2009 annual report [2009]

Annual Report
Fiscal Year Ended June 30, 2009
Employees' Retirement System of Georgia

2009

INTRODUCTORY SECTION
Table of Contents

Introductory Section

Boards of Trustees

2

Letter of Transmittal

3

Actuarial Section

Employees' Retirement System

5

Public School Employees Retirement System

9

Legislative Retirement System

13

Georgia Judicial Retirement System

17

Group Term Life Insurance Plan -- Pre-Retirement

21

Group Term Life Insurance Plan -- Post-Retirement

25

Georgia Military Pension Fund

29

Investment Section

Pooled Investment Fund/Structural Analysis/Short-Term Investments

33

Bonds

34

Equity Holdings

35

Financial Section

Independent Auditors' Report

36

Management's Discussion and Analysis (Unaudited)

37

Basic Financial Statements:

Combined Statement of Net Assets as of June 30, 2009

43

(With Comparative Totals as of June 30, 2008)

Combined Statement of Changes in Net Assets for the Year Ended June 30, 2009

44

(With Comparative Totals for the Year Ended June 30, 2008)

Combining Statement of Net Assets as of June 30, 2009

45

Defined Benefit Plans

Combining Statement of Net Assets as of June 30, 2009

46

Combining Statement of Changes in Net Assets for the Year Ended June 30, 2009

47

Defined Benefit Plans

Combining Statement of Changes in Net Assets for the Year Ended June 30, 2009

48

Notes to Financial Statements

49

Required Supplementary Schedules (Unaudited)

Schedules of Funding Progress

67

Schedules of Employer Contributions

68

Notes to Required Supplementary Schedules

69

Additional Information

Administrative Expenses Schedule

Contributions and Expenses for the Year Ended June 30, 2009

71

(With Comparative Totals for the Year Ended June 30, 2008)

2009 - Employees' Retirement System of Georgia

1

INTRODUCTORY SECTION
Boards of Trustees

Russell W. Hinton, ex-officio Chair
State Auditor Employees' Retirement System Public School Employees Retirement System Legislative Retirement System Georgia Judicial Retirement System Georgia Defined Contribution Plan Georgia Military Pension Fund Georgia Deferred Compensation Plans State Employees' Assurance Department
Dan Ebersole, ex-officio Director
Office ofTreasury and Fiscal Services Employees' Retirement System
Public School Employees Retirement System Legislative Retirement System
Georgia Judicial Retirement System Georgia Defined Contribution Plan
Georgia Military Pension Fund Georgia Deferred Compensation Plans State Employees' Assurance Department
Michael D. Kennedy Korn/Ferry International Employees' Retirement System Public School Employees Retirement System Legislative Retirement System Georgia Judicial Retirement System Georgia Defined Contribution Plan Georgia Military Pension Fund Georgia Deferred Compensation Plans
Frank F. Thach, Jr. Employees' Retirement System Public School Employees Retirement System Legislative Retirement System Georgia Judicial Retirement System Georgia Defined Contribution Plan Georgia Military Pension Fund Georgia Deferred Compensation Plans
Ned J. Winsor Assistant Treasurer United Parcel Service Employees' Retirement System Public School Employees Retirement System Legislative Retirement System Georgia Judicial Retirement System Georgia Defined Contribution Plan Georgia Military Pension Fund Georgia Deferred Compensation Plans State Employees' Assurance Department

Harold Reheis Board Vice-Chair Joe Tanner & Associates Employees' Retirement System Public School Employees Retirement System Legislative Retirement System Georgia Judicial Retirement System Georgia Defined Contribution Plan Georgia Military Pension Fund Georgia Deferred Compensation Plans
Steve Stevenson Commissioner
State Personnel Administration Employees' Retirement System Public School Employees Retirement System Legislative Retirement System Georgia Judicial Retirement System Georgia Defined Contribution Plan Georgia Military Pension Fund Georgia Deferred Compensation Plans State Employees' Assurance Department
Daniel J. Craig Superior Court Judge Augusta Judicial Circuit Georgia Judicial Retirement System
William D. Ray Superior Court Judge
Gwinnett County Georgia Judicial Retirement System
Karlton Van Banke Presiding Judge
Juvenile Court of Clayton County Georgia Judicial Retirement System
Samuel B. Kellett President
Kangaroo Bob's LLC Public School Employees Retirement System
J. Sammons Pearson Vice President - Wealth Management
Smith Barney Public School Employees Retirement System
Michael Thurmond, ex-officio Commissioner of Labor
State Employees' Assurance Department
H. Phillip Bell Owner
Phillip Bell State Farm Insurance Agency State Employees' Assurance Department

