Review report, Sheriffs' Retirement Fund of Georgia, a component unit of the state of Georgia, year ended June 30, 1997

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REVIEW REPORT SHERIFFS' RETIREMENT FUND OF GEORGIA A COMPONENT UNIT OF THE STATE OF GEORGIA
YEAR ENDED JUNE 30, 1997

STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASH I NGTON STREET
ATLANTA, GEORGIA 30334-8400

SHERIFFS' RETIREMENT FUND OF GEORGIA - TABLE OF CONTENTS -

INDEPENDENT ACCOUNTANTS COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

EXHIBITS

FINANCIAL STATEMENTS

A STATEMENT OF PLAN NET ASSETS

ARISING FROM CASH TRANSA'CTIONS

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

CASH AND CASH EQUIVALENTS

17

2 SCHEDULE OF INVESTMENT ACTIVITIES

18

3 SCHEDULE OF ADMINISTRATIVE EXPENSES PAID BY OBJECT

24

4 RECONCILIATION OF SALARIES AND TRAVEL

25

5 RECONCILIATION OF PER DIEM AND FEES

26

6 SCHEDULE OF FUNDING PROGRESS

27

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 10, 1998

Honorable Zell Miller, Governor Members of the General Assembly of Georgia Members of the Board of Commissioners of the Sheriffs' Retirement Fund of Georgia
and Honorable James A. Cody, Secretary-Treasurer Sheriffs' 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) of the Sheriffs' Retirement Fund of Georgia as of and for the year ended June 30, 1997, 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 of accounting other than generally accepted accounting principles. All information included in these financial statements is the representation of the management of the Sheriffs' 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 financial 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 of accounting described in Note 2. The accompanying supplementary information (Schedules 1 through 6) is presented only for supplementary analysis purposes. Such information has been subjected to the

97ARL-4C

inquiries and analytical procedures applied in the review of the financial statements and we are not aware of any material modifications that should be made thereto.
Respectfully submitted,
~,0'l~~
Claude L. Vickers State Auditor
CLV:gp 97ARL-4C

fINANCIAL STATEMENTS - 1-

SHERIFFS' RETIREMENT FUND OF GEORGIA STATEMENT OF PLAN NET ASSETS ARISING FROM CASH TRANSACTIONS
FIDUCIARY FUND TYPE - PENSION TRUST FUND JUNE 30, 1997

EXHIBIT "A"

ASSETS
Cash and Cash Equivalents
Investments U. S. Government Securities, at Cost (Market Value $12,498,158.35) Stocks, at Cost (Market Value $24,755,229.98) Bonds and Debentures, at Cost (Market Value $3,926,044.00) Investment Accounts, at Cost (Market Value $19,083.04) Certificates of Deposit, at Cost (Market Value $200,000,00) Mutual Funds, at Cost (Market Value not Available) Real Estate Limited Partnerships, at Cost (Market Value not Available) Real Estate Investment Trusts, at Cost (Market Value not Available)

$

55,739.14

$ 12,631,850,81 13,258,132.60 3,943,550.00 19,083.04 200,000.00 1,775,772.45 296,464,00 32,150,00

32,157,002.90

TOTAL ASSETS

$ 32,212,742,04

LIABILITIES

$

--=.:O.,-=-OO~

NET ASSETS HELD IN TRUST FOR PENSION BENEFITS (A schedule of funding progress is presented on page 27,)

$ 32,212,742.04

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. -2-

SHERIFFS' RETIREMENT FUND OF GEORGIA STATEMENT OF CHANGES IN PLAN NET ASSETS ARISING FROM CASH TRANSACTIONS
PENSION TRUST FUND YEAR ENDED JUNE 30,1997

EXHIBIT"B"

ADDITIONS
Member Contributions
Fines and Bond Forfeitures
Investment Income Interest Received Dividends Received Gain or (Loss) on Sale of Investments (Net) Distributions
Other Sources Interest Received on Demand Deposits Proceeds from Securities Litigation
DEDUCTIONS
Benefits Death Benefits Retirement Benefits Survivorship Benefits
Administrative Expenses Personal Services Operating Expenses
Refunds to Terminated Members
NET INCREASE
NET ASSETS HELD IN TRUST FOR PENSION BENEFITS - JULY 1, 1996

