1993 annual report [1993]

the Emplbyees' Retirement System
TWO NORTHSIDE 75 SUITE 300
ATLANTA, GEORGIA 30318-7778
(404) 352-6400 GIST 271-6400
RUDOLPH JOHNSON, DIRECTOR
JIM LARCHE, DEPUTY DIRECTOR
Employees' Retirement System Public School Employees Retirement System
Legislative Retirement System Trial Judges and Solicitors Retirement Fund
Georgia Defined Contribution Plan State Employees Assurance Department
State Social Security Trust Fund

Ta6h of Contents
BOARDSOFTRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 DIRECTOR'S COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
LEGISLATIVEREVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ACTUARIAL SUMMARY
Employees' Retirement System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 . 6 Public School Employees Retirement System . . . . . . . . . . . . . . . . . . . . . . . . 7 . 9 Legislative Retirement System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 .12 Trial Judges and Solicitors Retirement Fund . . . . . . . . . . . . . . . . . . . . . . . . 13 .15 State Employees Assurance Department (GTLI) . . . . . . . . . . . . . . . . . . . . . 16 .18
INVESTMENT REPORT
Investment Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Pooled Investment Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Structural Analysis of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Temporary Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Common Stock Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 .25 Mortgages. Other Secured Notes. Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Purchases of Long-Term Fixed-Income Investments . . . . . . . . . . . . . . . . . . . . . . 27 Purchases of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 .29 Sales of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 .31
AUDITED FINANCIAL STATEMENTS
Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Balance Sheets. Historical Trend Information. Supplementary
Information. and Additional Information . . . . . . . . . . . . . . . . . . . . . 34 .61

Boards of Trustees -I As of June 30, 1993

Emplbyees' Retirement System

Joe Edwards, Ph.D. Chairman Commissioner, Retired Department of Human Resources

William E. Strickland Vice Chairman
Commissioner, Retired Georgia Revenue Department

Claude L. Vickers, ex-officio State Auditor Department of Audits

Bobbie Jean Bennett, ex-officio
Commissioner State Merit System

William E. Sumner Attorney at Law Atlanta, Georgia

Steven N. McCoy, ex-officio Director Office of Treasury & Fiscal Services

John W. McIntyre Chairman and CEO, Retired Citizens & Southern National Bank

Tu6lic Sdiool Emplbyees Retirement System

Jeanne Hill Director Georgia School Bus Drivers Association

Members of ERS Board of Trustees

TrialJudjes and Solicitors Retirement Fund

Bill Shaw Abney Juvenile Court Judge

Spencer Lawton, Jr. State Court Solicitor
Members of ERS Board of Trustees

S. Lark Ingram
State Court Judge

Le~isliztiveRetirement System

Members of ERS Board of Trustees

State Social Security lrust Fund

Members of ERS Board of Trustees

State Emplbyees Assurance !Department

Joe Edwards, PhD., Chmn. Commissioner, Retired Department of Human Resources

Claude Vickers State Auditor Department of Audits

David Poythress, ex-officio Commissioner
Department of Labor

Steven N. McCoy, ex-officio

Bobbie Jean Bennett, ex-officio

Director

Commissioner

Office of Treasury & Fiscal Services

State Merit System

John W. McIntyre Chairman and CEO, Retired Citizens & Southern National Bank

Director's Commnts
It is a pleasure to present the 1993 Annual Report on the systems/programs administered by the Employees' Retirement System (ERS). By statute, the staff of the Employees' Retirement System administers seven separate and distinct systems/programs:the Employees' Retirement System, the Public School Employees' Retirement System, the Trial Judges and Solicitors Retirement Fund, the Legislative Retirement System, the Georgia Defined Contribution Plan, the State Employees' Assurance Department, commonly known as the Group Term Life Insurance Program, and State Social Security contracts with political subdivisions.
This report includes the following: letters from our actuary, Buck Consultants, Inc., on the funding of the retirement systems and the Group Term Life Insurance Program, together with highlights from the most recent valuation of each system, an investment report, including a listing of the Pooled Investment Fund Portfolio, the report of our auditors, Deloitte & Touche.
Since 1970, we have offered a Pre-Retirement Program in the Atlanta area for prospective retirees of our system who are within five years of retirement eligibility. The program has been expanded in recent years and is now presented in all areas of the State. The seminars provide exploration and discussion of topics such as Social Security, Medicare, health insurance, estate planning and wills. Classes are coordinated by our staff with outside resource people.
Additionally, we now offer independence planning seminars designed for younger employees with at least five years of State employment. The.program touches on most of the topics considered in the preretirement seminars, but gives emphasis to the importance of setting financial goals early in one's career. This program, called Ten Plus, is also offered statewide.
We hope you find this report informative. It is intended to provide extensive and reliable information as a basis for making management decisions and as a means of determining responsible stewardship for the assets contributed by the retirement systems' members and their employees. It is distributed to all employers as our link between the retirement systems and our membership.
We would like to express our gratitude to the Boards of Trustees for their leadership. We appreciate the support of Governor Miller, the Legislature, and departmental officials. With this continued interest and support, and the diligence of our staff, we can assure our members and retirees that we will continue to maintain a successful operation that provides protection and financial soundness to the retirement systems.
Rudolph ~ohnsonD, irector

