GA, E 4-00 ,Ai I l]Cll: of (jeorgia Annual ,ReDort INTRODUCTORY SECTION TABLE OF CO.NTENTS BOARDS OF TRUSTEES LETTER OF TRANSMITTAL 1 2-3 LEGISLATION .' 4-8 ACTUARIAL SUMMAR'Y EMPLOYEES' RETIREMENT SYSTEM 9 - 11 PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM 12 - 14 LEGISLATIVE RETIREMENT SYSTEM 15 - 17 TRIAL JUDGES AND SOLICITORS RETIREMENT FUND . . . . . . . . . . . . . . . .. 18 - 20 STATE EMPLOYEES ASSURANCE DEPARTMENT (GTLI) 21 - 23 DISTRICT ATTORNEYS' RETIREMENT SYSTEM 24 - 25 SUPERIOR COURT JUDGES RETIREMENT SYSTEM . . . . . . . . . . . . . . . . . . . 26 - 27 INVESTMENT SECTION POOLEDINVESTMENTFuND 28 STRUCTURAL ANALYSIS OF INVESTMENTS/RATE OF RETURN " 29 TEMPORARY INVESTMENTS/BoNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 30 COMMON STOCK HOLDINGS 31 - 35 LONG-TERM FIXED-INCOME, MORTGAGES, REAL ESTATE " 36 AUDITED FINANCIAL STATEMENTS TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 37 INDEPENDENT AUDITORS' REPORT " 38 BALANCE SHEETS, HISTORICAL TREND INFORMATION, SUPPLEMENTARY INFORMATION, AND ADDITIONAL INFORMATION . . . . 39 - 82 INTRODUCTORY SECTION BOARDS OF TRUSTEES Joe Edwards, Ph.D. Chairman Commissioner, Retired Department of Human Resources Claude L. Vickers, ex-officio State Auditor Department of Audits Steven N. McCoy, ex-officio Director Office of Treasury & Fiscal Services Bobbie Jean Bennett, ex-officio Commissioner State Merit System William E. Strickland Vice Chairman Commissioner, Retired Georgia Revenue Department William E. Sumner Attorney at Law Atlanta, Georgia John W. Mcintyre Chairman and CEO, Retired Citizens & Southern National Bank Jeanne Hill Director Georgia School Bus Drivers Association Members of ERS Board of Trustees Lilla May Hunsley Director, School Nutrition Program Gwinnett County Billy Shaw Abney Juvenile Court JUdge Members of ERS Board of Trustees 1fi.ewsIatifr ~tirtttnt~lJskm ~i:at~ncial~mritlJ Wnmt Jlj"mtlt .argin ~fitrelt QInntrihutinn ~ Members of ERS Board of Trustees Spencer Lawton, Jr. State Court Solicitor Joe Edwards, Ph.D., Chmn. Commissioner, Retired Department of Human Resources Steven N. McCoy, ex-officio Director Office of Treasury & Fiscal Services Claude Vickers State Auditor Department of Audits Bobbie Jean Bennett, ex-officio Commissioner State Merit System David Poythress, ex-officio Commissioner Department of Labor John W. Mcintyre Chairman and CEO, Retired Citizens & Southern National Bank ZeU Miller, ex-officio Governor State of Georgia ~ltfIrinr QInurt Wllirs ~irmcnt~lJsrent / Jlj"mtlt ~istricl J\~s' ~tirtttnt~lJskm / Jlj"mtlt Rudolph Johnson Director Employees' Retirement System Stephen McCoy, ex-oflicio Director Office of Treasury & Fiscal Services EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 1 INTRODUCTORY SECTION LETTER OF TRANSMITTAL RUDOLPH JOHNSON, DIRECTOR December 1, 1996 It is a pleasure to present the 1996 Annual Report on the systems and programs administered by the Employees' Retirement System (ERS). By statute, the staff ofERS administers eleven separate and distinct systems / programs: the Employees' Retirement System, the Public School Employees Retirement System, the Legislative Retirement System, the Superior Court Judges Retirement Fund / System, the District Attorneys Retirement Fund / System, the Trial Judges & Solicitors Retirement Fund, the Georgia Defined Contribution Plan, and State Social Security contracts with political subdivisions. This report includes the following: letters from our actuaries, Buck Consultants, Inc. and Watson Wyatt & Company, on the funding of the retirement systems and the Group Term Life Insurance Program with highlights from the most recent valuation of each system, an investment report, including a listing of the Pooled Investment Fund Portfolio, the auditors' report from Deloitte & Touche, a synopsis of legislation affecting the retirement systems passed by the 1996 General Assembly. Educational Programs In 1970 the Employees' Retirement System developed and began offering preretirement planning seminars for prospective retirees. For many years the program was only available to those within five years of retirement eligibility. In recent years the program has been expanded to reach all employees. The program is now called "Independence Planning." Series I is for members with less than five years and is a one-day session covering topics such as health insurance, deferred compensation, Social Security, and retirement. Series II is designed for midcareer employees and Series III is for employees within five years of retirement. Both are two-day sessions and include the Series I topics with additional topics such as insurance, estate planning, investments, and wellness. Programs are held in our Atlanta office, as well as other locations throughout the state. The programs are expanded according to demand and as we are able to accommodate with our small staff. Classes are coordinated and conducted by our staff with outside resource people. Investments During Fiscal Year 1996, investments of the "Pooled Investment Fund", which includes the funds from all systems administered by the Employees' Retirement System with the exception of the Georgia Defined Contribution Plan, continued to grow. The fiscal year-end average book value of the fund was $6,551,000,000. Investment income was $837,500,000 resulting in a return on the average investment for the period of 12.78%. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 2 INTRODUCTORY SECTION LETTER OF TRANSMITTAL The investment status ofERS is excellent. The very high quality of the fund's investments is in keeping with the continued policy of "conservatism" and "preservation of capital." The return on investments is well in excess of actuarial requirements. We hope you find this report informative. It is intended as a basis for making management decisions and for 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 system. Rudolph Johnson Director EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 3 - .. .~.' INTRODUCTORY SECTION LEGISLA TION ACT 857 (SB 67) - DISTRICT ATTORNEYS' RETIREMENT SYSTEM Allows members who previously had rejected spousal coverage because such member was unmarried or the spouse had died or such member ceased to be married to elect spouses' benefits prior to December 31, 1996 or within six months after becoming married or remarried. The member shall, at the time of making the election, pay the contributions which would have been made from the month of the marriage or remarriage to the date ofthe election. The period for which the retroactive payments are made shall be included toward the ten years requiring spousal contributions which are necessary for spousal coverage. ACT 063 (SB 435) - EMPLOYEES' RETIREMENT SYSTEM Employees of a county juvenile detention facility transferred to the Department of Children and Youth shall become members of ERS, except employees who were members of a local plan shall have an option to remain in the local retirement plan. Within 30 days of becoming an ERS member, the local plan shall pay to ERS the total employee and employer contributions and accumulated interest paid by and on behalf ofthe member. In addition, the county may pay to ERS on behalf of the employee such amount as the county deems appropriate, and the employee shall receive such creditable service under ERS as the amount paid will allow without creating any accrued liability on ERS not to exceed the accredited service under the local plan. (The bill also stipulates the basis for benefits, etc. if the member remains in the local plan.) ACT 870 (SB 641) - EMPLOYEES' RETIREMENT SYSTEM Georgia Student Finance Commission becomes Georgia Student Finance Authority on July 1, 1996. Current employees who remain with the Authority may retain current Merit System and Retirement System status unless a classified employee transfers or accepts promotion to another position, then he/she will become unclassified. The rights and benefits under ERS shall not be impaired. ACT 995 (UB 213) - SUPERIOR COURT JUDGES RETIREMENT SYSTEM Amends the defmition of "prior service" to include "holding office as a juvenile court judge whether or not such member participated in a retirement fund." Creditable service obtained for prior service as a juvenile court judge shall not be used for purposes of vesting. One year of such creditable service may be obtained for each three years of actual service as a superior court judge up to a maximum of five years. ACT 996 (UB 244) - EMPLOYEES' RETIREMENT SYSTEM Effective July 1, 1996, Option 5 is amended to allow a dependent child (as defined in the IRC of 1986) as beneficiary under this option. A new section is added to allow a recalculation of benefits if a dependent child beneficiary predeceases the retiree. This applies under any option chosen, not just Option 5. If the retiree is married, one year after the death of the dependent child beneficiary, the retiree may elect to begin receiving an actuarially reduced benefit of equivalent value and reestablish on behalf of the spouse the same option which was applicable to the deceased child. The option on behalf of a new spouse can only be established one year after the death of the dependent child and one year after the remarriage of the retired member. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 4 INTRODUCTORY SECTION LEGISLA nON ACT 823 (DB 407) - EMPLOYEES' RIlTJREMENT SYSTEM Effective July 1, 1996, or at date of employment, officers and employees of the North Georgia Mountain Authority shall become ERS members. Those employed on July 1, 1996 may receive credit for prior service by providing proof of prior employment no later than December 31, 1996 or six months after the date of employment, whichever date is later, and paying employee contributions that would have been paid had the employee been a member during such period. The Authority is authorized to pay the employer contributions. ERS will determine the amount of service to be credited based on the funds paid, and credit will be established only for service fully funded. The employees may transfer all or a portion of their vested interest in the Authority's retirement plan to ERS to satisfy all or a portion of the cost of prior service under ERS. The Authority is authorized to supplement any payment. Any employee at July 1, 1996 shall continue in the same membership status; otherwise all new employees shall be under the New Plan. ACT 824 (DB 449) - EMPLOYEES' RETIREMENT SYSTEM Effective July 1, 1996 ERS members employed as a narcotics agent with the Georgia Bureau of Investigation prior to membership shall be entitled to obtain creditable service for such prior service by making application no later than July 1, 1997, or one year after becoming a member, whichever is later.The member shall pay the employee contributions which would have been paid had he/she been a member during such time, plus regular interest thereon, and the GBI shall pay the employer contributions. This service may be established by both Old and New Plan members. ACT 518 (DB 506) - SUPERIOR COURT JUDGES RETIREMENT SYSTEM A retiring member's benefit under current law is based on a maximum of 16 years and this amendment allows credit up to a maximum of 24 years and the benefit for the years in excess of 16 will be 1% of the state salary paid to superior court judges at the time of retirement. The method of calculating early retirement benefits is changed accordingly still allowing retirement at age 60 with a benefit not exceeding 75% of the benefit as calculated above. Current members' and retirees' benefits shall be calculated under the new or old procedure, whichever benefits the member/retiree. The ear~) retiree's benefit shall be a percentage of the regular benefit, which percentage shall be the proportion which the number of years of creditable service the member has in the retirement system bears to 16, but the benefit derived from such computation shall be reduced by one-fourth of 1% for each month less than 16 years of creditable service. Members and retirees of the system on July 1, 1996 shall have their benefits calculated under the new procedure and if any increase is available to any judges retired on July 1, 1996, the increase shall be prospective only. ACT 825 (DB 586) - TEACHERS RETIREMENT SYSTEM & EMPLOYEES' RETIREMENT SYSTEM Amends the TRS law making changes in the provision allowing ERS refund paybacks under that system. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 5 INTRODUCTORY SECTION LECISLA710N ACT 656 (DB 590) - ALL SYSTEMS Amends the general retirement provisions to allow a member of a public retirement system, whose employment was interrupted by a period of military duty (voluntary or involuntary service including active duty, active duty for training, initial active duty for training, inactive duty training, full-time National Guard duty, and any period during which a member is absent from employment for the purpose of an examination to determine his/her fitness to perform such duty), after returning to employment under the "Uniformed Senrices Employment and Reemployment Rights Act," to establish up to five years of such military duty, which shall be extended by any period of mandatory service imposed by the uniformed service recognized by paragraph (4) of subsection (C) of Section 4312 of federal Public Law 103-353, the Uniformed Service Employment and Reemployment Rights Act of 1994. The member must notify the board of trustees of his/her intent within six months of resuming employment. The member shall pay employee contributions for the period based on the salary the member would have received during the period of absence if same can reasonably be determined; otherwise the member's average rate of compensation during the twelve month period immediately preceding the period of qualified service or such lesser time as the member was employed. The returning veteran shall have three times the period of military or a maximum of five years, whichever is shorter, computed from the date the veteran resumes employment, in which to repay the employee costs. The board may provide by rule for computing the amount of creditable service on payment of less than the total amount of employee contributions. The employer shall pay the actuarial value of the service, less the employee contributions, and shall have the same time period in which to make the payment as the member has; provided, the employer shall not be required to make any payment until the fiscal year following the year such notice is given. ACT 519 (DB 679) - SUPERIOR COURT JUDGES RETIREMENT SYSTEM The disability provision is amended to allow retirement after ten years with a benefit of two-thirds of the maximum. Benefits shall be calculated under this provision for current and future retirees but shall not authorize payment of retroactive benefits. (Disability with four years service and one-half ofthe maximum benefit is not changed.) ACT 601 (DB 709) Office of School Readiness is created effective April 15, 1996, and employees transferred to this agency from the Department ofHuman Resources and the Department of Education who are currently members of ERS can elect to continue membership in ERS in the same status the member possessed at the time oftransfer. All employees hired after April 15, 1996 shall become members ofERS under the New Plan. ACT 660 (DB 743) - TRIAL JUDGES & SOLICITORS RETIREMENT FUND Amends the required years of contributions for spousal coverage from 22 years to 16 years. ACT 662 (DB 782) - TRIAL JUDGES & SOLICITORS RETIREMENT FUND Changes the defmition of "inferior courts" to include the State Court of Richmond County. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 6 INTRODUCTORY SECTION LECISLA7ION ACT 664 (UB 852) - EMPLOYEES' RrnREMENT SYSTEM Allows the re-establbhment of "lost membership" service after a one year period without payment of the interest currently required by statute. ACT 669 (UB 978) - EMPLOYEES' RrnREMENT SYSTEM Anyone becoming a member ofERS on or after July 1, 1995, who, immediately prior to becoming a member, was an officer or employee of the Georgia Housing and part Finance Authority, shall have the option to transfer all or of hislher vested interest with the Authority's retirement plan to ERS. The Authority shall be authorized to supplement such transfer of funds. Credit under ERS will only be granted for such service as fully funded by the transfer(s) without creating any additional accrued liability onERS. ACT 828 (UB 1006) DISTRICT ATIORNEYS' RETIREMENT SYSTEM Any district attorney who haslhad credit under ERS as an assistant district attorney or employee of the Prosecuting Attorneys' Council may establish the ERS service under this system by notifying this system and ERS no later than December 31, 1996, or within six months after first becoming a member. ERS shall transfer the employee contributions and interest thereon to the DAs system and refund to the member contributions for any service not allowed by the DA system. If the member has received a refund from ERS, the member shall within six months of certification of such refund by ERS pay the refunded amount plus 5% interest per annum to the date of payment. Any member who did not elect ERS membership as an assistant district attorney or employee of the Prosecuting Attorneys' Council may receive credit for such period of time he/she would have been eligible for membership by paying, no later than December 31, 1996, or within six months after first becoming a member, the employer and employee contributions which would have been payable had he/she been a member during such period together with 5% interest per annum to date of payment. No service shall be established under this provision if it has or may be used under any other state or local system, and service established under this provision shall not be used to meet the minimum service requirement for retirement eligibility. ACT 626 (UB 1012) - EMPLOYEES' RETIREMENT SYSTEM Allows the purchase of up to five years of prior service for members who were employed by the Georgia Federal State Shipping Point Inspection Service on July 1, 1975. (This is in addition to 5 years prior service purchase already authorized under 47-2-310.) The member shall pay 5% employee contributions on the salary at July 1, 1975 plus 4% interest compounded annually to date of payment. Payment shall be made no later than January 1, 1996. The Service may supplement the payment. Credit will only be granted if payment is sufficient to fully fund the cost without creating any additional accrued liability on ERS. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 7 INTRODUCTORY SECTION LEGISLATION ACT 829 (DB 1046) - EMpLOYEES' RE'nREMENT SYSTEM Allows members who had temporary fuU-time service for less than nine months in a calendar year in the legislative branch of govemment immediately prior to their ERS membership to establish credit for up to five years of such service prior to January 1, 1997. One month of creditable service shall be given for each 20 days of part-time service, not to exceed 12 months in a calendar year. No creditable service will be granted for less than 60 days ofpart-time service during a calendar year. The employee must pay employer and employee contributions that would h~ve been paid if the employee had been a member, based on part-time compensation, together with regular interest. Proof of part-time service and compensation must be provided and application must be made by January 1, 1997. ACT 630 (DB 1070) - EMPLOYEES' RE'nREMENT SYSTEM Reopens the period specified in the 1994 law during which employees or former employees of county departments of family and children services (DFCS) may obtain credit for their previous DFCS service. The cutoff date is extended to December 31, 1996 for current employees and new members will be allowed to establish such service within six months of becoming a member of the system. ACT 831 (UB 1088) - DISTRICT AnoRNEYs' RETIREMENT SYSTEM Allows retired DAs to be appointed or elected to any state office. The retirement benefit will be suspended during the employment, and upon leaving such office, the member shall be again entitled to receive benefits calculated with any increases granted during the ~riod of suspension, but in no event shall the member be entitled to payment of benefits for the period of suspension. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 8 ACTUARIAL SECTION ACWARY'S CERTIFICATION LETTER sue' CO'NSULTANTS 200 Galleria Parkway, N.W. Suite 1200 Atlanta. Georgia 30339-5945 November 22, 1996 Board ofTrustees Employees'Retirement System ofGeorgia 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 ofthe 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, 1995. The report indicates that annual employer contributions at the rate of 10.64% of compensation for Old Plan members and 15.64% for New Plan members are sufficient to support the basic benefits ofthe System as in effect in 1996. The System is funded on an actuarial reselVe 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 15-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 ofthe retirement funds to provide the benefit called for by the System may be safely anticipated. Sincerely, ~l~~~ Donald M. Overholser Principal and Consulting Actuary EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 9 FINANCIAL SECTION VALUA nONBALANCE SHEET - as qfJune 30J 1995 - DOLLAR AMOUNTS 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 Service and disaiblity benefits $ 2,173,493 Death and survivor benefits 223,862 Deferred vested benefits 119,880 Total $ 2,517,235 (2) Present value of prospective benefits payable on account of present active members: Retirement and survivor allowances Refunds of member's contributions Total $ 5,736,139 65,495 5,801,634 (3) TOTAL ACTUARIAL LIABILITIES $ 8,318,869 PRESENT AND PROSPECTIVE ASSETS (4) Present assets: Annuity Savings Fund Pension Accumulation Fund Total present assets $ 714,981 4,653,086 $ 5,368,067 (5) Present value of total future contributions = (3) - (4) $ 2,950,802 (6) Present value of future member contributions and employer paid member contributions 1,159,498 (7) Present value of future employer contributions = (5) - (6) $ 1,791,304 (8) Employer normal contribution rate 4.30% (9) Present value of future payroll (1 %) $ 200,849 (10) Prospective normal contributions = (8) x (9) 863,651 (11) Prospective unfunded acccrued liability contributions = (7) - (10) 927,653 (12) TOTAL PRESENT AND PROSPECTIVE ASSETS $ 8,318,869 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 10 FINANCIAL SECTION SUMMARY OF PRlNCIPAL RESULTS - as qfJune 30, 1995 - DOLLAR AMOUNTS IN THOUSANDS Valuation Date Active members: Number Annual Compensation Retired members and beneficiaries: Number Annual allowances Valuation assets Unfunded actuarial accrued liability Recommended employer contribution rates: Old Plan Normal Accrued Liability Total New Plan Normal (includes 4.75% paid for member) Accrued liability Group Term Life Insurance Total June 30, 1995 74,004 $ 1,883,922 18,852 $ 264,669 $ 5,368,067 $ 927,653 June 30, 1994 71,407 $ 1,759,224 18,124 $ 240,908 $ 4,858,015 $ 896,073 4.30% 6.34% 10.64% 9.05% 6.34 0.25 15.64% 4.44% 6.20% 10.64% 9.19% 6.20 0.25 15.64% The valuation takes into account the effect of amendments to the System enacted through the 1996 session of the General Assembly. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA II ACTUARIAL SECTION ACWARY'S CERIIFlCA IION LETTER suCeO'~SULTANTS 200 Galleria Parkway, N.W. Suite 1200 Atlanta, Georgia 303395945 November 22,1996 Board ofTrustees Employees'Retirement System ofGeorgia Two Northside 75 Atlanta, Georgia 30318 Attention: Mr. Rudolph Johnson, Director Gentlemen: Section 47-4-60 of the law governing the operation of the Georgia Public School Employees' Retirement System provides that the employer contributions toward the cost of the System shall be actuarially determined and approved by the Board. We have submitted the report giving the results of the valuation ofthe System prepared as ofJune 30, 1995. The report indicates that an annual employer contribution at the rate of$444.97 per active member is sufficient to support the benefits ofthe System as in effect in 1996. 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 IS-year period. On the basis of the recommended contnbution rate, the Retirement System is being funded in conformity with the minimum funding standards 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 ofthe retirement funds to provide the benefits called for by the System may be safely anticipated. Sincerely, Donald M. Overholser Principal and Consulting Actuary EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 12 FINANCIAL SECTION VALUA nONBALANCE SHEET - as ofJune 30, 1995 - ACTUARIAL LIABILITIES (1 ) Present value of prospective benefits payable on account of present retired members, beneficiaries of deceased members, and terminated members entitled to deferred benefits $ 215,839,770 (2) Present value of prospective benefits payable on account of present active members: Service retirement allowances Disability retirement allowances Refunds of members' contributions Total (3) TOTAL ACTUARIAL LIABILITIES $ 214,615,939 20,450,268 2,767,975 $ 237,834,182 $ 453,673,952 PRESENT AND PROSPECTIVE ASSETS (4) Present assets: Members' Contributions Fund $ Pension Accumulation Fund Total present assets = (5) Present value of total future contributions (3) - (4) $ (6) Present value of future member contributions to the Members' Contributions Funds (7) Present value of future employer contributions to the = Pension Accumulation Fund (5) - (6) $ (8) Employer normal contribution rate $ (9) Present value of future membership service = (10) Prospective normal contributions (8) x (9) = (11 ) Prospective unfunded acccrued liability contributions (7) - (10) (12) TOTAL PRESENT AND PROSPECTIVE ASSETS 14,105,000 317,928,000 $ 121,640,952 114,183,588 267.51 207,149 $ 332,033,000 7,457,364 55,414,429 58,769,159 453,673,952 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 13 FINANCIAL SECTION SUMMARY OF PRINCIPAL RESULTS - as ofJune 30, 1995 - Valuation Date Active members: Number Retired members and beneficiaries: Number Annual allowances Valuation assets Unfunded accrued actuarial liability Normal contribution rate per active member Recommended annual employer contributions: Normal Accrued Liability Total June 3D, 1995 June 3D, 1994 30,648 29,693 9,980 9,668 $ 20,693,485 $ 17,502,787 $ 332,033,000 $ 309,898,000 $ 58,769,159 $ 57,904,355 $ 267.51 $ 256.65 I I $ 8,198,646 1$ 7,620,708 5.438,854 I I I I 5,694,292 $ 13,637,500 1$ 13,315,000 I I ! The valuation takes into account the effect of amendments to the System enacted through the 1996 session of the General Assembly. The valuation reflects the increase in the accrual rate since the previous valuation from $9 to $9.25 per month effective July 1, 1996. EMPWYEES' RETIREMENT SYSTEM OF GEORGIA 14 ACTUARIAL SECTION ACWARr's CERTIFICATION LEITER sue' CONSULTANTS 200 Galleria Parkway, N.W. Suite 1200 Atlanta, Georgia 30339-5945 November 21, 1996 Board ofTrustees Employees' Retirement System ofGeorgia Two Northside 75 Atlanta, Georgia 30318 Attention: Mr. Rudolph Johnson, Director Gentlemen: Section 47-6-22 of the Code of Georgia which governs the operation of the Georgia Legislative Retirement System provides that the actuary shall make periodic valuations ofthe contingent assets and liabilities of the Retirement System on the basis of regular interest and the tables 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, 1995. The report indicates that annual employer contributions at the rate of $822.82 per active member are sufficient to support the benefits ofthe System as in effect in 1996. 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 unit credit actuarial cost method. Gains and losses are reflected in the unfunded accrued liability which is being amortized by regular contributions within a 21-year period. On the basis of the recommended contribution rate, the Retirement System is being funded in conformity with the minimum funding standards 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 ofthe retirement funds to provide the benefits called for by the System may be safely anticipated. Sincerely, ~JWvOtwJI ~~ Donald M. Overholser Principal and Consulting Actuary EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 15 FINANCIAL SECTION VALUATIONBALANCE SHEET - as qfJune 30, 1995 - ACTUARIAL LIABILITIES Present value of prospective benefits payable on account of: (1) Present retired members and beneficiaries of deceased members and members entitled to deferred vested benefits $ 10,316,272 (2) Present active members: Service retirement allowances Disability retirement allowances Survivor allowances Refunds of members' contributions Total (3) TOTAL ACTUARIAL LIABILITIES $ 4,799,778 357,468 276,843 279,683 $ 5,713,772 $ 16,030,044 PRESENT AND PROSPECTIVE ASSETS (4) Present assets: Members' Account $ Accumulation Account Total present assets = (5) Present value of total future contributions (3) - (4) $ (6) Present value of future member contributions = (7) Present value of future employer contributions (5) - (6) $ (8) Prospective normal contributions = (9) Prospective unfunded accrued liability contributions (7) - (8) (10) TOTAL PRESENT AND PROSPECTIVE ASSETS 2,244,000 10,340,000 $ 3,446,044 2,373,549 $ 12,584,000 1,072,495 1,097,274 1,276,275 16,030,044 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 16 FINANCIAL SECTION SUMMARY OF PRINCIPAL RESULTS - as ofJune 30, 1995 - Valuation Date June 30. 1995 June 30. 1993 Number of active members 199 197 Retired members and beneficiaries: Number Annual allowances 160 151 $ 854,253 $ 781,371 Valuation assets $ 12,584,000 $ 11,140,000 Unfunded actuarial accrued liability $ 1,276,275 $ 1,248,622 Employer normal contribution rate per active member $ 349.60 $ 341.08 Recommended annual employer contributions: Normal $ Accrued Liability 69,570 $ 94,171 67,193 94,903 Total $ 163,741 $ 162,096 The valuation takes into account the effect of amendments to the System enacted through the 1996 session of the General Assembly. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 17 ACTUARIAL SECTION ACTUARY'S CERTIFlCA TION LEITER sue' CONSULTANTS 200 Galleria Parkway, N.W. Suite 1200 Atlanta, Georgia 30339-5945 November 21, 1996 Board ofTrustees Georgia Trial Judges and Solicitors Retirement Fund Two Northside 75 Atlanta, Georgia 30318 Attention: Mr. Rudolph Johnson, Director Gentlemen: Section 47-10-22 ofthe Code ofGeorgia which governs the operation ofthe Georgia Trial Judges and Solicitors Retirement Fund provides that the actuary shall make periodic valuations of the contingent assets and liabilities ofthe Retirement Fund on the basis of regular interest and the tables last adopted by the Board ofTrustees. We have submitted the report giving the results ofthe valuation ofthe Fund prepared as ofJune 30, 1995. The report indicates that employer contributions at the rate of 11.58 % ofcompensation are sufficient to support the benefits ofthe Fund as in effect in 1996. The Fund is funded on an actuarial resetVe basis. The actuarial assumptions used are in the aggregate reasonably related to the experience under the Fund and to reasonable expectations of anticipated experience under the Fund. The valuation method used in the most recent valuation is the entry age nonna! cost method. There is no unfunded accrued liability as ofJune 30, 1995. On the basis ofthe recommended contribution rate, the Retirement Fund is being funded in conformity with the minimum funding standards set forth in Code Section 47-20-10 of the Public Retirement Systems Standards Law. In our opinion the Fund is operating on an actuarially sound basis and the sufficiency of the retirement funds to provide the benefits called for by the Fund may be safely anticipated. Sincerely, / ~~tMJh Donald M. Overholser Principal and Consulting Actuary EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 18 FINANCIAL SECTION VALUA nONBALANCE SHEET 'Qfrim JJuag.ez ano~nlicitnrz ~tir.ement J'funo - as qf]une 30, 1995 - ACTUARIAL LIABILITIES Present value of prospective benefits payable on account of: (1) Present retired members and beneficiaries of deceased members and members entitled to deferred vested benefits (2) Present active members (3) TOTAL ACTUARIAL LIABILITIES $ 7,070,107 29,956,937 $ 37,027,044 PRESENT AND PROSPECTIVE ASSETS (4) Present assets: Members' Account $ Accumulation Account $ Total present assets = (5) Present value of total future contributions (3) - (4) $ (6) Present value of future member contributions = (7) Present value of future employer contributions (5) - (6) $ (8) Employer normal contribution rate (9) Present value of future payroll (1 %) $ = (10) Prospective normal contributions (8) x (9) = (11 ) Prospective (surplus) accrued liability contributions (7) - (10) (12) TOTAL PRESENT AND PROSPECTIVE ASSETS 4,666,000 20,662,000 $ 11,699,044 $ 6,876,706 17.34% 591,220 $ 25,328,000 4,822,338 10,251,755 (3,375,049) 37,027,044 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 19 FINANCIAL SECTION SUMMARY OF PRINCIPAL RESULTS - as qfJune 3D, 1995 - Valuation Date Active members: Number Annual compensation Retired members and beneficiaries: Number Annual allowances Valuation assets Unfunded actuarial accrued liability (surplus) Recommended employer contribution rates: Normal Accrued liability Total June 30, 1995 June 30, 1993 144 146 $ 5,990,878 $ 5,043,286 36 34 $ 475,371 $ 449,956 $ 25,328,000 $ 20,063,000 $ (3,375,049) $ (2,738,537) 17.34% (5.76) 11.58% 17.04% (5.46) 11.58% The valuation takes into account the effect of amendments to the System enacted through the 1996 session of the Genera: Assembly. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 20 ACTUARIAL SECTION ACWARY'S CERTIFICATION LEITER sue' CO'NSULTANTS 200 Galleria Parkway, N.W. Suite 1200 Atlanta, Georgia 30339-5945 November 21, 1996 Board ofTrustees Employees'Retirement System ofGeorgia Two Northside 75 Atlanta, Georgia 30318 Attention: Mr. Rudolph Johnson, Director Gentlemen: Chapters 47-2 and 47-19 of the Code of Georgia which govern the operation of the Georgia Employees' Group Term Life Insurance Plan provide that the actuary shall make periodic valuations of the contingent assets and liabilities of the Insurance Plan on the basis of regular interest and the tables last adopted by the Board of Trustees. We have submitted the report giving the results of the valuation of the Plan prepared as of June 30, 1995. The report indicates that the Plan is in close actuarial balance. Combined employer and employee contributions at the rate of 0.50% of salary are sufficient to support the benefits ofthe Plan. The Plan is funded on an actuarial reserve basis. The actuarial assumptions used are in the aggregate reasonably related to the experience under the Plan and to reasonable expectations of anticipated experience under the Plan. In our opinion the Plan is operating on an actuarially sound basis and the sufficiency of the funds to provide the benefits called for by the Plan may be safely anticipated. Sincerely yours, qV?-UO'~w/ .J~ Donald M. Overholser Principal and Consulting Actuary EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 21 ACTUARIAL SECTION VALUA TION BALANCE SHEET rllup 'ill.enn 1liie ~nsura:nc.e - as qfJune 30, 1995 - ACTUARIAL LIABILITIES (1) Present value of prospective benefits payable on account of present retired members (2) Present value of prospective benefits payable on account of present active members (3) TOTAL ACTUARIAL LIABILITIES $ 116,083,248 $ 318,769,299 $ 434,852,547 PRESENT AND PROSPECTIVE ASSETS (4) Present assets (5) Present value of future member premiums (6) Present value of future employer contributions (7) Total present assets and present value offuture employee premiums and employer contributions (8) Actuarial (Surplus) De:::it (9) TOTAL PRESENT AND PROSPECTIVE ASSETS $ 337,197,000 63,775,585 53,111,714 $ 454,084,299 (19,231,752) $ 434,852,547 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 22 FINANCIAL SECTION SUMMARY OF PRINCIPAL RESULTS - as ofJune 30, 1995 - Valuation Date Active members: Number Annual compensation Retired members: Number Insurance amount Valuation assets Actuarial (surplus) deficit Contribution rates: Old Plan Members Employee Employer Total New Plan Members Employee Employer Total June 30, 1995 June 30, 1993 74,004 68,646 $ 1,883,922,392 $ 1,667,427,949 14,271 13,028 $ 345,552,861 $ 288,675,367 $ 337,197,000 $ 282,431,000 $ (19,231,752) $ (4,493,300) 0.50%* 0.00 0.50% 0.25% 0.25 0.50% 0.50%* 0,00 0.50% 0.25% 0.25 0.50% * 0.25% paid by employer There have been no changes in the benefit provisions of the Plan since the previous valuation. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 23 ACTUARIAL SECTION ACWARY'S CERTIFICATION LEITER December 3, 1996 Watson Wyatt & Company Suite 432 4170 Ashford-Dunwoody Road, N.E. Atlanta, GA 30319-1466 Telephone 404 252 4030 Fax 404 256 3549 Board of Trustees District Attorneys Retirement System c/o Mr. Jim Larche, Deputy Director Two Northside 75 Suite 300 Atlanta, GA 30318 Subject: District Attorneys Retirement System Dear Sirs/Madams: As the actuary for the District Attorneys' Retirement System, we have made annual valuations of the assets and liabilities of the Retirement System. We have submitted a report giving the results of the most recent valuation of the System prepared as of July 1,1995. The report indicates that an annual employer contribution of$O, along with the State pick-up of employee contributions of approximately 4.75% of compensation, are sufficient to support the basic benefits of the System as in effect in 1995. The benefits valued in our study are summarized in the report. We used actuarial assumptions in the valuation which are reasonable in the aggregate and which represent our best estimate of anticipated experience. We used the aggregate actuarial cost method in determining the plan's normal cost and required employer contribution. This method computes each year's normal cost as a level percentage of covered compensation. In addition, this method does not explicitly recognize experience gains and losses, but it spreads these amounts over future service years and are included in the normal cost. The Retirement System is being funded in compliance with the State of Georgia minimum funding standards under Code Section 47, Chapter 20. In our opinion, the District Attorneys Retirement System is operating on an actuarially sound basis, and assets are sufficient to provide benefits on an on-going plan basis. We have not calculated the liabilities on a plan termination and settlement basis, although it appears that assets would be sufficient. Sincerely, WATSON WYATT WORLDWIDE ~l~ Laury S. Sikes, A.S.A. Associate Actuary EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 24 FINANCIAL SECTION ANNUAL COSTS AND VALUAlIONRESULTS - as qf]une 3D, 1995 - A. Participant Counts 1. Actives 2. Retirees and Beneficiaries 3. Terminated Vested* 4. Terminated Non-vested** B. Valuation Results 1. Present Value of Benefits a. For active participants b. For retired participants c. For terminated vested participants d. For terminated non-vested participants e. Total $ 16,822,394 $ 2,138,578 $ 278,177 $ 1,578 2. Valuation Assets 3. Present Value of Future Contributions by Employee and on Employee's Behalf 4. Present Value of Future Normal Costs: 1(e) - (2) - (3) 5. Present Value of Future Covered Benefit Payroll 6. Normal Cost Percentage: (4) .;- (5) 47 7 3 1 $ 19,240,727 $ 17,406,989 $ 3,020,805 $ (1,187,067) $ 37,047,900 (3.2041%) 7. Covered Annual Benefit Payroll $ 3,545,544 8. State's Normal Cost: (6) x (7) $ (113,603) C. State Contribution for Current Year State's Normal Cost with Interest to the end of the year $ (122,123) Due a deferred monthly benefit Due a refund, not a deferred monthly benefit These figures are for the District Attorneys' Retirement System. The District Attorneys' Retirement Fund was closed on June 30, 1978. There are no active members. The Fund is administered by ERS. Retirement payments are funded through Department of Administrative Services appropriations. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 25 ACTUARIAL SECTION ACWARY'S CERTIFlCA TION LEITER December 3, 1996 Watson Wyatt & Company Suite 432 4170 Ashford-Dunwoody Road, N.E. Atlanta, GA 30319-1466 Telephone 404 252 4030 Fax 404 256 3549 Board of Trustees Superior Court Judges Retirement System C/O Mr. Jim Larche, Deputy Director Two Northside 75 Suite 300 Atlanta, GA 30318 Subject: Superior Court Judges Retirement System Dear SirslMadams: As the actuary for the Superior Court Judges' Retirement System, we have made annual valuations of the assets and liabilities of the Retirement System. We have submitted a report giving the results of the most recent valuation of the System prepared as of July 1, 1995. The report indicates that an annual employer contribution of $0, along with the State pick-up of employee contributions of approximately 4.75% of compensation, are sufficient to support the basic benefits of the System as in effect in 1995. The benefits valued in our study are summarized in the report. We used actuarial assumptions in the valuation which are reasonable in the aggregate and which represent our best estimate of anticipated experience. We used the aggregate actuarial cost method in determining the plan's normal cost and required employer contribution. This method computes each year's normal cost as a level percentage of covered compensation. In addition, this method does not explicitly recognize experience gains and losses, but it spreads these amounts over future service years and are included in the normal cost. The Retirement System is being funded in compliance with the State of Georgia minimum funding standards under Code Section 47, Chapter 20. In our opinion, the Superior Court Judges Retirement System is operating on an actuarially sound basis, and assets are sufficient to provide benefits on an on-going plan basis. We have not calculated the liabilities on a plan termination and settlement basis, although it appears that assets would be sufficient. Sincerely, WATSON WYATT WORLDWIDE ~JLk Laury S. Sikes, A.S.A. Associate Actuary EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 26 FINANCIAL SECTION ANNUAL COSTSAND VALUATION RESULTS ~up.eriur([uurt Wubg.ez ~tir.em.ent~lIzt.em - as ofJune 30, 1995 - A. Participant Counts 1. Active participants 128 2. Retired participants 48 3. Terminated vested participants* 2 4. Terminated non-vested participants** 2 B. Valuation Results 1. Present Value of Benefits a. For active participants b. For retired participants c. For terminated vested participants d. For terminated non-vested participants e. Total $ 47,610,166 $ 13,394,295 $ 265,939 $ 47,886 $ 61,318,286 2. Valuation Assets $ 66,334,416 3. Present Value of Future Contributions by Employee and on Employee's Behalf $ 8,081,923 4. Present Value of Future Normal Costs: 1(e) - (2) - (3) $ (13,098,053) 5. Present Value of Future Covered Benefit Payroll $ 101,788,900 6. Normal Cost Percentage: (4) .;. (5) (12.8679%) 7. Covered Annual Benefit Payroll $ 11,075,584 8. State's Normal Cost: (6) x (7) $ (1,425,195) C. State Contribution for Current Year State's Normal Cost with Interest to the end of the year $ (1,532,085) * Due a deferred monthly benefit ** Due a refund, not a deferred monthly benefit These figures are for the Superior Court Judges Retirement System. The Superior Court Judges Retirement Fund was closed on December 31, 1976. As of June 30, 1996 there were six active members remaining in the Fund with retirement payments funded through Department of Administrative Services appropriations. E~IPLOYEES' RETIRD1E\\ SYSTE~I OF GEORGI ..\ 27 INVESTMENT SECTION STAWS OF INVESTMENTS - Fiscal Tear 1996 POOLED INVESTMENT FuND $ 6,033,702,269 Employees' Retirement System 375,094,460 State Employees' Assurance Department 367,128,175 Public School Employees Retirement System 28,414,720 Trial JUdges and Solicitors Retirement Fund 13,656,142 Legislative Retirement System 64,328,233 Superior Court Judges Retirement System 17,213,458 District Attorneys' Retirement System 645,200 Superior Court Judges Retirement Fund $ 6,900,182,657 Total Pooled Investments EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 28 INVESTMENT SECTION STAWS OF INVESTMENTS STRUCTURAL ANALYSIS OF INVESTMENTS TYPE OF INVESTMENT SHORT TERM INVESTMENTS BONDS COMMON STOCKS MORTGAGES AND REAL ESTATE 1996 1% 49% 50% Nil 100% 1995 3% 50% 47% Nil 100% June 30 1994 2% 50% 48% Nil 100% 1993 5% 50% 45% Nil 100% 1992 3% 50% 47% Nil 100% RATE OF RETURN ON AVERAGE AMOUNT INVESTED FISCAL YEARS 1986 -1996 FISCAL YEAR ENDING JUNE 30 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 AVERAGE BOOK VALUE (MILLIONS OF DOLLARS) $1,719 $2,055 $2,439 $2,863 $3,299 $3,774 $4,272 $4,771 $5,285 $5,842 $6,551 INVESTMENT INCOME (MILLIONS OF DOLLARS) $191.7 $262.4 $264.5 $296.6 $349.6 $343.3 $423.2 $428.7 $509.8 $538.9 $837.5 YIELD 11.15% 12.77% 10.84% 10.36% 10.60% 9.10% 9.91% 8.99% 9.65% 9.22% 12.78% EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 29 INVESTMENT SECTION STAWS OF INVES1MENTS Face Amount $ 100,638,000 ..... TEMPORARY INVESTMENTS - as qfJune 30, 1996 - =Issuer United States Government Obligations (subject to repurchase agreement due 7/1/96) Book Value $ 100,638,000 u.s. GOVERNMENT. CORPORATE AND OTHER BONDS Face Amount $ 2,200,000 12,850,000 175,000,000 1,020,000,000 635,000,000 275,000,000 360,000,000 310,000,000 230,000,000 575,000,000 130,000,000 $ 3,725,050,000 =Issuer Synovus Financial General Electric US Treas. Bond US Treas. Bond US Treas. Bond US Treas. Note US Treas. Note US Treas. Note US Treas. Note US Treas. Note US Treas. Note Interest Rate % 8.750 8.350 6.250 6.875 6.000 6.500 5.875 Year of Maturitv 2004 2004 2023 2005 2026 2005 2005 5.625 2006 6.250 2001 6.875 2006 6.500 2001 Book Value $ 2,200,000 12,850,000 144,934,292 926,063,613 533,583,422 257,983,097 329,742,330 273,824,239 217,018,473 550,671,120 124,200,677 $ 3,373,071,263 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 30 SHARES 300,000 1,710,000 600,000 200,000 925,000 980,000 960,000 513,750 1,177,500 730,000 400,000 190,000 305,600 80,000 240,000 850,000 61,000 1,040,000 530,000 65,000 656,000 1,290,000 225,000 460,000 70,000 1,152,000 150,000 557,000 210,000 190,000 55,000 INVESTMENT SECTION STAWS OF INVESTMENTS COMMON STOCK HOLDINGS - as qfJune 30, 1996 - COMPANY 3COMCORP ABBOTT LABS AIR PROD & CHEMS ALBERTSON'S INC. AMER EXPRESS AMER GENERAL CORP AMER HOME PROD AMER INTL GROUP AMOCO CORP AMP INC ANHEUSER-BuSCH AT&T ATLANTIC RICHFIELD BAKER HUGHES INC BELL ATLANTIC CORP BELLSOUTH CORP BOEING Co BRISTOL MYERS Co CALIBER SYSTEMS INC CATERPILLAR TRACTOR CHEVRON CORP CHUBB CORP CISCO SYSTEMS INC COCA COLA Co COLGATE PALMOLIVE COLUMBIAlHCA HEALTHCARE C CONAGRAINC COOPER INDUSTRIES CRACKER BARREL CUC INTL INC DARDEN RESTAURANTS INC BOOK VALUE $ 12,581,627 42,802,320 15,540,826 5,354,126 34,710,724 18,500,521 24,154,684 34,898,416 62,340,128 29,007,354 16,161,894 9,698,726 31,764,388 1,721,870 14,324,168 24,373,865 2,819,123 64,438,404 17,745,037 3,772,563 32,370,697 52,962,497 12,615,625 10,194,185 4,240,057 38,523,110 4,499,995 21,826,510 5,341,268 7,190,958 563,805 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 31 INVESTMENT SECTION STAWS OFINVES1MENTS Shares 800,000 334,685 120,000 16,500 24,000 246,500 502,000 275,000 230,000 230,000 375,000 560,000 700,000 835,000 1,602,000 100,000 900,000 130,000 500,000 460,000 635,000 210,000 306,000 205,000 535,000 93,000 225,000 550,000 445,830 50,000 150,000 COMMON STOCK HOLDINGS, continued - as rifJune 30, 1996 - COMPANY DELUXE CHECK PRINTERS DISNEY, WALT Dow CHEMICAL Co Dow JONES &Co DTE ENERGY Co DUKE POWER DUN & BRADSTREET DUPONT E I DE NEM DURACELL INTL INC ELECTRONIC ARTS INC ELECTRONIC DATA SYSTEMS EMERSON ELEC CO EaulFAX EXXON CORP FEDERAL NATL MTG Assoc FINGERHUT COS FIRST CHICAGO NBD CORP FIRST DATA CORP FORD MOTOR Co FRANKLIN RES INC GTE CORP GAP INC GENERAL ELEC GENERAL MILLS GENERAL RE CORP GENUINE PARTS Co GILLETIECO GOODYEAR TIRE & RUBBER GUIDANT CORP HALLIBURTON HARLEY DAVIDSON INC EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 32 Book Value $ 26,877,636 15,171,899 7,304,810 471,250 793,302 7,347,805 25,850,074 13,214,577 10,614,826 7,592,550 20,777,579 25,284,859 8,118,308 44,022,160 34,068,896 2,461,123 28,193,491 9,651,902 16,730,406 19,434,971 21,838,777 5,818,533 11,959,285 10,411,555 60,814,653 1,643,962 11,261,555 19,265,587 7,073,399 1,684,293 7,052,542 SHARES 225,000 133,500 747,600 654,166 330,000 200,000 150,000 320,000 740,000 455,000 1,350,000 50,000 570,000 635,000 1,213,062 146,853 200,000 1,150,000 175,000 325,000 465,000 