- Collection:
- Georgia Government Publications
- Serial:
- Annual report - Employees' Retirement System of Georgia.
- Title:
- 2003 annual report [2003]
- Creator:
- Georgia. Employees' Retirement System
- Contributor to Resource:
- Georgia. Employees' Retirement System
- Publisher:
- Atlanta, Ga. : Georgia. Employees' Retirement System
- Date of Original:
- 2003
- Subject:
- Georgia
- Location:
- United States, Georgia, 32.75042, -83.50018
- Medium:
- publications (documents)
- Type:
- Text
- Format:
- application/pdf
- Description:
- Began in 1964?; ceased with 2009.
Report year ends June 30.
Issues for <1994-> includes Employees' Retirement system of Georgia, Public School Employees Retirement System, Legislative Retirement System, Trial Judges and Solicitors Retirement Fund, State Employees Assurance Department, State Social Security Trust Fund. - External Identifiers:
- Call Number GA E400 .A1 2003
- Metadata URL:
- https://dlg.galileo.usg.edu/id:dlg_ggpd_y-ga-be400-b-pa1-b2003-belec-p-btext
- Digital Object URL:
- https://dlg.galileo.usg.edu/do:dlg_ggpd_y-ga-be400-b-pa1-b2003-belec-p-btext
- Language:
- eng
- Holding Institution:
- University of Georgia. Map and Government Information Library
- Rights:
-
2003
ANNUAL REPORT
P P CC
Public Pension Coordinating Council
Public Pension Standards
2003 Award
Presented to
Employees Retirement System of Georgia
In recognition of meeting professional standards for plan design and administration as
set forth in the Public Pension Standards.
Presented by the Public Pension Coordinating Council, a confederation of National Association of State Retirement Administrators (NASRA)
National Conference on Public Employee Retirement Systems (NCPERS) National Council on Teacher Retirement (NCTR)
Alan H. Winkle Program Administrator
INTRODUCTORY SECTION TABLE OF CONTENTS
INTRODUCTORY SECTION
Boards of Trustees
2
Letter of Transmittal
3
Legislation
4
ACTUARIAL SECTION
Employees' Retirement System
5
Public School Employees Retirement System
8
Legislative Retirement System
11
Georgia Judicial Retirement System
14
Group Term Life Insurance
17
Georgia Military Pension Fund
20
INVESTMENT SECTION
Pooled Investment Fund/Structural Analysis
23
Temporary Investments/Bonds
24
Equity Holdings
25
Mortgage/Real Estate Investment
26
FINANCIAL SECTION
Independent Auditors' Report
27
Management's Discussion and Analysis
28
General Purpose Financial Statements:
Combined Statements of Net Assets
33
Statements of Changes in Net Assets
34
Notes to Combined Financial Statements
35
Required Supplementary Information
46
Additional Information:
Combining Statements of Net Assets
51
Superior Court Judges and District Attorneys Retirement Funds -
Combining Statements of Net Assets
52
Combining Statements of Changes in Net Assets
53
Superior Court Judges and District Attorneys Retirement Funds -
Combining Statements of Changes in Net Assets
54
Administrative Expense Fund - Contributions and Expenses
55
2003 Employees' Retirement System of Georgia
1
INTRODUCTORY SECTION BOARDS 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 Georgia Military Pension Fund State Social Security Trust Fund
Georgia Defined Contribution Plan
Russell W. Hinton, ex-officio Vice-Chairman State Auditor
Employees' Retirement System Public School Employees Retirement System
Georgia Judicial Retirement System Legislative Retirement System Georgia Military Pension Fund 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 Georgia Military Pension Fund State Social Security Trust Fund
Georgia Defined Contribution Plan State Employees' Assurance Department
Michael Thurmond, ex-officio Commissioner of Labor
State Employees' Assurance Department
Barbara Ward Financial Manager City of Atlanta, Department of Finance
Employees' Retirement System Public School Employees Retirement System
Georgia Judicial Retirement System Legislative Retirement System Georgia Military Pension Fund State Social Security Trust Fund
Georgia Defined Contribution Plan
Bonny T. Wright Attorney-at-Law
Schulten Ward & Turner
State Employees' Assurance Department
Dan Ebersole, ex-officio Director
Office of Treasury & Fiscal Services
Employees' Retirement System Public School Employees Retirement System
Georgia Judicial Retirement System Legislative Retirement System Georgia Military Pension Fund State Social Security Trust Fund
Georgia Defined Contribution Plan State Employees' Assurance Department
Robert E. Keller District Attorney
Clayton Judicial Circuit
Georgia Judicial Retirement System
William F. Roberts Retired Director, Georgia State Finance &
Investment Commision
Employees' Retirement System Public School Employees Retirement System
Georgia Judicial Retirement System Legislative Retirement System Georgia Military Pension Fund State Social Security Trust Fund
Georgia Defined Contribution Plan
Kelly D. Turner State Court Judge Lowndes County
Georgia Judicial Retirement System
Cynthia D. Wright Superior Court Judge Superior Court of Fulton County
Georgia Judicial Retirement System
Marjorie Young, ex-officio Commissioner
State Merit System
Employees' Retirement System Public School Employees Retirement System
Georgia Judicial Retirement System Legislative Retirement System Georgia Military Pension Fund State Social Security Trust Fund
Georgia Defined Contribution Plan State Employees' Assurance Department
2
2003 Employees' Retirement System of Georgia
INTRODUCTORY SECTION LETTER OF TRANSMITTAL
2003 Employees' Retirement System of Georgia
3
INTRODUCTORY SECTION LEGISLATION
4
2003 Employees' Retirement System of Georgia
ACTUARIAL SECTION ACTUARY'S CERTIFICATION LETTER
Employees' Retirement System
2003 Employees' Retirement System of Georgia
5
ACTUARIAL SECTION VALUATION BALANCE SHEET
Employees' Retirement System
- as of June 30, 2002 -
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
(2) Present value of prospective benefits payable on account of present active members: Retirement and survivor allowances Refunds of members= contributions Total
(3) TOTAL ACTUARIAL LIABILITIES
$ 5,260,707 428,033 101,640
$ 5,790,380
$ 9,032,941 59,095
9,092,036 $ 14,882,416
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
$ 12,124,414 $ 2,758,002
$ 1,363,159 6.21%
$ 240,374
1,394,843
1,492,723 (129,564) $ 14,882,416
6
2003 Employees' Retirement System of Georgia
ACTUARIAL SECTION SUMMARY OF PRINCIPAL RESULTS
Employees' Retirement System
- as of June 30, 2002 -
DOLLAR AMOUNTS IN THOUSANDS
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
June 30, 2002
June 30, 2001
71,790
75,132
$
2,408,306 $
2,397,169
27,229
25,889
$
598,493 $
538,890
$
11,558,373 $
12,343,625
12,124,414
11,750,624
$
(129,564) $
(193,369)
13 years
20 years
For Fiscal Year Ending Annual required employer contribution rates (ARC):
June 30, 2004
June 30, 2003
Old Plan Normal Accrued Liability Total
New Plan Normal (includes 4.75% paid for member) Accrued liability Total
6.21% (0.55) 5.66%
10.96% (0.55) 10.41%
6.24% (0.58) 5.66%
10.99% (0.58) 10.41%
The valuation reflects 1.5% Ad Hoc COLAs effective July 1, 2002 and January 1, 2003 and the effect of amendments to the System enacted through the 2002 session of the General Assembly.