$

101,930,56

1,912,745.48

$ 1,094,750,89
329,011,44 493,439,53
32,065,50

1,949,267,36

$

1,311,65

1,460,89

2,772.54 $

3,966,715,94

$

84,000,00

1,574,909,13

345,457,98 $ 2,004,367,11

$

72,407,66

267,299,61

339,707,27

17,627.50

2,361,701.88

$

1,605,014,06

30,607,727.98

NET ASSETS HELD IN TRUST FOR PENSION BENEFITS - JUNE 30,1997

$ 32,212,742.04

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-

SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT "C"

NOTE 1: PLAN DESCRIPTION

ORGANIZATION AND PURPOSE The Sheriffs' Retirement Fund of Georgia is a cost-sharing multiple employer defined benefit pension plan established in 1963 by the General Assembly of Georgia for the purpose of paying retirement benefits to the sheriffs ofthe State of Georgia. The Board of Commissioners of the Retirement Fund is comprised of six (6) members and consists ofthe Director ofthe Office of Treasury and Fiscal Services, one (1) retired beneficiary of the Retirement Fund, and four (4) persons holding office as sheriffs within the State of Georgia, each of whom are active members ofthe Retirement Fund and have held office as a sheriff for at least four (4) years. The Sheriffs' Retirement Fund of Georgia is considered a component unit of the State of Georgia 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 defined in Section 2100 of the Governmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards.

Any qualified and commissioned sheriff of any county within the State of Georgia who makes payment of the required contributions is eligible for membership. The Retirement Fund is funded through a combination of member contributions paid by the affected sheriff and designated portions of fines and forfeitures for criminal and quasi-criminal cases involving the violation of State of Georgia statutes, including traffic laws.

CURRENT MEMBERSHIP The following analysis compares the membership of the Sheriffs' Retirement Fund of Georgia at June 30, 1997, to that of the prior year:

Retirees and Beneficiaries Currently Receiving Benefits and Terminated Members Entitled to but not yet Receiving Benefits For Retirement For Survivorship

June 30, 1997 June 30, 1996

161

152

28

29

Number of Active Members Vested Nonvested

l.8..2

181

90

89

67

65

ill

154

A detailed analysis of individuals receiving benefits during the fiscal year ended June 30, 1997, is on file in the office of the State Auditor.

-4-

SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT "C"

NOTE 1: PLAN DESCRIPTION
PLAN BENEFITS The Sheriffs' Retirement Fund of Georgia provides retirement as well as death 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: Normal retirement is at age fifty':'five (55) provided the member has at least four (4) years of credited service as a sheriff after and including January 1, 1961. The credited service requirement is eight (8) years for a sheriff who first or again becomes an active member on or after July 1, 1988. A member must have terminated hislher service as sheriff to receive benefits.
(B) RETIREMENT BENEFITS: The normal benefit is calculated by multiplying $69.00 by the number of years of credited service. The minimum monthly benefit paid is $276.00 and the maximum monthly benefit paid is $2,070.00.
(C) OPTIONAL BENEFITS: The following optional benefit provisions are available to members upon application for retirement benefits:
(1) 100% Joint Life Annuity
(2) 50% Contingency Life Annuity
The monthly benefit amount paid under the optional provisions is the actuarial equivalent of the monthly normal retirement benefit and is payable until remarriage.
(D) DEATH BENEFITS: (1) Upon the death of any member, the total amount of hislher contributions, or those in excess of any retirement benefits received to that date, will be paid, without interest, to the surviving spouse, the named beneficiary, or the member's estate.
(2) In addition to the death benefit discussed in item (1), upon the death of either:
(a) an inactive member who would otherwise qualify to be carried upon the active membership rolls except that he/she no longer holds the office of sheriff;
(b) a member who is receiving retirement benefits; or
(c) a member who is otherwise qualified to receive retirement benefits from this Retirement Fund except that he/she has not reached the age of 55 years or has not filed an application or has not been approved for retirement benefits.
The sum of $7,000.00 will be paid as additional death benefits to the surviving spouse, the named beneficiary, or the member's estate.
-5-

SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT "C"

NOTE 1: PLAN DESCRIPTION

PLAN BENEFITS (D) DEATH BENEFITS:
(3) In addition to the death benefit discussed in item (1), upon the death of an active member, the sum
of $7,000.00 will be paid as additional death benefits to the surviving spouse, the named beneficiary, or the member's estate.

(4) In addition to the death benefit discussed in item (3), upon the death of an active member, the
surviving spouse receives an additional benefit in the form of a 100% joint life annuity. In such
event, the death benefit discussed in item (1) will not be payable.

