Review report, Judges of the Probate Courts Retirement Fund of Georgia, a component unit of the state of Georgia, year ended June 30, 1998

G--A {\100
J\\
J'~15
lq~l~'~~
REVIEW REPORT JUDGES OF THE PROBATE COURTS RETIREMENT FUND OF GEORGIA A COMPONENT UNIT OF THE STATE OF GEORGIA
YEAR ENDED JUNE 30, 1998
'----- - - - - - - -
STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

JUDGES OF THE PROBATE COURTS RETIREMENT FUND OF GEORGIA - TABLE OF CONTENTS -

INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

EXIllBITS

FINANCIAL STATEMENTS

A STATEMENT OF PLAN NET ASSETS

ARISING FROM CASH TRANSACTIONS

FIDUCIARY FUND TYPE - PENSION TRUST FUND

2

B STATEMENT OF CHANGES IN PLAN NET ASSETS

ARISING FROM CASH TRANSACTIONS

PENSION TRUST FUND

3

C NOTES TO THE FINANCIAL STATEMENTS

4

SUPPLEMENTARY INFORMATION

SCHEDULES

1 SCHEDULE OF ADMINISTRATIVE EXPENSES PAID BY OBJECT

14

2 RECONCILIATION OF SALARIES AND TRAVEL

15

3 RECONCILIATION OF PER DffiM AND FEES

16

4 SCHEDULE OF FUNDING PROGRESS

17

5 SCHEDULE OF EMPLOYER CONTRIBUTIONS

18

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
February 11, 1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly of Georgia Members ofthe Board of Commissioners ofthe Judges ofthe Probate Courts Retirement Fund of Georgia
and Honorable Robert W. Carter, Secretary-Treasurer Judges ofthe Probate Courts Retirement Fund of Georgia
INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have reviewed the accompanying financial statements (Exhibits A through C) ofthe Judges ofthe Probate Courts Retirement Fund ofGeorgia as ofand for the year ended June 30, 1998, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. As described in Note 2, these financial statements were prepared on the basis of cash receipts and disbursements, which is a comprehensive basis ofaccounting other than generally accepted accounting principles. All information included in these financial statements is the representation of the management of the Judges of the Probate Courts Retirement Fund of Georgia.
A review consists principally of inquiries of retirement fund personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the fmancial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with the basis of accounting described in Note 2.
Our review was made for the purpose of expressing limited assurance that there were no material modifications that should be made to the financial statements in order for them to be in conformity with the basis ofaccounting described in Note 2. The accompanying supplementary information (Schedules 1 through 5) is presented only for supplementary analysis purposes. Such information has been subjected to the

98ARL-4C

inquiries and analytical procedures applied in the review ofthe fmancial statements and we are not aware of any material modifications that should be made thereto.
Respectfully submitted,

CLV:gp 98ARL-4C

Claude L. Vickers State Auditor

FINANCIAL STATEMENTS - 1-

JUDGES OF THE PROBATE COURTS RETIREMENT FUND OF GEORGIA STATEMENT OF PLAN NET ASSETS ARISING FROM CASH TRANSACTIONS
FIDUCIARY FUND TYPE - PENSION TRUST FUND JUNE 30,1998

EXHIBIT "A"

ASSETS
Cash and Cash Equivalents Investments
U, S. Government Securities, at Cost (Market Value $21,338,130.00) Stocks, at Cost (Market Value $21,273,847.30) Investment Account, at Cost (Market Value $18,959.22) Mutual Funds, at Cost (Market Value $2,261,475.42)
TOTAL ASSETS LIABILITIES Payroll Withholdings
NET ASSETS HELD IN TRUST FOR PENSION BENEFITS (A schedule offunding progress is presented on page 19.)

