables 13.0 10.2 7.5
Investments 250.8 213.4 188.0
Securities lending collateral 18.4 20.4 22.5
Total assets 2 87.2 2 47.0 219.2
Other liabilities 2 0.6 15.4 1 1.8
Securities lending collateral 18.4 20.4 22.8
Total liabilities 3 9.0 35.8 3 4.6
Ending net assets held in trust for benefits $ 2 48.2 $ 2 11.2 $ 184.6
UNIFORM RETIREMENT SYSTEM FOR JUSTICES AND JUDGES
Administered by the Oklahoma Public Employees Retirement System
Management’s Discussion and Analysis (continued)
5
Condensed Schedules of Changes in Plan Net Assets
($ millions)
June 30,
2011 2010 2009
Member contributions $ 2.7 $ 2.6 $ 2.8
Court employer contributions 3.2 8.7 2.2
Net investment income (loss) 44.5 27.1 (35.7)
Total increase (decrease) 50.4 38.4 ( 30.7)
Retirement, death and survivor benefits 1 3.1 11.7 10.5
Refunds and withdrawals 0.2 ‐ ‐
Administrative expenses 0.1 0.1 0.1
Total deductions 1 3.4 11.8 10.6
Total changes in plan net assets $ 37.0 $ 26.6 $ ( 41.3)
For the year ended June 30, 2011 plan net assets increased $37.0 million or 17.5%. Total assets increased by 16.3% due to
increases of 17.5% in investments, 27.2% in receivables, and 30.0% in pending sales of securities. Total liabilities increased
9.0% due to a 33.8% increase in pending purchases of securities, offset by a 9.7% decrease in the securities lending cash
collateral liability.
Fiscal year 2011 showed a $12.0 million increase in total additions and a $1.5 million increase in total deductions.
Compared to the prior year, additions increased 31.2% due to an increase in the fair value of investments of $17.8 million
partially offset by a decrease in contributions of $5.4 million. The 12.8% increase in total deductions was primarily due to a
12.1% increase in retirement, death and survivor benefits. Administrative costs were 3.6% more when compared to the
prior year.
For the year ended June 30, 2010 plan net assets increased $26.6 million or 14.4%. Total assets increased by 12.6% due to
increases of 13.5% in investments, 36.0% in receivables, and 40.9% in pending sales of securities. Total liabilities increased
3.4% due to a 30.3% increase in pending purchases of securities, offset by a 9.5% decrease in the securities lending cash
collateral liability.
Fiscal year 2010 showed a $69.1 million increase in total additions and a $1.3 million increase in total deductions.
Compared to the prior year, additions increased 225.1% due to an increase in the fair value of investments of $63.8 million
and an increase in contributions of $6.3 million. The 12.6% increase in total deductions was due primarily to a 12.2%
increase in retirement, death and survivor benefits. Administrative costs were 2.1% less when compared to the prior year.
UNIFORM RETIREMENT SYSTEM FOR JUSTICES AND JUDGES
Administered by the Oklahoma Public Employees Retirement System
Management’s Discussion and Analysis (continued)
6
Additions to Plan Net Assets
For the year ended June 30, 2011, additions to plan net assets increased $12.0 million or 31.2% from the prior year. The
appreciation in the fair value of investments of $17.8 million is reflective of the rise in all markets for the year. Interest
income decreased $0.3 million or 10.5% as a result of falling interest rates, and securities lending income remained flat
compared to the prior year. Contributions decreased $5.4 million or 48.1% because the $6.0 million legislative
appropriation in fiscal 2010 was not repeated in fiscal 2011.
For the year ended June 30, 2010, additions to plan net assets increased $69.1 million or 225.1% from the prior year. The
appreciation in the fair value of investments of $63.8 million is reflective of the rise in all markets for the year. Interest
income decreased $1.0 million or 26.7% as a result of falling interest rates, and securities lending income increased $182.0
million or 121.9% due only to the elimination of the securities lending collateral deficiency incurred in the prior year.
Contributions increased $6.3 million or 125.2% because of an increase in the employer contribution rate from 7.0% to 8.5%,
and a $6.0 million appropriation by the State Legislature designated as employer contributions.
2011 2010 2009
Member contributions $2,668 $2,599 $2,775
Court employer contributions 3,193 8,704 2,244
Net appreciation (depreciation) 42,149 24,391 (39,397)
Interest, dividends, and other investment income 2,535 2,832 3,901
Investment expenses (157) (139) (96)
Securities lending income (loss) 29 33 (149)
$(50,000)
$(40,000)
$(30,000)
$(20,000)
$(10,000)
$‐
$10,000
$20,000
$30,000
$40,000
$50,000
Additions to Plan Net Assets
Comparative Data for Fiscal Years Ended June 30, 2011, 2010, and 2009
(in $000's)
UNIFORM RETIREMENT SYSTEM FOR JUSTICES AND JUDGES
Administered by the Oklahoma Public Employees Retirement System
Management’s Discussion and Analysis (continued)
7
Deductions to Plan Net Assets
For the year ended June 30, 2011 total deductions increased $1.5 million or 12.8% from the prior year. Retirement, death
and survivor benefits increased $1.4 million or 12.1% due to a 11.9% increase in the number of retirees with a 6.2%
increase in the average benefit. Refunds and withdrawals increased 159.2% from the prior year because the total amount
withdrawn is dependent on contribution amounts of the specific members electing to withdraw contributions each year.