(E) TERMINATION: The sum of contributions without interest can be paid to the member at any time prior to commencing benefits, but the withdrawal causes the member to lose entitlement to any benefits.

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 $37.50 per month ofcredited service, with a maximum payment period of thirty (30) years. For credited service prior to January 1, 1961, deductions in the amount of$20.00 are made from monthly retirement benefits until all credited months prior to January 1, 1961, are paid, subject to a twenty-five (25) year maximum. Dues of$25.00 must be paid for every month of credited service claimed from January 1961 to June 30, 1990, $30.00 per month of credited service from July 1, 1990, to June 30, 1994, and $37.50 per month of credited service after July 1, 1994.

(B) COURT FINES AND FORFEITURES: For each criminal and quasi-criminal case involving the violation of State of Georgia statutes, including traffic laws, a sum based upon the scale set forth below is collected by the presiding judge and remitted to the Retirement Fund:

For fines or bond forfeitures in excess of$5.00, in which a Sheriff of the Superior Courts acts as Sheriff in other courts

$ 2.00

In addition, the following amounts are required to be collected by the applicable courts and remitted to the Retirement Fund:

For civil suits filed in Superior Courts

$ 1.00

For civil actions filed in State Courts and Magistrate Courts where a Sheriff of the Superior Courts acts as a Sheriff in those courts

$ 1.00

-6-

SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT "C"

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PLAN ASSET MATTERS
FUND COMPRISING FINANCIAL STATEMENTS The Sheriffs' 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 permitted by statutes and regulations of the State of Georgia. A fund is an independent fiscal and accounting entity with a selfbalancing 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 financial 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 Sheriffs' Retirement Fund of Georgia prepares its financial 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, in most cases, has been noted on that statement, adjustments have not been made in the financial statements to reflect the effects of valuing investments at fair value, as it is the policy of the Sheriffs' Retirement Fund of Georgia to prepare its fmancial statements on a basis of accounting other than generally accepted accounting principles as noted above.
CASH AND CASH EQUIVALENTS Cash and Cash Equivalents include demand deposits with a bank.
INVESTMENTS The Official Code of Georgia Annotated Section 47-16-26 states that the Board of Commissioners of the Sheriffs' Retirement Fund of Georgia shall have full power to invest and reinvest funds subject to the terms and conditions imposed by the laws of the 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 ofthe Retirement Fund in common stock or equities. Statutory provisions governing the investments of domestic life insurance companies are enumerated in Title 33, Chapter 11 of the Official Code of Georgia Annotated. The significant forms of investments in accordance with these statutes and available to the Retirement Fund are as follows:

-7-

SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT "C"

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PLAN ASSET MATTERS
INVESTMENTS (1) Deposits in checking, savings, certificates of deposit or similar evidences ofdeposits 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 of any 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 of the United States of America.
(4) Loans guaranteed as to principal and interest by the government of the United States of America, 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 of principal and interest.
(6) Obligations oflocal 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 of the United States of America or of any state or of the District of Columbia, subject to certain conditions.
(8) Bonds, debentures, notes, or other evidences of indebtedness of any solvent corporation created or existing under the laws of the United States of America or of any state or of the District of Columbia, subject to certain conditions.
(9) Bonds, debentures, notes, or other evidences of indebtedness which are secured by first mortgage or deed of trust 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-

SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT "C"

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PLAN ASSET MATTERS
INVESTMENTS Investments are defined as those financial instruments with terms 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, bonds and debentures, investment accounts, certificates of deposit, mutual funds, and real estate limited partnerships and investment trusts are recorded at cost. Accrued interest purchased, premiums or discounts on bonds and debentures and 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 of Plan Net Assets were based on valuations appearing in the Retirement Fund's Investment Custodian Trust Report at June 30, 1997.
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 39% of the net assets available for benefits are invested in U. S. government securities. In addition, approximately 5.5% of the net assets available for benefits are invested in Biltmore Prime Cash Management, an open-end mutual fund.
Statutory provisions governing the investment of funds by the Sheriffs' Retirement Fund of Georgia do not appear to provide for investments in real estate limited partnerships and investment trusts. These investments represented 1% of the total investments, at cost, of the Retirement Fund.
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 Certain related party transactions were noted between the Sheriffs' Retirement Fund of Georgia (Retirement Fund) and the Georgia Sheriffs' Youth Homes, Incorporated (Youth Homes). The Secretary-Treasurer of the Retirement Fund also serves as the Executive Director of the Youth Homes; and the Assistant SecretaryTreasurer and Comptroller of the Retirement Fund hold similar positions with the Youth Homes.
In addition to shared personnel, the Retirement Fund and the Youth Homes share property space. For the fiscal year ended June 30, 1997, the Retirement Fund reimbursed the Youth Homes $13,200.00 for. shared space.