2

2009 - Employees' Retirement System of Georgia

INTRODUCTORY SECTION
Letter of Transmittal

April 1, 2010
The Boards of Trustees and staff are pleased to present the 2009 Annual Report of the retirement systems and programs administered by the Employees' Retirement System of Georgia (ERS).
This Report has been prepared in accordance with generally accepted accounting principles as promulgated by the Governmental Accounting Standards Board (GASB) and is presented in four sections: Introductory, Actuarial, Investment, and Financial.
The mission of ERS is to be the guardian of the plans for the ultimate benefit of the members, retirees, and beneficiaries of the plans. ERS's core responsibility is pension administration: the collection, reconciliation and disbursement of contributions for the welfare of the members, retirees, and beneficiaries of the plans and the sound and secure investment of retirement funds. We believe this report properly reflects the dedication of the Board of Trustees, staff, and consultants in carrying out ERS's mission.
Profile of the Systems ERS administers separate and distinct cost-sharing, multiple employer defined benefit pension plans for various employer agencies of the State of Georgia, as well as defined contribution plans, and a life insurance plan, which are as follows:
Employees' Retirement System of Georgia Public School Employees Retirement System Legislative Retirement System (LRS) Georgia Judicial Retirement System (GJRS) Georgia Military Pension Fund Superior Court Judges Retirement Fund District Attorneys Retirement Fund Georgia Defined Contribution Plan 401(k) Deferred Compensation Plan 457 Deferred Compensation Plan State Employees' Assurance Department
During fiscal year 2009, the net assets of the System decreased by $3.0 billion, or 18.5% to $13.2 billion by June 30, 2009. This decrease was primarily due to declining equities markets in 2009.
Legislative Overview Four key pieces of legislation were passed during the 2009 Legislative session which impact the plans ERS administers:
Act 44 allows ERS to increase its investment in equities to 75% by July 1, 2011. ERS can increase to 65% until July 1, 2010, an additional 5% for the next year, and then another 5% after July 1, 2011. The bill also changes the definition of a large retirement system which will impact local pension systems.
Act 82 eliminates cost of living adjustments for employees hired after 7/1/2009.
Act 94 ceases new entrants into the Group Term Life Insurance Plan (GTLI) after 7/1/2009. LRS, GJRS and new Appellate Judges in ERS were still allowed to enter into the plan. This complements the bill passed in 2008 for ERS new hires.

2009 - Employees' Retirement System of Georgia

3

INTRODUCTORY SECTION
Letter of Transmittal
Act 275 updates the Georgia Statute to comply with all federal retirement plan laws and impacts rehires that return to state service effective 5/11/09.
Normal retirement age is defined as age 62 and completion of 8 years of membership service or age 65 and completion of 10 years creditable service.
If a retiree who has not reached normal retirement age returns to state service other than legislative service, retirement benefits are suspended.
If a retiree who has not reached normal retirement age returns to legislative service, retirement benefits are suspended and active membership resumes.
If a retiree has reached normal retirement age and returns to state service other than legislative service, retirement benefits are suspended if employed more than 1,040 hours per calendar year.
If a retiree has reached normal retirement age and returns to legislative service, retiree has the option of suspending retirement benefits and returning to active membership or continuing retirement benefits with no additional membership accruals.
Acknowledgements We express our sincere thanks to the Boards of Trustees for their leadership and support. Many thanks are also extended to the offices of the Governor, Lieutenant Governor, members of the House and Senate Retirement Committees and their staff, members of the House of Representatives and the Senate, and the department officials whose support and assistance have helped ERS accomplish its mission over the years. Respectfully submitted,
Pamela L. Pharris, Executive Director Employees' Retirement System of Georgia

4

2009 - Employees' Retirement System of Georgia

ACTUARIAL SECTION
Actuary's Certification Letter Employees' Retirement System
June 19, 2009
Board of Trustees Employees' Retirement System of Georgia Two Northside 75, Suite 300 Atlanta, GA 30318-7778
Attention: Ms. Pamela Pharris, 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 annual 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, 2008. The report indicates that annual employer contributions at the rate of 5.66% of compensation for Old Plan Members and 10.41% of compensation for New Plan Members for the fiscal year ending June 30, 2011 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.
In our opinion, the valuation is complete and accurate, and the methodology and assumptions are reasonable as a basis for the valuation. The valuation takes into account the effect of all amendments to the System enacted through the 2008 session of the General Assembly.The valuation reflects semi-annual 1.0% Ad Hoc COLAs effective through January 1, 2011.
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 being amortized as a level percent of payroll within a 26-year period.
The 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 valuations, the continued sufficiency of the retirement fund to provide the benefits called for under the System may be safely anticipated.

