Annual report 2002 [2002]

1,,
GA
400 -Al
LOYEES' TIREMENT SYSTEM
OF GEORGIA

TAgLE OF CONTENTS EMPLOYEES' RETIREMENT SYSTEM

INTRODUCTION

Boards of Trustees

2

Letter of Transmittal

3

Legislation

4

ACTUARIAL SUMMARY

Employees' Retirement System

6

Public School Employees Retirement System

9

Legislative Retirement System

12

Georgia Judicial Retirement System

15

Group Term Life Insurance (GTLI)

18

INVESTMENTS

Pooled Investment Fund

21

Structural Analysis

21

Temporary Investments

22

Bonds

22

Common Stock Holdings

23

Mortgage

23

Real Estate Investment

23

AUDITED FINANCIAL STATEMENTS Table of Contents Independent Auditor's Report Balance Sheets, Historical Trend Information, Supplementary Information, Additional Information,

24
25
26-44

2002 - Employees Retirement System of Georgia

L'iOARDS OF TRUSTEES

Ray Crawford, Jr. Executive Director State Properties Commission Employees' Retirement System Public School Employees Retirement System Georgia Judicial Retirement System Legislative Retirement System State Social Security Trust Fund Georgia Defined Cont;ibution Plan
Russell W. Hinton, ex-officio \lice-Chc1irma11 State Auditor
Employees' Retirement System Public School Employees Retirement System
Georgia Judicial Retirement System Legislative Retirement System
State Social Security Trust Fund Georgia Defined Contribution Plan State Employees' Assurance Department
Michael D. Kennedy Chairman
Korn/Ferry International Employees' Retirement System Public School Employees Retirement System Georgia Judicial Retirement System Legislative Retirement System State Social Sccuritv Trust Fund Georgia Defined Cont;ibution Plan State Employees' Assurance Department
Michael Thunnond, ex-officio Commissioner of Labor
State Employees' Assurance Department

Dan Ebersole, ex-officio Director Office of'f'rearnry 6 Fiscal Sen,ices Employees' Retirement System Public School Employees Retirement System Georgia Judicial Retirement System Legislative Retirement System State Social Security Trust Fund Georgia Defined Contribution Plan State Employees' Assurance Department
Robert E. Keller District Attorney Claytn11 Judicial Circuit Georgia Judicial Retirement System
William E Roberts Retired Director, Georgia State Fi11a11ce 6 Investment Commission Employees' Retirement System Public School Employees Retirement System Georgia Judicial Retirement System Legislative Retirement System State Social Security Trust Fund Georgia Defined Contribution Plan
Kellv D. Turner Stat~ Court Judge Lowndes County Georgia Judicial Retirement System

Barbara Ward Fi11a11cial Ma11ager City of Athmtci, Departme11t of Finance Employees' Retirement System Public School Employees Retirement System Georgia Judicial Retirement System Legislative Retirement System State Social Security Trust Fund Georgia Defined Contribution Plan
Cynthia D. Wright Superior Court Judge Superior Court of Fulton County Georgia Judicial Retirement System
2

Bonnie T. Wright Attorney-at-Law Schulte,, Ward 6 'li,mer State Employees' Assurance Department
Marjorie Young, ex-officio Commissioner State Merit System Employees' Retirement System Public School Employees Retirement System Georgia Judicial Retirement System Legislative Retirement System State Social Securitv Trust Fund Georgia Defined C~ntribution Plan State Employees' Assurance Department
2002 - Employees Retirement System of Georgia

LETTER OF TRANSMITTAL

Cecelia Corbin Hunter Director Employees' Retirement System
It is my pleasure to join the Boards of Trustees and staff in presenting the 2002 Annual Report on the systems and programs administered by the Employees' Retirement System (ERS). By statute, the staff of ERS administers seven separate and distinct systems:
Employees' Retirement System of Georgia Public School Employees Retirement System Legislative Retirement System Georgia Judicial Retirement System Georgia Defined Contribution Plan State Employees' Assurance Department (CTLI) State Social Security contracts with political
subdivisions
This annual report includes letters from our actuary, Buck Consultants, Inc., on the funding of the retirement systems and the Croup 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; and the auditors' report from Deloitte & Touchc.

INVESTMENTS
At ERS' inception, legislation authorized a 50/50 split between equities and bonds. Thus, the investments of ERS have been forward thinking and always have included a diverse portfolio of bonds and equities. In the early clays, trust funds were managed by a sole custodian bank. In 1974, the in-house Division of Investment was created; and in 1983 multiple outside advisers became a part of the investment team.
The Division of Investment has maintained a policy of "conservatism" and "preservation of capital," and has successfully outperformed the market. At the encl of 1982 the trust funds had a market value of $1.017 billion; ten years later, 1992, the market value was $5.6 billion; and, ten years later, at thecnd of 2002, the market value was$ I2.8 billion.
The ERS staff joins me in expressing our sincere thanks to the Boards of Trustees for their leadership. In addition, we appreciate the support of the Governor, Lieutenant Governor, Retirement Committee Chairmen of the Georgia General Assembly House of Representatives and Senate, respectively, and departmental officials. With this continued support, and the diligence of our staff, we can assure our members and retirees that we have a successful operation and are providing protection and financial soundness to the retirement system.
Cecelia Corbin Hunter, Director

2002 - Employees Retirement System of Georgia

[_

_

LEGISLATION

ACT 950 (SB 62) EMPLOYEES' RETIREMENT SYSTEM
Amends O.C.C.A. 47-l-14(a) relating to the exemption from public inspection to redefine "retirement system" to include any association of like political subdivisions, the purpose of which is the pooling of funds for retirement or pension purposes.
Amends 47-2-96(j) to allow Old and New Plan members to receive credit for up to two years of military service, which began during the draft period (September 16, 1940 to Mach 31, 1947 and June 24, 1948 to July I, 1973) and extends past military draft cut-off elate. Member shall pay the regular employee contribution of 5 percent of compensation last paid as an employee before entering military service or 5 percent first paid as an employee after returning from military service, plus 4 1/2 percent interest. Application must be made prior to December 31, 2003.
ACT 918 (SB138) PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM
Amends 47-4-101 to increase the maximum benefit multiplier from $12.00 up to $15.00 to the extent funds are appropriated. Minimum benefit multiplier increases from $9.50 to $12.00. The General Assembly appropriated and Governor Barnes approved an increase from $12.00 to $12.50 times the years of creditable service. The increase was effective in retiree checks for the month of July, which were deposited or mailed on the last business day of July 2002.

ACT 998 (HB 254) EMPLOYEES' & GEORGIA JUDICIAL RETIREMENT SYSTEMS
Amends 47-23-64 to allow state court judges and solicitors general to transfer ERS active service to CJRS or establish ERS refunded service under CJRS by paying back contributions plus regular interest (4%). ERS must be notified not later than December 3I, 2002 or within 90 clays of first becoming a member of CJRS, whichever elate is later. No service can be credited that will create any accrued unfunded liability on this system.
ACT 895 (HB 552) GEORGIA JUDICIAL RETIREMENT SYSTEM
Amends O.C.C.A. 47-23-21 to allow the Board of Trustees from time to time to adopt a method or methods to establish an employee contribution rate lower than as established in Article 5, provided such rate shall not be lower than 6 1/2 %. Such method shall be based on (I) recommendation of actuary, (2) actuarial soundness of fund, and (3) other factors as Board deems relevant.
ACT 997 (HB 557) EMPLOYEES' & GEORGIA JUDICIAL RETIREMENT SYSTEMS
Amends O.C.C.A. 47-23-29 to establish Croup Term Life Insurance (CTLI) for active members of CJRS on or after July I, 2002 and to be administered via contract by the ERS Board of Trustees. The CTLI coverage will be basically the same as that in effect for ERS members.

ACT 931 (HB 227).EMPLOYEES' RETIREMENT SYSTEM
Creates the Georgia Military Pension Fund under O.C.C.A. 4724 for members of the Georgia National Guard effective July I, 2002. Board of Trustees of ERS shall administer the fund.

ACT 994 (HB 666) EMPLOYEES' RETIREMENT SYSTEM
Amends O.C.C.A. 47-2-263 to allow any member subject to 47-2-262 up to four years prior service as a full-time law assistant for a judicial circuit employed pursuant to O.C.C.A. 15-6-28 by paying an amount determined by the actuary as necessary to grant prior service without creating any accrued actuarial liability to the System. Payment must be made not later than July I, 2003, or within six months of first or again becoming a member, whichever is later.

4

2002 - Employees Retirement System of Georgia

ACT 959 (H B 785) EMPLOYEES' RETIREMENT SYSTEM
Amends O.C.G.A. 47-2-326 to allow employees of the Georgia Rail Passenger Authority to become members of ERS effective July 1, 2002 or on the date of employment, whichever is later.

ACT 69 (HB 1372) INVESTMENT OF PENSION FUNDS
Creates the Joint Study Committee on Economic Development Through the Investment of State Pension Funds into Private Equities.

ACT 958 (HB931) EMPLOYEES' RETIREMENT SYSTEM
Amends O.C.G.A. 47-2-ll0(c) to provide that benefits of a retired member who retired on a normal service retirement with at least l 0 years of actual service as an officer or trooper of the Uniform Division of the Department of Public Safety shall not be suspended if he or she accepts full-time or parttime employment with the Department of Public Safety or the Department of Motor Vehicle Safety as a radio operator or a driver's license examiner. No employee benefits shall accrue, including retirement credits. This provision would no longer apply on or after July 1, 2007.

OTHER. LEGISLATION OF INTER.EST
ACT 928 (HB 1313) ALL SYSTEMS
Increases the amount of retirement income exclusion to $14,000 for taxable years beginning on or after January 1, 2001 and prior to January 1, 2002; $14,500 for taxable years beginning on or after January 1, 2002 and prior to January I, 2003; $15,000 for taxable years beginning on or after January I, 2003.

Also amends 47-2-334(c) to state that employee contributions shall not be less than I% nor greater than 1 1/2%, with .25% credited to GTLI. Any reduction in percentage shall be based upon (1) recommendation of actuary, (2) actuarial soundness of fund in accordance with standards provided in 47-20-10 or higher standards adopted by Board, and (3) other factors deemed relevant by the Board.

Acids 47-2-299 to allow an employee of a Community Service Board created pursuant to 37-2-6 to obtain prior service as an employee of a private nonprofit hospital deemed to be the community health center through a contract with the Department of Human Resources and which was authorized to bill Medicaid for outpatient clinic option services under the state community mental health program prior to December 31, 1991, and who, without a break in service, became an employee of the Community Service Board in the same position held in the private hospital. Applies to both Old and New Plan members. Member must pay amount deemed by the actuary to grant such benefit without creating any accrued actuarial liability to the retirement system. Application must be made by December 31, 2002.