-9-

SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT "c"

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, 1997, are categorized below in order to provide information about the extent to which such deposits are exposed to custodial credit risk.

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.

Cash Deposits

Carrying Amount

Bank Balances

Risk Categories

2

3

$ 25573914 $ 449,02020 $ 30000000 $ 149,020 20 $==="O~O~O

CATEGORIZATION OF INVESTMENTS For purposes of analysis of custodial credit risk, investments consist ofU. S. government securities, stocks, bonds and debentures, 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, 1997, are categorized below. These amounts include amounts maintained in open-end mutual funds and real estate limited partnerships and investment trusts which are not subject to risk categorization.

- 10 -

SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT "C"

NOTE 3: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

CATEGORIZATION OF INVESTMENTS

Type ofInvestment

Risk Categories 2

U. S. Government Securities Stocks Bonds and Debentures Investment Accounts

$ 12,631,850.81 $ 13,258,132.60 3,943,550.00 19,083.04

0.00 $

$ 29 852 616 45 $

0.00 $

Mutual Funds (Open-End)

Real Estate Limited Partnerships

Real Estate Investment Trusts

Total Investments

(Not Available)

NOTE 4: EMPLOYER CONTRIBUTIONS

Carrying

Market

3

Amount

Value

0.00 $ 12,631,850.81 $ 12,498,158.35

13,258,132.60 24,755,229.98

3,943,550.00 3,926,044.00

19,083.04

19,083.04

0.00 $ 29,852,616.45 $ 41,198,515.37

1,775,772.45



296,464.00



32.150.00



$ 3195700290 $4119851537

Governmental Accounting Standards Board Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, requires that the Retirement Fund measure all actuarially determined information in accordance with certain parameters. A schedule of employer contributions is not presented since the latest actuarial valuation as of July 1, 1996, did not provide information for the most recent six fiscal years of information in accordance with these parameters.

NOTE 5: CONTRIBUTIONS REQUIRED AND MADE

FUNDING POLICY The minimum annual employer contribution requirements are set forth in the Official Code of Georgia Annotated (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 July 1, 1996, which reflected the proceeds of designated portions of fines and bond forfeitures 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 47-16-43 and are not actuarially determined. Covered payroll information was not available.

FUNDING REQUIREMENTS Actual contributions for the year ended June 30, 1997, were as follows:

Member Contributions Fines and Bond Forfeitures

$ 101,930.56 1,912,745.48
$ 2.014.676.04

- 11 -

SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT "C"

NOTE 6: 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, 1996

$ 10,742.32

Additions

5,919.66

Balance June 30, 1997

$ 16.661.98

NOTE 7: RISK MANAGEMENT

The Department ofAdministrative Services (DOAS) has the responsibility for the State of Georgia ofmaking and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The Sheriffs' Retirement Fund of Georgia is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.

The Secretary-Treasurer and all employees of the Sheriffs' Retirement Fund of Georgia are bonded under a Public Employees Blanket Bond written by Employers Insurance of Wausau, on which the premium has been paid to October 1, 1997. Under this agreement, the policy insures the Sheriffs' Retirement Fund of Georgia to a maximum of$1,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees and from failure of its employees to perform faithfully their duties or to account properly for all monies and property received by virtue of their position or employment.

All employees ofthe Sheriffs' Retirement Fund of Georgia are also bonded under Commercial Crime Policies written by the United States Fire Insurance Company, on which the premiums have been paid to October 1, 1997. Under these additional public employee dishonesty coverages, the policies insure the Retirement Fund to a maximum of $9,000,000.00 against loss sustained through fraudulent or dishonest acts by its employees and from failure of its employees to perform faithfully.

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SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1997

EXHIBIT "C"

NOTE 8: CONTINGENCIES

Litigation, claims and assessments filed against the Sheriffs' Retirement Fund of Georgia, if any, 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 fiscal year ended June 30, 1997.