Administrative costs increased 3.6% when compared to the prior year due to an increased allocation rate of 1.9% and
increases in personnel costs and depreciation of capital assets.
For the year ended June 30, 2010 total deductions increased $1.3 million or 12.6% from the prior year. Retirement, death
and survivor benefits increased $1.3 million or 12.2% due to a 5.0% increase in the number of retirees with a 6.6% increase
in the average benefit. Refunds and withdrawals increased 612.3% from the prior year because the total amount
withdrawn is dependent on contribution amounts of the specific members electing to withdraw contributions each year.
Administrative costs decreased 2.1% when compared to the prior year due to a decreased allocation rate of 0.6% and the
reclassification and capitalization of allocated payroll costs for internally generated computer software.
2011 2010 2009
Retirement, death and survivor benefits $13,118 $11,705 $10,430
Refunds and withdrawals 172 66 9
Administrative expenses 119 115 117
$‐
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
Deductions to Plan Net Assets
Comparative Data for Fiscal Years Ended June 30, 2011, 2010, and 2009
(in $000's)
UNIFORM RETIREMENT SYSTEM FOR JUSTICES AND JUDGES
Administered by the Oklahoma Public Employees Retirement System
Management’s Discussion and Analysis (continued)
8
Investments
The investment portfolio is reported in the chart below by the asset class of the investment managers’ portfolios which
includes the cash equivalents in those portfolios. A summary of the Plan’s cash equivalents and investments for fiscal years
ended June 30, 2011, 2010, and 2009 is as follows:
Cash Equivalents and Investments
($ millions) June 30,
2011 2010 2009
Fixed income $ 89.8 $ 85.8 $ 73.3
U.S. equities 104.7 83.2 74.0
International equities 60.9 46.8 41.4
Other 0.3 0.5 0.5
Total managed investments 2 55.7 2 16.3 1 89.2
Cash equivalents on deposit with State 0.1 0.1 0.1
Securities lending collateral 18.4 20.4 22.5
Total cash equivalents
and investments $ 274.2 $ 236.8 $ 2 11.8
The increase in the Plan’s managed investments is reflective of the increase in all markets for the year. The Plan’s overall
return for the year ended June 30, 2011 was 21.4%. A 4.3% return for the fixed income component exceeded the market
trend for the asset class. Equity index funds correlated closely with market trends with U.S. and international equities
showing returns of 32.8% and 30.1% respectively. Amounts of $5.6 million of U.S. equity index funds and $1.7 million of
fixed income were used to supplement the cash requirements of monthly retiree benefit payments. The change in
securities lending collateral is dependent on the securities loaned by the Plan’s master custodian at year end.
At June 30, 2011 the distribution of the Plan’s investments including accrued income and pending trades was as follows:
Other
0.1%
Fixed Income
33.0%
U.S. Equities
42.3%
International Equities
24.6%
2011
UNIFORM RETIREMENT SYSTEM FOR JUSTICES AND JUDGES
Administered by the Oklahoma Public Employees Retirement System
Management’s Discussion and Analysis (continued)
9
The increase in the Plan’s managed investments is reflective of the increase in all markets for the year. The Plan’s overall
return for the year ended June 30, 2010 was 14.3%. A 13.5% return for the fixed income component exceeded the market
trend for the asset class. Equity index funds correlated closely with market trends with U.S. and international equities
showing returns of 16.4% and 10.5% respectively. Fixed income holdings were increased by $6.0 million during the year
due to reallocations of $3.5 million from the international equity index fund and $2.5 million from the domestic equity
index funds. Another $1.9 million of U.S. equity index funds and $4.8 million of fixed income were used to supplement the
cash requirements of monthly retiree benefit payments. The change in securities lending collateral is dependent on the
securities loaned by the Plan’s master custodian at year end.
At June 30, 2010 the distribution of the Plan’s investments including accrued income and pending trades was as follows:
Economic Factors
Funding
A measure of the adequacy of a pension’s funding status is when it has enough money in reserve to meet all expected
future obligations to participants. The funded ratios of the Plan at June 30 for the current and preceding two years were as
follows:
2011 2010 2009
96.3% 81.3% 84.8%
Plan Amendment
Three Plan provision changes were enacted by the State Legislature during the session ended in May 2011. The retirement
age was increased to age 67 with eight years of judicial service, or age 62 with 10 years of service; cost of living adjustments
are no longer considered non‐fiscal retirement bills and must now be funded by the Legislature before they can be passed
into law; and the OPERS hearing procedures have been brought in line with the Administrative Procedures Act by providing
clarification on appeals to administrative decisions by the OPERS Board and by the appointment of hearing examiners.