2002 - Employees Retirement System of Georgia

5

ACTUARIAL SUMMARY EMPLOYEES' RETIREMENT SYSTEM
ACTUARY'S CERTIFICATION LETTER

A Mellon Consulting Company
200 Galleria Parkway, N.W. Suite 1900 Atlanta, Georgia 30339-5945
August 6, 2002
Board of Trustees Employees Retirement System of Georgia Two Northside 75, Suite 300 Atlanta, GA 30318
Attention: Ms. Cecelia Corbin Hunter, Executive Director
Members of the Board:
Section 47-2-26 of the law governing the operation of the Employees' Retirement System of Georgia provides that the actuary shall make periodic valuations of the contingent assets and liabilities of the Retirement System on the basis of regular interest and the tables last adopted by the Board of Trustees. We have submitted the report giving the results of the actuarial valuation of the System prepared as of June 30, 2001. The report indicates that annual employer contributions at the rate of 5.66% of active payroll for Old Plan members and 10.41% of active payroll for New Plan members for the fiscal year ending June 30, 2003 are sufficient to support the benefits of the System. In preparing the valuation, the actuary relied on data provided by the System. While not verifying data at the source, the actuary performed tests for consistency and reasonableness. Our firm, as actuary, is responsible for all of the actuarial trend data in the financial section of the annual report and the supporting schedules in the actuarial section of the annual report.
Since the previous valuation, the actuarial assumptions have been revised to reflect the results of the experience investigation adopted by the Board on June 20, 2002. In our opinion, the valuation is complete and accurate, and the methodology and assumptions used are reasonable as a basis for the valuation. The valuation takes into account the effect of all amendments to the System enacted through the 2002 session of the General Assembly as well as the 1.5% Ad Hoc COLAs effective July 1, 2002 and January 1, 2003.
The System is funded on an actuarial reserve basis. The actuarial assumptions recommended by the actuary and adopted by the Board are in the aggregate reasonably related to the experience under the System and to reasonable expectations of anticipated experience under the System. The assumptions and methods used for funding purposes meet the parameters set for the disclosures presented in the financial section by Governmental Accounting Standards Board (GASB) Statement Nos. 25 and 27. The funding objective of the plan is that contribution rates over time will remain level as a percent of payroll. The valuation method used is the entry age normal cost method. The normal contribution rate to cover current cost has been determined as a level percent of payroll. Gains and losses are reflected in the unfunded accrued liability which is negative and being amortized as a level percent of payroll within a 20-year period.
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. Assuming that contributions to the System are made by the employer from year to year in the future at the rates recommended on the basis of the successive actuarial valuations, the continued sufficiency of the retirement fund to provide the benefits called for under the System may be safely anticipated.
This is to certify that the independent consulting actuary is a member of the American Academy of Actuaries and has experience is performing valuations for public retirement systems, that the valuation was prepared in accordance with principles of practice prescribed by the Actuarial Standards Board, and that the actuarial calculations were performed by qualified actuaries in accordance with accepted actuarial procedures, based on the current provisions of the retirement system and on actuarial assumptions that are internally consistent and reasonably based on the actual experience of the System.
Sincerely,

Edward A. Macdonald Principal, Consulting Actuary EAM:sr Buck Consultants, Inc.
770 I955-2488 Fax 770 I933-8336
6

2002 - Employees Retirement System of Georgia

ACTUARIAL SUMMARY EMPLOYEES' RETIREMENT SYSTEM

VALUATION BALANCE SHEET - as of June 30, 2001 - 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 disability benefits Death and survivor benefits Deferred vested benefits Total

$ 4,875,973
407,503 138 156

(2) Present value of prospective benefits payable on account of present active members: Retirement and survivor allowances Refunds of members' contributions Total

$ 8,977,154
61 276

(3) Total Actuarial Liabilities

$ 5,421,632
9 038 430 $ 14,460,062

PRESENT AND PROSPECTIVE ASSETS (4) Actuarial value of assets (5) Present value of total future contributions= (3) - (4) (6) Present value of future member contributions and employer
paid 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 unfunded accrued liability contributions = (7) - (10)
(12) Total Present and Prospective Assets

$ 2,709,438
$ 1,311,432
6.24%
$ 241,154

$ 11,750,624
1,398,006
1,504,801 (193,369)
$ 14,460.062

2002 - Employees Retirement System of Georgia

7

A C T U A R I A L S U M M A I~ Y EMPLOYEES' RETIREMENT SYSTEM

SUMMARY OF PRINCIPAL RESULTS - as of June 30, 2001 - dollar amounts in thousands

VALUATION DATE

JUNE 30, 2001

JUNE 30, 2000

Active members: Number Annual Compensation
Retired members and beneficiaries: Number Annual allowances
Assets: Market Value Actuarial Value
Unfunded actuarial accrued liability
Amortization Period

75,132 $ 2,397,169
25,889 $ 538,890
$ 12,343,625 11,750,624
$ (193,369) 20 years

75,318 $ 2,304,289
24,488 $ 480,380
$ 13,301,163 10,999,901
$ (426,493) 40 years

For Fiscal Year Ending
Annual required employer contribution rates (ARC):
Old Plan Normal Accrued Liability Total
New Plan Normal (includes 4.75% paid for member) Accrued liability Total

June 30, 2003

June 30, 2002

6.24% _j_Qj_fil
5.66%
10.99% _j_Qj_fil
10.41%

6.51% (0.85) 5.66%
11.26% (0.85) l 0.41 %

'/'he valuation reflects 1.5% Ac/ l-loc COLAs effective fuly 1, 2002 and famwry 1, 2003 and the effect of amendments to the System enacted through the 2002 session of the General Assembly.

8

2002 - Employees Retirement System o(Ceorgia

ACTUARIAL SUMMARY PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM
ACTUARY'S CERTIFICATION LETTER

BUC' CONSULTANTS
A Mellon Consulting Company
200 Galleria Parkway, N.W. Suite 1900 Atlanta, Georgia 30339-5945
July 15, 2002
Board of Trustees Georgia Public School Employees' Retirement System Two Northside 75, Suite 300 Atlanta, GA 30318
Attention: Ms. Cecelia Corbin Hunter, Executive Director
Members of the Board:
Section 47-4-60 of the law governing the operation of the Georgia Public School Employees' Retirement System provides that the employer contributions shall be actuarially determined and approved by the Board. We have submitted the report giving the results of the actuarial valuation of the System prepared as of June 30, 2001. The report indicates that annual employer contributions at the rate of $105.67 per active member for the fiscal year ending June 30, 2003 are sufficient to support the benefits of the System. In preparing the valuation, the actuary relied on data provided by the System. While not verifying data at the source, the actuary performed tests for consistency and reasonableness. Our firm, as actuary, is responsible for all of the actuarial trend data in the financial section of the annual report and the supporting schedules in the actuarial section of the annual report.
Since the previous valuation, the actuarial assumptions have been revised to reflect the results of the experience investigation approved by the Board on June 20, 2002. In our opinion, the valuation is complete an accurate, and the methodology and assumptions used are reasonable as a basis for the valuation. The valuation takes into account the effect of amendments to the System enacted change the 2002 session of the General Assembly. Since the previous valuation, the benefit multiplier for active and retired members has been increased by $0.50, from $12.00 to $12.50.
The System is funded on an actuarial reserve basis. The actuarial assumptions recommended by the actuary and adopted by the Board are in the aggregate reasonably related to the experience under the System and to reasonable expectations of anticipated experience under the System. The assumptions and methods used for funding purposes meet the parameters set for the disclosures presented in the financial section by Governmental Accounting Standards Board (GASB) Statement Nos. 25 and 27. The funding objective of the plan is that contribution rates over time will remain level as a dollar per active member. The valuation method used is the entry age normal cost method. The normal contribution rate to cover current cost has been determined as a dollar per active member. Gains and losses are reflected in the unfunded accrued liability which is negative and being amortized as a level dollar per member within a 40-year period.
The valuation has been prepared in accordance with the parameters set forth in Statement Nos. 25 and 27 of the Governmental Accounting Standards Board. The annual required contribution (ARC) of the employer under GASB for the fiscal year ending June 30, 2003 is $4,120,677, which will liquidate the unfunded accrued liability over a 40-year period. The System has a negative Net Pension Obligation (NPO) because more than the annual required contribution under GASB 25/27 was made for the fiscal years ending June 30, 1998, June 30, 1999, June 30, 2000, and June 30, 2001. Since the appropriation amounts for fiscal years 2002 and 2003 are greater than the ARC for the respective years, the plan will continue to increase the negative NPO.
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. Assuming that contributions to the System are made by the employer from year to year in the future at the rates recommended on the basis of the successive actuarial valuations, the continued sufficiency of the retirement fund to provide the benefits called for under the System may be safely anticipated.
This is to certify that the independent consulting actuary is a member of the American Academy of Actuaries and has experience is performing valuations for public retirement systems, that the valuation was prepared in accordance with principles of practice prescribed by the Actuarial Standards Board, and that the actuarial calculations were performed by qualified actuaries in accordance with accepted actuarial procedures, based on the current provisions of the retirement system and on actuarial assumptions that are internally consistent and reasonably based on the actual experience of the System.

Edward A. Macdonald Principal, Consulting Actuary
EAM:sr
Buck Consultants, Inc.
770 I955-2488 Fax 770 I933-8336

2002 - Employees Retirement System of Georgia

9

ACTUARIAL SUMMARY PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM

VALUATION BALANCE SHEET- as oflune 30, 2001
ACTUARIAL LIABI LIT! ES
(1) Present value of prospective benefits payable on account of present retired members, beneficiaries of deceased members, and terminated members entitled to deferred benefits
(2) Present value of prospective benefits payable on account of present active members: Service retirement allowances Disabilitv retirement allowances Refunds 'of members' contributions Total
(3) Total Actuarial Liabilities

$ 354,945,717

$ 299,933,891 16,522,5 5I 5 663 828

322,120,270 $ 677,065,987

PRESENT AND PROSPECTIVE ASSETS (4) Actuarial value of assets (5) Present value of total future contributions = (3) - (4) (6) Present value of future member contributions to the
Members' Contributions Fund (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 accrued liability contributions= (7) - (10) (I2) Total Present and Prospective Assets

$ (31,325,013)

$ (38,394,441)

$

288.48

I 96,373

$ 708,391,000 7,069,428
56,649,683 (95,044.124)
$ 677,065.987

JO

2002 - Employees Retirement System of Georgia

- --------

ACTUARIAL SUMMARY PUBLIC SCHOOL EMPLOYEES RETIREMENT SYSTEM

SUMMARY OF PRINCIPAL RESULTS - as of June 30, 2001
VALUATION DATE
Active members: Number
Retired members and beneficiaries: Number Annual allowances
Assets: Market Value Actuarial Value
Unfunded actuarial accrued liability
Amortization Period

JUNE 30, 2001 JUNE 30. 2000

38,997

36,182

11,661

11,394

$ 34,151,616** $ 29,388,547*

$ 748,571,000 708,391,000
$ (95,044,124)
40 years

$ 813,296,000 667,642,000
$ (52,285,329)
40 years

For Fiscal Year Ending
Employer contribution rate per active member: Normal Accrued Liability Total
Annual required employer contributions (ARC): Normal Accrued Liability
Total
Annual appropriation

June 30, 2003

$ 288.48

(182.81}

$

105.67

$ 11,249,855 (7,129.178)
4,120,677
$ 15,258,226

June 30, 2002

$

429.36

(108.39}

$

320.97

$ 15,535,104 (3,921.878)
11,613,226
$ 12,874,104

Qoes not include increase in benefit accrual rate effective July I, 2000. The results of the valuation have been ad;usted to incl11de this increase.
Does not include increases in benefit accrual rate effective July I, 2002. The results of the val11atio11 have been adi11sted to include this increase.
The valuation takes into acco11nt the effect of amendments to the System enacted through the 2002 session of the General Assembly. Since the previous valuation, the benefit multiplier for active and retired members has been increased by $0.50, from $12.00 to $12.50.