NOTE 9: RETIREMENT PLAN
.
The Sheriffs' Retirement Fund of Georgia participates in a defined contribution plan, in which benefits depend solely on amounts contributed to the plan plus investment earnings. The Georgia Sheriffs' Youth Homes, Incorporated Money Purchase Pension Plan was established May 22, 1979, for the purpose of providing retirement allowances for employees of the Georgia Sheriffs' Youth Homes, Incorporated and employees of the Sheriffs' Retirement Fund of Georgia. The Georgia Sheriffs' Youth Homes, Incorporated administers the money purchase pension plan. The plan is available to all employees that are twenty-one (21) years of age and have completed one year of service. An employee must have completed at least 1,000 hours of service in an eligibility service period to qualify for one year of service in the plan. Vesting in employer contributions to the plan is based on the following table:

Years of Service

Percentage

1

30%

2

35%

3

40%

4

45%

5

60%

6

80%

7

100%

The Sheriffs' Retirement Fund of Georgia contributes 14% of the employee's qualified salary to the plan per fiscal year. Employees may contribute up to 5% of qualified salaries each fiscal year. Upon termination or retirement, any vested benefit will be paid to the participant in a lump sum or as periodic payments from one of the deferred options available. The Retirement Fund's total payroll in fiscal year 1997 amounted to $58,487.33, of which $48,436.00 was for covered employees and used by the Retirement Fund for calculating contributions. For fiscal year 1997, the Retirement Fund contributed $6,781.04 to this retirement plan. No employee contributions were made to the plan for fiscal year 1997. The Retirement Fund has no further liability under the plan other than the future contributions to the plan as established.

- 13 -

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SUPPLEMENTARY INFORMATION - 15 -

THIS PAGE LEFT BLANK

SHERIFFS' RETIREMENT FUND OF GEORGIA CASH AND CASH EQUIVALENTS JUNE 30, 1997
INTEREST BEARING ACCOUNT Wachovia Bank of Georgia, NA, Stockbridge, Georgia

SCHEDULE "1" $ ===55=,7=3:=9=1,=4

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

SHERIFFS' RETIREMENT FUND OF GEORGIA SCHEDULE OF INVESTMENT ACTIVITIES YEAR ENDED JUNE 30,1997

U, S, GOVERNMENT SECURITIES Wachovia Bank of Georgia, N.A., Atlanta, Georgia
Federal Home Loan Mortgage Corporation
Federal National Mortgage Association
Govemment National Mortgage Association United States Treasury Notes

MATURITY DATE

SHARES/UNITS HELD
JUNE 30,1997

PAR VALUE

MARKET VALUE

INTEREST RATE

01/01/97 01/01/99 12101/02 04/07/04 04/24/06 04/01/08 10/01/08 11/10/99 11/16/00 06/10/02 10/01/02 OS/25/03 03/20/06 01/25/07 01/25/08 10/01/10 11/13/06 01/29/07 07/15/08 08/15/08 10/31/96 05/31/97 11/30/98 07/15/99 01/15/00 09/30/00 01/31/01 08/15/02 02115/03 05/15/04 05/15/05 08/31/00 12131/01 05/31/02

$

619,977,21 $

617,100.52

446,857,14

443,130.35

500,000.00

496,405.00

300,000.00

300,093.00

240,523.76

244,793.06

253,345.11

246,834.14

500,000.00

519,060.00

400,000.00

395,000.00

308,583,59

312,715.52

300,000.00 30,005.34
500,000,00 255,751,83 300,000,00 300,000.00
9,743.87 28,882.45

297,282.00 29,939.63
496,250,00 251,915.55 296,907.00 298,734.00
10,266.63 30,321.95

400,000.00 400,000.00
800,000.00 500,000.00 900,000.00 500,000.00 1,000,000,00 1,000,000.00 800,000.00 400,000.00 500,000.00

395,500.00 402,188.00
796,496.00 483,360.00 899,721.00 496,095.00 1,042,340.00 998,120.00 799,496.00 396,064.00 502,030.00

6.375% 6,000% 6.600% 7.300% 7.245% 7.400% 6.200% 8.000% 6.300% 6,375% 7.600% 6,375% 7.200% 8.800% 6.800% 6,600% 7.000% 7.200% 8.100% 8.100% 6.375% 6.375% 5.200% 6.375% 6.375% 6.200% 5,400% 6.400% 6.300% 7.000% 6.500% 6.300% 6.200% 6.500%