1993 Legislation
Fifty-one bills affecting the systems administered by Ew were introduced during 1993. Of these,
six were enacted and thirty were rolled over for 1994. The six enacted are:
- - ACT 607 (SB 129) ERS This Act amends the general provisions relative to state government.
In addition to amending O.C.G.A. 50-13-4 relating to administrative procedure, Chapter 50 of Title 13 was amended to require state agencies to keep unfilled a position vacated by a state employee being granted involuntary separation retirement. Further, the sum of the separated employee's salary and the cost of the employee's retirement shall be deleted permanently from the agency's budget.
This does not apply if the employee is being involuntarily separated because of a mandatory retirement age or as a direct result of an Act of the General Assembly which abolished such employee's position.
- - ACT 616 (SB 352) PSERS & TRS This Act allows public school retirees to continue
health insurance coverage by paying premium through payroll deduction or direct payment on a quarterly basis to the State Health Insurance Benefit Plan at the same rate as other retired direct payees.
Surviving spouses may continue the same level of coverage but cannot add dependents. Coverage may be limited to coverage supported by the employer contributions.
- ACT 83 (HB144) - ALL RETIREMENT SYSTEMS Corrects errors in Title 47 of the
O.C.G.A. (Effective 3/22/93 upon Governor's signing.)
- - ACT 538 (HB 7502 ERS Permits voluntary retirementupon or after attaining age 55 for certain
law enforcement personnel (officers and troopers in the Department of Public Safety, Conservation Rangers in the Department of Natural Resources, Alcohol and Tobacco Officers or Agents of the Department of Revenue, and Officers and Agents of the Georgia Bureau of Investigation) with the same benefit calculations as currently provided under the involuntary separation provisions. This law also allows retirement at age 55 and 10 years of service with benefits calculated as if the member were age 65 (without projection in years of service).
- - ACT 781 (SB 7812 ERS & TRS This Act amends the TRS law to require a rehired retiree who
previously had an option to elect either ERS or TRS membership to again become a member of the system from which helshe retired. This Act also provides an expense allowance for members of the Board of Trustees of the Employees Retirement System.
- - ACT 456 (HB 782) TJSRF This Act gives the Board of Trustees authority to grant postretirement
increases to retirees of the Trial Judges and Solicitors Retirement Fund. The initial increase cannot exceed 3% and subsequent increases may be granted effective January 1 and July 1 of each year not to exceed 1.5%.
Note: Technically,Acts 607 and 616 are not retirement bills as they do not amend the retirement laws. The above Acts are effectiveJuly I , 1993 (except HB 144 as noted).

BUC' C~JSULTANTS
200 Galleria Parkway, N.W.Suite 1200
Atlanta, Georgia 30339-5945
February 11, 1994
Board of Trustees Employees' Retirement System of Georgia Two Northside 75 Atlanta, Georgia 30318
Attention: Mr. Rudolph Johnson, Director
Gentlemen:
Section 47-2-26 of the Code of Georgia which governs the operation of the Employees' Retirement System of Georgia provides that the actuary shall make periodic valuations of the contingent assets and liabilities of the Retirement System on the basis of regular interest and the table last adopted by the Board of Trustees. We have submitted the report giving the results of the valuation of the System prepared as of June 30, 1992. The report indicates that annual employer contributions at the rate of 9.21 % of compensation are sufficient to support the basic benefits of the System as in effect in 1993.
The System is funded on an actuarial reserve basis. The actuarial assumptions used are in the aggregate reasonably related to the experience under the System and to reasonable expectations of anticipated experience under the System. The valuation method used in the most recent valuation is the entry age normal cost method. Gains and losses are reflected in the unfunded
accrued liability which is being amortized by regular contributions within a 20-year period.
On the basis of the recommended contribution rate, the Retirement System is being funded in conformity with the minimum funding standard set forth in Code Section 47-20-10 of the Public Retirement Systems Standards Law. In our opinion the System is operating on an actuarially sound basis and the sufficiency of the retirement funds to provide the benefit called for by the System may be safely anticipated.
Donald M. Overholser Consulting Actuary
Buck Consultants, Inc.
4041955-2488 Fax 4041933-8336

VALUATION BALANCE SHEET As of June 30,1992
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
(All dollar amounts are in thousands)

ACTUARIAL LIABILITIES

(1)

Present value of prospective benefits payable on account of

present retired members, beneficiaries of deceased members,

and members entitled to deferred vested benefits

(2)

Present value of prospective benefits payable on account of

present active members:

Retirement and suwivor allowances

$

Refunds of members' contributions

Total

(3)

TOTAL ACTUARIAL LIABILITIES

PRESENTANDPROSPECTIVE ASSETS

(4)

Present assets:

Annuity Savings Fund

Pension Accumulation Fund

Total Present Assets

- Present value of total future
contributions = (3) (4)

Present value of future member contributions and employer paid member contributions

- Present value of future employer contributions to the Pension

Accumulation Fund = (5) (6)

$

Employer normal contribution rate

Present value of future payroll (1%)

$

Prospective normal contributions = (8) x (9)

- Prospective unfunded accrued liability contributions
= (7) (10)
TOTAL PRESENT AND PROSPECTIVE ASSETS

4,906,604 65,613 $ $
-
$
1,622,197 4.67%
172,317

4,972,217 6,552,985