Audit Report
Sheriffs' Retirement Fund of Georgia
Fiscal Year Ended June 30, 2012
Prepared by: State Accounting Office
"Georgia State Capitol" Artist: GeorgeAnn S. Moore, Gainesville, Georgia

The artwork on the cover was created by Gainesville artist GeorgeAnn Moore and will be hanging in the Office of the Governor as part of a rotating exhibit "The Art of Georgia" through January 25, 2013. For more information about the exhibit, the selected artists and their work, visit www.gaarts.org.

SHERIFFS' RETIREMENT FUND OF GEORGIA - TABLE OF CONTENTS Page
SECTION I - FINANCIAL

Independent Auditor's Report

1

Basic Financial Statements

Statement of Fiduciary Net Assets

4

Statement of Changes in Fiduciary Net Assets

5

Notes to the Financial Statements

6

Required Supplementary Information

Schedule of Funding Progress

12

Schedule of Contributions from the Employer and Other Contributing Entities

13

SECTION II - REPORT ON INTERNAL CONTROL OVER FINANCIAL

REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN

AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH

GOVERNMENT AUDITING STANDARDS

17

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SECTION I - FINANCIAL

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BASIC FINANCIAL STATEMENTS

SHERIFFS' RETIREMENT FUND OF GEORGIA STATEMENT OF FIDUCIARY NET ASSETS JUNE 30, 2012

Assets Cash and Cash Equivalents Receivables
Interest and Dividends Investments
Pooled Investments Mutual Funds Municipal, U. S. and Foreign
Government Obligations Corporate Bonds/Notes/Debentures Stocks
Total Assets
Liabilities Accounts Payable and Other Accruals Compensated Absences Payable
Total Liabilities
Net Assets Held in Trust for Pension Benefits

$

448,001

249,676

4,869,364 16,041,431

5,425,026 14,465,189 32,040,772

73,539,459

17,265 8,643
25,908

$

73,513,551

The notes to the financial statements are an integral part of this statement.
4

SHERIFFS' RETIREMENT FUND OF GEORGIA STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2012

Additions: Contributions Plan Members Other Contributions Fines and Bond Forfeitures Interest and Other Investment Income Dividends and Interest Net Depreciation in Investments Reported at Fair Value Less: Investment Expense Net Investment Income Other Miscellaneous
Total Additions
Deductions: General and Administrative Expenses Benefits Refunds
Total Deductions
Change in Net Assets Held in Trust for Pension Benefits
Net Assets, July 1
Net Assets, June 30

$

76,160

2,678,871

$

1,863,123

(926,918) (320,384)

615,821

126,491

3,497,343

186,623 4,552,574
15,600
4,754,797

(1,257,454) 74,771,005

$

73,513,551

The notes to the financial statements are an integral part of this statement.
5

SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2012

A. PLAN DESCRIPTION

ORGANIZATION AND PLAN DESCRIPTION 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 of the State of Georgia. The Board of Commissioners of the Retirement Fund is comprised of six members and consists of the state treasurer, 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 included within the State of Georgia's basic financial statements as a part of the primary government.

Any qualified and commissioned sheriff of the superior court 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 sheriffs 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, 2012, to that of the prior year:

Retirees and Beneficiaries Currently Receiving Benefits
Terminated Members Entitled to, But Not Yet Receiving Benefits

June 30, 2012 June 30, 2011

181

186

6

7

Total

187

193

Number of Active Members

150

153

PARTICIPATING EMPLOYERS AND CONTRIBUTING ENTITIES The number of participating employers at June 30, 2012 was 150. The number of contributing entities at June 30, 2012 was 919.