250,000 1,402,000 650,000 225,000 1,427,000 100,000 812,000 256,000 237,000 570,000 INVESTMENT SECTION STATUS OF INVESTMENTS COMMON STOCK HOLDINGS, continued - as ofJune 30, 1996 - COMPANY HASBRO BRADLEY INC HEINZ, HJ HEWLETT PACKARD Co HOME DEPOT HONEYWELL INTEL INTERPUBLIC GRP OF COS INTL Bus MACHINES INTL FLAVORS & FRAGRANCES INTL PAPER JOHNSON & JOHNSON KELLOGG KEYCORP KIMBERLY CLARK liLLY, ELI liMITED INC LOCKHEED MARTIN LUBRIZOL CORP MANPOWER INC MARSH McLENNAN COS INC MASCO MATTEL INC McDoNALDS CORP MCI COMMUNICATIONS MEDTRONIC MERCK & Co INC MICROSOFT MINNESOTA MNG &MFG MOBIL CORP MONSANTO COMPANY MOTOROLA INC BOOK VALUE $ 6,309,410 3,193,997 40,778,939 25,594,460 11,507,818 12,421,432 7,088,839 29,214,076 31,010,947 16,372,058 24,838,333 2,665,696 16,810,330 35,915,136 39,169,852 3,045,920 15,438,167 36,946,445 7,000,000 22,119,755 13,448,387 6,230,530 28,659,443 13,875,844 11,028,337 59,244,122 11,039,346 34,622,950 20,086,695 3,368,482 27,444,602 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 33 INVESTMENT SECTION STAWS OF INVESTMENTS COMMON STOCK HOLDINGS, continued - as qfJune 30, 1996 - .. SHARES 22,000 150,000 567,000 150,000 14,000 193,000 530,000 675,000 1,899,000 1,135,000 870,000 135,000 275,000 664,000 365,000 275,000 580,000 330,000 300,000 185,000 1,040,400 955,000 850,000 225,000 520,000 352,000 600,000 755,000 205,000 508,000 272,000 COMPANY NATL SERVICE INDUSTRIES NEWELL Co NORFOLK SOUTHERN NUCORCORP NYNEX OFFICE DEPOT ORACLE CORP PENNEY JC INC PEPSICO INC PFIZER INC PHILIP MORRIS Co PIONEER HI BRED INTL PRAXAIR PROCTOR &GAMBLE Co PROVIDIAN CORP RALSTON PURINA GROUP RAYTHEON Co ROYAL DUTCH PET RUBBERMAID RUSSELL CORP SAFECOCORP SARA LEE CORP SCHERING PLOUGH CORP SEAGATE TECHNOLOGY SPRINT SUNTRUST BANKS INC SUPER VALU STORES SYSCOCORP TENNECO TEXASINSTRSINC TORCHMARK CORP EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 34 BOOK VALUE $ 575,514 3,847,795 30,070,123 7,638,680 583,120 3,839,668 17,097,776 32,857,494 32,412,049 44,261,672 55,275,205 7,352,843 6,937,971 34,100,886 11,880,302 10,697,784 6,430,804 40,880,415 8,239,544 5,460,361 24,719,839 24,227,453 32,887,152 12,789,756 12,384,364 6,718,805 14,607,123 20,507,759 7,974,559 27,485,851 11,486,550 SHARES 185,000 250,000 120,000 670,000 618,000 100,000 12,000 1,170,000 730,000 17,000 1,026,000 532,000 1,540,000 130,000 495,000 INVESTMENT SECTION STAWS OF INVESTMENTS COMMON STOCK HOLDINGS, continued - as ofJune 30, 1996 - COMPANY Toys R Us INC UNILEVER UNION PACIFIC UNITED HEALTHCARE CORP UNITED TECHNOLOGIES VARITVCORP VF CORP WAL-MART STORES INC WARNER LAMBERT Co WELLS FARGO & Co WESTVACO WHIRLPOOL WMX TECHNOLOGY WRIGLEY WM Co XEROX CORP IN-HoUSE FUNDS TOTAL COMMON STOCK HOLDINGS BOOK VALUE $ 4,782,218 33,671,405 6,666,954 36,495,409 29,563,442 3,706,251 554,416 25,164,540 25,439,229 2,592,294 21,497,763 17,402,794 44,618,098 6,094,554 14,556,842 836,652,996 $ 3,422,024,806 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 35 INVESTMENT SECTION STAWS OF INVESTMENTS PuRCHASES OF LONG-TERM FIXED-INCOME INVESTMENTS - Fiscal Year 1996 POOLED INVESTMENT FuND Face Amount Type of Security Coupon Rate % Year of Maturity Average Yield % Moody's Bond Rating * $ 20,000,000 . .. US TREAS. BOND $ 25,000,000 . .. US TREAS. BOND $140,000,000 US TREAS. BOND $ 15,000,000 . .. US TREAS. NOTE $ 10,000,000 US TREAS. NOTE $ 65,000,000 . .. US TREAS. NOTE $ 3,000,000 US TREAS. NOTE $ 50,000,000 . .. US TREAS. NOTE $328,000,000 Bonds Bonds Bonds Notes Notes Notes Notes Notes 6.250 6.875 6.000 6.500 6.250 6.500 6.125 5.875 2023 2025 2026 2005 2000 2005 2000 2005 7.005 T 6.928 T 6.612 T 6.184 . . . . . . . . . T 5.843 " .T 6.201 T 5.904 T 5.714 T NOTE: 'T indicates obligations of U.S. Government. MORTGAGES AND OTHER SECURED NOTES - as qfJune 30, 1996- Borrower and Mortgaged Property Int. Rate % Year Last Pmt. Due Balance Out-standing on Loan WEST & ABBITT BENT CREEK COL APTS 9.5 2004 $ 699,658 ADAIR JACK PENNEY BLDG ATLANTA 7.875 2001 1,225,035 $ 1,924,693 REAL ESTATE INVESTMENTS - as qfJune 30, 1996- Description of Property Book Value Comments BETA BUILDING TWO NORTHSIDE 75 ATL (Constitutes one-half interest in property) $ 2,522,905 Presently houses the offices of Employees' and Teachers Retirement System. The Employees' Retirement System on 7/1/76 acquired a 50% interest in the building. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 36 AUDITORS' REpORT TABLE OF CONTENTS INDEPENDENT AUDITORS' REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 COMBINED FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30,1996 AND 1995: COMBINED BALANCE SHEETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 39 COMBINED STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND BALANCE 40 NOTES TO COMBINED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . 41 - 59 REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED JUNE 30, 1996: . . . . 60 SUMMARY OF ANALYSIS OF FUNDING PROGRESS . . . . . . . . . . . . . . . . . . . . . . 61 - 62 SUMMARY OF REVENUES BY SOURCE . . . . . . . . . . . . . . . . . . . . . . . . . 63 - 64 SUMMARY OF EXPENSES BY TYPE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 - 66 ADDITIONAL INFORMATION FOR THE YEARS ENDED JUNE 30, 1996 AND 1995: 67 COMBINING BALANCE SHEET ....................................... 68 SUPERIOR COURT JUDGES & DISTRICT ATTORNEYS RETIREMENT PLANS COMBINING BALANCE SHEET ................................. 69 COMBINING STATEMENT OF REVENUES, EXPENSES AND CHARGES IN FUND BALANCE 70 SUPERIOR COURT JUDGES & DISTRICT ATTORNEYS RETIREMENT PLANS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND BALANCE 71 STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND BALANCE: EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA . . . . . . . . . . . . . . . . . .. 72 PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM . . . . . . . . . . . . . . . . . .. 73 LEGISLATIVE RETIREMENT SYSTEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 TRIAL JUDGES AND SOLICITORS RETIREMENT FUND . . . . . . . . . . . . . . . . 75 SUPERIOR COURT JUDGES RETIREMENT SYSTEM ..................... 76 SUPERIOR COURT JUDGES RETIREMENT FUND . . . . . . . . . . . . . . . . . . . . . . . . 77 DISTRICT ATTORNEY'S RETIREMENT SYSTEM . . . . . . . . . . . . . . . . . . . . . . 78 DISTRICT ATTORNEYS RETIREMENT FUND ........................ 79 GEORGIA DEFINED CONTRIBUTION PLAN . . . . . . . . . . . . . . . . . . . 80 ADMINISTRATIVE EXPENSE FUND - CONTRIBUTIONS AND EXPENSES ....... 81 - 82 EMPWYEES' RETIREMENT SYSTEM OF GEORGIA 37 Deloitte & ToucheLLP o INDEPENDENT AUDITORS' REPORT Suite 1700 100 Peachtree Street Atlanta, Georgia 30303-1911 Telephone: (404) 220-1500 Facsimile: (404) 220-1583 Board of Trustees Employees' Retirement System of Georgia: We have audited the accompanying combined balance sheets of the Employees' Retirement System of Georgia (the "System"), including all funds administered by the Employees' Retirement System of Georgia, as of June 30, 1996 and 1995 and the related combined statements of revenues, expenses, and changes in fund balance for the years then ended. These financial statements are the responsibility of the System's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such combined financial statements present fairly, in all material respects, the combined financial position of the Employees' Retirement System of Georgia, including all funds administered by the Employees' Retirement System of Georgia, as of June 30, 1996 and 1995 and the combined results of their operations for the years then ended in conformity with generally accepted accounting principles. As discussed in Note 1 to the financial statements, the System had a change in its reporting entity in 1996, and, retroactively, restated the 1995 financial statements for the change. Our audits were conducted for the purpose of forming an opinion on the basic combined financial statements taken as a whole. The required supplementary information and additional information for the years ended June 30, 1996 and 1995 listed in the Table of Contents is presented for purposes of additional analysis and is not a required part of the basic combined financial statements. This required supplementary information and additional information is the responsibility of the System's management. Such information has been subjected to the auditing procedures applied in the audits of the basic combined financial statements and, in our opinion, is fairly presented in all material respects in relation to the basic combined financial statements taken as a whole. October 18, 1996 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 38 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA COMBINED BALANCE SHEETS JUNE 30,1996 AND 1995 (Thousands of Dollars) ASSETS CASH RECEIVABLES: Employee and employer contributions Interest and dividends INVESTMENTS: Short-term investments (approximates market value) Obligations of the U.S. Government and its agencies, corporate and other bonds (quoted market value of $3,596,475 in 1996 and $3,401,785 in 1995) Common stocks (quoted market value of$4,851,878 in 1996 and $3,802,942 in 1995) Mortgages, other secured notes receivable, and real estate investments LIABILITIES AND FUND BALANCES LIABILITIES: Cash overdrafts Accounts payable and accrued expenses FUND BALANCES: Reserved for employee contributions and interest Reserved for employer contributions and earnings Reserved for insurance claims 1996 $ 950 29,102 75,644 104,746 103,818 3,386,993 3,422,025 4,448 6,917,284 $7,022,980 $ 94 4,872 4,966 797,052 5,840,881 380,081 7,018,014 $7,022,980 1995 (Restated) $ 235 28,409 58,382 86,791 201,638 3,030,866 2,845,222 4,633 6,082,359 $6,169,385 $ 4,146 1,875 6,021 764,135 5,062,023 337,206 6,163,364 $6,169,385 See notes to combined financial statements. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 39 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA COMBINED STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN FUND BALANCE YEARS ENDED JUNE 30, 1996 AND 1995 (Thousands of Dollars) OPERATING REVENUES: Employee contributions Employer contributions Insurance premiums Administrative expense allotment Investment income: Dividends and interest Net gain on disposal of securities Less broker and investment agent fees OPERATING EXPENSES: Retirement payments Refunds of employee contributions and interest Death benefits Administrative expenses NET INCOME FUND BALANCE: Beginning ofyear End of year 1996 1995 (Restated) $ 69,641 288,178 10,645 731 397,046 441,618 (9,438) 1,198,421 $ 69,441 272,113 10,267 640 364,263 175,823 (7,111) 885,436 310,695 15,546 13,391 4,139 343,771 854,650 6,163,364 $7,018,014 280,367 14,363 11,999 3,990 310,719 574,717 5,588,647 $6,163,364 See notes to combined financial statements. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 40 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA NOTES TO COMBINED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED JUNE 30,1996 AND 1995 1. GENERAL Employees' Retirement System of Georgia ("ERS") is a single-employer, public employee retirement system. ERS is also the administrator of the following seven retirement funds (the "System"): a. Public School Employees Retirement System ("PSERS") - single employer; b. Legislative Retirement System ("LRS") - single employer; c. Trial Judges and Solicitors Retirement Fund ("TJSRF") - multiple employer cost-sharing. d. Superior Court Judges Retirement System ("SCJRS") e. Superior Court Judges Retirement Fund ("SCJRF") f. District Attorneys' Retirement System ("DARS") g. District Attorneys Retirement Fund ("DARF") The accompanying combined financial statements, in addition to including the accounts of the foregoing retirement systems and funds, include the accounts of the State Employees' Assurance Department ("SEAD") and the Georgia Defined Contribution Plan ("GDCP") which also are administered by ERS. All significant accounts and transactions among the systems and funds have been eliminated. In evaluating how to define the System for financial reporting purposes, the management of the System has considered all potential component units. The decision to include a potential component unit in the reporting entity is made by applying the criteria set forth by GASB Statement No. 14. The concept underlying the definition of the reporting entity is that elected officials are accountable. Based on these criteria, the System has not included any other entities in its reporting entity. ERS is a component unit of the State of Georgia. Effective July 1, 1995, ERS assumed legal responsibility for administering SCJRS, SCJDF, DARS, and DARF. For comparative purposes, the June 30, 1995 financial statements and supplemental schedules have been restated to include these plans as follows (in thousands): Total assets As Previously Reported Adjustment As Restated $6,096,348 $73,037 $6,169,385 Net income $- 568,045 $ 6,672 $ 574,717 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 41 2. AUTHORIZING LEGISLATION AND PLAN DESCRIPTIONS Each fund, including benefit and contribution provisions, was established by State law. The following summarizes authorizing legislation of the System and the plan description of each retirement fund: a. ERS is a defined benefit pension plan established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees and has the powers and privileges of a corporation. Membership - As of June 30, 1996, membership data relating to ERS is as follows: Retirees and beneficiaries currently receiving benefits Active plan participants Inactive 19,845 73,625 51,542 145,012 Benefits - The benefit structure ofERS was significantly modified on July 1, 1982. Unless the employee elects otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982 is an "old plan" member subject to the plan provision in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions. Under both the old and new plans, a member may retire and receive normal retirement benefits after completion of 10 years creditable service and attainment of age 65. If 1 years of service is completed and age 60 is reached, the member may retire with a reduced benefit. Additionally, there are some provisions allowing for retirement after 30 years of service regardless of age. Retirement benefits paid to members are based upon the monthly average of the member's highest eight consecutive calendar quarters multiplied by the number of years of creditable service. Postretirement cost-of-living adjustments are also made to members' benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS. Contributions and Vesting - Member contributions under the old plan are 4% of annual compensation up to $4,200 plus 6% of annual compensation in excess of $4,200. Under the old plan, the State pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these State contributions are included in the members' accounts for refund purposes.. Member contributions under the new plan are 1.25% of annual compensation. The State is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation. Members become vested after I years of creditable service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions, the member forfeits all rights to retirement benefits. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 42 The employer contributions are projected to liquidate the unfunded actuarial accrued liability within IS years based upon the actuarial valuation at June 30, 1995. b. PSERS is a defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. PSERS is administered by the ERS Board of Trustees plus two other trustees not on the ERS Board. Membership - As of June 30, 1996, membership data relating to PSERS is as follows: Retirees and beneficiaries currently receiving benefits Active plan participants Inactive 10,271 33,009 69,366 112,646 Benefits - A member may retire and elect to receive normal monthly retirement benefits after completion of I years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of 10 years of service. Members retiring before age 65 will receive a reduced benefit. Upon retirement, the member will receive a monthly benefit of $8 multiplied by the number of years of creditable service. Effective July 1,1995, this monthly benefit increases to $9. Death, disability, and spousal benefits are also available through PSERS. Additionally, PSERS makes periodic cost-of-living adjustments to the monthly benefits. Contributions and Vesting - Members contribute $4 per month for nine months. The State of Georgia, although not the employer ofPSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the Board. Members become vested after 10 years of creditable service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions, the member forfeits all rights to retirement benefits. The employer contributions are projected to liquidate the unfunded actuarial accrued liability within 15 years based upon the actuarial valuation at June 30, 1995. c. LRS is a defined benefit plan established by the Georgia General Assembly in 1979 for the purpose of providing retirement allowances for all members of the General Assembly. LRS is administered by the ERS Board of Trustees. Membership - As of June 30, 1996, membership data related to the System is as follows: Retirees and beneficiaries currently receiving benefits 163 Active plan participants 196 Inactive 337 696 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 43 Benefits - A member's normal retirement is after 8 years of creditable service and attainment of age 65 or 8 years of membership service (4 legislative terms) and attainment of age 62. A member may retire early and elect to receive a monthly retirement benefit after completion of 8 years of membership service and attainment of age 60; however, the retirement benefit is reduced by 5% for each year the member is under age 62. Upon retirement, the member will receive a monthly service retirement allowance of $28 multiplied by the number of years of creditable service reduced by age reduction factors, if applicable. Death, disability, and spousal benefits are also available through the plan.' Contributions and Vesting - Member contributions are 8.5% of annual salary. The State pays member contributions in excess of 4% of annual compensation. Employer contributions are actuarially determined and approved and certified by the Board. Members become vested after 8 years of creditable service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions, the member forfeits all rights to retirement benefits. Based on the June 30, 1995 actuarial valuation ofLRS (the latest actuarial valuation; present Board policy requires a biennial valuation), the employer contributions are projected to liquidate the unfunded actuarial accrued liability within 21 years. d. TJSRF is a defined benefit pension plan established by the Georgia General Assembly in 1968 for the purpose of providing retirement allowances for trial judges and solicitors of certain courts of Georgia, and their survivors and other beneficiaries. TJSRF is administered by the ERS Board of Trustees and three other trustees not on the ERS Board. Membership - As of June 30, 1996, membership data relating to TJSRF is as follows: Retirees and beneficiaries currently receiving benefits 35 Active plan participants 146 Inactive 161 342 Benefits - The normal retirement for TJSRF is age 60 with 16 years of creditable service; however, a member may retire at age 60 with a minimum of 10 years of creditable service. Additionally, a member must retire at age 70 or forfeit all retirement and disability benefits. Members holding office on July 1, 1980 are exempt from this provision. Retirement benefits paid to members are computed as 4% ofthe average annual compensation multiplied by the total years of creditable service not to exceed 16 years. The average annual compensation is the average salary of a member during the two consecutive years of creditable service producing the highest such average but excluding any salary increases exceeding 5% over the previous year during the two-year period. Death, disability, and spousal benefits are also available. EMPLOYEES' RETIREMENf SYSTEM OF GEORGIA 44 Contributions and Vesting - Members are required to contribute 7.5% oftheir salary plus an additional 2.5% if spousal benefit is elected. Employer contributions are actuarially determined and approved and certified by the Board. Members become vested after 10 years of creditable service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws hislher member contributions, the member forfeits all rights to retirement benefits. Based on the June 30, 1995 actuarial valuation (the latest actuarial valuation; present Board policy requires a biennial valuation), TJSRF does not have an unfunded accrued liability. e. SCJRS is a defined benefit pension plan established by the Georgia General Assembly in 1976 for the purpose of providing retirement benefits to the superior court judges of the State of Georgia. SCJRS is directed by its own Board of Trustees. The Board of Trustees for ERS and SCJRS entered into a contract for ERS to administer the plan effective July 1, 1995. Membership - As of June 30, 1996, membership data relating to SCJRS is as follows: Retirees and beneficiaries currently receiving benefits 48 Active plan participants 160 Inactive 4 212 Benefits - The normal retirement for SCJRS is age 60 with 16 years of creditable service with a benefit of two-thirds of the state salary paid to superior court judges at the time ofthe member's retirement, plus 1% for each year of creditable service over 16 up to a maximum of 24 years. Additionally, a member may retire with reduced benefits at age 60 with a minimum of 10 years of creditable service. A member must retire at age 75, or at the end of the term in which the member becomes 75, or forfeit all retirement and disability benefits. Death, disability, and spousal benefits are also available. Contributions and Vesting - Member contributions are 7.5% of their salary plus an additional 2.5% for the spousal coverage benefit or 2.75% for the spouse plus benefit if elected. The State pays member contributions of 4.75% of the member's annual salary. Employer contributions are actuarially determined and approved and certified by the Board. Members become vested after 10 years of creditable service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if a member later holds office as a superior court judge, the member shall be reinstated as if never before a member and may re-establish prior service by repaying the amount withdrawn, plus interest, within 60 days of certification of such amount. f. SCJRF is a defined benefit pension plan established by the Georgia General Assembly in 1945 for the purpose of providing retirement benefits to the superior court judges of the State of Georgia. SCJRF is directed by its own Board of Trustees. The Board of Trustees for ERS and SCJRS entered into a contract for ERS to administer the System effective July 1, 1995. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 45 Membership - As of June 30, 1996, membership data relating to SCJRF is as follows: Retirees and beneficiaries currently receiving benefits 35 Active plan participants 6 41 Benefits - The normal retirement for SCJRF is age 68 with 19 years of creditable service with a benefit of two-thirds the salary paid to superior court judges. A member may also retire at age 65 with a minimum of 10 years of creditable service with a benefit of one-half the salary paid to superior court judges. Death, disability, and spousal benefits are also available. Contributions and Vesting - Member contributions are 5.0% of their salary plus an additional 2.5% for the spousal coverage benefit if elected. The State pays member contributions of 5.0% of the member's annual salary. Additional employer contributions are not actuarially determined but are provided on an as-needed basis to fund current benefits. g. DARS is a defined benefit pension plan established by the Georgia General Assembly in 1978 for the purpose of providing retirement benefits to the district attorneys of the State of Georgia. DARS is directed by its own Board of Trustees. The Board of Trustees for ERS and DARS entered into a contract for ERS to administer the plan effective July 1, 1995. Membership - As of June 30, 1996, membership data relating to DARS is as follows: Retirees and beneficiaries currently receiving benefits 6 Active plan participants 50 Inactive 3 59 Benefits -The normal retirement for DARS is age 60 with 10 years of creditable service with a benefit of 4% of the member's average annual compensation for each year of creditable service. If service exceeds 16 years, the benefit is 4% for each year of creditable service plus 1% for each year served after 16, not to exceed 24 years (72%). "Average annual compensation" is the highest average of two consecutive years of creditable service, except no increase during such period in excess of 5% may be used. Death, disability, and spousal benefits are also available. Early retirement benefits are not available. Contributions and Vesting - Member contributions are 7.5% of their salary plus an additional 2.5% for the spousal coverage benefit if elected. The State pays member contributions of 4.75% of the member's annual salary. Employer contributions are actuarially determined and approved and certified by the Board. Members become vested after 10 years of creditable service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if a member later holds office as a district attorney, the member shall be reinstated as if never before a member and may re-establish prior service by repaying the amount withdrawn, plus interest. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 46 h. DARF is a defined benefit pension plan established by the Georgia General Assembly in 1949 for the purpose of providing retirement benefits to the district attorneys of the State of Georgia. DARF is directed by its own Board of Trustees. The Board of Trustees for ERS and DARF entered into a contract for ERS to administer the plan effective July 1, 1995. Membership - As of June 30, 1996, DARF had 13 retirees and beneficiaries currently receiving benefits. Benefits - Persons appointed as district attorney emeritus shall receive an annual benefit of $15,000 or one-half of the state salary received by such person as a district attorney for the calendar year immediately prior to the person's retirement, whichever is greater. Contributions and Vesting - Member contributions were 5.0% of their salary plus an additional 2.5% for the spousal coverage benefit if elected. The State paid member contributions of 5.0% of the member's annual salary. Additional employer contributions are not actuarially determined but are provided on an as-needed basis to fund current benefits. 1. GDCP is a defined contribution plan established by the Georgia General Assembly in July 1993 for the purpose of providing retirement allowances for state employees who are not members of a public retirement or pension system. GDCP is administered by the ERS Board of Trustees. Membership - As of June 30, 1996, membership data relating to GDCP is as follows: Active plan participants Inactive 45,439 40,823 86,262 Benefits - A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board. If a member has less than $3,500 credit to his/her account, the Board has the option of requiring a lump sum distribution to the member. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Contributions - Members are required to contribute 7.5% of their gross salary. There are no employer contributions. Earnings will be credited to each member's account as adopted by the Board. Upon termination of employment, the amount ofthe member's account is refundable upon request by the member. j. The State Employees' Assurance Department ("SEAD") was created in 1953 by the Georgia General Assembly to furnish survivors' benefits for eligible members ofERS. SEAD contracts with ERS and LRS to provide group term life insurance coverage for their participants. Death benefit payments are payable to the beneficiary or estate of the insured individual. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 47 3. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies of the System: a. Basis ofAccounting - The System's financial statements are prepared using the accrual basis of accounting. Contributions from the employers and the members are recognized as revenue in the period in which the members provide services. Investment income is recognized as earned by the System. b. Investments - Investments are carried at cost. The carrying value of investments is not adjusted for temporary declines in market value since the Syste.m has both the ability and intent to hold the securities to maturity or until cost is recovered. Investments which have suffered other than a temporary decline in value are reduced to net realizable value. Premiums and discounts on U.S. Government and corporate bonds are amortized over the remaining life of the respective bond on a straight-line basis, which is not significantly different from the effective interest method. Realized gains and losses from securities transactions are recorded using the average cost method. Gains and losses relating to the exchange of bonds of similar quality are deferred as yield adjustments and amortized using the straight-line method from the exchange date to the maturity date of the new bond acquired, which is not significantly different from the lesser of the maturity date of the bond sold or the bond acquired. At June 30, 1996 and 1995, a deferred gain of $258,505,000 and $248,408,000, respectively, resulted from bond exchanges and is included as a credit in investments. No investment in anyone organization except the U.S. Government represents 5% or more of the net assets available for pension benefits. There are no investments in, loans to, or leases with parties related to the System. c. Real Estate Investments - An office building which is included in mortgages and real estate investments is owned equally by the System and the Teachers Retirement System of Georgia. The System incurred approximately $302,000 in rental expense for the years ended June 30, 1996 and 1995. The expense is included in administrative expenses. The remainder of the building is leased to outside parties, and this revenue is included in investment income. d. Recently Issued Accounting Standards - In November 1994, the Governmental Accounting Standards Board (GASB) issued its Statement No. 25, "Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans." This Statement is effective for periods beginning after June 15, 1996. The System will implement the Statement in the year ending June 30, 1997. Implementation of Statement No. 25 will require the investments of the System to be reported at fair value. Currently investments are reported at cost. In addition, Statement No. 25 requires that plans measure all actuarially determined information in accordance with certain parameters. The impact that the adoption of the Statement will have on the System's financial position and results of operations has not yet been determined. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 48 4. INVESTMENT PROGRAM The System maintains sufficient cash to meet its immediate liquidity needs. Cash not immediately needed is invested in either short-term or long-term investment securities as directed by management. All investments are held by agent custodial banks in the name ofthe System. Cash - Cash balances are fully insured through the Federal Deposit Insurance Corporation, an agency of the United States Government. Fiduciary accounts, such as those of the System, are granted $100,000 of insurance coverage per- participant in the System. Temporary cash on hand not committed for a specific purpose is invested overnight. Investments - The System is authorized by its Board of Trustees (through statutes) to invest in a variety of short-term and long-term securities, as follows: (a) Short-Term - Repurchase and reverse repurchase agreements, whereby the System invests in direct obligations ofthe United States Government or in obligations unconditionally guaranteed by the agencies of the United States Government or U.S. corporations. The System may sell or purchase such obligations under agreements to resell or repurchase the obligations at a date certain in the future, at a specific price which reflects a premium over the purchase or selling price equivalent to a stated rate of interest. United States Treasury obligations with varying terms up to 360 days. Other short-term securities authorized, but not currently used are: Commercial paper, with a maturity of 180 days or less. Commercial paper is an unsecured promissory note issued primarily by corporations for a specific amount and maturing on a specific day. The System considers for investment only commercial paper of the highest quality, rated P-l and/or A-I by national credit rating agencies. Master notes, an overnight security administered by a custodian bank and an obligation of a corporation whose commercial paper is rated P-l and/or A-I by national credit rating agencies. Investments in commercial paper or master notes are limited to no more than $25 million in any one name. (b) Long-Term - Fixed income investments are authorized in the following instruments: Corporate bonds with at least an "A" rating by a national rating agency, and limited to no more than 5% oftotal System assets in anyone name. Maturities of these securities vary up to a period of 40 years to provide the System with flexibility necessary to meet changing market conditions. United States and foreign government obligations. Quality and call requirements of corporate bonds are applicable. Private placements are authorized under the same general restrictions applicable to corporate bonds. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 49 Mortgage investments are authorized to the extent that they are secured by first mortgages on improved real property located in the State having a loan-to-value ratio no higher than 75%. Mortgages as a group cannot exceed 10% of total assets or 1% for anyone loan. Equity securities are also authorized (in statutes) for investment as a complement to the System's fixed income portfolio and as a long-term inflation hedge. By statute, no more than 50% of the total invested assets may be placed in equities and no more than 5% in anyone corporation. Equity holdings in anyone corporation may not exceed 5% of the outstanding equity ofthe issuing corporation. The equity portfolio is managed by the Investment Services Division in conjunction with independent advisor-managers. Buy/sell decisions are based on securities meeting rating criteria established by the Board of Trustees, in-house research considering such things as yield, growth, and sales statistics, and analysis of independent market research summoned by the managers. Equity trades are approved and executed by the Division's staff. Common stocks eligible for investment are approved by the Investment Committee of the Board of Trustees before being placed on an approved list. Substantially all of the investments ofERS, PSERS, LRS, TJSRF, SCJRS, SCJRF, DARS, and SEAD are pooled into one common investment fund. Investments of approximately $17,102,000, held by the Georgia Defined Contribution Plan, are not included in the investment pool. Units in the pooled investment fund are allocated to the respective funds based upon the cost of assets contributed and additional units are allocated to the participating funds based on the market value of the pooled investment fund at the date of contribution. Net income of the pooled investment fund is allocated monthly to the participating funds based upon the number of units outstanding during the month. The units ofthe pooled investment fund at June 30, 1996 and 1995 were allocated as follows (in thousands): 1996 1995 Employees' Retirement System Public School Employees Retirement System Legislative Retirement System Trial Judges and Solicitors Retirement Fund State Employees' Assurance Department Superior Court Judges Retirement System Superior Court Judges Retirement fund District Attorneys' Retirement System 7,331 465 18 35 464 74 1 20 7,302 472 19 34 465 73 1 19 8,408 8,385 The System's pooled investments are categorized below to give an indication of the level of risk assumed by the System at year-end. Category 1 includes investments that are insured or registered or for which the securities are held by the System or its agent in the System's name. Category 2 includes uninsured and unregistered investments for which the securities are held by the counterparty's trust department or agent in the System's name. Category 3 includes uninsured and unregistered investments EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 50 for which the securities are held by the counterparty, or by its trust department or agent but not in the System's name. The following amounts are in thousands of dollars: June 30, 1996 Repurchase agreements United States Government and corporate obligations. Common stocks Mortgages, other secured notes receivable, and real estate investments Total pooled investments 1 $ 100,638 Category 2 $ 3 $ 3,373,071 3,422,025 $6,895,734 $ $ Carrying Amount $ 100,638 Market Value $ 100,638 3,373,071 3,422,025 3,582,775 4,851,878 6,895,734 8,535,291 4,448 4,448 $6,900,182 $8,539,739 June 30,1995 (Restated) Repurchase agreements United States Government and corporate obligations Common stocks Mortgages, other secured notes receivable, and real estate investments Total pooled investments 1 $ 187,723 Category 2 $ 3 $ 3,030,866 2,845,222 $6,063,811 $ $ Carrying Amount $ 187,723 Market Value $ 187,723 3,030,866 2,845,222 3,401,785 3,802,942 6,063,811 7,392,450 4,633 4,633 $6,068,444 $ 7,397,083 Short-term investments of approximately $3,180,000 and, $13,915,000-at June 30, 1996 and 1995, respectively, held by the Georgia Defined Contribution Plan, are not included in the investment pool. 5. INVESTMENTS LENDING PROGRAM The System is presently involved in a securities lending program with major brokerage firms. The System lends securities for varying terms and receives a fee based on the loaned securities' value. During a loan, the System continues to receive dividends and interest as the owner ofthe loaned securities. The brokerage firms pledge collateral securities consisting of U.S. Government and agency securities, mortgage-backed securities issued by a U.S. Government agency, and U.S. corporate bonds. The collateral value must be equal to at least 102% to 110% of the loaned securities' value, depending on the type of collateral security. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 51 Securities loaned totaled $3,486,222,000 at cost (market value, $3,773,152,000) and $3,105,636,000 at cost (market value, $3,551,140,000) at June 30, 1996 and 1995, respectively. The collateral value was equal to 103.2% and 103.8% of the loaned securities market value at June 30, 1996 and 1995, respectively. The loaned securities are classified as Category 1 investments (see Note 4) based on the custodial arrangements for the collateral securities. Loaned securities are included in the accompanying balance sheets since the System maintains ownership. The related collateral securities are not recorded as assets on the System's balance sheets, and a corresponding liability is not recorded, since the System does not trade or sell the collateral securities. 6. FUNDING STATUS AND PROGRESS Presented below are the pension benefit obligations for ERS, PSERS, LRS, TJSRF, SCJRS, and DARS. SCJRF and DARF are not actuarially funded plans; therefore, no periodic actuarial valuations have been performed. See Note 7. The amount of the pension benefit obligation is based on a standardized measurement established by the Governmental Accounting Standards Board (GASB) Statement 5 that is required to be used for reporting purposes. The standardized measurement is the actuarial present value of credited projected benefits. This pension valuation method reflects the present value of estimated pension benefits that will be paid in future years as a result of member services performed to date and is adjusted for the effects of projected salary increases and any step-rate benefits. A standardized measurement of the pension benefit obligation was adopted by the GASB to enable readers of the financial statements to (a) assess the System's funding status on a going-concern basis, (b) assess progress made in accumulating sufficient assets to pay benefits when due, and (c) make comparisons among similar retirement systems. Because the standardized measurement is used only for disclosure purposes by the System, the measurement is independent of the actuarial computation made to determine contributions to the System. The actuarial funding method used to determine contributions to the System is explained in Note 7. A variety of significant actuarial assumptions are used to determine the standardized measurement of the pension benefit obligation; these assumptions are summarized below for each of the retirement funds. ERS - Significant actuarial assumptions used to calculate the ERS pension benefit obligation include the following: The present value of future pension benefits paid was computed using a discounted rate of 7.5%. This rate is also the same rate assumed to be earned on investments in the plan in future years. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 52 Future pension payments reflect the following assumed salary increases as a result of inflation and merit increases: Age Annual Rate 20 9.5% 25 8.5 30 6.5 35 6.0 40 to 65 5.7 The System has the authority to grant cost-of-living adjustments by state statute. As of June 30, 1995, cost-of-living adjustments have been included in the pension benefit obligation. The standardized measurement of the ERS unfunded pension benefit obligation as of June 30, 1995 (the latest annual actuarial valuation) is as follows (in thousands): Pension benefit obligation: Retirees and beneficiaries currently receiving benefits and terminated employees entitled to benefits but not yet receiving benefits Current employees: Accumulated contributions Employer-financed vested Employer-financed nonvested $2,517,235 685,011 1,211,531 1,268,334 Total pension benefit obligation 5,682,111 Net assets available for benefits, at cost ($6,528,108 with investments at market value) 5,368,067 Unfunded pension benefit obligation $ 314,044 PSERS - Significant actuarial assumptions used to calculate the PSERS pension benefit obligation included (a) a discount rate of7.5% for the present value of future pension benefits paid and (b) a 7.5% rate of return on investments in the plan in future years. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 53 The standardized measurement of the PSERS assets in excess of pension benefit obligation as of June 30, 1995 (the latest annual actuarial valuation) is as follows (in thousands): Pension benefit obligation: Retirees and beneficiaries currently receiving benefits and terminated employees entitled to benefits but not yet receiving benefits Current employees: Accumulated contributions Employer-financed vested Employer-financed nonvested $215,840 11,347 100,200 20,335 Total pension benefit obligation 347,722 Net assets available for benefit, at cost ($403,785 with investments at market value) 332,033 Unfunded pension benefit obligation $ 15,869 LRS - Significant actuarial assumptions used to calculate the LRS pension benefit obligation include (a) a discount rate of 7.5% for the present value of future pension benefits paid and (b) a 7.5% rate of return on investments in the plan in future years. The standardized measurement of the LRS assets in excess of the pension benefit obligation as of June 30, 1995 (the latest actuarial valuation; present Board policy requires a biennial valuation) is as follows (in thousands): Pension benefit obligation: Retirees and beneficiaries currently receiving benefits and terminated employees entitled to benefits but not yet receiving benefits Current employees: Accumulated contributions Employer-financed vested Employer-financed nonvested $10,316 1,509 2,025 10 Total pension benefit obligation 13,860 Net assets available for benefits, at cost ($15,303 with investments at market value) 12,584 Unfunded pension benefit obligation $ 1,276 TJSRF - Significant actuarial assumptions used to calculate the TJSRF pension benefit obligation include the following: The present value of future pension benefits paid was computed using a discounted rate of7.5%. This rate is also the rate assumed to be earned on investments in the plan in future years. Salary increases are assumed to be 6% per year. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 54 The standardized measurement of the TJSRF assets in excess of the pension benefit obligation as of June 30, 1995 (the latest actuarial valuation; present Board policy requires a biennial valuation) is as follows (in thousands): Pension benefit obligation: Retirees and beneficiaries currently receiving benefits and terminated employees entitled to benefits but not yet receiving benefits Current employees: Accumulated contributions Employer-financed vested Employer-financed nonvested $ 7,070 3,891 6,006 5,650 Total pension benefit obligation 22,617 Net assets available for benefits, at cost ($30,801 with investments at market value) 25,328 Assets in excess of pension benefit obligation $ (2,711) SCJRS - Significant actuarial assumptions used to calculate the SCJRS pension benefit obligation include the following: The present value of future pension benefits paid was computed using a discounted rate of 7.5%. This rate is also the rate assumed to be earned on investments in the plan in the future years. Salary increases are assumed to be 5.5% per year. The standardized measurement of the SCJRS unfunded pension benefit obligation as of June 30, 1995 (the latest annual actuarial valuation) is as follows (in thousands): Pension benefit obligation: Retirees and beneficiaries currently receiving benefits and terminated employees entitled to benefits but not yet receiving benefits Current employees: Retirement benefits Withdrawal benefits Disability benefits Death benefits Refund of employee contributions $13,708 40,935 1 2,856 2,059 36 Total pension benefit obligation 59,595 Net assets available for benefits, at cost ($69,585 with investments at market value) 57,227 Unfunded pension benefit obligation $ 2,368 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 55 DARS - Significant actuarial assumptions used to calculate the DARS pension benefit obligation include the following: The present value of future pension benefits paid was computed using a discounted rate of7.5%. This rate is also the rate assumed to be earned on investments in the plan in future years. Salary increases are assumed to be 5.5% per year. The standardized measurement of the DARS assets in excess of pension benefit obligation as of June 30, 1995 (the latest annual actuarial valuation) is as follows (in thousands): Pension benefit obligation: Retirees and beneficiaries currently receiving benefits and terminated employees entitled to benefits but not yet receiving benefits Current employees: Retirement benefits Withdrawal benefits Disability benefits Death benefits Refund of employee contributions $ 2,418 9,443 16 499 370 42 Total pension benefit obligation 12,788 Net assets available for benefits, at cost ($18,530 with investments at market value) 15,231 Assets in excess of pension benefit obligation $ (2,443) 7. CONTRIBUTIONS REQUIRED AND CONTRIBUTIONS MADE ERS - ERS funding policy provides for periodic employer contributions at actuarially determined rates that, expressed as percentages of annual payroll, will accumulate sufficient assets to pay benefits when due. Level percentage of payroll employer contribution rates are determined using the entry age funding method. ERS also uses the level percentage of payroll method to amortize the unfunded liability within approximately 15 years following the valuation date. Total contributions to the System in 1996 amounted to (in thousands) $327,943 of which $271,342 and $56,601 were made by the employer and members, respectively, compared to total contributions of $316,078 in 1995 of which $259,144 and $56,934 were made by the employer and members, respectively. The contribution amounts were actuarially determined as described above and were based on an actuarial valuation as of June 30, 1995 and 1994, respectively. The pension contributions represent funding for normal cost ($863,651 in 1995 and $838,343 in 1994) and the amortization of the unfunded actuarial accrued liability ($927,653 in 1995 and $896,073 in 1994). Contributions made by the employer and members approximate 15.3% and 3.2%, respectively, of covered payroll for the year. Significant actuarial assumptions used to compute contribution requirements are the same as those used to compute the standardized measure of the pension obligation. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 56 PSERS - Employer and member contributions to the System are determined on an actuarial basis using the entry age actuarial cost method. The normal contribution rate is calculated as the level dollar amount which, if applied for the average new member during the entire period of anticipated covered service, would be required in addition to the contributions of the member to meet the cost of all benefits payable on his/her behalf. The accrued liability contribution has been established as the level annual amount which will be sufficient to amortize the unfunded actuarial accrued liability within approximately 15 years following the valuation date. Total contributions to the'System in 1996 amounted to (in thousands) $13,867 of which $12,750 and $1,117 were made by the employer and members, respectively, compared to total contribution of $10,252 in 1995 of which $9,162 and $1,090 were made by the employer and members, respectively. The contribution amounts were actuarially determined as described above and were based on an actuarial valuation as of June 30, 1995 and 1994, respectively. The pension contributions represent funding for normal cost ($55,414 in 1995 and $51,747 in 1994) and the amortization of the unfunded actuarial accrued liability ($58,769 in 1995 and $57,904 in 1994). Contributions made by the employer and members approximate $386 and $34, respectively, per active member. Significant actuarial assumptions used to compute contributions are the same as those used to compute the standardized measure ofpension obligation. LRS - Employer and member contributions to the System are determined on an actuarial basis using the unit credit actuarial cost method. Normal cost is funded on a current basis and is calculated on a level dollar basis. The accrued liability contribution has been established as the level annual amount which will be sufficient to amortize the unfunded actuarial accrued liability within approximately 21 years following the valuation date. Total contributions to the System in 1996 amounted to (in thousands) $363 of which $164 and $199 were made by the employer and members, respectively, compared to total contributions of $399 in 1995 of which $196 and $203 were made by the employer and members, respectively. The contribution amounts were actuarially determined as described above and were based on an actuarial valuation as of June 30, 1995 and 1993, respectively. The pension contributions represent funding for normal cost ($1,097 in 1995) and the amortization of the unfunded actuarial accrued liability ($1,276 in 1995). Contributions made by the employer and members approximate 7.4% and 9.0%, respectively, of covered payroll for the year. Significant actuarial assumptions used to compute contribution requirements are the same as those used to compute the standardized measure of the pension obligation. TJSRF - Employer contributions to TJSRF are determined on an actuarial basis using the entry age actuarial cost method. Normal cost will be funded on a current basis and calculated on a level percentage basis. Based on the actuarial valuation as of June 30, 1995, there is no unfunded actuarial liability. Total contributions to the System in 1996 amounted to (in thousands) $995 of which $472 and $523 were made by the employer and members, respectively, compared to total contributions of$I,043 in 1995 of which $548 and $495 were made by the employer and members, respectively. The contribution amounts were actuarially determined as described above and were based on an actuarial valuation as of June 30, 1995 and 1993, respectively. The pension contributions represent funding for normal cost ($10,252 in 1995) and the amortization of the unfunded actuarial accrued surplus ($3,375 in 1995). EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 57 Contributions made by the employer and members approximate 8.0% and 8.8%, respectively, of covered payroll for the year. Significant actuarial assumptions used to compute contribution requirements are the same as those used to compute the standardized measure of the pension obligation. SCJRS - SCJRS funding policy provides for periodic actuarial valuations of the assets and liabilities of the plan. SCJRS is valued under the aggregate actuarial cost method. This method computes each year's normal cost as a level percentage of covered compensation. In addition, this method does not directly calculate an actuarial accrued liability; therefore, it does not explicitly recognize experience gains and losses nor does it create balances to be amortized over future years. Rather, this method spreads these variations over future service years and includes them in the normal cost. Total contributions to the System in 1996 amounted to (in thousands) $2,411 of which $1,178 and $1,233 were made by the employer and members, respectively, compared to total contributions of $1,900 in 1995 of which $821 and $1,079 were made by the employer and members, respectively. The contribution amounts were based on actuarial valuations as of June 30, 1995 and 1993, respectively. The pension contributions represent funding for normal cost of $(13,098) in 1995. Contributions made by the employer and members approximate 7.8% and 8.2%, respectively, of covered payroll for the year. Significant actuarial assumptions used to compute contribution requirements are the same as those used to compute the standardized measure of pension benefit obligation. SCJRF - SCJRF is not an actuarially funded plan; therefore, no periodic actuarial valuations have been performed. As set forth in the Official Code of Georgia Annotated (O.C.G.A.) Section 47-8-80, the State pays benefits without regard to the sufficiency of the fund to pay such benefits. Employer contributions are thus appropriated by the State to fund current benefits. Total contributions to the System in 1996 amounted to (in thousands) $1,920 of which $1,889 and $31 were made by the employer and members, respectively, compared to total contributions of $1,897 in 1995 of which $1,867 and $30 were made by the employer and members, respectively. DARS - DARS funding policy provides for periodic actuarial valuations ofthe assets and liabilities of the plan. DARS is valued under the aggregate actuarial cost method. This method computes each year's normal cost as a level percentage of covered compensation. In addition, this method does not directly calculate an actuarial accrued liability; therefore, it does not explicitly recognize experience gains and losses nor does it create balances to be amortized over future years. Rather, this method spreads these variations over future service years and includes them in the normal cost. Total contributions to the System in 1996 amounted to (in thousands) $496 of which $180 and $316 were made by the employer and members, respectively, compared to total contributions of $527 in 1995 of which $165 and $362 were made by the employer and members, respectively. The contribution amounts were based on actuarial valuations as of June 30, 1995 and 1993, respectively. The pension contributions represent funding for normal cost of $( 1,187) in 1995. Contributions made by the employer and members approximate 4.5% and 7.9%, respectively, of covered payroll for the year. Significant actuarial assumptions used to compute contribution requirements are the same as those used to compute the standardized measure of pension benefit obligation. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 58 DARF - DARF is not an actuarially funded plan; therefore, no periodic actuarial valuations have been performed. As set forth in the Official Code of Georgia Annotated (O.e.G.A.) Section 47-12-100, the State pays benefits without regard to the sufficiency ofthe fund to pay such benefits. Employer contributions are thus appropriated by the State to fund current benefits. Total contributions to the System in 1996 amounted to (in thousands) $203, all of which were made by the employer, compared to total contributions of$210 in 1995, all of which were made by the employer. 8. SEAD ACTUARIAL VALUATION According to the SEAD policy terms covering the lives of members, insurance coverage is provided on a monthly renewable term basis and no return premiums or cash value are earned. The fund balance represents the excess accumulation of investment income and premiums over benefit payments and expenses and is held as a reserve for payment of death benefits under existing policies. The most current actuarial valuation of SEAD is as of June 30, 1995. The valuation indicated that both the employee and employer contribution rate of 0.25% of members' salaries as of June 30, 1995 was appropriate. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 59 REQUIRED SUPPLEMENTARY INFORMATION The following pages present required supplementary information related to each of the retirement funds which the Employees' Retirement System administers. The information is designed to provide the reader with details regarding the progress made in accumulating sufficient assets to pay benefits as they become due. Data presented for the fiscal years 1987 through 1990 were derived from the System's audited financial statements for such years which were reported upon by other auditors for those years and such data have been included herein based solely on the report of the other auditors. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 60 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Funds Administered) REQUIRED SUPPLEMENTARY INFORMATION SUMMARY OF ANALYSIS OF FUNDING PROGRESS (Thousands of Dollars) Fiscal Year Net Assets Available for Benefits Pension Benefit Obligation Percentage Funded Unfunded (Assets in Excess of) Pension Benefit Obligation Annual Covered Payroll Unfunded (Assets in Excess of) Pension Benefit Obligation as a Percentage of Covered Payroll Employees' Retirement System 1987 1988 1989 1990 1991 1992 1993 1994 1995 $1,921,175 2,274,944 2,633,117 3,054,344 3,478,267 3,935,809 4,366,979 4,858,015 5,368,067 $2,752,237 3,078,633 3,406,927 3,602,814 3,975,899 4,205,401 4,797,464 5,168,164 5,682, III 69.8% 73.9 77.3 84.8 87.5 93.6 91.0 94.0 94.5 $831,062 803,688 773,810 548,470 497,632 269,592 430,485 310,149 314,044 $1,173,233 1,259,620 1,380,754 1,529,806 1,636,476 1,570,723 1,667,428 1,759,224 1,833,922 70.8% 63.8 56.0 35.9 30.4 17.2 25.8 17.6 16.7 Public School Employees Retirement System I ...t!l ~ t'l 14 ?::l j ~ t'l ~ Legislative Retirement System2 e-e "" Fiscal Year Net Assets Available for Benefits Pension Benefit Obligation Percentage Funded Unfunded (Assets in Excess of) Pension Benefit Obligation Annual Covered Payroll Unfunded (Assets in Excess of) Pension Benefit Obligation as a Percentage of Covered Payroll 1987 1989 1991 1993 $ 8,821 12,108 15,915 20,063 $ 5,857 9,633 13,887 17,799 150.6% 125.7 114.6 112.7 (88.6)% (61.5) (43.1) (44.9) 1995 25,328 22,617 112.0 (45.3) Superior Court Judges Retirement System 1993 1995 46,723 57,227 52,908 88. 59,595 96.0 6,185 2,368 10,539 58.7 11,076 21.4 District Attorneys' Retirement System 1993 12,353 1995 15,231 10,360 12,788 119.2 119.1 (1,993) (2,443) 3,417 3,546 (58.3) (68.9) These summaries are shown only for the years available. Additional years will be added as data become available. Actuarial valuations for the fiscal year ended June 30, 1996 are currently in process and are not available for this analysis. 1 No statistics regarding covered payroll are available. Contributions are not based upon members' salaries, but are simply $4.00 per member per month for nine months. 2 Actuarial valuations are performed biennially. (Concluded) EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Funds Administered) REQUIRED SUPPLEMENTARY INFORMATION SUMMARY OF REVENUES BY SOURCE (Thousands of Dollars) Employees' Retirement System Public School Employees Retirement System Legislative Retirement System Trial Judges and Solictors Retirement Fund Fiscal Year 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 Contributions Employee Employer $47,135 47,916 48,142 48,535 57,647 55,137 54,438 54,509 56,934 56,601 $162,306 179,632 202,666 230,089 250,179 243,030 231,325 243,774 259,144 271,342 909 932 953 986 1,011 1,020 1,043 1,061 1,090 1,117 12,456 13,332 13,617 13,625 9,154 9,415 9,155 9,155 9,162 12,750 173 60 191 27 204 31 204 58 207 142 192 159 201 129 181 121 203 196 199 164 283 457 321 537 332 317 399 412 414 335 415 436 466 436 461 602 495 548 523 472 Investment Income $220,073 227,562 244,068 294,393 289,965 359,693 365,917 436,597 462,572 721,346 20,024 19,985 20,617 24,134 22,188 26,384 25,839 29,675 30,626 46,760 878 859 864 994 914 1,076 1,047 1,196 1,214 1,820 1,014 1,060 1,141 1,376 1,340 1,658 1,691 2,028 2,179 3,395 Administrative Expense Allotment Total Revenues $ 429,514 455,110 494,876 573,017 597,791 657,860 651,680 734,880 778,650 1,049,289 $194 33,583 242 34,491 268 35,455 292 39,037 389 32,742 441 37,260 472 36,509 479 40,370 490 41,368 575 61,202 38 1,149 44 1,121 44 1,143 54 1,310 64 1,327 69 1,496 74 1,451 75 1,573 77 1,690 68 2,251 59 1,813 38 1,956 40 1,830 46 2,233 56 2,145 54 2,563 58 2,651 59 3,150 60 3,282 70 4,460 (Continued) EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 63 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Funds Administered) REQUIRED SUPPLEMENTARY INFORMATION SUMMARY OF REVENUES BY SOURCE (Thousands of Dollars) Fiscal Year Contributions Employee Employer Investment Income Administrative Expense Allotment Total Revenues Superior Court Judges Retirement System' 1995 1996 $1,079 1,233 $ 821 1,178 $4,730 7,250 $10 $ 6,640 14 9,675 Superior Court Judges Retirement Fundi District Attorneys' Retirement SystemI District Attorneys Retirement Fundi Georgia Defined Contribution Plan 1995 1996 1995 1996 1995 1996 1993 1994 1995 1996 30 31 362 316 8,363 9,319 9,248 9,621 1,867 1,889 165 180 210 203 49 75 1,216 1,926 89 376 693 886 1,946 1,995 3 1,746 4 2,426 210 203 8,452 9,695 9,941 10,507 The accrual basis of accounting for investment transactions was adopted during fiscal year 1989. The above balances for 1988 and 1987 were restated to reflect the change in accounting principle. , Audited infonnation prior to 1995 is not available. (Concluded) EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 64 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Funds Administered) REQUIRED SUPPLEMENTARY INFORMATION SUMMARY OF EXPENSES BY TYPE (Thousands of Dollars) Employees' Retirement System Fiscal Year 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 Benefits $ 99,970 110,999 127,304 143,621 165,251 190,534 212,354 234,015 257,002 283,974 Refunds $7,593 7,212 7,393 6,013 6,295 7,568 5,597 6,908 6,532 8,133 Administrative Other Expenses Expenses $1,260 $230 1,649 233 1,987 19 2,118 38 2,268 54 2,210 6 2,559 2,921 3,162 3,016 Total Expenses $109,053 120,093 136,703 151,790 173,868 200,318 220,510 243,844 266,696 295,123 Public School Employees Retirement System 1987 11,515 338 194 1988 12,455 325 242 1989 13,181 354 268 1990 14,034 323 292 1991 15,079 317 389 1992 15,877 331 441 1993 16,719 332 472 1994 17,463 338 479 . 