$ 12,493,670,30 $ 12,498,158.35

STOCKS
Wachovia Bank of Georgia, N,A., Atlanta, Georgia Agricultural Beverages Computer - Data Processing Services Computer EqUipment Cosmetics, Toiletries, Soap Diversified - Industrial Drugs, Medical Electrical Equipment Electronics Entertainment - Leisure Related Financial Services - Non-Banking Food Service Foods - Processed Household Appliances and Supplies Insurance Medical Supplies and Services Printing and Publishing Retail Trade - Specialty

6,400 17,800 32,500 11,800 12,512
6,380 45,600 13,200 29,373 18,500 21,400 20,900 10,800
7,700 5,250 26,200 17,175 25,600

$

512,000.00

1,210,400.00

1,382,060.00

660,800.00

1,185,512.00

608,275,00

4,242,482.60

858,000.00

1,855,754.18

1,232,591.40

1,270,112.50

649,827.20

840,039.80

1,087,625.00

784,218.75

1,873,312.50

390,731.25

1,359,712.50

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

SCHEDULE "2"

BALANCE JULY 1,1996

INVESTMENTS

INVESTMENTS INVESTMENTS

MADE

REALIZED

BALANCE JUNE 30,1997

INTEREST RECEIVED

DIVIDENDS RECEIVED

GAIN OR (LOSS) ON SALE OF INVESTMENTS

DISTRIBUTIONS

$

313,810.28

754,101.94

489,732.34

485,937.50

300,000.00

296,139.54

279,370.87

502,421.88

402.480.00

498,750.00

458,072.20

425,246.43

298.593.75

138,603.08

503,750.00

278,501.27

0.00 $

0.00

12,212.94

33,095.89

299,273.44

1,098,163.00

391.187.50

417,062.50

798,750.00

802,000.00

497,031.25

922,921.88

519.453.13

1,086.403.13

503,750.00

0.00

0.00

0.00

$
299,679.00 300,000.00
495,312.50 805,000.00 400,187.50 499,453.13

313,810.28 $ 126,665.63
38,723.90
52,571.66 34,655.32
498,750.00 143,220.49 425,246.43
107,519.42
28,264.09
3,102.75 5,880.65 299,273.44 1,098,163.00
798,750.00

0.00 $ 627.436.31 451,008.44 485,937.50 300,000.00 243,567.88 244,715.55 502.421.88 402.480.00
0.00 314,851.71
0.00 298,593.75
31,083.66 503,750.00 250,237.18 299,679.00 300,000.00
9,110.19 27,215.24
0.00 0.00 391,187.50 417,062.50 0.00 802,000.00 497,031.25 922,921.88 519.453.13 1,086.403.13 999,062.50 805,000.00 400,187.50 499,453.13

9,557.73 40,887.35 30,116.52 36.450.00 21.735.00 19,888.47 16,343.46 41,750.00 24,800.00 39,000.00 29,851.92 19,988.50 21,330.00
7,015.37 33,750.00 17,670.28 10,482.92
1,006.55 2,747.51 10,312.50 67,375.00 20,500.00 25,500.00 54,944.75 49,000.00 26,250.00 57,375.00 31,250.00 72,500.00 30,822.01 2,209.94 12,250.00
-88.80

$ 13,806,815.74 $ 2,799,632.13 $ 3,974,597.06 $ 12,631,850.81 $ 884,571.98

$

-4.447.10

-1,505.83

-356.44

-657.05 1,222.08

1,250.00 -2,851.24 19,746.56
-3,729.94
622.88

215.83 360.24 726.56 1,837.00

10,312.50

$

22,746.05

$

148,301.66

237,556.25

660,104.41 $

0.00

733,141.29

254,180.10

1,688,803.87

251,023.50

642,026.95

578,386.33

838,594.91

490,064.88

549,777.50

0.00

257,000.00

900,483.67

238,215.50

1,019,827.82

525,875.00 644,390.00
$
735,580.30
385,084.50 38,912.51
96,500.00
401,008.30 183,825.00 146,691.24

$
277,715.92 142,287.52 440,645.78
90,947.79 85,120.39
279,397.14

148,301.66 237,556.25 1,185,979.41 644,390.00 455,425.37 254,180.10 2,282,096.65 251,023.50 586,465.67 617,298.84 747,647.12 501,444.49 549,777.50 401,008.30 440,825.00 1,047,174.91 238,215.50 740,430.68

$

5,888.00

9,167.00

8,756.00

2,328.00

8.470.24

11,832.00

49,817.00 $

12,936.00

4,010.48

9,235.33

19,996.00

1,918.00

13,854.00

13,860.00

1,650.00

14,658.00

10,305.02

10,390.50

190,025.49 97,675.89
219,765.05 94,362.32 75,779.24
653.32 156,270.60

- 19 -

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

SCHEDULE "2"