$

28,223.74

$ 20,431,953.14 12,831,423.54 18,959.22 2,261,475,42
$

35,543,811.32 35,572,035.06

1,278.89

$ 35,570,756.17

See Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information.
The notes to the financial statements are an integral part of this statement.
-2-

JUDGES OF THE PROBATE COURTS RETIREMENT FUND OF GEORGIA STATEMENT OF CHANGES IN PLAN NET ASSETS ARISING FROM CASH TRANSACTIONS
PENSION TRUST FUND YEAR ENDED JUNE 30, 1998 .

EXHIBIT"B"

ADDITIONS

Member Contributions

$ 191,960.66

Fines and Bond Forfeitures

442,595,88

Marriage License Fees

128,194.81

Investment Income Interest Received Dividends Received Gain or (Loss) on Sale of Investments (Net)

$ 1,286,846,60 523,899.67
3,363,762,62

5,174,508,89

Other Sources Commission Recapture on Stock Transaction Fees Interest Received on Member Buy-Back Provisions (O,C,GA Section 47-11-40) Other

$

8,044,80

100.60

187,03

8,332.43 $ 5,945,592,67

DEDUCTIONS

Benefits Disability Benefits Retirement Benefits Survivorship Benefits

$

6,762,63

928,744,76

133,024,55 $ 1,068,531,94

Administrative Expenses Personal Services Operating Expenses

$

10,292,60

109.988,81

120.281.41

1,188,813,35

NET INCREASE

$ 4,756,779.32

NET ASSETS HELD IN TRUST FOR PENSION BENEFITS - JULY 1, 1997

30,813,976.85

NET ASSETS HELD IN TRUST FOR PENSION BENEFITS - JUNE 30. 1998

See Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information,
The notes to the financial statements are an integral part of this statement.
-3-

JUDGES OF THE PROBATE COURTS RETIREMENT FUND OF GEORGIA EXHIBIT "c"
NOTES TO THE FINANCIAL STATEMENTS JUNE 30.1998

NOTE 1: PLAN DESCRIPTION

ORGANIZATION AND PURPOSE The Judges ofthe Probate Courts Retirement Fund of Georgia is a cost-sharing multiple-employer defined benefit pension plan established in 1958 by the General Assembly of Georgia for the purpose of paying retirement benefits to the judges ofthe Probate Courts ofthe State of Georgia The Board of Commissioners ofthe Retirement Fund is comprised ofseven (7) members and consists ofthe Governor or his designee, an appointee of the Governor other than the Attorney General, four judges of the probate courts who are members of the Retirement Fund, and one appointee of the Governor who is a member of the Retirement Fund and a retired judge of a probate court. The Judges ofthe Probate Courts Retirement Fund of Georgia is considered a component unit ofthe State ofGeorgia and is included within the State of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational, and financial relationships with the State of Georgia. These reporting entity relationships are defmed in Section 2100 of the Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards.

All duly qualified and commissioned judges ofthe counties ofthe State of Georgia and any person serving as Secretary-Treasurer ofthe Board ofCommissioners of the Judges ofthe Probate Courts Retirement Fund of Georgia are eligible to apply for membership. The Retirement Fund is funded through a combination of member contributions paid by the affected judges of the probate courts, designated portions of fines and forfeitures for criminal and quasi-criminal cases involving the violation of State of Georgia traffic laws, and a designated portion of fees collected for the processing of marriage licenses.

CURRENT MEMBERSHIP The following analysis compares the membership ofthe Judges ofthe Probate Courts Retirement Fund of Georgia at June 30, 1998, to that of the prior year: .