Other
0.2%
Fixed Income
38.1%
U.S. Equities
39.5%
International Equities
22.2%
2010
UNIFORM RETIREMENT SYSTEM FOR JUSTICES AND JUDGES
Administered by the Oklahoma Public Employees Retirement System
Management’s Discussion and Analysis (continued)
10
Other
Other than changes in the fair value of Plan assets as may be impacted by the equity and bond markets and changes in the
Plan provisions that may have an effect on the actuarial liability, no other matters are known by management to have a
significant impact on the operations or financial position of the Plan.
Requests for Information
This financial report is designed to provide a general overview of the Plan’s finances for all those with an interest. Questions
concerning any of the information provided in this report or requests for additional financial information should be
addressed to the Financial Reporting Division, OPERS, P.O. Box 53007, Oklahoma City, Oklahoma 73152‐3007.
UNIFORM RETIREMENT SYSTEM FOR JUSTICES AND JUDGES
Administered by the Oklahoma Public Employees Retirement System
Statements of Plan Net Assets
June 30, 2011 and 2010
Assets 2011 2010
Cash equivalents $ 5,032,606 $ 3,034,217
Receivables:
Member contributions 199,879 201,642
Participating court employer contributions 249,850 214,247
Due from brokers for securities sold 12,070,877 9,287,623
Accrued interest 439,422 484,868
Total receivables 12,960,028 10,188,380
Investments, at fair value:
Short‐term investments 789,848 1,494,699
Government obligations 53,065,445 48,399,213
Corporate bonds 31,363,065 33,460,418
Domestic equity index funds 104,698,605 83,196,021
International equity index fund 60,900,978 46,831,162
Securities lending collateral 18,384,813 20,363,956
Total investments 269,202,754 233,745,469
Total assets 287,195,388 246,968,066
Liabilities
Due to brokers and investment managers 20,621,565 15,423,555
Securities lending collateral 18,384,813 20,363,956
Total liabilities 39,006,378 35,787,511
Net assets held in trust for pension benefits $ 248,189,010 $ 211,180,555
See accompanying notes to financial statements.
11
UNIFORM RETIREMENT SYSTEM FOR JUSTICES AND JUDGES
Administered by the Oklahoma Public Employees Retirement System
Statements of Changes in Plan Net Assets
Years Ended June 30, 2011 and 2010
Additions: 2011 2010
Contributions:
Members $ 2,667,908 $ 2,599,341
Participating court employers 3,193,277 8,704,232
Total contributions 5,861,185 11,303,573
Investment income:
From investing activities:
Net appreciation in fair value of investments 42,148,970 24,390,695
Interest 2,534,867 2,832,603
Total investment income 44,683,837 27,223,298
Less – Investment expenses (157,258) (139,481)
Income from investing activities 44,526,579 27,083,817
From securities lending activities:
Securities lending income 65,917 75,763
Securities lending expenses:
Borrower rebates (31,267) (35,605)
Management fees (5,194) (7,493)
Income from securities lending activities 29,456 32,665
Net investment income 44,556,035 27,116,482
Total additions 50,417,220 38,420,055
Deductions:
Retirement, death and survivor benefits 13,117,911 11,705,265
Refunds and withdrawals 172,089 66,389
Administrative expenses 118,765 114,662
Total deductions 13,408,765 11,886,316
Net increase 37,008,455 26,533,739
Net assets held in trust for pension benefits:
Beginning of year 211,180,555 184,646,816
End of year $ 248,189,010 $ 211,180,555
See accompanying notes to financial statements.
12
UNIFORM RETIREMENT SYSTEM FOR JUSTICES AND JUDGES
Administered by the Oklahoma Public Employees Retirement System
13
Notes to Financial Statements
June 30, 2011 and 2010
(1) Summary of Significant Accounting Policies
The following are the significant accounting policies followed by the Uniform Retirement System for Justices and
Judges (the Plan).
(a) Basis of Accounting
The financial statements are prepared using the economic resources measurement focus and the accrual basis
of accounting under which expenses are recorded when the liability is incurred, revenues are recorded in the
accounting period in which they are earned and become measurable, and investment purchases and sales are
recorded as of their trade dates. Member and employer contributions are established by statute as a
percentage of salaries and are recognized when due, pursuant to formal commitments, as well as statutory or
contractual requirements. Benefits and refunds are recognized when due and payable in accordance with the
terms of the Plan.
The Plan, together with other similar fiduciary – pension trust funds of the state of Oklahoma (the State), is a
component unit of the State. The Plan is administered by the Oklahoma Public Employees Retirement System
(OPERS). As set forth in Title 20 of the Oklahoma Statutes, at Section 1108, a portion of the administrative
overhead expenses, including personnel and other supporting services costs, which are paid for by a separate
retirement fund also administered by OPERS, are allocated to the Plan. The allocation is based on OPERS’
estimate of the cost of services provided to the Plan by the separate fund. Allocated costs are charged to the
Plan and paid with funds provided through operations of the Plan.
(b) Investments
The Plan is author