2003 Employees' Retirement System of Georgia
7
ACTUARIAL SECTION ACTUARY'S CERTIFICATION LETTER
Public School Employees' Retirement System
8
2003 Employees' Retirement System of Georgia
ACTUARIAL SECTION VALUATION BALANCE SHEET
Public School Employees' Retirement System
- as of June 30, 2002 -
ACTUARIAL LIABILITIES
(1) Present value of prospective benefits payable on account of present retired members, beneficiaries of deceased members, and terminated members entitled to deferred benefits
$ 382,513,139
(2) Present value of prospective benefits payable on account of present active members: Service retirement allowances Disability retirement allowances Refunds of members' contributions Total
(3) TOTAL ACTUARIAL LIABILITIES
$ 284,193,081 15,300,005 4,993,260 $ 304,486,346
$ 686,999,485
PRESENT AND PROSPECTIVE ASSETS
(4) Actuarial value of assets
$ 727,529,000
(5) Present value of total future contributions = (3) - (4)
$ (40,529,515)
(6) Present value of future member contributions to the Members' Contributions Funds
6,210,936
(7) Present value of future employer contributions to the Pension Accumulation Fund = (5) - (6)
$ (46,740,451)
(8) Employer normal contribution rate
$
292.67
(9) Present value of future membership service
172,526
(10) Prospective normal contributions = (8) x (9)
50,493,184
(11) Prospective unfunded accrued liability contributions = (7) - (10)
(97,233,635)
(12) TOTAL PRESENT AND PROSPECTIVE ASSETS
$ 686,999,485
2003 Employees' Retirement System of Georgia
9
ACTUARIAL SECTION SUMMARY OF PRINCIPAL RESULTS
Public School Employees' Retirement System
- as of June 30, 2002-
Valuation Date
Active members: Number
Retired members and beneficiaries: Number Annual allowances
Assets: Market Value Actuarial Value
Unfunded actuarial accrued liability
Amortization period
Fiscal Year Ending
Employer contribution rate per active member: Normal Accrued Liability Total
Annual required employer contributions (ARC): Normal Accrued Liability
Total
June 30, 2002
June 30, 2001
34,207
38,997
11,784
11,661
$
35,113,773* $
34,151,616*
$
697,461,000 $
748,571,000
727,529,000
708,391,000
$
(97,233,635) $
(95,044,124)
20 years
40 years
June 30, 2004
June 30, 2003
$
292.67 $
288.48
(268.31)
(182.81)
$
24.36 $
105.67
$
10,011,363 $
11,249,855
(9,178,167)
(7,129,178)
$
833,196 $
4,120,677
The valuation takes into account the effect of amendments to the System enacted through the 2002 session of the General Assembly.
There have been no changes since the previous valuation.
*Does not include increases in benefit accrual rate effective July 1, 2002. The results of the valuation have been adjusted to include this increase.
10
2003 Employees' Retirement System of Georgia
ACTUARIAL SECTION ACTUARY'S CERTIFICATION LETTER
Legislative Retirement System
2003 Employees' Retirement System of Georgia
11
ACTUARIAL SECTION VALUATION BALANCE SHEET
Legislative Retirement System
- as of June 30, 2002 -
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
$ 15,325,699
$
8,101,594
550,480
309,777
343,495
$
9,305,346
$ 24,631,045
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
$ (2,005,955)
(3,475,719)
26,637,000 1,469,764 1,382,408
(4,858,127) $ 24,631,045
12
2003 Employees' Retirement System of Georgia
ACTUARIAL SECTION SUMMARY OF PRINCIPAL RESULTS
Legislative Retirement System
- as of June 30, 2002 -
Valuation Date
Number of active members
Retired members and beneficiaries: Number Annual allowances
Assets: Market Value Actuarial Value
Unfunded actuarial accrued liability (surplus)
Amortization period
June 30, 2002 209
June 30, 2001 212
192
192
$
1,240,266 $
1,108,552
$
25,467,000 $
27,777,000
26,637,000
26,034,000
$
(4,858,127) $
(4,423,819)
N/A*
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, 2004
June 30, 2003
$
502.06 $
429.86
$
(502.06)
(429.86)
0.00 $
0.00
$
104,930 $
91,130
(104,930)
(91,130)
$
0.00 $
0.00
*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 2002 session of the General Assembly.
2003 Employees' Retirement System of Georgia
13
ACTUARIAL SECTION ACTUARY'S CERTIFICATION LETTER
Georgia Judicial Retirement System
14
2003 Employees' Retirement System of Georgia
ACTUARIAL SECTION VALUATION BALANCE SHEET
Georgia Judicial Retirement System
- as of June 30, 2002-
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
$ 55,534,426
215,575,549 $ 271,109,885
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) 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
$ 228,417,000
42,692,885 $
15,806,228 20.33%
3,397,380
26,886,657 69,068,735
(53,262,507) $ 271,109,885
2003 Employees' Retirement System of Georgia
15
ACTUARIAL SECTION SUMMARY OF PRINCIPAL RESULTS
Georgia Judicial Retirement System
- as of June 30, 2002 -
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, 2002
July 1, 2001
428
435
$
38,630,312 $
37,687,700
134
130
$
6,166,415 $
5,615,022
$
213,611,000 $
225,173,000
228,417,000
219,288,000
$
(53,262,507) $
(63,204,705)
10 years
10 years
For Fiscal Year Ending
Annual required employer contribution rates (ARC): Normal Accrued Liability
Total
June 30, 2004
20.33% (16.48)
3.85%
June 30, 2003
20.33% (20.33)
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 July 1, 2002 and January 1, 2003.
16
2003 Employees' Retirement System of Georgia
ACTUARIAL SECTION ACTUARY'S CERTIFICATION LETTER
Group Term Life Insurance Plan
2003 Employees' Retirement System of Georgia
17
ACTUARIAL SECTION VALUATION BALANCE SHEET
Group Term Life Insurance Plan
- as of June 30, 2002 -
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
$ 266,936,331
$ 422,881,391 $ 689,817,722
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 (surplus) deficit (9) TOTAL PRESENT AND PROSPECTIVE ASSETS
$ 793,005,000 73,961,036 6,438,605
$ 873,404,641 (183,586,919)
$ 689,817,722
18
2003 Employees' Retirement System of Georgia
ACTUARIAL SECTION SUMMARY OF PRINCIPAL RESULTS
Group Term Life Insurance Plan
Valuation Date
Active members: Number Annual compensation
Retired members: Number Insurance amount
Assets: Market Value Actuarial Value
Actuarial (surplus) deficit
FISCAL YEAR ENDING
Contribution rates:
Old Plan Members Employee Employer Total
New Plan Members Employee Employer Total
- as of June 30, 2002 -
June 30, 2002
June 30, 2001
71,999
75,132
$
2,411,719,724 $
2,397,168,519
21,832
20,621
$
734,037,944 $
652,905,949
$
754,054,000 $
790,700,000
793,005,000
753,964,000
$
(183,586,919) $
(242,500,215)
June 30,2004
June 30, 2003
0.50%* 0.00 0.50%
0.50%* 0.25 0.75%
0.25% 0.00 0.25%
0.25% 0.25 0.50%
* 0.25% paid by employer
2003 Employees' Retirement System of Georgia
19
ACTUARIAL SECTION ACTUARY'S CERTIFICATION LETTER
Georgia Military Pension Fund
20
2003 Employees' Retirement System of Georgia
ACTUARIAL SECTION VALUATION BALANCE SHEET
Georgia Military Pension Fund
- as of June 30, 2002 -
ACTUARIAL LIABILITIES Present value of prospective benefits payable on account of:
(1) Present retired members (2) Former members entitled to deferred vested benefits (3) Present active members
(4) TOTAL ACTUARIAL LIABILITIES
$
0
154,130
8,377,763
$
8,531,893
PRESENT AND PROSPECTIVE ASSETS (5) Actuarial value of assets (6) Present value of future employer contributions = (4) - (5) (7) Employer normal contribution rate (8) Present value of future membership service (9) Present value of future normal contributions = (7) X (8) (10) Present value of unfunded accrued liability contributions
= (6) - (9)
(11) TOTAL PRESENT AND PROSPECTIVE ASSETS
$
$
8,531,893
$
4.40
47,711
0 209,928
8,321,965
$ 8,531,893
2003 Employees' Retirement System of Georgia
21
ACTUARIAL SECTION SUMMARY OF PRINCIPAL RESULTS
Georgia Military Pension Fund
- as of June 30, 2002 -
Valuation Date
Number of active members included in valuation
Retired members: Number Annual allowances
June 30, 2002 9,695
0
$
0
Former members entitled to deferred vested pensions:
Number
$
Annual deferred pensions
Assets:
Market Value
$
Actuarial Value
Unfunded actuarial accrued liability
$
Amortization period
33 28,980
0 0 8,321,965 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
June 30, 2004
$
4.40
64.39
$
68.79
$
42,658
624,261
$
666,919
22
2003 Employees' Retirement System of Georgia
INVESTMENT SECTION
POOLED INVESTMENT FUND as of June 30, 2003
$ 11,679,683,000 779,032,000 695,093,000 25,613,000 869,000 36,514,000 220,496,000 541,000
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 Georgia Military Pension Fund
$ 13,437,841,000 Total Pooled Investments at Fair Value
*The Superior Court Judges Retirement Fund was closed on December 31, 1976. As of June 30, 2003 there were two active members remaining in the Fund with retirement payments funded through Department of Administrative Services appropriations.