Retirees and Beneficiaries Currently Receiving Benefits and Terminated Members Entitled to but not yet Receiving Benefits For Disability For Retirement For Survivorship
Number ofActive Members Vested Nonvested

June 3D. 1998 June 3D. 1997

2

1

80

86

.2l

30

.w

ill

148

147

-1

~

llQ

ill

-4-

JUDGES OF THE PROBATE COURTS RETIREMENT FUND OF GEORGIA EXHIBIT "C" NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1998
NOTE 1: PLAN DESCRIPTION
PLAN BENEFITS The Judges of the Probate Courts Retirement Fund of Georgia provides retirement as well as death and disability benefits. Benefit provisions and vesting requirements are established by statute and may be amended only by the General Assembly of Georgia A description of plan benefits and vesting requirements is as follows:
(A) RETIREMENT CONDITIONS: A member shall be eligible for retirement at sixty (60) years of age and must have served at least four years as a regularly qualified and commissioned probate judge or Secretary-Treasurer of the Retirement Fund.
(B) RETIREMENT BENEFITS: Any member approved for retirement benefits shall be paid a monthly benefit equal to five percent (5%) of his/her average monthly net earnings up to, but not exceeding, a total of twenty years to determine their monthly benefits with the following exception:
Any member who has served for a total oftwenty years as ajudge of the probate court or employee of the Retirement Fund, or a combination of such service, and who has contributed all dues owed to the Retirement Fund as provided but who is not eligible upon retirement to receive the maximum retirement benefits provided, shall be entitled to continue dues to the Retirement Fund and to continue to receive credit during such a period of time as he/she shall continue to serve as a judge of the probate court or employee of the Retirement Fund beyond twenty years of service. The average monthly net earnings ofany such member shall be added to the monthly net earnings of the individual during the twenty year period of service. The sum ofthese amounts shall then be divided by 240, and the result of such division shall then be used as the average monthly net earnings upon which retirement benefits shall be calculated. Benefits calculated and paid pursuant to this provision shall not exceed the limitations specified.
(C) OPTIONAL BENEFITS: The monthly benefits referred to above are payable for the lifetime of the member. Members may elect to receive an actuarially reduced benefit in the form of a Joint and Survivor Annuity.
(D) DISABILITY BENEFITS: Any member who becomes totally and permanently disabled after completing four years of creditable service is entitled to receive retirement benefits in the amount that the member would receive if their retirement were effective at the time the member became disabled.
(E) DEATH BENEFITS:
(1) Death before Retirement: In the event ofthe death ofthe member, the surviving spouse may elect to withdraw the dues paid into the Retirement Fund by the deceased member plus interest, in which case the spouse shall be deemed to have waived any rights to any benefits; or an optional payment plan may be chosen for which benefits will be paid according to the terms of the Plan.
-5-

JUDGES OF THE PROBATE COURTS RETIREMENT FUND OF GEORGIA EXHIBIT "C" NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1998

NOTE 1: PLAN DESCRIPTION

PLAN BENEFITS (E) DEATH BENEFITS:
(2) Death after Retirement: The surviving spouse, upon reaching sixty (60) years of age, may elect to receive a benefit equal to fifty percent (50%) ofthe monthly retirement benefit being paid to the deceased spouse at the time of death. These benefits will be paid for the remainder of the surviving spouse's life.

(F) TERMINATION: In the event oftermination, a member is entitled to any retirement benefits that may have been earned. However, the member may waive the right to these benefits and receive all dues paid plus interest.

FUNDING REQUIREMENTS Contribution provisions are established by statute and may be amended only by the General Assembly of Georgia. A description of contribution requirements is as follows:

(A) MEMBER'S CONTRIBUTIONS: Members must contribute five percent (5%) of their net monthly earnings up to the ceilings for total net earnings specified in the Plan.