2002 - Employees Retirement System of Georgia

11

[ _ ~ ___ A~ T U A R. l A L S U _M M A_ RY _
LEGISLATIVE RETIREMENT SYSTEM
ACTUARY'S CERTIFICATION LETTER

BUC'
CONSULTANTS
A Mellon Consulting Company
200 Galleria Parkway, N.W. Suite 1900 Atlanta, Georgia 30339-5945
July 17, 2002
Board ofTrustees Legislative Retirement System of Georgia Two Northside 75, Suiie 300 Atlanta, GA 30318
Attention: Ms. Cecelia Corbin Hunter, Executive Director
Members of the Board:
Section 47-6-22 of the law governing the operation of the Georgia Legislative Retirement System provides that the actuary shall make periodic valuations of the contingent assets and liabilities of the Retirement System on the basis of regular interest and the 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, 2001. The report indicates that no annual employer contributions for the fiscal year ending June 30, 2003 are required to support the benefits of the System. In preparing the valuation, the actuary relied on data provided by the System. While not verifying data at the source, the actuary performed tests for consistency and reasonableness. Our firm, as actuary, is responsible for all of the actuarial trend data in the financial section of the annual report and the supporting schedules in the actuarial section of the annual report.
Since the previous valuation, the post-retirement mortality tables have been revised to reflect the results of the experience investigation adopted by the Board on June 20, 2002. In our opinion the valuation is complete and accurate, and the methodology and assumptions used are reasonable as a basis for the valuation. The valuation takes into account all amendments to the System enacted through the 2002 session of the General Assembly.
The System is funded on an actuarial reserve basis. The actuarial assumptions recommended by the actuary and adopted by the Board are in the aggregate reasonably related to the experience under the System and to reasonable expectations of anticipated experience under the System. The assumptions and methods used for funding purposes meet the parameters set for the disclosures presented in the financial section by-Governmental Accounting Standards Board (GASB) Statement Nos. 25 and 27. The funding objective of the plan is that contribution rates over time will remain level as a dollar per active member. The valuation method used is the unit credit cost method. The normal contribution rate to cover current cost has been determined as a dollar per active member. Gains and losses are reflected in the unfunded accrued liability which is negative and being amortized as a level dollar per active member.
The valuation has been prepared in accordance with the parameters set forth in Statement Nos. 25 and 27 of the Governmental Accounting Standards Board. The annual required contribution (ARC) of the employer under GASB for the fiscal year ending June 30, 2003 is $0. The System has a negative Net Pens1on Obligation (NPO) because more than the annual required contribution under GASB 25/27 was made for the fiscal years ending June 30, 1998, June 30, 1999, June 30, 2000, and June 30, 2001. Since the contribution amounts for fiscal years 2002 and 2003 are greater than the ARC, the plan will continue to increase the negative NPO.
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. Assuming that contributions to the System are made by the employer from year to year in the future at the rates recommended on the basis of the successive actuarial valuations, the continued sufficiency of the retirement fund to provide the benefits called for under the System may be safely anticipated.
This is to certify that the independent consulting actuary is a member of the American Academy of Actuaries and has experience is performing valuations for public retirement systems, that the valuation was prepared in accordance with principles of practice prescribed by the Actuarial Standards Board, and that the actuarial calculations were performed by qualified actuaries in accordance with accepted actuarial procedures, based on the current provisions of the retirement system and on actuarial assumptions that are internally consistent and reasonably based on the actual experience of the System.
~ftt( Edward A. Macdonald Principal, Consulting Actuary
EAM:sr
Buck Consultants, Inc.
770 I955-2488 Fax 770 I933-8336

12

2002 - Employees Retirement System ofGeorgia

LEGISLATIVE RETIREMENT SYSTEM

VALUATION BALANCE SHEET - as oflune 30, 2001
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: Service retirement allowances Disability retirement allowances Survivor allowances Refunds of members' contributions Total
(3) Total Actuarial Liabilities

$15,614,337

$ 7,754,271 549,926 316,573 347,327 $

8,968,097

$ 24.582,434

PRESENT AND PROSPECTIVE ASSETS (4) Actuarial value of 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 actuarial accrued liability
contributions = (7) - (8)
(10) Total Present and Prospective Assets

$ (1,451,566) $ (3,047,716)

$ 26,034,000
1,596,150
1,376,103 $ (4,423,819)
$ 24,582,434

2002 - Employees Retirement System of Georgia

13

ACTUAl<..IAL SUMMARY LEGISLATIVE RETIREMENT SYSTEM

SUMMARY OF PRINCIPAL RESULTS -as oflune 30, 2001
VALUATION DATE
Number of active members
Retired members and beneficiaries: Number Annual allowances
Assets: Market Value Actuarial Value
Unfunded actuarial accrued liability
Amortization Period

JUNE 30. 2001 JUNE 30. 2000

212

210

192
$ 1,108,552

189
$ 1,056,360

$ 27,777,000
26,034,000
$ (4,423,819)
NIA*

$ 29,525,000
24,666,000
$ (3,038,310)
N/A*

For Fiscal Year Ending
Employer contribution rate per active member: Normal Accrued Liability Total
Annual required employer contributions (ARC): Normal Accrued Liability
Total

June 30, 2003

$ 429.86

(429.86)

$

0.00

$

91,130

(91,130)

0

June 30, 2002

$

780.23

(780.23)

$

0.00

$ 163,848
(163,848)
0

* If the annual required employer contribution (ARC) is based on 40 year amortization of the unfunded accrued liability, the ARC is less than $0, which is not allowed under GASB 25/27. Therefore, the accrued liability contribution has been set such that the total ARC equals $0.
The valuation takes into account the effect of amendments to the System enacted through the 2001 session of the General Assembly.

14

2002 - Employees Retirement System of Georgia

ACTUARIAL SUMMARY
GEORGIA JUDICIAL RETIREMENT SYSTEM
ACTUARY'S CERTIFICATION LETTER

BUC'
CONSULTANTS
A Mellon Consulting Company
200 Galleria Parkway, N.W. Suite 1900 Atlanta, Georgia 30339-5945
July 9, 2002
Board of Trustees Georgia Judicial Retirement System Two Northside 75, Suite 300 Atlanta, GA 30318 Attention: Ms. Cecelia Corbin Hunter, Executive Director
Members of the Board:
Section 47-23-21 of the law governing the operation of the Georgia Judicial Retirement System provides that the actuary shall make periodic valuations of the contingent assets and liabilities of the Retirement System on the basis of regular interest and the tables last adopted by the Board of Trustees. We have submitted the report giving the results of the actuarial valuation of the System prepared as of June 30, 2001. The report indicates that no annual employer contributions for the fiscal year ending June 30, 2003 are required to support the benefits of the System. In preparing the valuation, the actuary relied on data provided by the System. While not verifying data at the source, the actuary performed tests for consistency and reasonableness. Our finm, as actuary, is responsible for all of the actuarial trend data in the financial section of the annual report and the supporting schedules in the actuarial section of the annual report.
Since the previous valuation, the post-retirement mortality tables have been revised to reflect the results of the experience investigation adopted by the Board on June 20, 2002. In our opinion the valuation is complete and accurate, and the methodology and assumptions used are reasonable as a basis for the valuation. The valuation takes into account the effect of amendments to the System enacted through the 2002 session of the General Assembly, as well as the 1.5% Ad Hoc COLA's effective July 1, 2002 and January 1, 2003.
The System is funded on an actuarial reserve basis. The actuarial assumptions recommended by the actuary and adopted by the Board are in the aggregate reasonably related to the experience under the System and to reasonable expectations of anticipated experience under the System. The assumptions and methods used for funding purposes meet the parameters set for the disclosures presented in the financial section by Governmental Accounting Standards Board (GASB) Statement Nos. 25 and 27. The funding objective of the plan is that contribution rates over time will remain level as a percent of payroll. The valuation method used is the entry age nonmal cost method. The normal contribution rate to cover current cost has been detenmined as a level percent of payroll. Gains and losses are reflected in the unfunded accrued liability which is negative and being amortized as a level percent of payroll within a 10-year period.
The valuation has been prepared in accordance with the parameters set forth in Statement Nos. 25 and 27 of the Governmental Accounting Standards Board. Although there was an annual required contribution (ARC) of the employer under GASB for the fiscal year ending June 30, 2001 of 4.62% of payroll, the employer contribution made was less than that amount, and the System barely met the minimum funding standards set forth in Code Section 47-20-10. The System will have a Net Pension Obligation (NPO) because less than the ARC contributions were made for the fiscal year ending June 30, 2001. The NPO will be paid off by higher future contributions.
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. Assuming that contributions to the System are made by the employer from year to year in the future at the rates recommended on the basis of the successive actuarial valuations, the continued sufficiency of the retirement fund to provide the benefits called for under the System may be safely anticipated.
This is to certify that the independent consulting actuary is a member of the American Academy of Actuaries and has experience is perfonming valuations for public retirement systems, that the valuation was prepared in accordance with principles of practice prescribed by the Actuarial Standards Board, and that the actuarial calculations were performed by qualified actuaries in accordance with accepted actuarial procedures, based on the current provisions of the retirement system and on actuarial assumptions that are internally consistent and reasonably based on the actual experience of the System.
~Jtau Edward A. Macdonald Principal, Consulting Actuary
EAM:sr
Buck Consultants, Inc.
770 I955-2488 Fax 770 I933-8336

2002 - Employees Retirement System of Georgia

15

ACTUARIAL SUMMARY GEORGIA JUDICIAL RETIREMENT SYSTEM
VALUATION BALANCE SHEET-as ofluly 1, 2001 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

$ 51,093,721
205 169 443
$ 256,263,164

P!USENT AND PROSPECTIVE ASSETS (4) Actuarial value of 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 unfunded actuarial accrued liability
contributions = (7) - (10) (12) Total Present and Prospective Assets

$ 36,975,164
$ 8,701,184
20.33%
$ 3,536,935

$ 219,288,000
28,273,980
71,905,889
$ (63,204,705) $ 256,263.164

16

2002 - Employees Retirement System of Georgia

ACTUARIAL SUMMARY
GEORGIA JUDICIAL RETIREMENT SYSTEM

SUMMARY OF PRINCIPAL RESULTS - as of fuly 1, 2001
VALUATION DATE
Active members: Number Annual compensation
Retired members and beneficiaries: Number Annual allowances
Assets: Market Value Actuarial Value
Unfunded actuarial accrued liability
Amortization Period

JULY 1. 2001

JULY 1. 2000

435 $ 37,687,700
130 $ 5,615,022
$ 225,173,000 219,288,000
$ (63,204,705) 10 years

416 $ 34,855,836
116 $ 4,561,959
$ 239,644,000 204,136,000
$ (65,708,156) 12 years

For Fiscal Year Ending
Annual required employer contribution rates (ARC): Normal Accrued Liability Total

June 30, 2003

June 30, 2002

20.33% (20.33)
0.00%

19.98% (19.98)
0.00%

The valuation takes into account the effect of amendments to the System enacted through the 2002 session of the General Assembly. The valuation reflects the 1.5% Ad Hoc COLA's effective fuly I, 2002 and fanuary I, 2003.