STRUCTURAL ANALYSIS OF INVESTMENTS AT FAIR VALUE
TYPE OF INVESTMENT SHORT TERM INVESTMENTS BONDS COMMON STOCKS MORTGAGES AND REAL ESTATE
June 30, 2003 1.5%
47.0% 51.5%
N il 100.0%
2003 Employees' Retirement System of Georgia
23
INVESTMENT SECTION
SHORT-TERM INVESTMENTS
- as of June 30, 2003 -
Face Amount
$ 195,254,000*
Issuer
United States Government and Corporate Obligations
(subject to repurchase agreements due 7/01/03)
Fair Value
$ 195,254,000*
* Consists of Employees' Retirement System $188,292,000 and Georgia Defined Contribution Plan $6,962,000.
U.S. GOVERNMENT, CORPORATE AND OTHER BONDS - as of June 30, 2003 -
Par Value
$ 2,068,282 205,000,000 725,000,000 495,000,000 230,000,000 80,000,000 215,000,000 545,000,000 437,000,000 250,000,000 125,000,000 550,000,000 405,000,000 120,000,000 765,000,000 140,000,000 763,000,000
Issuer
General Electric
Interest Rate %
8.350
US Treasury Note
1.750
US Treasury Note
1.625
US Treas. Note
1.250
US Treas. Note
1.125
FNMA-CALLABLE
2.330
FNMA-CALLABLE
2.590
US Treas. Note
2.000
US Treas. Note
3.500
FNMA-CALLABLE
2.200
GENERAL ELECTRIC CAP CORP 5.375
US Treas. Note
3.250
US Treas. Note
2.625
FNMA
6.375
US Treas. Note
3.625
US Treas. Bond
6.250
US Treas. Bond
5.375
Year of Maturity
2004 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2008 2009 2013 2030 2031
Fair Value
$ 2,142,202 206,793,750 729,988,000 494,693,100 229,137,500 80,224,800 217,687,500 550,793,350 460,624,220 251,172,500 137,563,750 574,062,500 408,669,300 142,125,600 770,974,650 174,300,000 859,092,220
$ 6,052,068,282 5,000,000
$ 6,057,068,282
ERS Fixed Income Securities Defined Contribution Fixed Income Securities Total ERS and Defined Contribution Fixed Income Securities
$ 6,290,044,942 5,085,640
$ 6,295,130,582
24
2003 Employees' Retirement System of Georgia
INVESTMENT SECTION
SHARES
5,340,045 2,614,120 5,200,000 3,019,806 3,462,028 1,324,560 2,457,800 2,122,000 2,022,133 2,195,800 3,576,300 2,257,460
720,600 1,124,523 1,301,480 1,685,800
950,500 3,342,800
981,500 1,346,170
EQUITY HOLDINGS - as of June 30, 2003 -
COMPANY
PFIZER INC JOHNSON & JOHNSON MICROSOFT CITIGROUP INC EXXON MOBIL CORP PROCTOR & GAMBLE CO COCA COLA CO WAL-MART STORES INC AMERICAN INTERNATIONAL GROUP MEDTRONIC GENERAL ELECTRIC CO PEPSICO INC 3M COMPANY BANK OF AMERICA CORP AMGEN INC SCHLUMBERGER LTD INTL BUS MACHINES INTEL CORP UNITED TECHNOLOGIES WELLS FARGO CO TOTAL - 20 LARGEST HOLDINGS
TOTAL - ALL HOLDINGS
A complete listing is available upon written request.
2003 Employees' Retirement System of Georgia
FAIR VALUE
$ 182,362,537 135,150,004 133,328,000 129,247,697 124,321,425 118,124,261 114,066,498 113,887,740 111,581,299 105,332,526 102,568,284 100,456,970 92,942,988 88,871,053 85,819,591 80,193,506 78,416,250 69,563,668 69,519,645 67,846,968
$ 2,103,600,910
$ 6,912,594,038
25
INVESTMENT SECTION
Borrower and Mortgaged Property
WEST & ABBITT BENT CREEK COL APTS
MORTGAGE - as of June 30, 2003 -
Interest Rate %
9.5
Year Last Pmt. Due
2004
Balance Outstanding on Loan $ 555,062
Description of Property
BETA BUILDING TWO NORTHSIDE 75 ATL (Constitutes one-half interest in property)
REAL ESTATE INVESTMENT
- as of June 30, 2003 -
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.
26
2003 Employees' Retirement System of Georgia
FINANCIAL SECTION INDEPENDENT AUDITORS' REPORT
INDEPENDENT AUDITORS' REPORT
Board of Trustees Employees' Retirement System of Georgia:
We 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, 2003 and 2002, 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.
We 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. We 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, 2003 and 2002, and the changes in financial status for the years then ended in conformity with accounting principles generally accepted in the United States of America.
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. We 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.
The Introductory, Investment and Actuarial Sections listed in the Table of Contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. This additional information is the rDeescpeomnsbiebril2it2y, 2o0f0t3he System's management. Such information has not been subjected to the auditing procedures applied in our audits of the basic financial statements and, accordingly, we express no opinion on them.
December 22, 2003
2003 Employees' Retirement System of Georgia
27
FINANCIAL SECTION
MANAGEMENT'S DISCUSSION AND ANALYSIS
This section provides a discussion and analysis of the financial performance of the Employees' Retirement System of Georgia (the "System") for the year ended June 30, 2003. The discussion and analysis of the System's financial performance is within the context of the accompanying financial statements, notes to the financial statements, required supplementary schedules, and additional information following this section.
The System is responsible for administering a cost-sharing, multiple-employer defined benefit pension plan for various employer agencies of Georgia, along with six 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") Georgia Military Pension Fund ("GMPF") Superior Court Judges Retirement Fund ("SCJRF") District Attorneys Retirement Fund ("DARF")
The defined contribution retirement plan is the Georgia Defined Contribution Plan ("GDCP") and 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 increased by $179 million, or 1.3%, from $13.3 billion at June 30, 2002 to $13.5 billion at June 30, 2003. The improvement was primarily due to the increase in the fair value of investments.
For the year ended June 30, 2003, the total additions to net assets were $907 million and the total deductions were $728 million. The deductions consisted of benefit payments of $684 million, refunds of $15 million, death benefits of $19 million and administrative expenses of $10 million. The additions consisted of employer and member contributions totaling $327 million, insurance premiums of $15 million, net investment income of $564 million and other income of $1 million. Net investment income of $564 million (comprised of interest and dividend income and the change in fair value of investments, reduced by investment expenses) was an improvement over the net investment loss of $562 million for the year ended June 30, 2002. The increase was primarily due to the improved market conditions in 2003 compared to 2002.