2009 - Employees' Retirement System of Georgia

5

ACTUARIAL SECTION
Actuary's Certification Letter Employees' Retirement System
June 19, 2009 Board of Trustees Page 2

This is to certify that the independent consulting actuary is a member of the American Academy of Actuaries and has experience in 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 System and on actuarial assumptions that are internally consistent and reasonably based on the actual experience of the System.
Future actuarial results may differ significantly from the current results presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. Since the potential impact of such factors is outside the scope of a normal annual actuarial valuation, an analysis of the range of results is not presented herein.
Sincerely yours,

Edward A. Macdonald, ASA, FCA, MAAA President
EAM: bdm

Cathy Turcot Principal and Managing Director

6

2009 - Employees' Retirement System of Georgia

ACTUARIAL SECTION
Valuation Balance Sheet Employees' Retirement System

- As of June 30, 2008 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

$ 9,040,826 591,303
124,400

Total

$

(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 total future contributions = (3)-(4)
(6) Present value of future member contributions and employer normal contributions
(7) Prospective unfunded accrued liability contributions = (5)-(6)

$ $ 3,393,384

(8) TOTAL PRESENT AND PROSPECTIVE ASSETS

$

9,756,529 7,654,201 17,410,730
14,017,346
1,729,873 1,663,511 17,410,730

2009 - Employees' Retirement System of Georgia

7

ACTUARIAL SECTION
Summary of Principal Results Employees' Retirement System

Dollar Amount in Thousands

Valuation Date
Number of active members Annual earnable compensation
Number of retired members and beneficiaries Annual Allowances
Assets: Market Value Actuarial Value
Unfunded actuarial accrued liability
Amortization period (years)
Funded Percentage
For Fiscal Year Ending
Annual Required Employer Contribution Rates (ARC) Old Plan Initial Normal Rate Employer Paid on Behalf of Employee Normal Rate Accrued Liability Rate Total
New Plan Normal Rate Accrued Liability Rate Total

June 30, 2008
75,293 $ 2,809,199

June 30, 2007
73,985 $ 2,680,972

35,579

34,174

$

997,623 $

936,278

$ 13,080,653 14,017,346

$ 14,272,114 13,843,689

$ 1,663,511 $ 1,041,490

26

15

89.4 %

93.0 %

June 30, 2011 June 30, 2010

6.80 % (4.75) % 2.05 % 3.61 % 5.66 %
6.80 % 3.61 % 10.41 %

6.83 % (4.75) % 2.08 % 3.58 % 5.66 %
6.83 % 3.58 % 10.41 %

8

2009 - Employees' Retirement System of Georgia

ACTUARIAL SECTION
Actuary's Certification Letter Public School Employees' Retirement System
June 19, 2009
Board of Trustees Georgia Public School Employees' Retirement System Two Northside 75, Suite 300 Atlanta, GA 30318
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 contribution shall be actuarially determined and approved 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, 2008. Based on a monthly benefit accrual rate of $14.75 effective July 1, 2008, the valuation indicates that annual employer contributions of $7,509,000 or $187.16 per active member for the fiscal year ending June 30, 2011 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.
In our opinion, the valuation is complete and accurate, and the methodology and assumptions are reasonable as a basis for the valuation.The valuation takes into account the effect of all amendments to the System enacted through the 2008 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 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 active member within a 10year period.
The 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.