2002 - Employees Retirement System of Georgia

17

ACTUARIAL SUMMARY GR.OUP TER.M LIFE INSUR.ANCE
ACTUAR.Y'S CER.TI FICATION LETTER.
BUC'
CONSULTANTS
A Mellon Consulting Company
200 Galleria Parkway, N.W. Suite 1900 Atlanta, Georgia 30339-5945
September 30, 2002
Board of Trustees Employees Retirement System of Georgia Two Northside 75 Atlanta. GA 30318 Attention: Ms. Cecelia Corbin Hunter, Executive Director Members of the Board: 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, 2001. The report indicates that combined employer and employee contributions at the rate of 0.75% of active payroll for Old Plan members and 0.50% of active payroll for New Plan members are sufficient to support the benefits of the Plan. Since the previous valuation, the actuarial assumptions have been revised to reflect the results of the experience investigation adopted by the Board on June 20. 2002. The valuation takes into account the effect of all amendments to the System enacted through the 2002 session of the General Assembly. 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,
~~
Edward A. Macdonald Principal, Consulting Actuary EAM:sr

Buck Consultants, Inc.
770 I955-2488 Fax 770 I933-8336
18

2002 - Employees Retirement System of Georgia

ACTUARIAL SUMMARY

-

- --

GROUP TERM LIFE INSURANCE

VALUATION BALANCE SHEET - as oflune 30, 2001 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

PRESENT AND PROSPECTIVE ASSETS (4) Actuarial value of assets (5) Present value of future member premiums (6) Present value of future employer contributions (7) Total present assets and present value of future employee
premiums and employer contributions (8) Actuarial Deficit (9) Total Present and Prospective Assets

$ 237,817,358 415300388
$ 653,117,746
$ 753,964,000 $73,813,379 67 840 582
$ 895,617,961 (242,500,215)
$ 653,117,746

2002 - Employees Retirement System of Georgia

19

ACTUARIAL SUMMARY GROUP TERM LIFE INSURANCE

SUMMARY OF PRI N_CI PAL RESULTS - as of June 30, 2001
VALUATION DATE
Active members: Number Annual Compensation
Retired members: Number Insurance amount
Assets: Market Value Actuarial Value
Actuarial deficit
Contribution rates:
Old Plan Members Employee Employer Total
New Plan Members Employee Employer Total

JUNE 30, 2001 JUNE 30, 2000

75,132 $ 2,397,168,519

75,318 $2,304,289,449

20,621 $ 652,905,949

18,964 $ 580,395,780

$ 790,700,000 753,964,000
$ (242,500,215)

$ 846,072,000 700,123,000
$ (65,691,207)

0.50%*
----1Ll2
0.75%
0.25% 0.25 0.50%

0.50%* _ill
0.75%
0.25%
----1Ll2
0.50%

* 0.25% paid by employer

20

2002 - Employees Retirement System of Georgia

INVESTMENTS

POOLED INVESTMENT FUND- fiscal year 2002

$ 11,472,726,000 748,633,000 693,991,000 25,363,000 925,000 26,722,000 212 151 000

Employees' Retirement System State Employees' Assurance Department Public School Employees Retirement System Legislative Retirement System Superior Court Judges Retirement Fund* Georgia Defined Contribution Plan Georgia Judicial Retirement System

$13,180,511,000

Total Pooled Investments at Fair Value

* The Superior Court Judges Retirement Fund was closed on December 31, 1976. As of June 30, 2002 there were two active members remaining in the Fund with retirement payments fimded through Department of Administrative Services appropriations.

STR.UCTURAL ANALYSIS OF INVESTMENTS AT FAIR. VALUE

Type of Investment

June 30, 2002

Short Term Investments

2%

Bonds

44%

Common Stocks

54%

Mortgages and Real Estate

100%

2002 - Employees Retirement System of Georgia

21

INVESTMENTS

TEMPORARY INVESTMENTS - as oflune 30, 2002

FACE AMOUNT

ISSUER

$ 228,003,000

United States Government and Corporate Obligations
(subject to repurchase agreements due 7/01/02)

FAIR VALUE $ 228,003,000

U.S. GOVERNMENT, CORPORATE AND OTHER BONDS -as oflune 30, 2002

FACE AMOUNT

ISSUER

INTEREST RATE%

YEAR OF MATURITY

FAIR MARKET VALUE

$ 3,964,130.63 125,000,000.00 120,000,000.00 224,000,000.00 790,000,000.00 445,000,000.00
1,045,000,000.00 205,000,000.00 385,000,000.00
1,010,000,000.00 220,000,000.00 242,000,000.00 120,000,000.00 360,000,000.00 205,000,000.00 140,000,000.00
$ 5,639,964,130.63

General Electric General Electric Cap Corp FNMA US Treas. Note US Treas. Note US Treas. Note US Treas. Note US Treas. Note US Treas. Note US Treas. Note US Treas. Bond US Treas. Bond US Treas. Bond US Treas. Bond US Treas. Bond US Treas. Bond

8.350 5.375 6.375 5.875 4.625 3.500 4.375 5.000 5.000 4.875 7.250 6.250 6.875 6.125 5.250 6.250

2004

$ 4,232,898.69

2007

127,842,500.00

2009

129,787,200.00

2004

238,069,440.00

2006

813,700,000.00

2006

437,074,550.00

2007

l ,059,368,750.00

2011

208,460,400.00

2011

390,293,750.00

2012

1,013,787,500.00

2022

262,075,000.00

2023

259,317,520.00

2025

138,300,000.00

2027

380,700,000.00

2029

192,829,150.00

2030

151,638,200.00

$ 5,807,476,858.69

22

2002 - Employees Retirement System of Georgia

-

-

-

INVESTMENTS

COMMON STOCK HOLD! NGS - as of fune 30, 2002

SHARES

COMPANY

4,654,525

Pfizer Inc.

3,868,028

Exxon Mobil Corp.

I

3,994,139

Citigroup Inc.

!

2,691,800

Microsoft

I

2,122,995

American International Group

2,631,500

vVal-Mart Stores Inc.

2,634,520

Johnson & Johnson

1,450,460

Proctor & Gamble Co.

4,313,300

General Electric Co.

3,196,250

Home Depot

2,053,700

Coca Cola Co.

2,383,460

Pepsico Inc.

2,309,800

Medtronic

1,738,170

Wells Fargo Co.

1,182,523

Bank of America Corp.

1,076,500

United Technologies

3,815,000

Intel Corp.

1,230,800

Merck & Co. Inc.

1,836,344

Gillette Co.

841,300

Federal National Mortgage Association

Total - 20 Largest Holdings Total - All Holdings
A complete listing of all stock holdings will be available upon written request.

FAIR MARKET VALUE $ 162,908,375.00 158,279,705.76 I 54,772,886.25 147,241,460.00 144,851,948.85 144,758,815.00 137,680,015.20 129,526,078.00 125,301,365.00 117,398,262.50 115,007,200.00 114,882,772.00 98,974,930.00 87,012,790.20 83,202,318.28 73,094,350.00 69,700,050.00 62,327,712.00 62,196,971.28 62,045,875.00
$ 2,251,163,880.32 $ 7,140,706,275.10

MORTGAGE - as oflune 30, 2002
BORROWER.AND MORTGAGED PROPER.TY West & Abbitt Bent Creek Col Apts

INTEREST RATE% 9.5

YEAR LAST

BALANCE

PAYMENT DUE OUTSTANDING ON LOAN

2004

$582,074

$582,074

REAL ESTATE INVESTMENT - as offune 30, 2002

DESCRIPTION OF PROPER.TY
Beta Building Two Northside 75, Atlanta (Constitutes one-half interest in property)

FAIR VALUE $ 3,744,225

COMMENTS
Presently houses the offices of Employees' and Teachers Retirement Systems. The Employees' Retirement System on 7/1/76 acquired a 50% interest in the building.

2002 - Employees Retirement System of Georgia

23

I
1;

AUDITED FINANCIAL STATEMENTS TABLE OF CONTENTS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Funds and Systems Administered by the Employees' Retirement System of Georgia)

Page

INDEPENDENT AUDITORS' REPORT

25

MANAGEMENT'S DISCUSSION AND ANALYSIS

26

COMBINED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS

ENDED JUNE 30, 2002 AND 2001:

Combined Statements of Net Assets

28

Combined Statements of Changes in Net Assets

29

Notes to Combined Financial Statements

30

REQVIRED SUPPLEMENTARY SCHEDULES:

Schedule of Funding Progress

37

Schedule of Employer Contributions

38

Notes to Required Supplementary Schedules

39

ADDITIONAL INFORMATION AS OF AND FOR THE YEARS

ENDED JUNE 30, 2002 AND 2001:

Combining Statements of Net Assets

40

Superior Court Judges and District Attorneys Retirement Funds -

Combining Statements of Net Assets

41

Combining Statements of Changes in Net Assets

42

Superior Court Judges and District Attorneys Retirement Funds -

Combining Statements of Changes in Net Assets

43

Administrative Expense Fund - Contributions and Expenses

44

24

2002 - Employees Retirement System of Georgia

AUDITED FINANCIAL STATEMENTS
IN DEPENDENT AUDITORS' REPORT
VALUATION BALANCE SHEET - as of June 30, 2001 - dollar amounts in thousands
Deloitte &Touche
Deloitte & Touche LLP 191 Peachtree Street, N.W. Suite 1500 Atlanta, Georgia 30303-1924
www.us.deloitte.com
Board of Trustees Employees' Retirement System of Georgia:
\,Ve have audited the accompanying combined statements of net assets of the Employees' Retirement System of Georgia, including all plans and funds administered by the Employees' Retirement System of Georgia (collectively, the "System"), a component unit of the state of Georgia, as of June 30, 2002 and 2001, and the related combined statements of changes in net assets for the years then ended. These combined financial statements are the responsibility of the System's management. Our responsibility is to express an opinion on these combined financial statements based on our audits.
\,\fe conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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. \Ve believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material respects, the financial status of the System as of June 30, 2002 and 2001, and the changes in financial status for the years then ended in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 3 to the financial statements, as of July 1, 2001, the System adopted the provisions of the Governmental Accounting Standards Board Statements No. 34, Basic Financial Statements - and Management's Disrnssion and Analysis - for State and Local Governments, and No. 38, Certain Financial Statement Note Disclosures.
Management's Discussion and Analysis and the required supplementary schedules listed in the Table of Contents are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. This information is the responsibility of the System's management. \,\fe have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of supplementary information. However, we did not audit such information, and we do not express an opinion on it.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information listed in the Table of Contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. This 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 financial statements and, in our opinion, is fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole.
~ -f- ?;,ct....~
Deloitte& Touchc LLP November 27, 2002

2002 - Employees Retirement System of Georgia

25

I'

AUDITED FINANCIAL STATEMENTS

MANAGEMENT'S DISCUSSION & ANALYSIS

This discussion and analysis of the Employees' Retirement System of Georgia (the "System") provides an overview of the financial performance during the fiscal year ended June 30, 2002. It is intended to be a narrative supplement to the financial information that begins on page 26, and should be read within the context of the accompanying financial statements, notes to the financial statements and disclosures, supplementary schedules, and additional information.
The System is responsible for administering a cost-sharing multipleemployer defined benefit pension plan for various employer agencies of Georgia, along with five other defined benefit pension plans, a defined contribution plan, and a life insurance plan.
The defined benefit pension plans include: Employees' Retirement System ("ERS") Legislative Retirement System ("LRS") Public School Employees' Retirement System ("PSERS") Georgia Judicial Retirement System ("GJRS") Superior Court Judges Retirement Fund ("SCJRF") District Attorneys Retirement Fund ("DARF")

The required supplementary schedules include a schedule of funding progress and a schedule of employer contributions.
DESCRIPTION OF THE FINANCIAL STATEMENTS
TI1e Combined Statement of Net Assets is the statement of financial position presenting information that includes all of the System's assets and liabilities with the balance representing the Net Assets Held in Trust for Pension Benefits. The statements are presented as of June 30, 2002 and June 30, 2001 for comparative purposes. These statements are presented on page 28.
The Combined Statement of Changes in Net Assets reports the changes in net assets during the fiscal years ended June 30, 2002 and June 30, 2001 for comparative purposes. Additions and deductions of net assets are summarized in this statement. Additions include contributions to the retirement plans from employers and members, group life insurance premiums, and investment loss, which includes interest and dividends and the net depreciation in the fair value of investments. Deductions include retirement payments, life insurance death benefit payments, refunds of member contributions, and administrative expenses. These statements are presented on page 29.

