~t'\ A.~Oo . tt\ SJ.\\, \CV1~-"~ REVIEW REPORT SHERIFFS' RETIREMENT FUND OF GEORGIA A COMPONENT UNIT OF THE STATE OF GEORGIA YEAR ENDED JUNE 30,1999 STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS 254 WASHINGTON STREET ATLANTA, GEORGIA 30334-8400 SHERIFFS' RETIREMENT FUND OF GEORGIA - TABLE OF CONTENTS - INDEPENDENT ACCOUNTANT'S COMBINED REPORT ON REVIEW OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION EXHIBITS 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 5 SUPPLEMENTARY INFORMATION SCHEDULES 1 SCHEDULE OF ADMINISIRATNE EXPENSES PAID BY OBJECT 18 2 RECONCILIATION OF SALARIES AND IRAVEL 19 3 RECONCILIATION OF PER DIEM AND FEES 20 4 SCHEDULE OF FUNDING PROGRESS 21 5 SCHEDULE OF EMPLOYER CONTRIBUTIONS 22 RUSSELL W. HINTON STATE AUDITOR (404) 6562174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400 January 28, 2000 Honorable Roy E. Barnes, Governor Members of the General Assembly of Georgia Members ofthe Board of Commissioners ofthe 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) ofthe Sheriffs' Retirement Fund of Georgia as of and for the year ended June 30, 1999, 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 ofcash 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 ofretirement 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 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 99ARL-4C inquiries and analytical procedures applied in the review ofthe financial statements and we are not aware of any material modifications that should be made thereto. Respectfully submitted, ~~IW~.HinJton ).~ State Auditor RWH:gp 99ARL-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. 1999 EXHIBITA ASSETS Cash and Cash Equivalents Investments U.S. Government Securities, at Cost (Market Value $12,808,520.25) Stocks, at Cost (Market Value $34,1.83,675.83) Bonds and Debentures, at Cost (Market Value $8,077,334.00) Investment Accounts, at Cost (Market Value $9,534.60) Mutual Funds, at Cost (Market Value $2,381,964.09) Real Estate Limited Partnerships, at Cost (Market Value not Available) Real Estate Investment Trusts, at Cost (Market Value $84,607.50) TOTAL ASSETS LIABILITIES $ 20,857.76 $ 12,984,375.54 20,913,151.73 8,197,534.50 9,534.60 2,381,964.09 34,362.00 25,913.00 44,546,835.46 $ 44,567,693.22 0.00 NET ASSETS HELD IN TRUST FOR PENSION BENEFITS (A schedule of funding progress is presented on page 21) $ 44,567,693.22 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- SHERIFFS' RETIREMENT FUND OF GEORGIA STATEMENT OF CHANGES IN PLAN NET ASSETS ARISING FROM CASH TRANSACTIONS PENSION TRUST FUND YEAR ENDED JUNE 30.1999 EXHIBIT"B" ADDITIONS Member Contributions Fines and Bond Forfeitures Invesbnent Income Interest Received Dividends Received Gain or (Loss) on Sale of Invesbnents (Net) Distributions Other Sources Interest Received on Demand Deposits Other DEDUCTIONS Benefits Death Benefits Retirement Benefits SUrvivorship Benefits Administrative Expenses Personal Services Operating Expenses NET INCREASE NET ASSETS HELD IN TRUST FOR PENSION BENEFITS - JULY 1. 1998 $ 69,390.10 2,124,778.40 $ 1,276,153.50 370,007.89 4,653,122.17 9,565.00 6,308,848.56 $ 605.76 69.97 675.73 $ 8,503,692.79 $ 42,000.00 1,808,318.16 434,761.32 $ 2,285,079.48 $ 101,674.24 353,638.19 455,312.43 $ 2,740,391.91 5,763,300.88 38,804,392.34 NET ASSETS HELD IN TRUST FOR PENSION BENEFITS - JUNE 30.1999 $ 44,567,693.22 See Independent Accountants Combined Report on Review of Financial Statements and Supplementary Infonnation. The notes to the financial statements are an integral part of this statement -3- SHERIFFS' RETIREMENT FUND OF GEORGIA NOTESTOTHEF~~STATEMENTS JUNE 3D. 1999 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 ofGeorgia for the purpose of paying retirement benefits to the sheriffs ofthe State of Georgia. The Board of Commissioners ofthe Retirement Fund is comprised of six (6) members and consists ofthe Director of the Office of Treasury and Fiscal Services, one former sheriff who is a retired beneficiary of the Retirement Fund, and four persons holding office as sheriffs within the State of Georgia, each of whom are active members of the Retirement Fund and have held office as a sheriff for at least four years. The Sheriffs' Retirement Fund of Georgia is considered a component unit of the State of Georgia and is included within the State ofGeorgia 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 Co~ification of Governmental Accounting and Financial R!4>orting 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, 1999, 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 3D. 1999 June 3D. 1998 160 160 32 32 Number of Active Members Vested Nonvested 192 192 70 70 84 --H1 154 157 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 ofplan benefits and vesting requirements is as follows: -5- SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1999 EXHIBIT "C" NOTE 1: PLAN