2009 - Employees' Retirement System of Georgia

9

ACTUARIAL SECTION
Actuary's Certification Letter Public School Employees' Retirement System
June 19, 2009 Board of Trustees Page 2

This is to certify that the independent consulting actuary is a member of the American Academy of Actuaries and has experience in 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.
Future actuarial results may differ significantly from the current results presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. Since the potential impact of such factors is outside the scope of a normal annual actuarial valuation, an analysis of the range of results is not presented herein.
Sincerely yours,

Edward A. Macdonald, ASA, FCA, MAAA President
EAM:mjn

Cathy Turcot Principal and Managing Director

10

2009 - Employees' Retirement System of Georgia

ACTUARIAL SECTION
Valuation Balance Sheet Public School Employees' Retirement System

- As of June 30, 2008 -

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
(3) TOTAL ACTUARIAL LIABILITIES
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 membership service
(10) Prospective normal contributions = (8) x (9)
(11) Prospective unfunded actuarial accrued liability contributions = (7)-(10)
(12) TOTAL PRESENT AND PROSPECTIVE ASSETS

$ 422,786,166 17,922,001 28,892,559

$ 469,600,726 361,723,557
$ 831,324,283

$ 39,469,283

$ 32,201,819

$

263.07

201,874

$ 791,855,000 7,267,464
53,106,993

(20,905,174) $ 831,324,283

2009 - Employees' Retirement System of Georgia

11

ACTUARIAL SECTION
Summary of Principal Results Public School Employees' Retirement System

Valuation Date
Number of active members
Retired members and beneficiaries: Number Annual allowances
Assets: Market Value Actuarial Value
Unfunded actuarial accrued liability
Amortization period (years)
Funded ratio
For Fiscal Year Ending
Employer contribution rate per active member: Normal Accrued liability Total
Annual Required Employer Contribution (ARC): Normal Accrued liability Total

June 30, 2008
40,121

June 30, 2007
39,086

13,487 $ 48,805,317

13,193 $ 46,661,948

$ 740,364,000 791,855,000
$ (20,905,174) 10
102.7%

$ 811,649,000 785,460,000
$ (39,382,352) 15
105.3%

June 30, 2011 June 30, 2010

$

236.07

$

259.33

(75.91)

(117.87)

$

187.16

$

141.46)

$ 10,555,000) (3,046,000)
$ 7,509,000

$ 10,136,000 (4,607,000)
$ 5,529,000

Does not include increases in benefit accrual rate effective after the valuation date. The results of
the valuation have been adjusted to include these increases.
The ARC is in addition to any administrative expense allotments that are contributed to the System.

12

2009 - Employees' Retirement System of Georgia

ACTUARIAL SECTION
Actuary's Certification Letter Legislative Retirement System

June 19, 2009
Board of Trustees Legislative Retirement System of Georgia Two Northside 75, Suite 300 Atlanta, GA 30318
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 actuarial valuation of the System prepared as of June 30, 2008. The report indicates that no annual employer contributions for the fiscal year ending June 30, 2011 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.
In our opinion, the valuation is complete and accurate, and the methodology and assumptions are reasonable as a basis for the valuation. The valuation takes into account the effect of all amendments to the System enacted through the 2008 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 entry age normal cost method. The normal contribution rate to cover current cost has been determined as a level 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 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 in 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.

2009 - Employees' Retirement System of Georgia

13

ACTUARIAL SECTION
Actuary's Certification Letter Legislative Retirement System
June 19, 2009 Board of Trustees Page 2

Future actuarial results may differ significantly from the current results presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. Since the potential impact of such factors is outside the scope of a normal annual actuarial valuation, an analysis of the range of results is not presented herein.
Sincerely yours,

Edward A. Macdonald, ASA, FCA, MAAA President
EAM/CT:jel

Cathy Turcot Prinicipal and Managing Director

14

2009 - Employees' Retirement System of Georgia

ACTUARIAL SECTION
Valuation Balance Sheet Legislative Retirement System

- As of June 30, 2008 -

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
(3) TOTAL ACTUARIAL LIABILITIES
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

$ 11,602,141 3,344,954
4,419,379

$ 19,366,474

6,786,236 $ 26,152,710

$ (4,553,290) $ (6,180,276)

$ 30,706,000 1,626,986 71,795

(6,252,071)

$ 26,152,710

2009 - Employees' Retirement System of Georgia

15

ACTUARIAL SECTION
Summary of Principal Results Legislative Retirement System

Valuation Date
Number of active members
Retired members and beneficiaries: Number Annual allowances
Assets: Market Value Actuarial Value
Unfunded actuarial accrued liability
Amortization period (years)
Funded Ratio
For Fiscal Year Ending
Total Normal Cost Less Member Contributions
Employer Paid Normal Cost
Annual Required Employer Contribution Rates (ARC): Normal Accrued liability Total
Employer contribution rate per active member: Normal Accrued liability Total

June 30, 2008
218

June 30, 2007
218

226 $ 1,638,815

224 $ 1,608,813

$ 28,764,000 30,706,000

$ 31,121,000 30,049,000

$ (6,252,071) $ (5,691,844)