6

SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2012
A. PLAN DESCRIPTION
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 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 sheriff who first or again becomes an active member on or after July 1, 1988. A member must have terminated his or her service as sheriff to receive benefits.
(B) RETIREMENT BENEFITS: The monthly benefit is a single life annuity payable in monthly payments for the life of the member. The maximum monthly payment at June 30, 2012 is equal to $132.14 per month (plus 1/12 of this amount for each month of any partial year) for each full year of creditable service up to a maximum of $3,964.20 per month. The Board of Commissioners is authorized to provide for increases effective as of January 1 and July 1 of each year up to 1 percent of the maximum monthly retirement benefit then in effect.
(C) OPTIONAL BENEFITS: Members may elect, as an alternate to the benefit described above, to receive a 100 percent joint life annuity payable during the life of the member or the member's spouse or a contingency life annuity with a 50 percent monthly payment to the surviving spouse. The amount of the benefit for these options is an actuarially reduced portion of the single life annuity benefit described, above.
(D) DEATH BENEFITS (1) In the event of the death of a member before retirement, the total amount of his or her contributions into the fund shall be paid, without interest, to the surviving spouse, the named beneficiary or the member's estate.
(2) In the event of the death of a member after retirement, who has yet to receive an amount in benefits equal to the total amount the member paid in as contributions, the difference shall be paid, without interest, to the surviving spouse, the named beneficiary or the member's estate.
(3) Additionally, upon the death of the following, the sum of $15,000 shall be paid to the surviving spouse, the named beneficiary or the members estate:
(a) an inactive member who would otherwise qualify to be carried upon the active membership rolls except that he or she no longer holds office of sheriff;
(b) a member who is receiving retirement benefits;
(c) a member who is otherwise qualified to receive retirement benefits from this Retirement Fund except that he or she has not reached age 55 or has not filed an application or has not been approved for retirement benefits or
(d) any active member.
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SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2012
A. PLAN DESCRIPTION
(4) In addition to the death benefit discussed in item (D)(3), upon the death of an active member, the surviving spouse receives an additional benefit in the form of a 100 percent joint life annuity. In such event, the death benefit discussed in item (D)(1) will not be payable.
(E) TERMINATION: At any time before a member begins drawing retirement benefits, the member may request a refund of the total sum he or she has paid into the Retirement Fund as membership dues. No interest shall be paid upon amounts so withdrawn.
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING The Retirement Fund's financial statements are prepared on the accrual basis of accounting, except for the collection of fines and forfeitures which are recognized when collected from the courts. Any accrual of these fines and forfeitures would be immaterial to the Retirement Fund's financial statements. Contributions from members are recognized as additions in the period in which the members provide services. Retirement benefit and refund payments are recognized as deductions when due and payable.
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 are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price.
C. CONTRIBUTIONS
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, 2012, which reflected the proceeds of designated portions of fines and forfeitures as the employer contribution, indicated that the minimum employer contribution was met. Member contribution requirements are set forth in O.C.G.A. Section 47-16-43 and are not actuarially determined. Administrative expenses are paid from funds received by the Retirement Fund.
Contribution provisions are established by statute and may be amended only by the General Assembly of Georgia. A description of contribution requirement is as follows:
(A) MEMBERS CONTRIBUTIONS: Members must contribute $45.00 per month, with a maximum payment period of thirty years.
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SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2012

C. CONTRIBUTIONS

(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,

in any court where a sheriff of a superior

court acts as a sheriff

$2

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

For civil actions, cases or proceedings filed in superior courts

$1

For civil actions, cases or proceedings filed in state courts

and magistrate courts where a sheriff of the superior

courts acts as a sheriff in those courts

$1

Actual contributions for the year ended June 30, 2012, were as follows:

Member Contributions Fines and Forfeitures

$

76,160

2,678,871

Total

$ 2,755,031

D. FUNDED STATUS AND FUNDING PROGRESS The funded status of the plan as of July 1, 2012, the most recent actuarial valuation date, is as follows:

Actuarial value of Plan
assets (a)

Acturial accrued liability (AAL) entry age
(b)

Unfunded AAL (UAAL)
(b-a)

Funding ratio (a/b)

Annual covered payroll
(c)

UAAL as a percentage of
covered payroll [(b-a)c]

$ 69,356,000 $ 77,766,000 $ 8,410,000

89.2%

n/a

n/a

9

SHERIFFS' RETIREMENT FUND OF GEORGIA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2012

The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the AAL for benefits.

Additional information as of the latest actuarial valuation follows:

Valuation Date

July 1, 2012

Actuarial cost method

Entry age normal

Amortization method

Level dollar, open

Remaining amortization period

30 years

Asset valuation method

Five-year smoothed market value with 10% corridor

Actuarial assumptions: Investment rate of return (includes inflation) Projected salary increases Cost-of-living adjustments

6.50% N/A N/A

10

REQUIRED SUPPLEMENTARY INFORMATION

SHERIFFS' RETIREMENT FUND OF GEORGIA SCHEDULE OF FUNDING PROGRESS JUNE 30, 2012

Actuarial Valuation
Date

Actuarial Value of Assets
(a)

Actuarial Accrued Liability (AAL) - Entry Age Normal
(b)

Unfunded AAL/(Funding
Excess) (UAAL)
(b-a)

Funded Ratio (a/b)

Covered Payroll
( c )

July 1, 2008

69,553,000

67,081,000

(2,472,000) 103.7%

n/a

July 1, 2010

66,897,000

72,755,000

5,858,000

91.9%

n/a

July 1, 2012

69,356,000

77,766,000

8,410,000

89.2%

n/a

The actuarial value of assets at July 1, 2012 is equal to 94.3% of the market value of assets.

UAAL as a Percentage of Covered
Payroll ((b-a)/c)
n/a
n/a
n/a

12

Fiscal Year
2007 2008 2009 2010 2011 2012

SHERIFFS' RETIREMENT FUND OF GEORGIA SCHEDULE OF CONTRIBUTIONS FROM THE EMPLOYER AND
OTHER CONTRIBUTING ENTITIES JUNE 30, 2012

Annual Required Contribution

$

657,100

657,100

401,174

401,174

1,101,385

1,101,385

Percentage Contributed
400.5% 410.1% 697.7% 661.0% 226.8% 243.2%

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SECTION II - REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

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