1995 18,359 384 490 1996 21,312 334 575 Legislative Retirement System 1987 293 32 38 1988 316 34 44 1989 347 35 44 1990 389 17 54 1991 571 107 64 1992 637 8 69 1993 720 66 74 1994 786 12 75 1995 831 38 77 1996 883 26 68 Trial Judges and Solicitors 1987 112 30 59 Retirement Fund 1988 136 49 38 1989 161 75 40 1990 188 48 46 1991 212 25 52 1992 328 49 54 1993 405 172 58 1994 468 14 59 1995 474 92 60 1996 507 329 70 12,047 13,022 13,803 14,649 15,785 16,649 17,523 18,280 19,233 22,221 363 394 426 460 742 714 860 873 946 977 201 223 276 282 289 431 635 541 626 906 (Continued) EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 65 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Funds Administered) REQUIRED SUPPLEMENTARY INFORMATIONSUMMARY OF EXPENSES BY TYPE (Thousands of Dollars) Superior Court Judges Retirement SystemI Superior Court Judges Retirement FundI District Attorneys' Retirement SystemI District Attorneys Retirement FundI Georgia Defined Contribution Plan Fiscal Year Benefits Refunds Administrative Expenses Other Expenses Total Expenses 1995 1996 $ 1,360 1,729 $ 144 $ 10 14 $ 1,514 1,743 1995 1996 1,932 1,887 1,932 1,887 1995 199 12 3 214 1996 200 4 204 1995 1996 1993 1994 1995 1996 210 203 1,603 4,215 7,161 6,724 210 203 1,603 4,215 7,161 6,724 The System adopted the accrual basis of accounting for investment transactions during fiscal year 1989. The above balances for 1988 and 1987 were restated to reflect the change in accounting principle. I Audited information prior to 1995 is not available. (Concluded) EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 66 ADDITIONAL INFORMATION (See Independent Auditors' Report) E~IPI.OYEES' RIUIIU:~IENT SYSTE~I OF GEOIWIA 67 ;~E I 0-< t'l t'l "'?" t'l ::l ;;0 t'l ~ t'l Z -l et- O:l EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Funds Administered) COMBINING BALANCE SHEET JUNE 30, 1996 WITH COMPARATIVE TOTALS FOR 1995 (Thousands of Dollars) Employees' Retirement System Public School Employees Retirement System Pension Trust Funds Legislative Retirement System Trial JUdges and Solicitors Retirement Fund State Employees' Assurance Department Supenor Court JUdges and District Attorneys Pooled Retirement Investment Plans Fund Georgia Defined Contribution Plan Eliminations Total All Systems 1996 1995 (Restated) Assets Cash Receivables: Employee and employer contributions Interest and dividends Unremitted insurance premiums Investments: Short-tenn investments (approximates market value) Obligations of the United States Government and its agencies, corporate and other bonds (quoted market value of $3,596,475 in 1996 and $3,401,785 in 1995) Common stocks (quoted market value of $4,851,878 in 1996 and $3,802,942 in 1995) Mortgages, other secured notes receivable, and real estate investments Equity in Pooled Investment Fund Liabilities and Fund Balance Liabilities: Cash overdrafts Accounts payable and accrued expenses Insurance premiums payable Fund Balance: Reserved for employee contributions and interest Reserved for employer contributions and earnings Reserved for insurance claims Fund balance unreserved Systems' equity $ 556 27,645 $ 40 31 $ 59 102 $ 823 $ 115 220 $ 75,381 $ 180 $ 950 $ 235 1,104 263 $ (823) 29,102 75,644 28,409 58,382 100,638 3,180 103,818 201,638 2,523 6,096,904 $6,127,628 $371,297 $371,297 13,819 $13,890 28,726 $28,887 379,258 $380,081 3,373,071 13,922 3,386,993 3,030,866 83,036 $ 83,371 3,422,025 1,925 ---$6,973,040 --$18,649 (6,973,040) $(6,973,863) 3,422,025 4,448 ---- $ 7,022,980 2,845,222 4,633 ---- $ 6,169,385 $ 4,595 800 -------s;J95 $ 94 189 ------m- $9 23 ---,z 741,674 5,380,559 14,587 356,427 2,438 11,420 0,T2T,2JJ $6,127,628 ----m-;m4 $371,297 IT,8"5"8" $13,890 $ 5 -, 5,124 23,758 ~ $28,887 $380,081 ~ $380,081 $ 72 -----n $ 2 ----z $ (823) ----crnJ $ 94 4,872 ~ $ 4,146 1,875 -----o;uzT 15,392 67,907 -rr,m $83,371 $6,973,040 0,9'7J;04lf $6,973,040 17,837 810 ---rr,ro $ 18,649 (6,973,040) """TO,9'7J;U4U) $(6,973,863) 797,052 5,840,881 380,081 764,135 5,062,023 337,206 t;UmfI4 $ 7,022,980 0";l0J;J64 $ 6,169,385 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Funds Administered) Superior Court Judges and District Attorneys Retirement Plans COMBINING BALANCE SHEET JUNE 30, 1996 WITH COMPARATIVE TOTALS FOR 1995 (Thousands of Dollars) Assets Cash Receivables: Employee and employer contributions Investments: Equity in Pooled Investment Fund liabilities and Fund Balance :t:::l 5 Liabilities: Accounts payable and accrued expenses >tr.n<, :t:r:l 0 ." 0 trl 0 :;0 ;C;";J: 0> <.D Superior Court Judges Retirement System Pension Trust Funds Superior District Court Judges Attorneys' Retirement Retirement Fund System District Attorneys Retirement Fund Total All Systems 1996 1995 Restated $ 23 175 64,993 $65,191 $ 66 3 -65-2 $721 $ 23 42 17,391 $17,456 $3 $3 $ 115 220 $ 251 83,036 $83,371 -7-2,7-86 $73,037 $ 32 32 11,685 53,474 65,159 $ 65, 191 $ 34 34 113 574 -68-7 $721 $3 3 $3 3 3,594 13,859 17,453 $17,456 $3 $ 72 --7-2 15,392 13,625 67,907 83,299 $83,371 -5-9,4-12 -7-3,0-37 $73,037 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Funds Administered) :tI:::I COMBINING STATEMENT OF REVENUES, EXPENSES, ;!l AND CHANGES IN FUND BALANCE 0-< t'l YEAR ENDED JUNE 30, 1996 WITH COMPARATIVE TOTALS FOR 1995 t'l "!. (Thousands of Dollars) 'j" Pension Trust Funds ~ :t:':l Superior Court Judges and ..,t'l Z Public School Trial Judges State District Georgia Total Employees' Employees Legislative and Solicitors Employees' Attorneys Pooled Defined All Systems eV.-. Administrative expense allotment Investment income: "0 Dividends and interest Net gain on disposal of securities 271,342 12,750 164 472 3,450 $ 10,645 575 68 70 18 82 $ 396,075 889 441,618 288,178 10,645 731 397,046 441,618 272,113 10,267 640 364,263 175,823 Less: Broker and investment agent fees Allocation of investment earnings (254) 721,518 1,049,289 46,760 61,202 1,820 ~ 3,395 4,460 45,768 56,413 ~ 14,299 (9,181) 828,512 (3) 10,507 $ (828,512) (828,512) (9,438) 1,198,421 (7,111) 885,436 Operating Expenses: Retirement payments Refunds of employee contributions and interest Death benefits Administrative expenses 283,974 21,312 883 507 4,019 8,133 334 26 329 13,391 3,016 575 68 70 147 18 295,123 22,221 977 906 ~ 4,037 6,724 245 6,969 310,695 280,367 15,546 13,391 ~ 343,771 14,363 11,999 ~ 310,719 Transfers from Systems to Pooled Investment Fund Net Income ---- 754,166 --38,981 --1,274 --- 3,554 42,875 10,262 ~ 848,861 --3,538 (20,349) (848,861) 854,650 574,717 Fund Balance: Beginning of Year End o{Year 5,368,067 ~ 332,033 ~ 12,584 $13,858 25,328 $28,882 337,206 $380,081 73,037 $83,299 6,124,179 $6,973,040 15,109 $18,647 (6,124,179) ~ 6,163,364 5,588,647 $7,018,014 $6,163,364 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Funds Administered) Superior Court Judges and District Attorneys Retirement Plans COMBINING STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN FUND BALANCE YEAR ENDED JUNE 30,1996 WITH COMPARATIVE TOTALS FOR 1995 (Thousands of Dollars) Operating Revenues: Employee contributions Employer contributions Administrative expense allotment Allocation of investment earnings Total operating revenues Operating Expenses: Retirement payments Refunds of employee contributions ~ and interest i Administrative expenses Total operating expenses ::0;1 !:l Net Income I Fund Balance: Beginning of Year I End of Year o "'l o 13 ;~; " Superior-- Court Judges Retirement System Pension Trust Funds ----siij)erio-r--- ----oiStrlct Court Judges Attorneys' Retirement Retirement System System $ 1,233 1,178 14 7,250 9,675 $ 31 1,889 75 1,995 $ 316. 180 4 1,926 2,426 1,729 1,887 200 14 1,743 7,932 57,227 $65,159 1,887 108 579 $ 687 4 204 2,222 15,231 $17,453 - District Attorneys Retirement Fund $ 203 203 203 203 $- Total All Systems 1996 1995 (Restated) $ 1,580 3,450 18 9,251 14,299 $ 1,471 3,063 13 5,995 10,542 4,019 - -18 4,037 10,262 73,037 3,701 156 13 3,870 6,672 66,365 $83,299 $ 73,037 ~ EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 5 -< (Including All Funds Administered) t'l t'l "'- :;d Employees' Retirement System of Georgia ~ t'l ~ ;q STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN FUND BALANCE ~ YEARS ENDED JUNE 30,1996 AND 1995 (Thousands of Dollars) o ." o ot'l 5:; 1996 """ Employee Employer Contributions Contributions and Interest and Earnings Total Employee Contributions and Interest 1995 Employer Contributions and Earnings Total Operating Revenues: Employer and employee contributions Allocation of investment earnings Total operating revenues Operating Expenses: Retirement payments Refunds of employee contributions and interest Administrative expenses Total operating expenses Intrafund Transfers, Increase (Decrease): Interest on employee accounts Retirements Net intrafund transfers Net Income Fund Balance: Beginning of Year End of Year $ 56,601 56,601 8,133 8,133 25,394 (47,169) (21,775) 26,693 714,981 $741,674 $ 271,342 721,346 992,688 $ 327,943 721,346 1,049,289 283,974 3,016 286,990 283,974 8,133 3,016 295,123 (25,394) 47,169 21,775 727,473 754,166 4,653,086 $5,380,559 5,368,067 $6,122,233 $ 56,934 56,934 6,532 6,532 24,292 (35,003) (10,711) 39,691 675,290 $714,981 $ 259,144 462,572 721,716 $ 316,078 462,572 778,650 257,002 3,162 260,164 257,002 6,532 3,162 266,696 (24,292) 35,003 10,711 472,263 511,954 4,180,823 $4,653,086 4,856,113 $5,368,067 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Funds Administered) Public School Employees Retirement System STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN FUND BALANCE YEARS ENDED JUNE 30,1996 AND 1995 (Thousands of Dollars) Operating Revenues: Employer and employee contributions Allocation of investment earnings Administrative expense allotment Total operating revenues Operating Expenses: Retirement payments 5~I Refunds of employee contributions and interest Administrative expenses ~I Total operating expenses l'=I :~= ~ Intrafund Transfers - Increase (Decrease): Interest on employee accounts t'l ~ Retirements ~I Net intrafund transfers ;1 Net Income "l Q ~I Fund Balance: Beginning of Year >...., '" End of Year Employee Contributions and Interest 1996 Employer Contributions and Earnings Total $ 1,1l7 1,117 $ 12,750 46,760 575 60,085 $ 13,867 46,760 575 61,202 334 334 422 (723) (301) 482 21,312 575 21,887 (422) 723 301 38,499 21,312 334 575 22,221 38,981 14,105 $14,587 317,928 $356,427 332,033 $371,014 Employee Contributions and Interest 1995 Employer Contributions and Earnings Total $ 1,090 1,090 $ 9,162 30,626 490 40,278 $ 10,252 30,626 490 41,368 384 384 410 (647) (237) 469 18,359 490 18,849 (410) 647 237 21,666 18,359 384 490 19,233 22,135 13,636 $14,105 296,262 $317,928 309,898 $332,033 ~ ~ EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Funds Administered) ~ ~ j Legislative Retirement System ::0; ~ ~ ~ STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN FUND BALANCE YEARS ENDED JUNE 30,1996 AND 1995 (Thousands of Dollars) o ." Q 13 ::0; C;..;'.J:, Employee 1996 Employer "'" Contributions Contributions and Interest - - and Earnings Total Operating- Revenues: Employer and employee contributions Allocation of investment earnings Administrative expense allotment Total operating revenues $ 199 199 $ 164 1,820 - -68 2,052 $ 363 1,820 - -68 2,251 Operating Expenses: Retirement payments Refunds of employee contributions and interest Administrative expenses Total operating expenses Intrafund Transfers - Increase (Decrease): Interest on employee accounts Retirements Net intrafund transfers 26 26 58 ~ 21 883 883 26 -68 -68 -951 977 (58) -37 (21) Net Income 194 1,080 1,274 Fund Balance: Beginning of Year End of Year 2,244 $2,438 10,340 $11,420 12,584 $13,858 Employee Contributions and Interest 1995 Employer Contributions and Earnings Total $ 203 - 203 38 - -38 51 ~ (108) 57 2,187 ~ $ 196 1,214 77 1,487 831 77 908 (51) 159 108 687 9,653 $ 10,340 $ 399 1,214 77 1,690 831 38 77 946 744 11,840 $12,584 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Funds Administered) Trial Judges and Solicitors Retirement Fund STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN FUND BALANCE YEARS ENDED JUNE 30,1996 AND 1995 (Thousands of Dollars) Operating Revenues: Employer and employee contributions Allocation of investment earnings Administrative expense allotment Total operating revenues Operating Expenses: Retirement payments gl Refunds of employee contributions and interest Administrative expenses 5 t:i Total operating expenses ~ ~ ~ ;;:I j Superior Court Judges Retirement System i" :t';1: ~ I STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN FUND BALANCE YEARS ENDED JUNE 30, 1996 AND 1995 (Thousands of Dollars) o ." o ot'1 i" Q 1996 s:: "0) Employee Contributions -Employer Contributions and Interest - - and Earnings Total Operating Revenues: Employer and employee contributions Allocation of investment earnings Administrative expense allotment Total operating revenues $ 1,233 1,233 $ 1,178 7,250 - 14 8,442 $ 2,411 7,250 - -14 9,675 Operating Expenses: Retirement payments Refunds of employee contributions and interest Administrative expenses Total operating expenses 1,729 - -14 1,743 1,729 -14 1,743 Intrafund Transfers - Increase (Decrease): Interest on employee accounts Retirements Net intrafund transfers 618 (611) 7 (618) -611 -iZ) Net Income 1,240 6,692 7,932 Fund Balance: Beginning of Year 10,445 46,782 57,227 End of Year $11,685 $53,474 $65,159 Employee Contributions and Interest $ 1,079 - 1,079 144 - -144 604 (556) -48 983 9,462 $10,445 1995 Employer Contributions and Earnings Total $ 821 4,730 10 5,561 $ 1,900 4,730 10 6,640 1,360 10 1,370 (604) 556 (48) 4,143 1,360 144 10 1,514 5,126 42,639 $46,782 52,101 $57,227 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Funds Administered) Superior Court Judges Retirement Fund STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN FUND BALANCE YEARS ENDED JUNE 30,1996 AND 1995 (Thousands of Dollars) Operating Revenues: Employer and employee contributions Allocation of investment earnings Total operating revenues Operating Expenses: Retirement payments 1':1 Total operating expenses ~ ." 5 Intrafund Transfers - Increase (Decrease): -< E:l Interest on employee accounts "'- ?:l Retirements ::l ii3 ~"" Net intrafund transfers ."z."., Net Income (Deficit) 1-::l ~ ~I Fund Balance: Beginning of Year '?":l :~q I End of Year '::":: 0 .." 0 0'" ::0 -.r '"' 1996 Employer Contributions and Earnings Total $ 203 203 $ 203 203 203 203 203 203 $- $- 1995 Employer Contributions and Earnings Total $ 210 210 $210 210 210 210 210 210 $- $- g~ l EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Funds Administered) t'1 "? ~~ I Georgia Defined Contribution Plan sa ;t;'1;: zt,.'1., STATEMENT OF REVENUE, EXPENSES, AND CHANGES IN FUND BALANCE i',-.f"<.J, YEARS ENDED JUNE 30,1996 AND 1995 t;;'1;: (Thousands of Dollars) 0 "0' t'1 0 !I Employee 1996 Employer Contributions Contribution and Interest and Earnings Total Operating Revenues: Employee contributions Investment earnings, net Total operating revenues $ 9,621 9,621 -$ 8-86 886 $ 9,621 886 10,507 Operating Expenses: Refunds of employee contribution and interest 6,724 6,724 Total operating expenses 6,724 6,724 Intrafund Transfers - Increase (Decrease): Interest on employee accounts 426 . (426) Net intrafund transfers 426 (426) Net Income 3,323 460 3,783 Fund Balance: Beginning of Year End of Year 14,514 $17,837 595 $1,055 15,109 $18,892 Employee Contributions and Interest $ 9,248 9,248 1995 Employer Contribution and Earnings Total $ 693 693 $ 9,248 693 9,941 7,161 7,161 7,161 7,161 328 328 2,415 (328) (328) 365 2,780 12,099 $ 14,514 230 $ 595 12,329 $15,109 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Funds Administered) Administrative Expense Fund CONTRIBUTIONS AND EXPENSES YEARS ENDED JUNE 30,1996 AND 1995 (Thousands of Dollars) Contributions: Employees' Retirement System Public School Employees Retirement System Legislative Retirement System Trial Judges and Solicitors Retirement Fund State Employees' Assurance Department Georgia Defined Contribution Plan Other Total contributions Expenses: Personal services: Salaries and wages Retirement contributions FICA Health insurance Miscellaneous Communications: Postage Publications and printing Telecommunications Travel Professional services: Accounting and investment services Computer services Actuarial services Medical services Audit fees Legal services 1996 $3,016 575 68 70 147 245 18 4,139 1995 $3,162 490 77 60 188 13 3,990 1,286 205 90 161 32 1,774 1,226 191 86 153 19 1,675 165 150 40 67 40 26 19 16 264 259 796 585 79 120 34 24 1,638 878 509 135 93 37 24 1,676 (Continued) EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 81 EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Funds Administered) Administrative Expense Fund CONTRIBUTIONS AND EXPENSES YEARS ENDED JUNE 30,1996 AND 1995 (Thousands of Dollars) Rentals: Office space Office equipment Other services and charges: Equipment Temporary services Supplies and materials Repairs and maintenance Courier services Board member expenses Miscellaneous Total expenses Net Income Balance: Beginning of Year End ofYear 1996 $ 302 1 303 14 108 17 5 4 4 8 160 4,139 1995 $ 302 1 303 9 22 15 4 5 4 18 77 3,990 $- $- (Concluded) EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA 82