Our actuarial consultant, Gabriel, Roeder, Smith & Company, concluded that the 2008 valuation was made in accordance with relevant state laws and rules and actuarial standards. It further concluded that the assumptions and methods used in the 2008 valuation were generally reasonable. However, our consultant also made several noteworthy observations and recommendations.

• Our consultant noted that the 2008 valuation disclosed the actuarial present value of future benefits and the actuarial present values of future pay. However, these values do not take into account an assumption for the probability that system members will participate in the Deferred Retirement Option Program (DROP). As a result, our consultant recommended that future valuations include such disclosures that fully reflect the effect of expected DROP participation.
• Additionally, our consultant continues to recommend that the valuation be improved by providing prior-year results in a side-by-side comparison with current-year results as appropriate. This information would provide a ready comparison of changes in values and percentage changes in the Florida Retirement System's membership, assets, and benefits.

Although the 2008 valuation determined that pension plan's assets exceeded its liabilities, State Board of Administration officials do not anticipate these surpluses will carry forward into the coming fiscal years. The most recent SBA-commissioned study to assess the likelihood that different investment strategies will earn rates of return sufficient to pay pension plan obligations projects that, because of poor investment returns related to the economic downturn, the pension plan's liabilities will exceed assets by $8.7 billion, resulting in a funding status of 93% for 2009.