DESCRIPTION PLAN BENEFITS (A) RETIREMENT CONDITIONS: Normal retirement is at age fifty-five (55) provided the member has at least four years of credited service as a sheriff after and including January 1, 1961. The credited service requirement is eight years for a sherifIwho 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 $72.00 by the number of years of credited service. The minimum monthly benefit paid is $288.00 and the maximum monthly benefit paid is $2,160.00. (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 ofthe monthly normal retirement benefit and is payable until remarriage. (D) DEATH BENEFITS: (1) Upon the death of any member, the total amount ofhislher 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 of55 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. -6- SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1999 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 fonn of a 100% joint life annuity. In such event, the death benefit discussed in item (1) will not be payable. (E) TERMINATION: The sum ofcontributions 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 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 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 Sheriffofthe Superior Courts acts as a Sheriff in those courts $ 1.00 -7- SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1999 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 ofits 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 has been disclosed, it is not presented within the financial statements at June 30, 1999, as it is the policy ofthe Sheriffs' Retirement Fund of Georgia to prepare its financial statements on a basis of accounting other than generally accepted accounting principles as noted above. Generallyaccepted accounting principles also require that plan liabilities for benefits and refunds due to plan members and beneficiaries should be recognized when due and payable in accordance with the terms ofthe plan, and all other plan liabilities should be recognized on the accrual basis ofaccounting. Plan liabilities are not recorded in the financial statements at June 30, 1999, as it is the policy of the Sheriffs' 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 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 ofGeorgia 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 oftheir investments.' In addition, the Board of Commissioners is restricted to invest -8- SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1999 EXHIBIT"C" NOTE 2: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES AND PLAN ASSET MATTERS INVESTMENTS no more than 50% ofthe assets ofthe Retirement Fund in common stocks or equities 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 of domestic life insurance companies are enumerated in Title 33, Chapter 11 of the Official Code of Georgia Annotated. The significant fonns of investments in accordance with these statutes and available to the Retirement Fund are as follows: (1) Deposits in checking, savings, certificates of deposit or similar 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 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 ofthe United States ofAmerica. (4) Loans guaranteed as to principal and interest by the government ofthe 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 ofthe . 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 oflocal units of government or government related entities located within the United States ofAmerica 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 of any state or ofthe 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- SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 1999 EXHIBIT"C" NOTE 2: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES AND PLAN ASSET MATTERS INVESTMENTS (9) Bonds, debentures, notes, or other evidences ofindebtedness 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. fuvestments 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 ofrevenue. fu addition, funds on deposit with the Retirement Fund's investment custodian for purposes of continual investment are reflected as investments regardless ofthe term of the instruments. fuvestments in U. S. government securities, stocks, bonds and debentures, investment accounts, certificates ofdeposit, 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 ofthe security. The market values reflected on the Statement ofPlan Net Assets were based on valuations appearing in the Retirement Fund's fuvestment Custodian Trust Report at June 30, 1999. futerest 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 29% ofthe net assets available for benefits are invested in U. S. government securities. The Retirement Fund has no other investments in securities of governmental, commercial, or industrial organizations whose cost exceeds 5% ofplan net assets. Statutory provisions governing the investment of fun