Benefit payments paid to retirees and beneficiaries increased by $65 million, or 10.6% from $619 million in 2002 to $684 million in 2003. This increase was the result of increases in the number of retirees and beneficiaries receiving benefits across all plans and postretirement cost-of-living increases in benefits.
28
2003 Employees' Retirement System of Georgia
FINANCIAL SECTION MANAGEMENT'S DISCUSSION AND ANALYSIS
Overview of the Financial Statements
The basic financial statements include: (1) the combined statements of net assets, (2) the combined statements of changes in net assets, and (3) notes to the financial statements. The System also includes in this report additional information to supplement the basic financial statements.
The System prepares its financial statements on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. These statements provide information about the System's overall financial status.
In addition, the System presents two required supplementary schedules, which provide historical trend information about the plans' funding. The two schedules include: (1) a schedule of funding progress and (2) a schedule of employer contributions.
Description of the Financial Statements
The 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 investments of the System in this statement are presented at fair value. These statements are presented on page 33.
The Combined Statement of Changes in Net Assets reports how the System's net assets changed during the fiscal year. The additions and deductions to net assets are summarized in this statement. The additions include contributions to the retirement plans from employers and members, group life insurance premiums, and investment income (loss), which includes interest and dividends and the net increase (decrease) in the fair value of investments. The deductions include benefit payments, life insurance death benefit payments, refunds of member contributions and interest, and administrative expenses. These statements are presented on page 34.
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 35.
There are two Required Supplementary Schedules included in this report. These required schedules are applicable to the five defined benefit plans: ERS, PSERS, LRS, GJRS and GMPF. 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 46.
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 48.
Additional information is presented, beginning on page 51. There are three statements included in this section of the report. They are: (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
2003 Employees' Retirement System of Georgia
29
FINANCIAL SECTION MANAGEMENT'S DISCUSSION AND ANALYSIS
funds. The Administrative Expense Fund Statement presents the 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 of the System
A summary of the System's net assets is as follows:
Assets: Cash and receivables Investments Capital assets, net
Net Assets (in thousands)
June 30,
2003
2002
$ 104,721 13,407,279 42
$ 108,753 13,195,741 33
Total assets
$ 13,512,042 $ 13,304,527
Liabilities: Due to brokers and accounts payable
$ 39,339 $ 10,684
Net assets
$ 13,472,703 $ 13,293,843
Amount Change
$ (4,032) 211,538 9
$ 207,515
Percentage Change
(3.7)% 1.6 % 27.3 %
1.6 %
$ 28,655 $ 178,860
268.2 % 1.3 %
The following table presents the investment allocation at June 30, 2003 and 2002:
2003
2002
Asset Allocation at June 30 (in percentages)
Equities Fixed income Short-term securities*
Asset Allocation at June 30 (in thousands) Equities Fixed income Short-term securities*
*Includes mortgages and real estate
51.5 % 47.0 %
1.5 %
54.1 % 44.1 % 1.8 %
$ 6,912,595 6,295,131 199,553
$ 13,407,279
$ 7,140,706 5,815,140 239,895
$ 13,195,741
The total investment portfolio increased $212 million from the prior year, which is due primarily to an increase in the fair value of fixed income investments.
30
2003 Employees' Retirement System of Georgia
FINANCIAL SECTION MANAGEMENT'S DISCUSSION AND ANALYSIS
The investment rate of return in fiscal year ended June 30, 2003 was 4.5%, with a (2.3%) return on equities and a 12.8% return on fixed income investments. The five-year annualized rate of return on investments at June 30, 2003 was 2.3%, with a (2.1%) return on equities, and an 8.1% return on fixed income investments.
A summary of the changes in the System's net assets for the years ended June 30 is as follows:
Additions: Employer contributions Member's contributions Insurance premiums Net investment income (loss) Other
Total additions
Changes in Net Assets (in thousands)
2003
2002
Amount Change
Percentage Change
$ 252,852 74,550 14,847
563,690 909
906,848
$ 247,101 75,704 14,364
(562,199) 940
(224,090)
$ 5,751 (1,154) 483
1,125,889 (31)
1,130,938
2.3 % (1.5)% 3.4 % 200.3 % (0.3)%
504.7 %
Deductions: Benefit payments Refunds Death benefits Administrative expenses
Total deductions
Net increase (decrease) in net assets
684,118 14,993 18,924
9,953
727,988
$ 178,860
618,682 13,704 18,227 9,446
660,059
$ (884,149)
65,436 1,289 697 507
67,929
$ 1,063,009
10.6 % 9.4 % 3.8 % 5.4 %
10.3 %
120.2 %
Additions--The System accumulates resources needed to fund benefit payments through contributions and returns on invested funds. Total contributions increased 1.4%, reflecting a contribution percentage that remained unchanged with a modest increase in overall salary growth. The net investment income increased by over $1 billion. This increase is principally due to the improved market conditions in 2003 as compared to 2002.
Deductions--Deductions increased 10.3%, primarily because of a 10.6% increase in benefit payments. This is due to an increase of approximately 3.7% in the number of retirees receiving benefit payments across all defined benefit plans and to postretirement cost-of-living increases in benefits. Refunds of member contributions increased by 9.4%, which was primarily due to a 19% increase in refunds paid from the Georgia Defined Contribution Plan. Administrative expenses increased by approximately $.5 million, an increase of 5.4% over the prior year due primarily to an increase in management staffing.
2003 Employees' Retirement System of Georgia
31
FINANCIAL SECTION MANAGEMENT'S DISCUSSION AND ANALYSIS
Funding Status
The schedules of funding progress and employer contributions provide information regarding how the plans are 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, 2002 and June 30, 2001 actuarial valuations, the latest valuations available, indicate the actuarial value of assets and funding ratios for the five defined benefit retirement plans were as follows:
ERS PSERS LRS GJRS GMPF
Actuarial Value of Plan
Assets (in thousands)
June 30, June 30,
2002
2001
$12,124,414 727,529 26,637 228,417 -
$11,750,624 708,391 26,034 219,288 N/A
Funding Ratio
June 30,
June 30,
2002
2001
101.1% 115.4% 122.3% 130.4%
0.0%
101.7% 115.5% 120.5% 140.5%
N /A
The System continues to be in a strong financial position as evidenced by the funding ratios, and it remains financially sound. A funding ratio over 100% indicates the plans, from an actuarial perspective, have more assets available than will be necessary to satisfy the obligations of the plans.
32
2003 Employees' Retirement System of Georgia
FINANCIAL SECTION COMBINED STATEMENTS OF NET ASSETS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
(Including All Plans and Funds Administered by the Employees' Retirement System of Georgia)
COMBINED STATEMENTS OF NET ASSETS JUNE 30, 2003 AND 2002 (In Thousands)
ASSETS CASH
RECEIVABLES: Employer and member contributions Interest and dividends Due from brokers for securities sold
Total receivables
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
Total investments
CAPITAL ASSETS--Net
Total assets
LIABILITIES Accounts payable and other Due to brokers for securities purchased
Total liabilities
NET ASSETS HELD IN TRUST FOR PENSION BENEFITS (A schedule of funding progress is presented on page 46.)
See notes to combined financial statements.