The defined contribution retirement plan is the Georgia Defined Contribution Plan ("GDCP").
The life insurance plan is the State Employees' Assurance Department ("SEAD").
FINANCIAL HIGHLIGHTS
The following highlights are discussed in more detail later in this analysis:
The net assets of the System decreased by $884 million, or 6.2%, from $14.2 billion to $13.3 billion for the year ended June 30, 2002. The decrease was primarily clue to the downturn in equity markets.
Net investment loss (interest and dividend income, reduced by net depreciation in the fair value of investments and investment expenses) was $562 million for the year ended June 30, 2002 - an improvement over the loss of $9 I I million for the prior fiscal year.
Contributions from employers declined by $89 million, or 26.5% for the year ended June 30, 2002. The decline was primarily due to a planned reduction in the contribution rate of approximately 30%. Retirement payments increased by $58 million, or 10.4% for the year ended June 30, 2002.
OVERVIEW OF THE FINANCIAL STATEMENTS
The financial statement include: (1) the combined statements of net assets, (2) the combined statements of changes in net assets, (3) notes to the financial statements, (4) required supplementary schedules, and (5) additional information. The financial statements are prepared on an accrual basis in accordance with accounting principles generally accepted in the United States of America promulgated by the Government Accounting Standards Board.

Notes to the financial statements are presented to provide the information necessary for a full understanding of the financial statements. The notes to the financial statements begin on page 30 of the report.
There are two Required Supplementary Schedules included in this report. These required schedules are applicable to the four defined benefit plans: ERS, PSERS, LRS, and GJRS. The Schedule of Funding Progress presents historical trend information about the actuarially-determined funded status of the plans from a long-term, on-going plan perspective, and the progress made in accumulating sufficient assets to fund benefit payments as they become due. The Schedule of Employer Contributions presents historical trend information about the annual required contributions of employers and percentage of such contributions in relation to actuarially-determined requirements for the years presented. The required supplementary schedules begin on page 37.
Notes to Required Supplementary Schedules are presented to provide the information necessary for a full understanding of the supplementary schedules. The notes to required supplementary schedules begin on page 39.
Additional information is presented, beginning on page 40. There are three statements included in this section of the report. They arc: (1) Combining Statements of Net Assets, (2) Combining Statements of Changes in Net Assets, and (3) Administrative Expense Fund Statement. The combining statements present the financial position and change in financial position for each of the plans and funds administered by the System, including the Pooled Investment Fund that holds and invests funds from each of the participating plans and funds. The Administrative Expense Fund Statement presents the

26

2002 - Employees Retirement System of Georgia

AUDITED FINANCIAL STATEMENTS

MANAGEMENT'S DISCUSSION & ANALYSIS

expenses incurred in the administration of these plans and funds, and the contributions from each plan and fund to provide for these expenses.

FINANCIAL ANALYSIS

Net Assds(in thousands)

lune 30,

2002

2001

Assets: Cash and receivables Investments Capital assets, net Total assets

$ 10s,7;3 13,195,741 _ _ _3_3
13,304,527

$ 132,488 14,055,934
14,188,422

Liabilities: Accounts payable and other
Net assets

10 684 --1.!lliJl
$13,293,843 $14 177,992

Amount Percentage Change Change

$ (23,73;) (860,193)
_ _3_3
(883,895)

(17.9)% (6.1)%
--
(6.2)%

~ ~

The alloca!ion of investments by type at June 30, 2002 and 2001 are

as follows:

Asset Allocation at lune 30 /in percentages) Eyuities Fixed income Short-term securities*

2002
54.1% 44.1%
l.8%

2001
57.0% 41.4%
l.6%

An explanation of the significant components of the changes in net assets follows:
Additions - The System accumulates resources needed to fund benefit payments through contributions and returns on invested funds. Employer contributions decreased 26.5%, primarily because of a reduction in the ERS employer contribution rate of approximately 30%. The fiscal year ended June 30, 2001 employer contribution rate was higher than the employer contribution rate recommended by the actuary and was approved by the System's Board of Trustees. Member contributions increased 4.5%, primarily because of increased ERS membership participation from 151,393 in 2001 to 153,687 in 2002, and increases in average compensation levels in 2002. The net investment loss is the result of the continuing unfavorable market conditions, as previously discussed.
Deductions - Deductions increased 9.6%, primarily because of a I 0.4% increase in retirement payments. '171is is partly due to an increase of approximately 4% in the number of retirees receiving benefit payments across all defined benefit plans. Administrative expenses increased by approximately $1 million, an increase of 12% over the prior year due primarily to costs related to the reengineering of the System's business processes.

Asset Allocation at lune 30 /in thousands) Equities Fixed income Short-term securities*
Includes mortgage and real estate

$ 7,140,706 5,815,140 239 39;
$13,195,741

$ 8,014,283 5,822,463 219 188
~14,055.934

The total investment portfolio decreased by approximately $860 million. The decline was primarily due to unfavorable conditions in the equity markets.

The investment rate of return in fiscal year ended June 30, 2002 was (4.0%), with a (14.5%) return on equities and a 10.9% return on fixed income investments. '171c five year annualized rate of return on investments at June 30, 2002 was 5.7%, with a 2.9% return on equities, and a 9.3% return on fixed income investments.

Changes in Net Assets{in thousands) Ammmt Percentage

2002

2001

Change Change

Additions: Employer contributions 1'.1Iembcr contributions

$ 247,101 75,704

$ 335,988 72,448

$ (88,887) (26.5)%

3,256

4.5%

Insurance premiums

14,364

l 3.813

551

4.0%

Net investment loss

(562,199)

(910,655)

348,456 38.3%

Other Total additions

~ (224 090)

94Q (487466)

---
263 376

54.0%

Deductions: Retirement payments Refunds Death benefits Administrative expenses Total deductions
Net decrease in net assets

618,682 13,704 18,227 _.'.2.!fi 660 0;9 $(884.149)

560,572 14,998 18,017 8 425 602 012 ~(l 089 478)

58,110 (1,294)
210 ___!_fill
-2M11
$ 205,329

10.4% (8.6)% 1.2% 12.1% 9.6%
18.8

FUNDING STATUS
The schedules of funding progress and employer contributions provide information regarding how the plans arc performing and funded from an actuarial perspective. The information is based upon actuarial valuations conducted by certified actuaries. The funding ratio, which is presented on the schedule of funding progress, indicates the ratio of the actuarial value of assets and the actuarial accrued liabilities. The higher this ratio, the better position the System is in with regards to its funding requirements. The June 30, 2001 and June 30, 2000 actuarial valuations, the latest valuations available, indicate the actuarial value of assets and funding ratios for the four defined benefit retirement plans were as follows:

ACTUARIAL VALUE or PI.AN ASSETS
(IN THOUSANDS)

June 30, 2001 June 30, 2000

ERS

$1 I,rnl,624 $10,999,901

PSERS

708,391

667,642

LRS

26,034

24,666

CJRS

219,288

204,136

FUNDING RATIO

June 30, 2001 June 30, 2000

101.7%

104.0%

115.5%

108.5%

120.5%

114.0%

140.5%

147.5%

The System continues to be in a strong financial position as evidenced by the funding ratios, and it remains financially sound, despite the unfavorable investment results in the current fiscal year. /\ funding ratio over I 00% indicates the plans, from an actuarial perspective, have more assets available than will be necessary to satisfy the obligations of the plans.

2002 - Employees Retirement System of Georgia

27

AUDITED FINANCIAL STATEMENTS
EMPLOYEES' RETIREMENT SYSTEM (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia)

COMBINED STATEMENTS OF NET ASSETS -June 30, 2002 and 2001 - in thousands

2002

ASSETS

CASH

$ 5,044

2001 $ 1,546

RECEIVABLES: Employer and member contributions Interest and dividends
Total receivables

28,600 75 109
103,709

36,986 93 956
130,942

INVESTMENTS - at fair value: Short-term Obligations of the U.S. Government and its agencies, corporate, and other bonds Common stocks Mortgage loans and real estate

235,569
5,815,140 7,140,706
4 326

214,837
5,822,463 8,014,283
4 351

Total investments

13,195,741

14,055,934

CAPITAL ASSETS, net

33

Total assets

13,304,527

14,188,422

LIABILITIES
Accounts payable and other Total liabilities
NET ASSETS HELD IN TRUST FOR PENSION BENEFITS
(A schedule of funding progress is presented on page 37.) See notes to combined financial statements.

10 684 10 684 $ 13,293,843

10 430 10 430 $ 14,177,992

28

2002 - Employees Retirement System of Georgia

AUDITED FINANCIAL STATEMENTS
EMPLOYEES' RETIREMENT SYSTEM (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia)

COMBINED STATEMENTS OF CHANGES IN NET ASSETS - fune 30, 2002 and 2001 - in thousands

2002

2001

NET ASSETS HELD IN TRUST FOR PENSION BENEFITS - Beginning of year

$ 14,177,992

$ 15,267,470

ADDITIONS: Contributions: Employer Member Insurance premiums Administrative expense allotment Investment loss: Net depreciation in fair value of investments Interest and dividends Total investment loss

247,101 75,704 14,364
940
(991,765) 441 176
(550,589)

335,988 72,448 13,813
940
(1,379,000) 479 631
(899,369)

Less investment expenses

11 610

11 286

Net investment loss

(562,199)

(910,655)

Total additions

(224,090)

(487,466)

DEDUCTIONS: Retirement payments Refunds of member contributions and interest Death benefits Administrative expenses

618,682 13,704 18,227 9 446

560,572 14,998 18,017 8 425

Total deductions

660 059

602,012

NET DECREASE

/884,149)

/1.089.478)

NET ASSETS HELD IN TRUST FOR PENSION BENEFITS - End of year

$ 13,293.843

$ 14.177.992

See notes to combined financial statements.

2002 - Employees Retirement System of Georgia

29

i
I'

AUDITED FINANCIAL STATEMENTS
EMPLOYEES' RETIREMENT SYSTEM (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia)

NOTES TO COMB IN ED Fl NANCIAL STATEMENTS - as of and for the years ended June 30, 2002 and 2001

I. GENERAL The accompanying combined financial statements of Employees' Retirement System of Georgia, including all plans and funds administered by the Employees' Retirement System of Georgia (collectively, the "System"), is comprised of the Employees' Retirement System of Georgia ("ERS"), Public School Employees' Retirement Systems ("PSERS"), Legislative Retirement System ("LRS"), Georgia Judicial Retirement System ("GJRS"), Superior Court Judges Retirement Fund ("SCJRF"), District Attorneys Retirement Fund ("DARF"), Georgia Defined Contribution Plan ("GDCP"), and State Employees' Assurance Department ("SEAD"). All significant accounts and transactions among the various systems, departments, 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 Governmental Accounting Standards Board ("GASB") Statement of Governmental Accounting Standards ("SGAS") 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. The System is a component unit of the State of Georgia.
Although the System is a component unit of the State of Georgia's financial reporting entity, it is accountable for its own fiscal matters and presentation of its separate, combined financial statements. The Boards of Trustees, comprised of active and retired members and ex-officio state employees, are ultimately responsible for the administration of the System.
2. AUTHORIZING LEGISLATION AND PLAN DESCRIPTIONS
Each plan and fund, including benefit and contribution provisions, was established by state law. The following summarizes authorizing legislation and the plan description of each retirement fund:
a. ERS is a single-employer, public employee, 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, 2002, participation in ERS is

as follows:

Retirees and beneficiaries currently receiving benefits

27,272

Terminated employees entitled to benefits but not

yet receiving benefits

59,796

Active plan members

73 924

Total

160,992

Employers

-----2..lli

Benefits -The benefit structure of ERS was significantly modified on July I, 1982. Unless the employee elects otherwise, an employee who currently maintains membership with ERS based upon state employment that started prior to July I, 1982 is an "old plan" member subject to the plan provisions in effect prior to July I, 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 I0 years of creditable service and attainment of age 65. Additionally, there are some provisions allowing for retirement after 25 years of creditable service regardless of age.