N/A*

N/A*

125.6%

123.4%

June 30, 2011

$

335,548

321,188

14,360

June 30, 2010

$

347,183

313,491

$

33,692

$

14,360

(14,360)

$

0

33,692 (33,692)
0

$

65.87

$

154.55

(65.87)

(154.55)

$

0.00 $

0.00

* If the annual required employer contribution (ARC) is based on 30 year amortization of the unfunded accrued
liability as of June 30, 2008 and June 30, 2007, the ARC is less than $0, which is not allowed under GASB 25/27.
Therefore, the accrued liability contribution has been set to such that the total ARC equals $0.

16

2009 - Employees' Retirement System of Georgia

ACTUARIAL SECTION
Actuary's Certification Letter Georgia Judicial Retirement System
June 19, 2009
Board of Trustees, Georgia Judicial Retirement System Suite 400, Two Northside 75 Atlanta, GA 30318
Members of the Board:
Section 47-23-21 of the law governs the operation of the Georgia Judicial Retirement System. The actuary makes annual 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, 2008. The report indicates that annual employer contributions at the rate of 3.85% of compensation for the fiscal year ending June 30, 2011 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.
In our opinion, the valuation is complete and accurate, and the methodology and assumptions are reasonable as a basis for the valuation.The valuation takes into account the effect of all amendments to the System enacted through the 2008 session of the General Assembly as well as 1.5% Ad Hoc COLAs effective July 1, 2008, July 1, 2009 and July 1, 2010.
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 14-year period.
The 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 in 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.

2009 - Employees' Retirement System of Georgia

17

ACTUARIAL SECTION
Actuary's Certification Letter Georgia Judicial Retirement System

June 19, 2009 Board of Trustees Page 2

Future actuarial results may differ significantly from the current results presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. Since the potential impact of such factors is outside the scope of a normal annual actuarial valuation, an analysis of the range of results is not presented herein.
Sincerely yours,

Edward A. Macdonald, ASA, FCA, MAAA President
EAM/CT:jel

Cathy Turcot Principal and Managing Director

18

2009 - Employees' Retirement System of Georgia

ACTUARIAL SECTION
Valuation Balance Sheet Georgia Judicial Retirement System

- As of June 30, 2008 -

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
(3) TOTAL ACTUARIAL LIABILITIES
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
(10) Prospective normal contributions = (8) x (9)
(11) Prospective unfunded actuarial accrued liability contributions = (7)-(10)

$ 74,097,302 11,498,026 5,005,299

$ 31,888,001

$

(71,103)

11.98%

$ 373,357,924

$ 90,600,627 254,602,374
$ 345,203,001 $ 313,315,000
31,959,104
44,728,279 (44,799,382)

(12) TOTAL PRESENT AND PROSPECTIVE ASSETS

$ 345,203,001

2009 - Employees' Retirement System of Georgia

19

ACTUARIAL SECTION
Summary of Principal Results Georgia Judicial Retirement System

Valuation Date
Number of active members Annual compensation
Retired members and beneficiaries: Number Annual Allowances
Assets: Market Value Actuarial Value
Unfunded actuarial accrued liability
Amortization period (years)
Funded Ratio
For Fiscal Year Ending
Annual Required Employer Contribution Rates (ARC): Normal Accrued liability Total

June 30, 2008
482 $ 51,101,951

June 30, 2007
480 $ 48,620,963

178 $ 9,965,350

171 $ 9,472,721

$ 291,484,000 313,315,000
$ (44,799,382) 14
116.7%

$ 304,974,000 297,090,000
$ (47,811,658) 16
119.2%

June 30, 2011 June 30, 2010

11.98% (8.13)
3.85%

12.05% (8.20)
3.85%

20

2009 - Employees' Retirement System of Georgia

ACTUARIAL SECTION
Actuary's Certification Letter Group Term Life Insurance Plan
Pre-Retirement
June 19, 2009
Board of Trustees Employees' Retirement System of Georgia Two Northside 75, Suite 300 Atlanta, GA 30318-7778
Attention: Ms. Pamela Pharris, 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. In this report, we have determined liabilities for life insurance benefits payable upon death in active service (Pre-Retirement).
We have submitted the report giving the results of the valuation of the Plan prepared as of June 30, 2008. The report indicates that employee contributions at the rate of 0.05% of active payroll for Old Plan members, and 0.02% of active payroll for New Plan members, members of the Legislative Retirement System and members of the Judicial Retirement System are sufficient to support the pre-retirement benefits of the Plan. No employer contributions are required for the fiscal year ending June 30, 2011 for pre-retirement benefits.
The funding method used for this valuation is the unit credit actuarial cost method with projected benefits. Gains and losses are reflected in the unfunded accrued liability. 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.
This is to certify that the independent consulting actuary is a member of the American Academy of Actuaries and has experience in 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 Plan.