(B) PROBATE COURT CONTRIBUTIONS: For each criminal and quasi-criminal case involving the violation of State ofGeorgia traffic laws, a sum based upon the scale set forth below is collected by the presiding judge and remitted to the Secretary-Treasurer ofthe Retirement Fund:

For fines or bond forfeitures in excess of $4.00, butnot more than $25.00

$ 1.00

For fines or bond forfeitures in excess of$25.00, but not more than $50.00

$ 1.50

For fmes or bond forfeitures in excess of$50.00, but not more than $100.00

$2.00

For fmes or bond forfeitures in excess of$100.00

$2.50

(C) PROCESSING OF MARRIAGE LICENSES: Each probate court within the State of Georgia remits twenty percent (20%)ofall fees collected for processing marriage licenses to the Secretary-Treasurer of the Retirement Fund.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PLAN ASSET MATTERS

FUND COMPRISING FINANCIAL STATEMENTS The Judges ofthe Probate Courts Retirement Fund of Georgia uses a fund to report on its financial position and the results of its operations determined in conformity with the accounting practices prescribed or

-6-

JUDGES OF THE PROBATE COURTS RETIREMENT FUND OF GEORGIA EXlllBIT "C" NOTES TO THE FINANCIAL STATEMENTS JUNE 30.1998
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PLAN ASSET MATTERS
FUND COMPRISING FINANCIAL STATEMENTS pennitted by statutes and regulations ofthe State of Georgia. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds are maintained consistent with legal and managerial requirements. The fund represented in the accompanying fmancial statements is as follows:
FIDUCIARY FUND TYPE
PENSION TRUST FUND - The fund used to account for the accumulation of resources for retirement benefits to eligible members.
BASIS OF ACCOUNTING The Judges ofthe Probate Courts Retirement Fund of Georgia prepares its fmancial statements on the basis of cash receipts and disbursements, which is a comprehensive basis of accounting other than generally accepted accounting principles. This basis of accounting is defined as that method of accounting in which certain revenues and related assets are recognized when received rather than when earned, and certain expenses are recognized when paid rather than when the obligation is incurred.
Generally accepted accounting principles applicable to retirement funds require that investments be valued at fair value as of the plan year-end for the Statement of Plan Net Assets. While market value has been disclosed, it is not presented within the financial statements at June 30, 1998, as it is the policy of the Judges ofthe Probate Courts Retirement Fund of Georgia to prepare its financial statements on a basis of accounting other than generally accepted accounting principles as noted above.
CASH AND CASH EQUIVALENTS Cash and Cash Equivalents consist of demand deposits with banks.
INVESTMENTS The Official Code of Georgia Annotated Section 47-11-23 states that the Board of Commissioners of the Judges ofthe Probate Courts Retirement Fund of Georgia shall have full power to invest and reinvest funds subject to the terms and conditions imposed by the laws ofthe State of Georgia upon domestic life insurance companies in the making and disposing of their investments. In addition, the Board of Commissioners is restricted to invest no more than 50% of the assets of the Retirement Fund in common stocks and may not invest more than 5% ofthe investment portfolio in corporations or in obligations of corporations organized in a country other than the United States of America or Canada. Statutory provisions governing the investments ofdomestic life insurance companies are enumerated in Title 33, Chapter 11 ofthe Official Code of Georgia Annotated. The significant forms of investment in accordance with these statutes and available to the Retirement Fund are as follows:
-7-