BALANCE JULY 1,1996

INVESTMENTS

INVESTMENTS INVESTMENTS

MADE

REALIZED

BALANCE JUNE 30,1997

INTEREST RECEIVED

DIVIDENDS RECEIVED

GAIN OR (LOSS) ON SALE OF
INVESTMENTS

DISTRIBUTIONS

$

343,942.50

$

343,942.50 $

0.00

442,892.27 $ 1,188,879.69

60,056.65

1,571,715.31

0.00

398,337.16

398,337.16

0.00

350,330.00

6,846.34

357,176.34

333.417.50

333.417.50

0.00

$ 10,958,070.91 $ 4,751,930.04 $ 2,451,868.35 $ 13,258,132.60

$

1,694.00 $

12,544.50

6,048.00

-69,089.30 31,758.13 73,687.84

$ 229,358.07 $

870,888.58

$

199,112.00

$

199,112.00 $

12,250.00

0.00 $

373,000.00

373,000.00

12,331.11

298,680.00

$

298,680.00

0.00

14,939.58

272,637.00

272,637.00

18,541.67

197,782.00

197,782.00

14,750.00

0.00

299,256.00

299,256.00

10,509.37

99,830.00

99,830.00

0.00

3,593.75

0.00

298,806.00

298,806.00

10,500.00

199,386.00

199,386.00

12,750.00

292,740.00

292,740.00

0.00

15,649.98

0.00

496,245.00

496,245.00

0.00

195,266.00

195,266.00

-572.92

0.00

299,838.00

299,838.00

308,205.10

308,205.10

0.00

8,660.63

307,116.00

307,116.00

21,750.00

0.00

299,901.00

299,901.00

10,616.67

505,205.00

505,205.00

31,875.00

$ 2,680,693.10 $ 2,262,312.00 $

999.455.10 $ 3,943,550.00 $ 198,144.84

$

4,873.85

1,867.06 $

0.00

$ ----='-'6-,'7=4-0=.9"1- $

$ 12,973.29
827.36
13,800.65 $

1.458.52 $ 1.458.52 .$

3,415.33 14,840.35
827.36
19,083.04

$

100,000.00

100,000.00

$ _---:2:.;0:..=0.:..:;,0..:.00.:.;..::.00;;...

$

100,000.00 $

100,000.00

6,000.00 6,034.07

$

200,000.00 $ _ _1;.;02.:.;,0..:.3"",4."",07"",

$

9,657.00

30.00 660.00

-19,905.10

$

-9,558.10

$ 2,053,998.93 $ 8,227,658.19 $ 8,505,884.67 $ 1,775,772.45

$ 99,653.37

- 21 -

SHERIFFS' RETIREMENT FUND OF GEORGIA SCHEDULE OF INVESTMENT ACTIVITIES YEAR ENDED JUNE 30 1997

REAL ESTATE LIMITED PARTNERSHIPS
Carlyle Income PIus-II, Limited Partnership First Capital Insured Real Estate Limited Partnership First Capital Insured-XIV, Limited Partnership John Hancock Realty Income Fund-II, Limited Partnership Krupp Cash PIus-V, Limited Partnership Partners Preferred Yield-II, Limited Partnership

MATURITY DATE

SHARES/UNITS HELD
JUNE 30,1997

PAR VALUE

151 5,000 2,000 2,500 2,500 1,915

REAL ESTATE INVESTMENT TRUSTS
Berkshire Realty Company, Incorporated NTS Mortgage Income Fund

2,680 2,500

MARKET VALUE

INTEREST RATE

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 22-

SCHEDULE "2"