2009 - Employees' Retirement System of Georgia

21

ACTUARIAL SECTION

Board of Trustees June 19, 2009 Page 2

Actuary's Certification Letter Group Term Life Insurance Plan
Pre-Retirement

Future actuarial results may differ significantly from the current results presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. Since the potential impact of such factors is outside the scope of a normal annual actuarial valuation, an analysis of the range of results is not presented herein.
Sincerely yours,

Edward A. Macdonald, ASA, FCA, MAAA President
EAM/CT:mjn

Cathy Turcot Principal and Managing Director

22

2009 - Employees' Retirement System of Georgia

ACTUARIAL SECTION

Valuation Results Group Term Life Insurance Plan
Pre-Retirement
- As of June 30, 2008 -
(1) ACTUARIAL ACCRUED LIABILITY: Present value of benefits payable on account of present retired members Present value of benefits payable on account of present active members TOTAL ACTUARIAL ACCRUED LIABILITY
(2) PRESENT ASSETS FOR VALUATION PURPOSES: (3) UNFUNDED ACTUARIAL ACCRUED LIABILITY: (1)-(2) (4) EMPLOYER NORMAL CONTRIBUTION RATE: (5) ACCRUED LIABILITY CONTRIBUTION: (6) TOTAL EMPLOYER CONTRIBUTION: (4)+(5)

$

0

62,170,533

$ 62,170,533

$ 172,595,000

$ (110,424,467) 0.23%

(0.23) 0.00%

2009 - Employees' Retirement System of Georgia

23

ACTUARIAL SECTION

Summary of Principal Results Group Term Life Insurance Plan Pre-Retirement

Valuation Date
Active members: Number Annual compensation
Retired members: Number Insurance amount
Actuarial Accrued Liability Market value of assets
Unfunded Actuarial Accrued Liability Funding Period Funded Ratio
For Fiscal Year Ending
Annual Required Contribution Rates: Total Normal Rate
Employee Rates: Old Plan Members New Plan, LRS and JRS Members
Employer Normal Rate
Accrued Liability Rate
Total Employer Rate

June 30, 2008

June 30, 2007

75,859 $ 2,850,849,928

74,549 $ 2,720,771,905

N/A N/A
$ 62,170,533 $ 172,595,000
$ (110,424,467) 27 years 277.6%

N/A N/A
$ 59,508,589 $ 185,335,000
$ (125,826,411) 40 years 311.4%

June 30, 2011

June 30, 2010

0.25 %

0.25 %

0.05 %* 0.02 % 0.23 %
(0.23) % 0.00 %

0.05 %* 0.02 % 0.22 %
(0.22) % 0.00 %

* 0.03% paid by employer.
24

2009 - Employees' Retirement System of Georgia

ACTUARIAL SECTION
Actuary's Certification Letter Group Term Life Insurance Plan
Post-Retirement
June 19, 2009
Board of Trustees Employees' Retirement System of Georgia Two Northside 75, Suite 300 Atlanta, GA 30318-7778
Attention: Ms. Pamela Pharris, 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. In this report, we have determined liabilities for life insurance benefits payable upon death after retirement (Post-Retirement).
In accordance with GASB 43 and 45, we have determined the liabilities for life insurance benefits payable upon death after retirement. We have submitted the report giving the results of the valuation of the Plan prepared as of June 30, 2008. The report indicates, for post-retirement benefits, there is no employer annual required contribution for the fiscal year ending June 30, 2011 based on a 6-year amortization period of the unfunded accrued liability.
The funding method used for this valuation is the unit credit actuarial cost method with projected benefits. Gains and losses are reflected in the unfunded accrued liability. 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.
This is to certify that the independent consulting actuary is a member of the American Academy of Actuaries and has experience in 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 Plan.