JUDGES OF THE PROBATE COURTS RETIREMENT FUND OF GEORGIA EXHIBIT "G" NOTES TO THE FINANCIAL STATEMENTS JUNE 30.1998
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PLAN ASSET MATTERS
INVESTMENTS (1) Deposits in checking, savings, certificates of deposit or slmllar evidences of deposits in banks, trust companies, savings and loan associations, and building and loan associations which have qualified for the insurance protection afforded by the Federal Deposit Insurance Corporation.
(2) Securities ofany open-end management type investment company or investment trust registered with the Securities and Exchange Commission, provided that the investment company or trust has been organized for not less than ten years or has assets of not less than $25,000,000.00 at the date of investment.
(3) Bonds, notes, securities or other evidences of indebtedness which are direct obligations of the government ofthe United States of America.
(4) Loans guaranteed as to principal and interest by the government ofthe United States ofAmerica, to the extent of such guaranty.
(5) Bonds, notes, warrants or securities not in default which are direct obligations of any state of the United States of America or of the District of Columbia, or of the government of Canada or any province of Canada, or for which the full faith and credit of such state, district, government or province has been pledged for the payment ofprincipal and interest.
(6) Obligations of local units of government or government related entities located within the United States of America or Canada, subject to certain conditions.
(7) Dividend paying stocks, common or preferred, of any solvent corporation created or existing under the laws ofthe United States ofAmerica or any state or ofthe District of Columbia, subject to certain conditions.
(8) Bonds, debentures, notes, or other evidences of indebtedness of any sc:>lvent corporation created or existing under the laws ofthe United States ofAmerica or ofany state or ofthe District of Columbia, subject to certain conditions.
(9) Bonds, debentures, notes, or other evidences ofindebtedness which are secured by first mortgage or deed oftrust or deed to secure debt upon fee simple, unencumbered improved real estate or income producing real property located in the United States of America or Canada, subject to certain conditions.
(10) Purchase money mortgages or like securities received upon the sale or exchange of real property acquired.
(11) Real estate acquired for the purpose of leasing same to any person, firm or corporation, or in real estate already leased to any person, firm or corporation, subject to certain conditions.
-8-

JUDGES OF THE PROBATE COURTS RETIREMENT FUND OF GEORGIA EXIDBIT "C" NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1998
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PLAN ASSET MATTERS
INVESTMENTS Investments are defined as those financial instruments with tenns in excess of three" months from the date of purchase and certain other securities held for the production of revenue. In addition, funds on deposit with the Retirement Fund's investment custodian for purposes of continual investment are reflected as investments regardless of the term of the instruments. Investments in U. S. government securities, stocks, investment accounts, and mutual funds are recorded at cost. Accrued interest purchased, premiums or discounts on U. S. government securities are reflected as a part of cost and are not amortized over the remaining life of the security. The market values reflected on the Statement ofPlan Net Assets were based on valuations appearing in the Retirement Fund's Investment Custodian Trust Report at June 30, 1998.
Interest income and dividend income are recognized when received in cash. Gains and/or losses are recognized using the completed transaction method. Accrued interest purchased is recorded as a reduction of interest income at the time of purchase.
Approximately 55% of the net assets available for benefits are invested in U. S. government securities. In addition, approximately 6% of the net assets available for benefits are invested in Short-Term Investment Company B, an open-end mutual fund. The Retirement Fund has no other investments in securities of governmental, commercial, or industrial organizations whose cost exceeds 5% of plan net assets.
The Retirement Fund has funds invested in open-end mutual funds. The Retirement Fund is not aware of the risk exposure resulting from investments in derivatives or similar investments, if any, through these open-end mutual funds.
FIXED ASSETS Fixed assets are recorded as expenditures at the time ofpurchase. No depreciation has been provided on fixed assets.
RELATED PARTY TRANSACTIONS The Secretary-Treasurer of the Judges of the Probate Courts Retirement Fund of Georgia is also SecretaryTreasurer of the Peace Officers' Annuity and Benefit Fund of Georgia from which the Retirement Fund contracted out administrative functions. For the year ended June 30, 1998, the Retirement Fund paid $15,950.00 in fees for administrative functions performed.
NOTE 3: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS
CATEGORIZATION OF DEPOSITS For purposes of analysis of custodial credit risk, cash deposits consist of all bank balances which include demand deposits and/or interest bearing accounts. The bank balances as of June 30, 1998, are categorized below in order to provide information about the extent to which such deposits are exposed to custodial credit risk.
-9-

JUDGES OF THE PROBATE COURTS RETIREMENT FUND OF GEORGIA EXIllBIT "C" NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1998

NOTE 3: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

CATEGORIZATION OF DEPOSITS Category 1 - Amounts covered by depository insurance or collateralized with securities (at market value) held by the Retirement Fund or by its agent in the Retirement Fund's name.