Retirement benefits paid to members arc based upon the monthly average of the member's highest 24 consecutive calendar months multiplied by the number of years of creditable service multiplied by the applicable benefit factor. Postrctirement 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 arc 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 and arc used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. 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.

30

2002 - Employees Retirement System of Georgia

AUDITED FINANCIAL STATEMENTS

NOTES TO COMBINED FINANCIAL STATEMENTS -as of and for the years ended June 30, 2002 and 2001

Employer contributions required for fiscal year 2002 were based on the June 30, 2000 actuarial valuation as follows:

Employer: Normal Employer paid for member Accrued liability Total

Old Plan New Plan
6.24 % 6.24 % 4.75 %
.(_Q_jfil% (0.58)% 5.66 % 10.41 %

Employer contributions for fiscal year 2001, as approved by the System's Board of Trustees, were as follows:

Employer: Normal Employer paid for member Accrued liability Total

Old Plan New Plan
6.66 % 6.66 % 4.75 %
3.09 % 3.09 % 9.75 % 1450 %

Members become vested after ten years of membership 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 arc projected to liquidate the actuarial accrued funding excess within 20 years based upon the actuarial valuation at June 30, 2001, on the assumption that the total payroll of active members will increase by 3.5% each year.

On November 20, I997, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan of ERS ("SRBP"). SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal
Revenue Code ("!RC S4 l 5") as a portion of ERS. The
purpose of the SRBP is to provide retirement benefits to employees covered by ERS whose benefits are otherwise
limited by !RC S4 l 5.

Beginning January 1, 1998, all members and retired former members in ERS arc eligible to participate in this plan whenever their benefits under ERS exceed the limitation on
benefits imposed by !RC S415.

There were 132 and 256 members eligible to participate in this portion of ERS as of June 30, 2002 and 2001, respectively. Employer contributions of $2,802,000 and $2,780,000 and retirement payments of $2,509,000 and $2,742,000 under the SRBP arc included in the combined statements of changes in net assets for the years ended June 30, 2002 and 2001, respectively. Cash of $542,000 and $114,000 and employer receivable of $96,000 and $205,000 under the SRBP are included in the combined statements of net assets for the years ended June 30, 2002 and 2001, respectively.

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 additional trustees.

Membership - As of June 30, 2002, participation in PSERS is as follows:

Retirees and beneficiaries currently receiving benefits Terminated employees entitled to benefits but not
yet receiving benefits Active plan members
Total Employers

11,917
40,873 46 551 99 341 ____lfil

Benefits - A member may retire and elect to receive normal monthly retirement benefits after completion of ten years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of ten years of service.

Upon retirement, the member will receive a monthly benefit of $12.50 multiplied by the number of years of creditable service. 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 each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees.

Employer contributions required for the years ended June 30, 2002 and 2001 were $320.97 and $391.33 per active member, respectively, and were based on the June 30, 2000 and I999 actuarial valuations, respectively.

2002 - Employees Retirement System of Georgia

31

AUDITED FINANCIAL STATEMENTS

NOTES TO COMBINED FINANCIAL STATEMENTS-as of and for the years ended fune 30, 2002 and 2001

Members become vested after ten 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.

Members become vested after eight 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 aGtuarial accrued funding excess within 40 years based upon the actuarial valuation at Junc 30, 200 I.
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 Georgia General Assembly. LRS is administered by the ERS Board of Trustees.
Membership - As of June 30, 2002, participation in LRS is as follows:

d. The GJRS is a system created to serve the members and beneficiaries of the Trial Judges and Solicitors Retirement Fund, the Superior Court Judges Retirement System, and the District Attorneys Retirement System (collectively, the "Predecessor Retirement Systems"). As of June 30, 1998, any person who was an active, inactive, or retired member or beneficiary of the Predecessor Retirement Systems was transferred to GJRS in the same status effective July 1, 1998. All assets of the Predecessor Retirement Systems were transferred to GJRS as of July 1, 1998. GJRS is administered by the ERS Board of Trustees and three additional trustees.

Retirees and beneficiaries currently receiving benefits Terminated employees entitled to benefits but not
yet receiving benefits Active plan members
Total Employers

193
130
--1Jl.
_ill _1

GJRS is a defined benefit pension plan established by the Georgia General Assembly for the purpose of providing retirement allowances for trial judges and solicitors of certain courts in Georgia, and their survivors and other beneficiaries, superior court judges of the State of Georgia, and district attorneys of the State of Georgia.

Benefits - A member's normal retirement is after eight years of creditable service and attainment of age 65, or eight years of membership service (four legislative terms) and attainment of age 62. A member may retire early and elect to receive a monthly retirement benefit after completion of eight 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 $32 multiplied by the number of years of creditable service reduced by age reduction factors, if applicable. Death, disability, and spousal benefits arc also available through the plan.
Contributions and Vesting - Member contributions are 8.5% of annual salary. The state pays member contributions in excess of 4.75% of annual compensation. Employer contributions are actuarially determined and approved and certified by the ERS Board of Trustees.

Membership - As of June 30, 2002, participation in GJRS is as follows:

Retirees and beneficiaries currently receiving benefits Terminated employees entitled to benefits but not
yet receiving benefits Active plan members
Total Employers

136
43 458 637 _ _4

Benefits -The normal retirement for GJRS 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. Retirement benefits paid to members are computed as 66 2/3% of annual salary plus 1% for each year of credited service over 16 years, not to exceed 24 years. Early retirement benefits paid to members are computed as the pro rata portion of the normal retirement benefit, based on service not to exceed 16 years. Death, disability, and spousal benefits arc also available.

There were no employer contributions required for the years ended June 30, 2002 and 2001 based on the June 30, 2000 and 1999 actuarial valuations, respectively.

Contributions and Vesting - Members are required to contribute 7.5% of their annual salary plus an additional 2.5% of their annual salary if spousal benefit is elected.

32

2002 - Employees Retirement System of Georgia

AUDITED FINANCIAL STATEMENTS

-

-

-

-

NOTES TO COMBINED FINANCIAL STATEMENTS -as of and for the years ended June 30, 2002 and 2001

Employer contributions are actuarially determined and approved and certified by the GJRS Board of Trustees.

There were no employer contributions required for the year ended June 30, 2002 based on the June 30, 2000 actuarial valuation. The employer contribution required for the year ended June 30, 2001 was 4.62% of active members' compensation, which was based on the June 30, 1999 actuarial valuation.

Members become vested after ten 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 arc projected to liquidate the actuarial accrued funding excess within ten years based upon the actuarial valuation at July 1, 2001 assuming that the amount of accrued liability payment increases 3.5% each year.

e. 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 Boards of Trustees for ERS and SCJRF entered into a contract for ERS to administer the plan effective July 1, 1995.

Membership - As of June 30, 2002, participation in SCJRF is as follows:

Retirees and beneficiaries currently receiving benefits Terminated employees entitled to benefits but not
yet receiving benefits Active plan members
Total Employers

32
4 _]_
-18.
_ _l

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.
f. 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 Boards 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, 2002, DARF had eight 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 annual salary plus an additional 2.5% for the spousal coverage benefit if elected. TI1e 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.
g. GDCP is a defined contribution plan established by the Georgia General Assembly in July 1992 for the purpose of providing retirement allowances for state employees who arc not members of a public retirement or pension system. GDCP is administered by the ERS Board of Trustees.
Membership - As of June 30, 2002, participation in GDCP is as follows:

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 arc also available.

Terminated employees entitled to benefits but not yet receiving benefits
Active plan members Total
Employers

70,225 32 540 102.765 _____ill!

2002 - Employees Retirement System of Georgia

33

l,
I.

AUDITED FINANCIAL STATEMENTS

NOTES TO COMBINED FINANCIAL STATEMENTS -as of and for the years ended June 30, 2002 and 2001

Benefits - A member may retire and elect to receive periodic payments after attainment of age 65. The payments will be based upon mortality tables and interest assumptions to be adopted by the ERS Board of Trustees. If a member has less than $3,500 credited to his/her account, the ERS Board of Trustees 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 annual salary. There are no employer contributions. Earnings will be credited to each member's account as adopted by the ERS Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member.
h. SEAD was created in 195 3 by the Georgia General Assembly to furnish survivors' benefits for eligible members of ERS. 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.
3. SIGNIFICANT ACCOUNTING POLICIES AND SYSTEM ASSET MATTERS
Basis of Accounting -The System's combined financial statements are prepared on the accrual basis of accounting. Contributions from the employers and members arc recognized as additions in the period in which the members provide services. Retirement and refund payments arc recognized as clccluctions when clue and payable.
Investments - Investments arc reported at fair value. Shortterm investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange arc valued at the last reported sales price. Investment income is recognized as earned by the System. No investment in any one 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.
Real Estate Investments - An office building that is incluclecl in mortgage loans and real estate is owned equally by the System and the Teachers Retirement System of Georgia. The System incurred approximately $341,000 in rental expense for the years ended June 30, 2002 and 2001, which is incluclecl in administrative expenses. The remainder of the building is leased to outside parties, and the rental revenue is included in interest and dividends.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally acccptccl in the United States of America requires management to make estimates and assumptions that affect the reported amounts of net assets and changes therein. Actual results could differ from those estimates. The System utilizes various investment instruments. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the combined financial statements.
New Accounting Pronouncements - The GASB has issued SGAS No. 34, Basic Financial Statements - and Mcmagement's Discussion and Analysis - for State and Local Governments, as amended by SCAS No. 37, Basic Financial Statements - and Management's Discussion and Analysis - State and Local Governments: Omnibus - an amendment of GASB Statements No. 21 and No. 34, and SCAS No. 38, Certain Financial Statement Note Disclosures. The System adopted these statements on July 1, 2001. In general, these statements required the_ System to present a Management's Discussion and Analysis ("/VID&A") and to depreciate capital assets. The !VID&A is considered to be required supplementary information and precedes the financial statements. The adoption of these statements did not have a material effect on the financial status of the System. See Note 7 for information regarding capital assets.
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 of the System.
Cash - Cash balances are fully insured through the Federal Deposit Insurance Corporation, an agency of the US. 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 - SGAS No. 3 requires governmental entities to categorize investments as an indication of the level of custodial credit risk assumed by the System at year-encl. Category I includes investments that are insured or registered or for which the securities are held by the System or its agent in

34

2002 - Employees Retirement System of Georgia

AUDITED FINANCIAL STATE/v\ENTS

NOTES TO COMBINED FINANCIAL STATEMENTS -as of and for the years ended June 30, 2002 and 2001

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 for which the securities are held by the counterparty, or by its trust department or agent but not in the System's name. All of the securities held by the System at June 30, 2002 and 2001 are of Category 1 risk level. 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: Short-term investments are authorized in the following
instruments: Repurchase and reverse repurchase agreements, whereby the System and a broker exchange cash for direct obligations of the U.S. Government or in obligations unconditionally guaranteed by the agencies of the U.S. Government or U.S. corporations. The System or broker promises to repay the cash received plus interest at a specific date in the future in exchange for the same securities. The System held repurchase agreements of $235,569,000 and $214,837,000 at June 30, 2002 and 2001, respectively. U.S. Treasury obligations with varying terms up to 360 days. Other short-term securities authorized, but not currently
used, arc: 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-1 and/or A-1 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-1 and/or A-1 by national credit rating agencies. Investments in commercial paper or master notes arc 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 ''JI:.' rating by a national rating agency and limited to no more than 5% of total System assets in any one 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. The System held corporate bonds of $132,075,000 and $6,139,000 at June 30, 2002 and 2001, respectively. U.S. and foreign government obligations with terms up to 30 years. Quality and call requirements of corporate bonds arc applicable. The System held U.S. government obligations of $5,683,065,000 and $5,816,324,000 at June 30, 2002 and 2001, respectively. Private placements are authorized under the same general restrictions applicable to corporate bonds. Mortgage investments are authorized to the extent that they arc secured by first mortgages on improved real property located in the State of Georgia having a loan-tovaluc ratio no higher than 75%. Mortgages, as a group cannot exceed I 0% of total assets or I% for any one loan.
Equity securities arc 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 60% of the total invested assets may be placed in equities and no more than 5% in any one corporation. Equity holdings in any one corporation may not exceed 5% of the outstanding equity of the issuing corporation. The equity portfolio is managed by the Investment Services Division (the "Division") in conjunction with independent advisors. 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. Equity trades arc 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 of ERS, PSERS, LRS, SCJRF, CJRS, SEAD, and certain investments of GDCP are pooled into one common investment fund. Investments of approximately $15,231,000, held by GDCP, 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 elate 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.