2009 - Employees' Retirement System of Georgia

25

ACTUARIAL SECTION

Board of Trustees June 19, 2009 Page 2

Actuary's Certification Letter Group Term Life Insurance Plan
Post-Retirement

Future actuarial results may differ significantly from the current results presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. Since the potential impact of such factors is outside the scope of a normal annual actuarial valuation, an analysis of the range of results is not presented herein.
Sincerely yours,

Edward A. Macdonald, ASA, FCA, MAAA President
EAM/CT:mjn

Cathy Turcot Principal and Managing Director

26

2009 - Employees' Retirement System of Georgia

ACTUARIAL SECTION

Valuation Results Group Term Life Insurance Plan
Post-Retirement
- As of June 30, 2008 -

(1) ACTUARIAL ACCRUED LIABILITY: Present value of prospective benefits payable on account of present retired members Present value of prospective benefits payable on account of present active members TOTAL ACTUARIAL ACCRUED LIABILITY
(2) PRESENT ASSETS FOR VALUATION PURPOSES: (3) UNFUNDED ACTUARIAL ACCRUED LIABILITY: (1)-(2) (4) EMPLOYER NORMAL CONTRIBUTION RATE: (5) ACCRUED LIABILITY CONTRIBUTION: (6) TOTAL EMPLOYER CONTRIBUTION: (4)+(5)

$ 486,568,677 213,315,357
$ 699,884,034 $ 737,114,000 $ (37,229,966)
0.26%
(0.26) 0.00%

2009 - Employees' Retirement System of Georgia

27

ACTUARIAL SECTION
Summary of Principal Results Group Term Life Insurance Plan Post-Retirement

Valuation Date
Active members: Number Annual compensation
Retired members: Number Insurance amount
Actuarial Accrued Liability Market Value of Assets
Unfunded Actuarial Accrued Liability Funding Period Funded Ratio
For Fiscal Year Ending
Annual Required Contribution Rates:
Total Normal Rate
Employee rates: Old Plan Members New Plan, LRS, and JRS Members
Employer Normal Rate
Accrued Liability Rate
Total Employer Rate

June 30, 2008

June 30, 2007

75,859 $ 2,850,849,928

74,549 $ 2,720,771,905

31,562 $ 1,330,922,085
$ 699,884,034 $ 737,114,000
$ (37,229,966) 6 years 105.3%

28,998 $ 1,215,944,463
$ 642,530,433 $ 778,048,000
$ (135,517,567) 36 years 121.1%

June 30, 2011

June 30, 2010

0.51 %
0.45 %* 0.23 % 0.26 % (0.26) % 0.00 %

0.50 %
0.45 %* 0.23 % 0.25 % (0.25) % 0.00 %

* 0.22% paid by employer.
28

2009 - Employees' Retirement System of Georgia

ACTUARIAL SECTION
Actuary's Certification Letter Georgia Military Pension Fund
June 29, 2009
Board of Trustees Georgia Military Pension Fund Two Northside 75, Suite 300 Atlanta, GA 30318
Members of the Board:
Section 47-24-22 of the law governing the operation of the Georgia Military Pension Fund provides that the actuary shall make periodic valuations of the contingent assets and liabilities of the Pension Fund 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 Fund prepared as of June 30, 2008. The report indicates that annual employer contributions of $1,281,784 or $110.28 per active member for the fiscal year ending June 30, 2011 are sufficient to support the benefits of the Fund.
In preparing the valuation, the actuary relied on data provided by the Fund. 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.
In our opinion, the valuation is complete and accurate, and the methodology and assumptions are reasonable as a basis for the valuation. Since the previous valuation, the assumed rates of withdrawal, retirement and mortality have been revised to reflect the results of the experience investigation for the three-year period ending June 30, 2007. The valuation takes into account the effect of all amendments to the Fund enacted through the 2008 session of the General Assembly.
The Fund 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 Fund and to reasonable expectations of anticipated experience under the Fund. The assumptions and methods used for funding purposes meet the parameters set for the disclosures presented in the financial section byGovernmentalAccounting 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 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 level dollar per active member. Gains and losses are reflected in the unfunded accrued liability which is being amortized as a level dollar per active member within a 30-year period.
The Fund 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 Fund is operating on an actuarially sound basis. Assuming that contributions to the Fund 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 Fund may be safely anticipated.