BALANCE JULY 1, 1996

INVESTMENTS

INVESTMENTS INVESTMENTS

MADE

REALIZED

BALANCE JUNE 30,1997

INTEREST RECEIVED

DIVIDENDS RECEIVED

GAIN OR (LOSS) ON SALE OF
INVESTMENTS

DISTRIBUTIONS

$

150,000.00

285,600.00

200,000.00

48,600.00

50,000.00

50,000.00

$

784,200.00

$

93,449.00 $

56,551.00

212,950.00

72,650.00

94,000.00

106,000.00

15,225.00

33,375.00

23,950.00

26,050.00

48,162.00

1,838.00

$

487,736.00 $

296,464.00

$

-55,850.00 $

-85,600.00

-94,000.00

-15,225.00

-23,950.00

-48,162.00

$

-322.787.00 $

2,416.00 5,900.00 6,400.00 10,675.00 2,500.00 1,400.00
29,291.00

$

50,000.00

50,000.00

$

100,000.00

$

25,925.00 $

24,075.00

41,925.00

8,075.00

$

67,850.00 $

32,150.00

$

-25,925.00 $

-41,925.00

$

-67,850.00 $

2,412.00 362.50
2,774.50

$ 30,590,519.59 $ 18,055,333.01 $ 16.488,849.70 $ 32,157,002.90 $ 1,094?50.89 $ 329,011.44 $

493,439.53 $

32,065.50

- 23-

SHERIFFS' RETIREMENT FUND OF GEORGIA SCHEDULE OF ADMINISTRATIVE EXPENSES PAID BY OBJECT
YEAR ENDED JUNE 30, 1997

SCHEDULE "3"

PERSONAL SERVICES
Salaries and Wages Employer's Contributions for:
F,LCA Retirement Unemployment Compensation Insurance
OPERATING EXPENSES
Regular Operating Expenses Supplies and Materials Insurance and Bonding Other Operating Expenses Publications and Printing
Travel
Equipment Equipment Purchases
Real Estate Rentals Georgia Sheriffs' Youth Homes, Incorporated
Per Diem, Fees and Contracts Per Diem and Fees

$ 58,487,33

$ 3,711.72
6,781.04 3,427.57

13,920.33 $

72,407.66

$ 1,722.99
3,492,00 3,247.52
21.00 $ 8,483,51
8,916.43
5,919.66
13,200.00
230,780.01

267,299.61

$

339,707.27

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 24-

SHERIFFS' RETIREMENT FUND OF GEORGIA RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE 30. 1997

SCHEDULE "4"

Totals per Annual Supplement

Adjustments Cody, Hall, Hall, Kilgore, Marchman, Powell, Whitson,

JamesA. Gloria Walter Kathy Tracy Faye Carter Lynn

SALARIES

TRAVEL

$

0.00 $

0.00

11,700.00 3,600.00
13,633.34 3,600.00
10,051.29 9,600.00 6,302.70

4,881.18
807.95 3,210.00
17.30

Totals per Report

$ 58,487.33 $======8=,9:=1::::::6.:=4=3

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 25-

SHERIFFS' RETIREMENT FUND OF GEORGIA RECONCILIATION OF PER DIEM AND FEES YEAR ENDED JUNE 30,1997

SCHEDULE "5"

Totals per Annual Supplement
Adjustments Bittick, L. Cary Cody, James A. Lemacks, D, G, Marchman, Tracy Powell, Faye Carter Wachovia Bank of Georgia, N,A,

TYPE PAYMENT
Board Member Reimbursable Expense Reimbursable Expense Reimbursable Expense Reimbursable Expense Consultant

FEE AMOUNT

EXPENSE AMOUNT

TOTAL

$ 214,336,44 $ 12,084,56 $ 226,421,00

7,460,89

353,17 -2,082,98
353,17 -807.95 -917.29

353,17 -2,082,98
353,17 -807.95 -917,29 7,460.89

Totals per Report

$ 221,797.33 $ 8,982.68 $ 230,780.01

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 26-

SHERIFFS' RETIREMENT FUND OF GEORGIA SCHEDULE OF FUNDING PROGRESS YEAR ENDED JUNE 30, 1997

SCHEDULE "6"

ACTUARIAL VALUATION
DATE

ACTUARIAL VALUE OF ASSETS
(a)

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

UNFUNDED AAL
(UAAL) (b-a)

07/01/96 $ 32,426,196.00 $ 34,200,103,00 $ 1,773,907.00

FUNDED RATION
(alb)
94.8%

COVERED PAYROLL
(c)
n/a

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

Information prior to July 1, 1996, 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 July 1, 1996. The actuarial value of assets is equal to 90% of market value of assets (excluding fixed assets). Additional information of this latest actuarial valuation follows:

Valuation Date
Actuarial Cost Method
Asset Valuation Method
Actuarial Assumptions: Investment Rate of Return Projected Salary Increases Includes Inflation at Cost-of-Living Adjustments

July 1,1996
Entry age normal cost
5-year smoothed market
6.5% None None None

See accompanying notes and Independent Accountant's Combined Report on Review of Financial Statements and Supplementary Information.
- 27-