2002 - Employees Retirement System of Georgia

35

AUDITED FINANCIAL STATEMENTS

NOTES TO COMBINED FINANCIAL STATEMENTS - as of and for the years ended June 30, 2002 and 2001

The units of the pooled investment fund at June 30, 2002 and 2001 were allocated as follows (in thousands):

Employees' Retirement System Public School Employees Retirement System Legislative Retirement System Georgia Judicial Retirement System State Employees' Assurance Department Superior Court Judges Retirement Fund Georgia Defined Contribution Plan

2002 6,950
420 15 129
454 I
_______J_Q
7,985

2001 7,118
433 16 130
459
_ _13 8,170

5. INVESTMENTS LENDING PROGRAM State statutes and board of trustees policies permit the System to lend its securities to broker-dealers with a simultaneous agreement to return the collateral for the same securities in the future. The System is presently involved in a securities lending program with major brokerage firms. The System lends equity and fixed income securities for varying terms and receives a fee based on the loaned securities' value. During a loan, the System continues to receive dividcncls and interest as the owner of the 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.

Securities loaned totaled $5,675,299,000 and $5,993,645,000 at fair value at June 30, 2002 and 2001, respectively. The collateral value was equal to 104.9% and 104.2% of the loaned securities' value at June 30, 2002 and 2001, respectively. The loaned securities arc classified as Category I investments (sec Note 4) based on the custodial arrangements for the collateral securities.

Loaned securities are included in the accompanying combined statements of net assets since the System maintains ownership. 'n1c related collateral securities arc not recorded as assets on the System's combined statements of net assets, and a corresponding liability is not recorded, since the System is deemed not to have the ability to pledge or trade the collateral securities. In accordance with the criteria set forth in SGAS No. 28, the System is deemed not to have the ability to pledge or sell the collateral securities since the

System's lending contracts do not address whether the lender can pledge or sell the collateral securities without a borrower default, the System has not previously demonstrated that ability, and there arc no indications of the System's ability to pledge or sell the collateral securities.
6. 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 arc earned. The net assets represent 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, 200 I. The valuation indicated that the employee contribution rate of .50% and .25% and the employer contribution rate of .25% and .25% of members' salaries for old plan members and new plan members, respectively, as of June 30, 2001 was appropriate. Oki plan members were hired prior to July 1, I982, and new plan members were hired on or after July I, I982.
7. CAPITAL ASSETS As the result of the adoption of SGAS No. 34 discussed in Note 3, the System has included capital assets and depreciation expense in the accompanying financial statements. The following is a summary of capital assets and depreciation information as of June 30, 2002 and for the year then ended:

Balance

Balance

at June 30, 2001 Additions Disposals at June 30, 2002

Capital assets: Equipment

s -

$41,597

$ -

$41,597

Vehicles

-----

20 551 62 148

-----

20 551 62 148

Accumulated depreciation for:

Equipment

Vehicles

-----

(18,639) (10 276) (28 915)

-----

Capital assets, net ~

$33,233

L..=._

(18,639) (10 276) /28 915)
$33,233

36

2002 - Employees Retirement System of Georgia

AUDITED FINANCIAL STATEMENTS REQ!) IRED SUPPLEMENTARY SCH EDU LES (In thousands)
SCHEDULE OF FUNDING PROGRESS

PAYROLL

ACTUARIAL VALUATION
DATE

Employees' Retirement System

6130197 6130198 6130199 6130100 6130101

ACTU,\IUAL VALUE OF PLAN ASSETS
(A)
7,432,306 8,613,575 9,848,723 10,999,901 11,750,624

ACTUARIAL ACCRUED LIABILITY ("AAL:') ENTRY ACE
(B)
8,159,345 9,093,758 9,695,614 10,573.408 11,557,255

UNFUNDED AALl(FUNDINC
EXCESS)
(B-/\)
727,039 480,183 (153,109) (426,493) (193,369)

FUNDING RATIO
(NB)
91.1% 94.7% 101.6% 104.0% 101.7%

ANNUAL COVERED PAYROLL

UNFUNDED AAI.J (FUNDINC
EXCESS) AS A PERCENTAGE OF
COVER

(C)

[(B-A)/C]

1,977,928 2,055,966 2,152,072 2,304,289 2,397,169

36.8% 23.4% (7.1)% (18.5)% (8.1)%

Public School Employees' Retirement System1

6130197 6130198 6130199 6130100 6130101

462,639 528,770 599,464 667,642 708,391

465,764 504,779 586,352 615,357 613,347

3,125 (23,991) (13,112) (52,285) (95,044)

99.3% 104.8% 102.2% 108.5% 115.5%

NIA

NIA

NIA

NIA

NIA

NIA

NIA

NIA

NIA

NIA

Legislative Retirement System

6130197 6130198 6130199 6130100 6130101

18,197 20,375 22,679 24,666 26,034

18,086 19,272 20,129 21,628 21,610

( 111) (1,103) (2,550) (3,038) (4,424)

!00.6% 105.7% 112.7% 114.0% 120.5%

2,340 2,363 2,411 2,411 3,567

(4.7)% (46.7)% (105.8)% (126.0)% (124.0)%

Georgia Judicial Retirement System

711/98 711199 7/1/00 711/01

160,171 183,249 204,136 219,288

117,771 129,233 138,427 156,083

(42,400) (54,016) (65,709) (63,205)

136.0% 141.8% 147.5% 140.5%

26,226 29,594 34,856 37,688

(161.7)% (182.5)% (188.5)% (167.7)%

This data, except for annual covered payroll, was provided by the System's actuary.
Information is shown only for the years available in accordance with the parameters of SCAS No. 25. Additional years will be added as data become available.
1 No statistics regarding covered payroll are available. Contributions are not based upon members' ;-alaries, but are simply $4.00 per member per month for nine months each fiscal year.
See notes to required supplementary schedules.

2002 - Employees Retirement System of Georgia

37

AUDITED FINANCIAL STATEMENTS
REQ!) I RED SUPPLEMENTARY SCHEDULES (In thousands)

SCH EDU LE OF EMPLOYER CONTRIBUTIONS

Year Ended June 30,

State Annual Required Contribution

Percentage Contributed

Employees' Retirement System

1997 1998 1999 2000 2001

282,249 286,794 304,461 302,332 315,505

100% 100% 100% 100% 100%

Public School Employees'

1997

13,645

100%

Retirement System

1998

13,638

107%

1999

10,839

158%

2000

9,789

184%

2001

12,874

132%

Legislative Retirement System

1997

1998

1999

2000

2001

159

100%

164

126%

84

108%

22

436%

NIA

Georgia Judicial Retirement System

1999 2000 2001

694 834 1,741

100% 100% 11%

Information is shown only for the years available in accordance with the parameters of SGAS No. 25. Additional years will be added as data become available.
See notes to required supplementary schedules.

38

2002 - Employees Retirement System of Georgia

AUDITED FINANCIAL STATEMENTS
EMPLOYEES' RETIREMENT SYSTEM (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia)

NOTES TO REmJIRED SUPPLEMENTARY SCHEDULES

1. Schedule of Funding Progress - The actuarial value of assets recognizes a portion of the difference between the fair value of assets and the expected actuarial value of assets, based on the assumed valuation rate of return. The amount recognized each year is 20% of the difference between fair value and expected actuarial value.

2. Schedule of Employer Contributions - The required employer contributions and percent of those contributions actually made are presented in the schedule.

3. Actuarial Assumptions - The information presented in the required supplementary schedules was determined as part of the actuarial valuations at the elates indicated. Additional information from the actuarial valuations for the most recent two-year period are as follows:

Employees' Retirement System:

Valuation date

June 30. 2001

Actuarial cost method

Entry age

Amortization method

Level percent of pay,

open

Rcn1aini11g amortization period

of the Funding Excess

20 years

Asset valuation method

5-ycar smoothed

market

Ac_tuarial assumptions: Investment rate of return 1 Projected salary incrcn."ics 1

7% 5.20-9 00%

Post-retirement cost-of-living

adjustment

None

June 30. 2000 Entrv age
Level percent of pay. open
40 years ;-year smoot-l1cd
market
7% 5.20-9.00%
None

Legislative Retirement System:

Valuation date Actuarial cost method Amortization method Remaining amortization period
of the Funding Excess Asset valuation method
Actuarial assumptions: Investment rntc of return 1 Projected salary incn.:ases 1
Postrctircmcnt cost-of-living adjustment

June 30. 2001 Unit credit
Level dollar. open
NIA 5-ycar smoothed
market
7% 5.20%
3% annually

June 30. 2000 Unit credit
Level dollar, open
Nii\ 5-ycar smoothed
market
7% 5.20%
3% annually

Georgia Judicial Retirement System:

Valuatio11 date

July I. 2001

1\ctuarial cost method

Entry .igc

Amortization nH.:thod

Le\'cl percent of pay,

open

Remaining arnortizati<m period

of the Funding Excess

IO years

Asset valuation method

5-year smoothed

market

Actu~1rial a.ssun1ptio11.<;;
lnvestme11t rat-c of rcturn 1 Projected salary increases 1

7% 5.20%

P<>stretiremcnt cost-of-living

adjustment

None

July I, 2000 Entry age
Level percent of pay. open
12 years 5-year smoothed
market
7% 5.20%
None

1Inclucles inflation rate of 3.50%

Public School Employees' Retirement System:

Valuation date Actuarial cost method Amortization method Remaining amortization period
of the Funding Excess Asset valuation method
Actuarial assumptions: Investment rate of return I Projected salary increases I
Postrctiremcnt cost-of-living adjustment

June 30. 2001 Entry age
Level dollar, open
40 years 5-year smoothed
market
7% N/A
3% annuallv

June 30, 2000 Entry age
Level dollar. open
40 years 5-year smoothed
market
7% N/A
3% annually

2002 - Employees Retirement System of Georgia

39

c!3 I

ASSETS

Employees' Retirement
System

CASII
RECEIVABLES, Employee and employer contributions Interest and dividends Unremitted insurance premiums
Total receivables

$ 4,353
27,144
----
27,144

INVESTMENTS - at fair value,

Short-term

Obligations of the U.S. Government and

its agencies, corporate and other bonds

Common stocks

Mortgage loans and real estate

3,744

Equity in pooled investment fund

11 534 275

10tal investments

11.538 019

CAPITAL ASSETS, net Total assets

- - - -33
11,569,549

N a a

LIABII.ITIES

N

I

~

Accounts payable and other

~

Insurance premiums payable

~
" ~

Total liabilities

;,,
~

NET ASSETS HELO IN TRUST

~ FOR PENSION BENEFITS

:l
C,
~

C/J
1
:"l'