Category 2 - Amounts collateralized with securities (at market value) held by the pledging financial institution's trust department or agent in the Retirement Fund's name.

Category 3 - Amounts collateralized with securities (at market value) held by the pledging financial institution or by its trust department or agent, but not in the Retirement Fund's name, and amounts uncollateralized.

Carrying Amount

Bank Balance

Risk Categories

2

3

Cash Deposits

$ 28,123.74 $ 86,482.47 $ 8648247 $

o00 $==-===!o~.o~o

CATEGORIZATION OF INVESTMENTS For purposes ofanalysis ofcustodial credit risk, investments consist ofU. S. government securities, stocks, and investment accounts. Investments are stated at cost, and are summarized and classified as to custodial credit risk within the categories described below:

Category 1 - Insured or registered, or securities held by the Retirement Fund or its agent in the Retirement Fund's name.

Category 2 - Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the Retirement Fund's name.

Category 3 - Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent but not in the Retirement Fund's name.

The carrying amounts of investment balances as of June 30, 1998, are categorized below. These amounts include amounts maintained in open-end mutual funds which are not subject to risk categorization.

Type ofInvestment U. S. Government Securities Stocks Investment Account
Mutual Funds (Open-End) Total Investments

Risk Categories 2

$ 20,431,953.14 $ 12,831,423.54 18.959.22

0.00 $

$ 33 282.335 90 $

0.00 $

Carrying

Market

3

Amount

Value

0.00 $ 20,431,953.14 $ 21,338,130.00

12,831,423.54 21,273,847.30

18.959.22

18.959.22

000 $ 33,282,335.90 $ 42,630,936.52

2.261.475.42 2.261.475.42

$ 35.543 811 32 $ 44.892.411.94

- 10-

JUDGES OF THE PROBATE COURTS RETIREMENT FUND OF GEORGIA EXHIBIT "C" NOTES TO THE FINANCIAL STATEMENTS JUNE 30.1998

NOTE 4: CONTRIBUTIONS REQUIRED AND MADE

FUNDING POLICY The minimum annual employer contribution requirements are set forth in the Official Code of Georgia Anriotated (O.C.G.A.) Section 47-20-10 and are not actuarially determined. This statute further prohibits any action to grant a benefit increase until such time as the minimum annual contribution requirements meet or exceed legislative requirements. The actuarial valuation as of June 30, 1997, which reflected the proceeds of designated portions of fines and forfeitures for violation of traffic laws and a designated portion of fees collected for processing marriage licenses as the employer contribution, indicated that the minimum employer contribution level was being met. Member contribution requirements are set forth in O.C.G.A. Section 47-11-40 and are not actuarially determined. Covered payroll information was not available.

FUNDING REQUIREMENTS Actual contributions for the year ended June 30, 1998, were as follows:

Member Contributions Fines and Bond Forfeitures Marriage License Fees

$ 191,960.66 442,595.88 128,194.81

$ 762,751.35

NOTE 5: CHANGES IN FIXED ASSETS

Fixed assets used in plan operations are not included in the accompanying financial statements as required by generally accepted accounting principles applicable to retirement funds. The following is a summary of changes in fixed assets during the fiscal year:

Equipment

Balance July 1, 1997

$ 9,189.50

Deletions Balance June 30, 1998

8.583.50
$'===!o!,6Q~6~.0~0

NOTE 6: RISK MANAGEMENT

The Judges of the Probate Courts Retirement Fund of Georgia is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors or omissions; job related illnesses or injuries to employee (workers' compensation); natural disaster; and unemployment compensation.

The Judges of the Probate Courts Retirement Fund of Georgia has obtained commercial insurance for risk ofloss associated with assets. The Retirement Fund has neither significantly reduced coverage for these risks nor incurred losses'(settlements) which exceeded insurance coverage in any of the past three years.