2003
$
4,707
26,467 45,397 28,150
100,014
195,254
6,295,131 6,912,595
4,299
13,407,279
42
13,512,042
12,187 27,152 39,339
$ 13,472,703
2002
$
5,044
28,600 75,109
-
103,709
235,569
5,815,140 7,140,706
4,326
13,195,741
33
13,304,527
10,684 -
10,684
$ 13,293,843
2003 Employees' Retirement System of Georgia
33
FINANCIAL SECTION COMBINED STATEMENTS OF CHANGES IN NET ASSETS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
(Including All Plans and Funds Administered by the Employees' Retirement System of Georgia)
COMBINED STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED JUNE 30, 2003 AND 2002 (In Thousands)
NET ASSETS HELD IN TRUST FOR PENSION BENEFITS--Beginning of year
ADDITIONS: Contributions: Employer Member Insurance premiums Administrative expense allotment Investment income (loss): Net increase (decrease) in fair value of investments Interest and dividends Total investment income (loss)
Less investment expenses
Net investment income (loss)
Total additions
DEDUCTIONS: Benefit payments Refunds of member contributions and interest Death benefits Administrative expenses
Total deductions
NET INCREASE (DECREASE)
NET ASSETS HELD IN TRUST FOR PENSION BENEFITS--End of year
See notes to combined financial statements.
2003
$ 13,293,843
252,852 74,550 14,847
909
236,390 339,805 576,195 12,505 563,690 906,848
684,118 14,993 18,924 9,953 727,988 178,860
$ 13,472,703
2002
$ 14,177,992
247,101 75,704 14,364
940
(991,765) 441,176 (550,589) 11,610 (562,199) (224,090)
618,682 13,704 18,227
9,446 660,059 (884,149)
$ 13,293,843
34
2003 Employees' Retirement System of Georgia
FINANCIAL SECTION NOTES TO COMBINED FINANCIAL STATEMENTS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
(Including All Plans and Funds Administered by the Employees' Retirement System of Georgia)
NOTES TO COMBINED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED JUNE 30, 2003 AND 2002
1. 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"), Georgia Military Pension Fund ("GMPF"), 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.
2003 Employees' Retirement System of Georgia
35
FINANCIAL SECTION NOTES TO COMBINED FINANCIAL STATEMENTS
Membership--As of June 30, 2003, participation in ERS is as follows:
Retirees and beneficiaries currently receiving benefits Terminated employees entitled to benefits but not yet
receiving benefits Active plan members
Total
28,562
56,525 74,947
160,034
Employers
516
Benefits--The benefit structure of ERS was significantly modified on July 1, 1982. Unless the employee elects otherwise, an employee who currently maintains membership with ERS based upon state employment that started prior to July 1, 1982 is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.
Under both the old and new plans, a member may retire and receive normal retirement benefits after completion of 10 years 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 are 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. Postretirement cost-of-living adjustments are also made to members' benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
Contributions and Vesting--Member contributions under the old plan are 4% of annual compensation up to $4,200 plus 6% of annual compensation in excess of $4,200. Under the old plan, the state pays member contributions in excess of 1.25% of annual compensation. Under the old plan, these state contributions are included in the members' accounts for refund purposes and are 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.
Employer contributions required for fiscal year 2003 and 2002 were based on the June 30, 2001 and 2000 actuarial valuations, respectively, as follows:
Employer: Normal Employer paid for member Accrued liability
Total
Old Plan New Plan
6.24 % (0.58)%
5.66 %
6.24 % 4.75 % (0.58)%
10.41 %
36
2003 Employees' Retirement System of Georgia
FINANCIAL SECTION NOTES TO COMBINED FINANCIAL STATEMENTS
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 are projected to liquidate the actuarial accrued funding excess within 13 years based upon the actuarial valuation at June 30, 2002, on the assumption that the total payroll of active members will increase by 3.5% each year.
On November 20, 1997, 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 ("IRC 415") 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 IRC 415.
Beginning January 1, 1998, all members and retired former members in ERS are eligible to participate in this plan whenever their benefits under ERS exceed the limitation on benefits imposed by IRC 415.
There were 162 and 132 members eligible to participate in this portion of ERS as of June 30, 2003 and 2002, respectively. Employer contributions of $1,308,000 and $2,802,000 and benefit payments of $1,907,000 and $2,509,000 under the SRBP are included in the combined statements of changes in net assets for the years ended June 30, 2003 and 2002, respectively. Cash of $42,000 and $542,000 under the SRBP is included in the combined statements of net assets for the years ended June 30, 2003 and 2002, respectively. Employer receivables of $96,000 under the SRBP are included in the combined statement of net assets for the year ended June 30, 2002.
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, 2003, participation in PSERS is as follows:
Retirees and beneficiaries currently receiving benefits Terminated emplolyees entitled to benefits but not yet
receiving benefits Active plan members
Total
12,078
40,988 51,175 104,241
Employers
182
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.
2003 Employees' Retirement System of Georgia
37
FINANCIAL SECTION NOTES TO COMBINED FINANCIAL STATEMENTS
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, 2003 and 2002 were $105.67 and $320.97 per active member, respectively, and were based on the June 30, 2002 and 2001 actuarial valuations, respectively.
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 contribution, the member forfeits all rights to retirement benefits.
The employer contributions are projected to liquidate the actuarial accrued funding excess within 20 years based upon the actuarial valuation at June 30, 2002.
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, 2003, participation in LRS is as follows:
Retirees and beneficiaries currently receiving benefits
206
Terminated employees entitled to benefits but not yet
receiving benefits
155
Active plan members
216
Total
577
Employers
1
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 are also available through the plan.
Contributions and Vesting--Member contributions are 8.5% of annual salary. The state pays member contributions in excess of 4.75% of annual compensation. Employer contributions are actuarially determined and approved and certified by the ERS Board of Trustees.
There were no employer contributions required for the years ended June 30, 2003 and 2002 based on the June 30, 2001 and 2000 actuarial valuations, respectively.
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.
38
2003 Employees' Retirement System of Georgia
FINANCIAL SECTION NOTES TO COMBINED FINANCIAL STATEMENTS
However, if an otherwise vested member terminates and withdraws his/her member contributions, the member forfeits all rights to retirement benefits.
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.
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.
Membership--As of June 30, 2003, participation in GJRS is as follows:
Retirees and beneficiaries currently receiving benefits
148
Terminated employees entitled to benefits but not yet
receiving benefits
38
Active plan members
473
Total
659
Employers
5
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 are also available.
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. 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, 2003 based on the June 30, 2001 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 are projected to liquidate the actuarial accrued funding excess within ten years based upon the actuarial valuation at July 1, 2002 assuming that the amount of accrued liability payment increases 3.5% each year.
2003 Employees' Retirement System of Georgia
39
FINANCIAL SECTION NOTES TO COMBINED FINANCIAL STATEMENTS
e. The GMPF is a defined benefit pension fund established on July 1, 2002 by the Georgia General Assembly for the purpose of providing retirement allowances and other benefits for members of the Georgia National Guard ("National Guard"). The GMPF is administered by the ERS Board of Trustees.
Membership--As of June 30, 2003, GMPF had 17 retirees and beneficiaries currently receiving benefits. Active and inactive plan member information is maintained by one employer, the Georgia Department of Defense.
Benefits--A member becomes eligible for benefits upon attainment of age 60 with 20 or more years of creditable service (including at least 15 years of service as a member of the National Guard), having served at least 10 consecutive years as a member of the National Guard immediately prior to discharge, and having received an honorable discharge from the National Guard.
The retirement allowance is payable for life in the amount of $50 per month plus $5 per month for each year of creditable service in excess of 20 years. The maximum benefit is $100 per month.
Contributions and Vesting--Employer contributions are actuarially determined and approved and certified by the ERS Board of Trustees. There are no member contributions required.
f. SCJRF is a defined benefit pension plan established by the Georgia General Assembly in 1945 for the purpose of providing retirement benefits to the superior court judges of the state of Georgia. SCJRF is directed by its own Board of Trustees. The 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, 2003, participation in SCJRF is as follows:
Retirees and beneficiaries currently receiving benefits
31
Terminated employees entitled to benefits but not yet
receiving benefits
4
Active plan members
2
Total
37
Employers
1
Benefits--The normal retirement for SCJRF is age 68 with 19 years of creditable service with a benefit of two-thirds the salary paid to superior court judges. A member may also retire at age 65 with a minimum of 10 years of creditable service with a benefit of one-half the salary paid to superior court judges. Death, disability, and spousal benefits are also available.