-0..,

0
C,
0

~.
""

10.09] _l..!IB.!_ __j__[_J]Q
$ 11 558.373

Public School F.mployccs' Retirement System $ (73) 4
---
4
697 942 697 942
---
697,873
412
----
_ _41_2
$ 697461

PENSION TRUST FUNDS

Legislative Retirement
System

Georgia Judicial Retirement System

Stale Employees Assurance Department

Superior Court Judges and District Attorneys Retirement Funds

Pooled Investment
Fund

$ (17)

$ 86

$ 36

$ 90

30
--
30

273
---
273

---1...ill. 1,123

3
--
3

$75,015
----
75,015

25 507 25.507
--
25,520

213 359 213,359
---
213,718

752 895 752.895
---
754.054

-----2iQ -21!)
--
1,023

228,003
5,807,476 7,140.706
582
----
13 176 767
----
13,251,782

II ~ _2l
$ 25 467

107
---
____Jfil_

-----

45
--
_ _4_5

-------

5..1.!M!l

$ 754 054

.......L.2N $ 13,251.782

Georgia Defined Contribution
Plan

Eliminations

$569

1,146 94
--
1,240

iD..Jll.l
(1,123)

7,566 7,664

26 874 42.104
--
43,913

(13 251 782)
03 251,782)
(13,252,905)

14
--
_ _1_4

{I 123) (I 123)

$ 43.899

$ /13 251 782

1n
0
3:
O::l
-z -z
Cl

Vl

-l

Total

~
m

All Srstems

2002

2001

3:
m z

$ 5044

-l
$1,546 Vl

28,600 75,109
----
103,709
235,569 5,815,140 7,140,706
4,326
----
13.195 741 _ _ _3_3 13,304,527
10,684
----
10 684
$ 13.293.843

0

'Tl

36,986 93,956

z
m

---- -l

130,942

Vl

Vl

m

-l

Vl

214,837 5,822,463

-I
i::

8,014,283 ~

4,351 VJ

---- .a

14.055 934

a a N

N

---- :si:..

14,188,422 18

3

".0.'..

10,430
----
10 430

:.0.;.:..;.
"...'..
"s0~'

b... '

$ 14,177.992

aa,N_

;:; .....
;:i-< 0
i::
"0'.
;:l Q.
"'

2 ("')
2
;Q:;.
C7t:,

~

"i:)
E,
;:l
"'
0. ;:l Q.
'-:rjm
3:

Q."

>"'
Q.

or--<-

. m

".;.~..:..'l.-.

m
~
;,:,

~-"'
Q.

m - l

..... ;,:,

;:i-a m

"' 3:

.gt;.:lm z

~ -l

"""'''

Vl
--<
Vl

~ -l ~m
~- 3:

3
";..:.'l..

VJ
'<"...'..
-"3 '
0
0
"0 '
d3 i:t
'--

-

-

-

-

A U D I T E D F I N A N C I A.L S TAT E M E N T S

SUPERIOR COURT JUDGES AND DISTRICT ATTORNEYS RETIREMENT FUNDS

COMBINING STATEMENTS OF NET ASSETS -June 30, 2002 with comparative totals for 2001 in thousands

ASSETS

PENSION TRUST FUNDS

Superior Court

District

Judges

Attorneys

Retirement

Retirement

Fund

Fund

TOTAL

2002

2001

CASH RECEIVABLES:
Employee and employer contributions Total receivables

$ 87
_ _3 3

$ 3

$ 90

$ 59

_ _3 3

INVESTMENTS .:... at fair value: Equity in pooled investment fund

-------2.N

-------2.N

--1.W.

Total assets

1,020

3

1,023

1,784

LIABILITIES
ACCOUNTS PAYABLE AND OTHER
Total liabilities
NET ASSETS HELD IN TRUST FOR PENSION BENEFITS

------12. -------11
i....:ill

_3

45

------12.

_3

45

------12.

~

$1,739

(A schedule of funding progress is presented on page 37.)

2002 - Employees Retirement System of Georgia

41

.ti

Employees' Retirement
System

Public School Employees' Retirement System

NET ASSETS I JELi) IN TRUST FOR PENSION BENEFITS - Beginning of year $ 12,3-13,625

ADDITIONS: Contributions:
Employer Member Jnsuram:c premiums Administrativeexpenscallotment lnve.~tment loss:_ Net appreciation in fair value of investments Interest and dividends Le.ssinvestmentexpenses Allocation of imestmenl
earnings

233,229 57,920
60 (730) (487 728)

Net investment lo.ss

/488 398)

Total additions

(197 249)

$748,571
11,623 1,275 . 625
(58) (28 8951 (28 951) ....ill..:UQJ.

DEDUCTIONS:

Retirement payments

Rehmds of employee contribution~ and interest

Death benefits

N

A<lmini~trati\'eexpenscs

g

N

Total deductions

I

~ -gi

TRANSFERS TO SYSTEMS FROM POOLEDINVESTMENTFUND

~

~

NET (DECREI\SE) INCREASE

~

~- NET ASSETS HELD IN TRUST FOR

3 ~

PENSIONBENEFJTS-EndofYear

~ ~
~

~
~ ~

~

0
--,

0
~ C

o,l
c;

574.602 5,430 7971
5S8003

H.794 261
____fill 35680

___ (785 252)

____ __filj_jJ)J_

$11.558.373

$697,461

PLAN AND FUNDS

Legislati,e Retirement
System

Georgia Judicial Retirement System

State Employees' Assurance Department

_________________

Superior Court

Judges and

District

Georgia

Attorneys

Pooled

Defined

Retirement Investment Contribution

Funds

Fund

Plan

Eliminations

$27,777

$225,173 $790,700

$ 1,739

$14,129,531

$ 40,407 $ (14,129,531)

70

20

291

3,527

14,364

110

175

(l) _(Lfil)_ _(Lill ___l2!l

(II) -12Jl1J.
---12J1fil
(5 406)

5
(32 5611 (12 558)
JJJ!J2l.

2,159 13 30
(l) /745) _JHfil I 454

12.678

(991,710) 440,444 (10,798)
___
(562 064)
/562 064)

(55) 667 (7)
_/J_,fil!J.
_.222l
-1l..fil2

562 064 562 064 562 064

1.240 16
_ _ _11_0 Ll.6

5,861 120
__ill ~

18,227 _ill
18452

2,185

_ _l_O
Wi

____

7,S77 ___lill _.liJfil_

____ ____

____ ____ _____

(2 l IO)

_ilLilll

(36 646)

____ ___QfilJ.

~ (877 749)

___ 3492

115685 S77 749

$ 25467

S 2B611 $ 754054

L2ZJl $ 13251782

$ 43899 $ /13251782)

~ n ~ 0
5 $
I:: 0:,
s.. -~ z
z ~

C)

V'l

Total

--1

All Systems

~

2002

2001

m

$

m 2

$ H,177,992 $15,267,470

-l

oVl

247,101 75,704 H,364
940

335,988

n"'T:I

72,448

:I

l3,8l3



940

Z

C)

(991,765)

(1.379,000)

~

441,176 (11,610)

479,631

_

(11.286)

Z

____ _____

Z

(562 199) (224 090)

m

(910 655)

-l

(487 466)

~

m
-l

v,

618,682

560.572

I

13,704

--

14,998



18,227

.18,017

::

9446

_______$.lli

..o

660059

602012

g N

N

----=

_____

tS~:,

8

-1fill:Ll12l

(l 089 478)

3

~ ~

$ 13293843 $14177992

~-

-~ ~
~
~
~

~

....
N
o
0
~

--::::;.
i,1
~
S-:o ~
>

;::::
""O E;-
~

i::,

N

;pC.... ~
2,_ ""O

r er.i >, Q
"' -<

::: . m
;:! . ~
~
-<;,::,
~ m
,S" j

,.:. ;,::,

";:;- m

g-;

$
m

-5- Z

O -l

~ v,
~ -<

~ ~

" m ::; $

;~::
...,_

~
-8~ '
3
a
~

::;
~-.
~ i:::.

u F N s I A D I T E D

I A N C I A L

s T -A T E M E N T

-

--

-

-

-

-

--

-

-~-

SUPERIOR COURT JUDGES AND DISTRICT ATTORNEYS RETIREMENT FUNDS

COMBINING STATEMENTS OF CHANGES IN NET ASSETS - fune 30, 2002 with comparative totals fc1r 2001

(in thousands)

PENSION TRUST FUNDS

Superior Court

District

Judges

Attorneys

Retirement

Retirement

Fund

Fund

TO'li\L

2002

2001

NET ASSETS HELD IN TRUST FOR PENSION BENEFITS - Beginning of year ADDITIONS:
Contributions: Employer Member
Administrative expense allotment Investment loss:
Interest and dividends Less investment expenses Allocation of investment earnings
Net investment loss
Total additions

$1,739
2,042 13 30
(3)
Jlli.l JZ1fil.
1,337

$ 117 117

$1,739
2,159 13 30
(3) _illi.l
--1Z1fil
1,454

$1,896
2,087 12 30
-1lill -1lill
2,018

DEDUCTIONS: Retirement payments Administrative expenses

2,068 ____J_Q_

117

2,185

2,145

~

__3_Q

Total deductions

2,098

_ill

2,215

2,175

NET INCREASE (DECREASE)
NET ASSETS HELD IN TRUST FOR PENSION BENEFITS - End of year

.ilill .L.21.11

L....=._

.ilill 1......211!.

-1llli
$1,739

2002 - Employees Retirement System of Georgia

43

AUDITED FINANCIAL STATEMENTS
EMPLOYEES' RETIREMENT SYSTEM (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia)

ADMINISTRATIVE EXPENSE FUND- Contributions and Expenses for the years ended June 30, 2002 and 2001

(in thousands)

2002

2001

Contributions: Employees' Retirement System Public School Employees' Retirement System Legislative Retirement System Georgia Judicial Retirement System State Employees' Assurance Department Georgia Defined Contribution Plan Superior Court Judges Retirement Fund

$ 7,971 625 110 175
225 310 _ _3_0

$ 6,950 625 110 175 225 310
_ _3_0

Total contributions Expenses:
Personal services: Salaries and wages Retirement contributions FICA Health insurance Miscellaneous

9 446
1,947 204 138 254
----12
2,572

8 425
1,805 310 125 236
_ _4_3 __lil2

Communications: Postage Publications and printing Telecommunications Travel

155 82 83 _ _2_3
_ill

IOI 40 78
__fl ------1lf2

Professional services: Accounting and investment services
Computer services Consulting services Actuarial services Medical services Professional fees Legal services

1,758 1,026 1,603
305 168 87 _ _6_8
----2....!lli.

1,474 1,879
826 I 55 192 61 _ _3_7
_____._ill

Rentals: Office space Office equipment

$ 341
_ _3 ______l.11

$ 341 _ _I
____]fl

Other services and charges: Equipment Temporary services Supplies and materials Repairs and maintenance Courier services Board member expenses Depreciation Miscellaneous
Total expenses

99 580 85 335
11 14 29 _ _1_9
----1.Jll
9 446

4 218 29 441
5 5
_ _2 ------1.Q
8 425

Net Income

Balance: Beginning of year

End of year

~

44

2002 - Employees Retirement System of Georgia

,,
--
PLOYEES' IREMENT SYSTEM
OF GEORGIA
T,vo Northsidc Seventy-Five I Suite 300 I Atlanta, Georgia 30318-7778 404-352-6400 I 1-800-805-4609 I Fax 404-352-6431