- n-

JUDGES OF THE PROBATE COURTS RETIREMENT FUND OF GEORGIA EXlllBIT "C" NOTES TO THE FINANCIAL STATEMENTS JUNE 30.1998
NOTE 6: RISK MANAGEMENT
The Judges ofthe Probate Courts Retirement Fund of Georgia has elected to self-insure for all losses related to torts, errors or omissions, which includes, among other risks, risks for sexual harassment and discrimination. Claims are accounted for on a cash basis and no losses related to errors or omissions have occurred in the past three years.
The Judges of the Probate Courts Retirement Fund of Georgia has elected to self-insure with regard to workers' compensation and unemployment insurance. Claims are accounted for on a cash basis and no losses related to workers' compensation or unemployment compensation have occurred in the past three years.
The Secretary-Treasurer and all employees ofthe Judges of the Probate Courts Retirement Fund of Georgia are bonded in the amount of $500,000.00 under an Employees Dishonesty Coverage Blanket Bond written by the United States Fire Insurance Company, on which the premium has been paid to May 16, 1999.
NOTE 7: YEAR 2000 SYSTEMS READINESS
The Judges ofthe Probate Courts Retirement Fund of Georgia has identified two computer systems that are critical to operations which are affected by the year 2000 issue. The year 2000 issue is the result of shortcomings in many electronic data processing systems and other equipment that make operations beyond the calendar year 1999 troublesome. The following stages have been identified by Governmental Accounting Standards Board Technical Bulletin 98-1, Disclosure About Year 2000 Issues, as necessary to implement year 2000 compliant systems.
Awareness Stage - Encompasses establishing a budget and project plan for dealing with the year 2000 Issue.
Assessment Stage - The actual process of identifying all of its systems and individual components of the systems to check for compliance.
Remediation Stage - When changes are made to systems and equipment.
Validationffesting Stage - The process of ensuring that the changes made to systems and equipment will produce a year 2000 compliant system.
It will be necessary for the Retirement Fund to progress through all four of these stages for each computer system, not already year 2000 compliant, in order to assure that these systems will not be adversely affected.
The Judges ofthe Probate Courts Retirement Fund ofGeorgia contracts with the Peace Officers' Annuity and Benefit Fund of Georgia for administrative functions. The Peace Officers' Annuity and Benefit Fund of Georgia uses Peachtree Software for its financial reporting system. The Peace Officers' Annuity and Benefit Fund ofGeorgia is responsible for remediating this system, and plans to purchase an upgrade to its Peachtree Software system that makes it year 2000 compliant. The Peace Officers' Annuity and Benefit Fund ofGeorgia
- 12-

JUDGES OF THE PROBATE COURTS RETIREMENT FUND OF GEORGIA EXHIBIT "C" NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1998
NOTE 7: YEAR 2000 SYSTEMS READINESS also uses an "in-hol.JSe" system on an IBM System 36 computer solely for the Judges of the Probate Courts Retirement Fund of Georgia retirement benefits. The Peace Officers' Annuity and Benefit Fund of Georgia is also responsible for remediating this system, and has contracted with a vendor for software program code revisions to make it year 2000 compliant. Testing and validation will have to occur prior to the system being used for benefits processing. Because ofthe unprecedented nature ofthe year 2000 issue, its effects and the success of related remediation efforts will not be fully determinable until year 2000 and thereafter. While management is confident that the Retirement Fund will be year 2000 ready, it cannot assume that its remediation efforts will be successful in whole or in part, or that parties with whom the Retirement Fund does business will be year 2000 ready. NOTE 8: CONTINGENCffiS Litigation, claims and assessments filed against the Judges ofthe Probate Courts Retirement Fund of Georgia, ifany, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the year ended June 30, 1998. At June 30, 1998, the Judges ofthe Probate Courts Retirement Fund of Georgia had inactive members' dues on hand in the amount of $9,333.34. One-hundred percent (100%) of such dues are refundable upon request of the inactive members.
- 13-