Contributions and Vesting--Member contributions are 5.0% of their salary plus an additional 2.5% for the spousal coverage benefit if elected. The state pays member contributions of 5.0% of the member's annual salary. Additional employer contributions are not actuarially determined but are provided on an as-needed basis to fund current benefits.
g. 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.
40
2003 Employees' Retirement System of Georgia
FINANCIAL SECTION NOTES TO COMBINED FINANCIAL STATEMENTS
Membership--As of June 30, 2003, 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. The state paid member contributions of 5.0% of the member's annual salary. Additional employer contributions are not actuarially determined but are provided on an as-needed basis to fund current benefits.
h. 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 are not members of a public retirement or pension system. GDCP is administered by the ERS Board of Trustees.
Membership--As of June 30, 2003, participation in GDCP is as follows:
Terminated employees entitled to benefits but not yet receiving benefits
Active plan members
76,236 32,840
Total
109,076
Employers
305
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.
Contribution--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.
i. SEAD was created in 1953 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 are recognized as additions in the period in which the members provide services. Retirement and refund payments are recognized as deductions when due and payable.
2003 Employees' Retirement System of Georgia
41
FINANCIAL SECTION NOTES TO COMBINED FINANCIAL STATEMENTS
Investments--Investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price. 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 included in mortgage loans and real estate is owned equally by the System and the Teachers Retirement System of Georgia. The System incurred approximately $437,000 and $341,000 in rental expense for the years ended June 30, 2003 and 2002, respectively, which is included 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 accepted 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.
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 U.S. 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-end. Category 1 includes investments that are insured or registered or for which the securities are held by the System or its agent in the System's name. Category 2 includes uninsured and unregistered investments for which the securities are held by the counterparty's trust department or agent in the System's name. Category 3 includes uninsured and unregistered investments 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, 2003 and 2002 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 $195,254,000 and $235,569,000 at June 30, 2003 and 2002, respectively.
42
2003 Employees' Retirement System of Georgia
FINANCIAL SECTION NOTES TO COMBINED FINANCIAL STATEMENTS
U.S. Treasury obligations with varying terms up to 360 days.
- Other short-term securities authorized, but not currently used, are:
Commercial paper, with a maturity of 180 days or less. Commercial paper is an unsecured promissory note issued primarily by corporations for a specific amount and maturing on a specific day. The System considers for investment only commercial paper of the highest quality, rated P-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 are limited to no more than $100 million in any one name.
(b) Long-Term:
Fixed income investments are authorized in the following instruments:
Obligations unconditionally guaranteed by agencies of the U.S. Government and corporate bonds with at least an "A" 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 $139,706,000 and $132,075,000 at June 30, 2003 and 2002, respectively.
U.S. and foreign government obligations with terms up to 30 years. Quality and call requirements of corporate bonds are applicable. The System held U.S. Government obligations of $6,155,425,000 and $5,683,065,000 at June 30, 2003 and 2002, respectively.
Private placements are authorized under the same general restrictions applicable to corporate bonds.
Mortgage investments are authorized to the extent that they are secured by first mortgages on improved real property located in the state of Georgia having a loan-to-value ratio no higher than 75%. Mortgages, as a group cannot exceed 10% of total assets or 1% for any one loan.
Equity securities are also authorized (in statutes) for investment as a complement to the System's fixed-income portfolio and as a long-term inflation hedge. By statute, no more than 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 Division of Investment Services (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 are approved and executed by the Division's staff. Common stocks eligible for investment are approved by the Investment Committee of the Board of Trustees before being placed on an approved list. The System held common stocks of $6,912,595,000 and $7,140,706,000 at June 30, 2003 and 2002, respectively.
Substantially all of the investments of ERS, PSERS, LRS, SCJRF, GJRS, GMPF, SEAD, and certain investments of GDCP are pooled into one common investment fund. Investments of approximately
2003 Employees' Retirement System of Georgia
43
FINANCIAL SECTION NOTES TO COMBINED FINANCIAL STATEMENTS
$12,048,000 and $15,231,000 at June 30, 2003 and 2002, respectively, held by GDCP, are not included in the common investment fund. Units in the pooled common investment fund are allocated to the respective plans based upon the cost of assets contributed, and additional units are allocated to the participating plans based on the market value of the pooled common investment fund at the date of contribution. Net income of the pooled common investment fund is allocated monthly to the participating plans based upon the number of units outstanding during the month.
The units and market value of each plan's equity in the pooled common investment fund at June 30, 2003 and 2002 were as follows (dollars in thousands):
2003
Market Value
Units
Employees' Retirement System Public School Employees' Retirement System Legislative Retirement System Georgia Judicial Retirement System State Employees' Assurance Department Georgia Military Pension Fund Superior Court Judges Retirement Fund Georgia Defined Contribution Plan
$ 11,679,683 695,093 25,613 220,496 779,032 541 869 36,514
6,737,963 400,996 14,776 127,203 449,421 312 501 21,065
$ 13,437,841 7,752,237
2002
Market Value
Units
$ 11,534,275 6,949,866
697,942 25,507
420,538 15,369
213,359
128,557
752,895
453,650
930 26,874
$ 13,251,782
560 16,193
7,984,733
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 dividends 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 $6,220,148,000 and $5,675,299,000 at fair value at June 30, 2003 and 2002, respectively. The collateral value was equal to 104.2% and 104.9% of the loaned securities' value at June 30, 2003 and 2002, respectively. The loaned securities are classified as Category 1 investments (see Note 4) based on the custodial arrangements for the collateral securities.
Loaned securities are included in the accompanying combined statements of net assets since the System maintains ownership. The related collateral securities are 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 are no indications of the System's ability to pledge or sell the collateral securities.
44
2003 Employees' Retirement System of Georgia
FINANCIAL SECTION NOTES TO COMBINED FINANCIAL STATEMENTS
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 are 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, 2002. The valuation indicated that the employee contribution rate of .50% and .25% and the employer contribution rate of .25% of members' salaries for old plan members and new plan members, respectively, as of June 30, 2002 were appropriate. Old plan members were hired prior to July 1, 1982, and new plan members were hired on or after July 1, 1982.
7. CAPITAL ASSETS
The following is a summary of capital assets and depreciation information as of June 30, 2003 and 2002 and for the years then ended:
Capital assets: Equipment Vehicles
Accumulated depreciation for: Equipment Vehicles
Capital assets, net
Balance at June 30, 2002
Additions
Disposals
Balance at June 30, 2003
$ 41,597 $ 21,089 $
-
20,551
-
-
62,148
21,089
-
$ 62,686 20,551 83,237
(18,639)
(9,367)
-
(10,276)
(2,935)
-
(28,915)
(12,302)
-
$ 33,233 $
8,787 $
-
(28,006) (13,211) (41,217)
$ 42,020
Capital assets: Equipment Vehicles
Accumulated depreciation for: Equipment Vehicles
Capital assets, net
Balance at June 30, 2001
Additions
Disposals
Balance at June 30, 2002
$
-
-
-
$ 41,597 $
-
20,551
-
62,148
-
$ 41,597 20,551 62,148
-
$
-
(18,639)
-
(10,276)
-
(28,915)
-
$ 33,233 $
-
(18,639) (10,276) (28,915)
$ 33,233
2003 Employees' Retirement System of Georgia
45
46
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia)
REQUIRED SUPPLEMENTARY SCHEDULES (In Thousands)
Schedule of Funding Progress
Actuarial Valuation
Date
Actuarial Value of Plan Assets
(a)
Actuarial Accrued Liability ("AAL") -
Entry Age (b)
Unfunded AAL/(Funding
Excess) (b - a)
Funding Ratio (a/b)
Annual Covered Payroll
(c)
Excess) as a Percentage of Covered Payroll
[(b-a)/c]
FINANCIAL SECTION REQUIRED SUPPLEMENTARY INFORMATION
Employees' Retirement System
6/30/1998 6/30/1999 6/30/2000 6/30/2001
6/30/2002
8,613,575 9,848,723 10,999,901 11,750,624
12,124,414
Public School Employees' Retirement System1
6/30/1998 6/30/1999 6/30/2000 6/30/2001
6/30/2002
528,770 599,464 667,642 708,391
727,529
Legislative Retirement System
6/30/1998 6/30/1999 6/30/2000 6/30/2001
6/30/2002
20,375 22,679 24,666 26,034
26,637
Georgia Judicial Retirement System
6/30/1998 6/30/1999 6/30/2000 6/30/2001 6/30/2002
160,171 183,249 204,136 219,288 228,417
Georgia Military Pension Fund
6/30/2002
-
This data, except for annual covered payroll, was provided by the System's actuary.
9,093,758 9,695,614 10,573,408 11,557,255 11,994,850
504,779 586,352 615,357 613,347 630,295
19,272 20,129 21,628 21,610 21,779
117,771 129,233 138,427 156,083 175,154
8,322
480,183 (153,109) (426,493) (193,369) (129,564)
(23,991) (13,112) (52,285) (95,044) (97,234)
(1,103) (2,550) (3,038) (4,424) (4,858)
(42,400) (54,016) (65,709) (63,205) (53,263)
8,322
94.7% 101.6% 104.0% 101.7% 101.1%
104.8% 102.2% 108.5% 115.5% 115.4%
105.7% 112.7% 114.0% 120.5% 122.3%
136.0% 141.8% 147.5% 140.5% 130.4%
0.0%
2,055,966 2,152,072 2,304,289 2,397,169 2,408,306
N/A N/A N/A N/A N/A
2,363 2,411 2,411 3,567 3,413
26,226 29,594 34,856 37,688 38,630
N/A
23.4 % (7.1)% (18.5)% (8.1)% (5.4)%
N/A N/A N/A N/A N/A
(46.7)% (105.8)% (126.0)% (124.0)% (142.3)%
(161.7)% (182.5)% (188.5)% (167.7)% (137.9)%
N/A
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. 1No statistics regarding covered payroll are available. Contributions are not based upon members' salaries, but are simply $4.00 per member per month for nine months each fiscal year.
See notes to required supplementary schedules.
2003 Employees' Retirement System of Georgia
FINANCIAL SECTION REQUIRED SUPPLEMENTARY INFORMATION
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
(Including All Plans and Funds Administered by the Employees' Retirement System of Georgia)
REQUIRED SUPPLEMENTARY SCHEDULES (In Thousands)
Schedule of Employer Contributions
Employees' Retirement System Public School Employees' Retirement System Legislative Retirement System Georgia Judicial Retirement System This data was provided by the System's actuary.
Year Ended June 30,
1998 1999 2000 2001 2002
1998 1999 2000 2001 2002
1998 1999 2000 2001 2002
1999 2000 2001 2002
State Annual Required Contribution
286,794 304,461 302,332 315,505 233,229
13,638 10,839
9,789 12,874 11,623
164 84 22 -
694 834 1,741
-
Percentage Contributed
100% 100% 100% 100% 100%
107% 158% 184% 132% 100%
126% 108% 436% N/A N/A
100% 100% 11% N/A
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.
2003 Employees' Retirement System of Georgia
47
FINANCIAL SECTION REQUIRED SUPPLEMENTARY INFORMATION
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia)
NOTES TO REQUIRED 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 dates indicated. Additional information from the actuarial valuations for the most recent two-year period is as follows:
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 return1 Projected salary increases1 Postretirement cost-of-living adjustment
June 30, 2002 Entry age Level percent of pay, open
13 years 5-year smoothed market
7% 5.20-9.00%
None
June 30, 2001 Entry age Level percent of pay, open
20 years 5-year smoothed market
7% 5.20-9.00%
None
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 return1 Projected salary increases Postretirement cost-of-living adjustment
June 30, 2002 Entry age Level dollar, open
20 years 5-year smoothed market
7% N/A
3% annually
June 30, 2001 Entry age Level dollar, open
40 years 5-year smoothed market
7% N/A
3% annually
48
2003 Employees' Retirement System of Georgia
FINANCIAL SECTION REQUIRED SUPPLEMENTARY INFORMATION
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia)
NOTES TO REQUIRED SUPPLEMENTARY SCHEDULES
Legislative Retirement System:
Valuation date Actuarial cost method Amortization method Remaining amortization period
of the Funding Excess Asset valuation method Actuarial assumptions:
Investment rate of return1 Projected salary increases Postretirement cost-of-living adjustment
June 30, 2002 Unit credit Level dollar, open
N/A 5-year smoothed market
7% N/A 3% annually
Georgia Judicial Retirement System:
Valuation date Actuarial cost method Amortization method Remaining amortization period
of the Funding Excess Asset valuation method Actuarial assumptions:
Investment rate of return1 Projected salary increases1 Postretirement cost-of-living adjustment
July 1, 2002 Entry age Level percent of pay, open
10 years 5-year smoothed market
7% 5.50% None
June 30, 2001 Unit credit Level dollar, open
N/A 5-year smoothed market
7% N/A 3% annually
July 1, 2001 Entry age Level percent of pay, open
10 years 5-year smoothed market
7% 5.50% None
2003 Employees' Retirement System of Georgia
49
FINANCIAL SECTION REQUIRED SUPPLEMENTARY INFORMATION
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia)
NOTES TO REQUIRED SUPPLEMENTARY SCHEDULES
Georgia Military Pension Fund:
Valuation date Actuarial cost method Amortization method Remaining amortization period
of the unfunded actuarial accrued liability Asset valuation method Actuarial assumptions: Investment rate of return1 Projected salary increases1 Postretirement cost-of-living adjustment
June 30, 2002 Entry age Level dollar, open
40 years 5-year smoothed market
7% N/A None
1Includes inflation rate of 3.50%
50
2003 Employees' Retirement System of Georgia
2003 Employees' Retirement System of Georgia
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia)
COMBINING STATEMENTS OF NET ASSETS JUNE 30, 2003 WITH COMPARATIVE TOTALS FOR 2002 (In Thousands)
ASSETS
Plans and Funds
Superior Court
Judges and
Public School
Georgia
State Georgia District
Georgia
Employees' Employees' Legislative Judicial Employees' Military Attorneys Pooled
Defined
Retirement Retirement Retirement Retirement Assurance Pension Retirement Investment Contribution
System
System System System Department Fund
Funds
Fund
Plan
Eliminations
Total
2003
2002
FINANCIAL SECTION ADDITIONAL INFORMATION
CASH
$ 4,101 $
87 $ 61 $ 54 $
4 $ 85 $ 195
$ 120
$ 4,707
$ 5,044
RECEIVABLES: Employer and member contributions Interest and dividends Due from brokers for securities sold Unremitted insurance premiums
Total receivables
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 Equity in pooled investment fund
Total investments
25,137
8
25,137
8
293
3,795
293
3,795
3,744
11,679,683
695,093
25,613
220,497
779,032
541
11,683,427
695,093
25,613
220,497
779,032
541
1 $ 45,356 28,150
1
73,506
1,028 41
$ 1,069
(3,795) (3,795)
26,467 45,397 28,150
-
100,014
28,600 75,109
-
103,709
188,292
6,290,045 6,912,595
555 869
869
13,391,487
6,962 5,086
36,513 48,561
195,254
(13,437,841) (13,437,841)
6,295,131 6,912,595
4,299 -
13,407,279
235,569
5,815,140 7,140,706
4,326 -
13,195,741
CAPITAL ASSETS, net Total assets
42 11,712,707
695,188
25,674
220,844
782,831
42
33
626
1,065
13,464,993
49,750
(13,441,636) 13,512,042
13,304,527
LIABILITIES
Accounts payable and other Due to brokers for securities purchases Insurance premiums payable
Total liabilities
NET ASSETS HELD IN TRUST FOR PENSION BENEFITS (A schedule of funding progress is presented on page 46.)