THIS PAGE LEn BLANK

SUPPLEMENTARY INFORMAnON - 15 -

JUDGES OF THE PROBATE COURTS RETIREMENT FUND OF GEORGIA SCHEDULE OF ADMINISTRATIVE EXPENSES PAID BY OBJECT YEAR ENDED JUNE 30.1998

SCHEDULE "1"

$ 120,281.41
See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Infonnation.
-16 -

JUDGES OF THE PROBATE COURTS RETIREMENT FUND OF GEORGIA RECONCILIATION OF SALARIES AND TRAVEL YEAR ENDED JUNE 30. 1998

SCHEDULE "2"

Totals per Annual Supplement

Adjustments Andrews, Crews, Greene, Poitevint,

Virginia Johnnie E. J. Mike Winford

Totals per Report

SALARIES

TRAVEL

$

8,400.00 $

2,128.38

-757.13 -505.67 -726.58 -139.00

$

8,400.00 $=====0=.0",,=0

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
-17 -

JUDGES OF THE PROBATE COURTS RETIREMENT FUND OF GEORGIA RECONCILIATION OF PER DIEM AND FEES YEAR ENDED JUNE 30, 1998

SCHEDULE "3"

Totals per Annual Supplement

Adjustments Andrews, Crews, Greene, Poitevint,

Virginia Johnnie E. J. Mike Winford

Totals per Report

TYPE PAYMENT
Board Member Board Member Board Member Board Member

FEE AMOUNT

EXPENSE AMOUNT

$ 90,426.15 $

0.00 $

TOTAL 90,426.15

757.13 505.67 726.58 139.00

757.13 505.67 726.58 139.00

$ 90,426.15 $

2,128.38 $

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
-18 -

JUDGES OF THE PROBATE COURTS RETIREMENT FUND OF GEORGIA SCHEDULE OF FUNDING PROGRESS YEAR ENDED JUNE 30, 1998

SCHEDULE "4"

ACTUARIAL VALUATION
DATE

ACTUARIAL VALUE OF ASSETS
(a)

ACTUARIAL ACCRUED LIABILITY (AAL) -PROJECTED UNIT CREDIT
(b)

UNFUNDED AAL
(UAAL) (b-a)

FUNDED RATIO (alb)

06/30/97 $ 35,171,185.00 $ 25,277,876,00 $ -9,893,309.00 139,1%

COVERED PAYROLL
(c)
n/a

UAALASA PERCENTAGE OF COVERED
PAYROLL b-a}/c)
n/a

Infonnation prior to June 30,1997, is not available in accordance with the parameters of GASB Statement No. 25.

The infonnation presented in this required supplementary schedule is based on the actuarial stUdy prepared as of June 30,1997, The actuarial value of assets is equal to 90% of market value of assets (excluding fixed assets).

See accompanying notes and Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information.
-19-

JUDGES OF THE PROBATE COURTS RETIREMENT FUND OF GEORGIA SCHEDULE OF EMPLOYER CONTRIBUTIONS YEAR ENDED JUNE 30,1998

SCHEDULE "5"

FISCAL YEAR
1998

ANNUAL REQUIRED CONTRIBUTION

$

534,700,00

PERCENTAGE CONTRIBUTED
106.7%

Information prior to June 30, 1997, is not available in accordance with the parameters of GASB Statement No. 25.

The information presented in this required supplementary schedule is based on the actuarial study prepared as of June 30, 1997, Additional information of this latest actuarial valuation follows:

Valuation Date

June 3D, 1997

Actuarial Cost Method

Projected unit credit

Amortization Method

Level dollar, open

Remaining Amortization Period

30 years

Asset Valuation Method

5-year smoothed market

Actuarial Assumptions: Investment Rate of Retum Projected Salary Increases Includes Inflation at Cost-of-Living Adjustments

7% None None None

See accompanying notes and Independent Accountanfs Combined Report on Review of Financial Statements and Supplementary Information.
-20 -