11,480
479
18
125
40
3,620
41
134
15,100
479
59
259
40
42 27,152
42
27,152
3
12,187
10,684
27,152
-
(3,795)
-
-
3
(3,795)
39,339
10,684
$ 11,697,607 $ 694,709 $25,615 $ 220,585 $ 782,791 $ 626 $ 1,023 $ 13,437,841 $ 49,747 $ (13,437,841) $ 13,472,703
$ 13,293,843
51
2003 Employees' Retirement System of Georgia
52
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia)
Superior Court Judges and District Attorneys Retirement Funds
COMBINING STATEMENTS OF NET ASSETS JUNE 30, 2003 WITH COMPARATIVE TOTALS FOR 2002 (In Thousands)
ASSETS
Pension Trust Funds
Superior Court District
Judges
Attorneys
Retirement Retirement
Fund
Fund
CASH RECEIVABLES:
Employer and member contributions
Total receivables INVESTMENTS - at fair value:
Equity in pooled investment fund Total assets
LIABILITIES
ACCOUNTS PAYABLE AND OTHER
Total liabilities NET ASSETS HELD IN TRUST FOR PENSION BENEFITS (A schedule of funding progress is presented on page 46.)
$ 194 1 1
869 1,064
41 41 $ 1,023
$ 1
1 1 1 $ -
Total
2003
2002
$ 195
$ 90
1 1
869 1,065
3 3
930 1,023
42 42 $1,023
45 45 $ 978
FINANCIAL SECTION ADDITIONAL INFORMATION
2003 Employees' Retirement System of Georgia
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia)
FINANCIAL SECTION ADDITIONAL INFORMATION
COMBINING STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEAR ENDED JUNE 30, 2003 WITH COMPARATIVE TOTALS FOR 2002 (In Thousands)
Plans and Funds
Superior Court
Judges and
Public School
Georgia
State Georgia District
Employees' Employees' Legislative Judicial Employees' Military Attorneys Pooled
Retirement Retirement Retirement Retirement Assurance Pension Retirement Investment
System
System System System Department Fund
Funds
Fund
Georgia Defined Contribution
Plan
Eliminations
Total
2003
2002
NET ASSETS HELD IN TRUST FOR PENSION BENEFITS - Beginning of year
$ 11,558,373 $ 697,461 $ 25,467 $ 213,611 $ 754,054
$ 978 $ 13,251,782 $ 43,899 $ (13,251,782) $13,293,843 $14,177,992
ADDITIONS: Contributions: Employer Member Insurance premiums Administrative expense allotment Investment income (loss): Net increase (decrease)
in fair value of investments Interest and dividends Less investment expenses Allocation of investment earnings
246,172 55,456
3,555 1,298
594
43
373
$ 591
2,118
297
3,814
8
14,847
110
175
30
13,677
252,852 74,550 14,847
909
247,101 75,704 14,364
940
1
2
(2,497)
(24)
(3)
(7)
491,107
29,673
1,077
9,347
33,037
41
236,467
339,460
(1)
(9,966)
39
(77) 342
(7) 1,640
(565,961)
236,390 339,805 (12,505)
-
(991,765) 441,176 (11,610)
-
Net investment income (loss)
488,611
29,649
1,074
9,340
33,039
41
38
565,961
1,898
(565,961)
563,690
(562,199)
Total additions
790,239
35,096
1,524
13,702
47,886
632
2,194
565,961
15,575
(565,961)
906,848
(224,090)
DEDUCTIONS: Benefit payments Refunds of member contributions and interest Death benefits Administrative expenses
637,243 5,253
8,509
37,021 233
594
1,246 20
110
6,483 70
175
18,924 225
6
2,119
30
9,417 310
684,118 14,993 18,924 9,953
618,682 13,704 18,227 9,446
Total deductions
651,005
37,848
1,376
6,728
19,149
6
2,149
9,727
727,988
660,059
TRANSFERS TO SYSTEMS FROM POOLED INVESTMENT FUND
NET INCREASE (DECREASE)
NET ASSETS HELD IN TRUST FOR PENSION BENEFITS - End of year
139,234
(2,752)
148
6,974
28,737
626
(379,902)
45
186,059
5,848
379,902 (186,059)
178,860
(884,149)
$ 11,697,607 $ 694,709 $ 25,615 $ 220,585 $ 782,791 $ 626 $ 1,023 $ 13,437,841 $ 49,747 $ (13,437,841) $13,472,703 $13,293,843
53
2003 Employees' Retirement System of Georgia
54
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia)
Superior Court Judges and District Attorneys Retirement Funds
COMBINING STATEMENTS OF CHANGES IN NET ASSETS
JUNE 30, 2003 WITH COMPARATIVE TOTALS FOR 2002 (In Thousands)
Pension Trust Funds
Superior Court District
Judges
Attorneys
Retirement Retirement
Fund
Fund
NET ASSETS HELD IN TRUST FOR PENSION BENEFITS Beginning of year
ADDITIONS: Contributions: Employer Member Administrative expense allotment Investment income (loss): Interest and dividends Less investment expenses Allocation of investment earnings Net investment income (loss)
Total additions
DEDUCTIONS: Benefit payments Administrative expenses
Total deductions
NET INCREASE (DECREASE)
NET ASSETS HELD IN TRUST FOR PENSION BENEFITS End of year
$ 978
2,005 8 30
(1) 39 38 2,081
2,006 30
2,036 45
$ 1,023
$ 113
113 113 113 $ -
Total
2003
2002
$ 978
$ 1,739
2,118 8
30
(1) 39 38
2,194
2,119 30
2,149 45
$ 1,023
2,159 13 30
(3)
(745) (748)
1,454
2,185 30
2,215 (761)
$ 978
FINANCIAL SECTION ADDITIONAL INFORMATION
FINANCIAL SECTION ADDITIONAL INFORMATION
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (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, 2003 AND 2002 (In Thousands)
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 Total contributions
Expenses: Personal services: Salaries and wages Retirement contributions FICA Health insurance Miscellaneous
Communications: Postage Publications and printing Telecommunications Travel
Professional services: Accounting and investment services Computer services Contracts Actuarial services Medical services Professional fees Legal services
2003 Employees' Retirement System of Georgia
2003
2002
$ 8,509 594 110 175 225 310 30
9,953
$ 7,971 625 110 175 225 310 30
9,446
2,247 235 160 294 40
2,976
1,947 204 138 254 29
2,572
165
155
105
82
96
83
22
23
388
343
2,147 883
1,202 521 163 69 27
5,012
1,758 1,026 1,603
305 168
87 68 5,015
(Continued) 55
FINANCIAL SECTION ADDITIONAL INFORMATION
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (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, 2003 AND 2002 (In Thousands)
Rentals: Office space Office equipment
Other services and charges: Equipment Temporary services Supplies and materials Repairs and maintenance Courier services Board member expenses Depreciation Miscellaneous
Total expenses
Net Income
Balance: Beginning of year End of year
2003
2002
$ 437 1
438
$ 341 3
344
18 611 127
33 13 12 325
1,139
9,953
-
99 580 85 335 11 14 29 19
1,172
9,446
-
$ -
$ -
(Concluded)
56
2003 Employees' Retirement System of Georgia
Two Northside Seventy-Five Suite 300 Atlanta, Georgia 30318-7778 404-352-6400 1-800-805-4609 Fax 404-352-6431