2009 - Employees' Retirement System of Georgia

29

ACTUARIAL SECTION
Actuary's Certification Letter Georgia Military Pension Fund
June 29, 2009 Board of Trustees Page 2

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 Fund.
Future actuarial results may differ significantly from the current results presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. Since the potential impact of such factors is outside the scope of a normal annual actuarial valuation, an analysis of the range of results is not presented herein.
Sincerely yours,

Edward A. Macdonald, ASA, FCA, MAAA President
EAM:mjn

Cathy Turcot Principal and Managing Director

30

2009 - Employees' Retirement System of Georgia

ACTUARIAL SECTION
Valuation Balance Sheet Georgia Military Pension Fund

- As of June 30, 2008 -

ACTUARIAL LIABILITIES Present value of prospective benefits payable on account of:
(1) Present retired members (2) Former members entitled to deferred benefits (3) Present active members (4) TOTAL ACTUARIAL LIABILITIES
PRESENT AND PROSPECTIVE ASSETS (5) Actuarial value of assets (6) Present value of total future contributions = (4)-(5) (7) Employer normal contribution rate (8) Present value of future membership service (9) Prospective normal contributions = (7) x (8) (10) Prospective unfunded actuarial accrued liability
contributions = (6)-(9) (11) TOTAL PRESENT AND PROSPECTIVE ASSETS

$

3,128,422

6,320,259

10,237,605

$ 19,686,286

$

$ 14,417,286

$

9.35

$

60,101

5,269,000 561,944

13,855,342 $ 19,686,286

2009 - Employees' Retirement System of Georgia

31

ACTUARIAL SECTION
Summary of Principal Results Georgia Military Pension Fund

Valuation Date
Number of active members
Retired members: Number Annual pensions
Former members entitled to deferred vested pensions: Number Annual deferred pensions
Assets: Market Value Actuarial Value
Unfunded actuarial accrued liability
Amortization Period
Funded Ratio
For Fiscal Year Ending
Employer contribution rate per active member: Normal Accrued liability Total
Annual Required Employer Contribution Rates (ARC): Normal Accrued liability Total

June 30, 2008
11,623

June 30, 2007
12,017

304

235

$

334,440 $

260,400

1,307

$

1,169,904 $

1,068 953,172

$

4,945,000 $

4,336,000

$

5,269,000 $

4,165,000

$ 13,855,342 $ 15,721,788

30 years

30 years

27.6%

20.9%

June 30, 2011 June 30, 2010

$

9.35 $

8.52

100.93

110.78

$

110.28 $

119.30

$

108,675 $

102,385

1,173,109

1,331,243

$

1,281,784 $

1,433,628

32

2009 - Employees' Retirement System of Georgia

INVESTMENT SECTION

Pooled Investment Fund - As of June 30, 2009 -
Dollar Amounts in Thousands Employees' Retirement System Public School Employees Retirement System Legislative Retirement System Georgia Judicial Retirement System State Employees' Assurance Department - Active State Employees' Assurance Department - OPEB Georgia Military Pension Fund Superior Court Judges Retirement Fund Georgia Defined Contribution Plan

$ 10,646,483 598,901 23,601 248,178 144,003 627,209 5,170 1,213 44,050
$ 12,338,808

Structural Analysis of Investments at Fair Value - As of June 30, 2009 -
Type of Investment Short-term Investments Bonds Common Stock Mutual funds, common collective trust funds and separate accounts*
Total
*Investments of state Deferred Compensation 401(k) and 457 Plans and Reserve Trust.

1.8% 39.8% 52.3%
6.1%
100.0%

Face Amount $235,623,000*

Short-Term Investments
- As of June 30, 2009 -
Issuer
United States Government, Agency, and Corporate Obligations
(subject to repurchase agreements due 7/01/09)

*Consists of Pooled Investment Fund $229,299,000 and Georgia Defined Contribution Plan $6,324,000.

2009 - Employees' Retirement System of Georgia

Fair Value $235,623,000*
33

INVESTMENT SECTION

US Government, Agency and Corporate Bonds - As of June 30, 2009 -

Issuer 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. NOTE GENERAL ELECTRIC CAP CORP US TREAS. NOTE GENERAL ELECTRIC CAP CORP/FDIC GENERAL ELECTRIC CAP CORP PFIZER INC US TREAS. NOTE WELLS FARGO & COMPANY US TREAS. NOTE 3M COMPANY PROCTER & GAMBLE CO UNITED PARCEL SERVICE UNITED PARCEL SERVICE 3M COMPANY GENERAL ELECTRIC CAP CORP VERIZON WIRELESS US TREAS. BOND BERKSHIRE HATHAWAY INC FEDERAL NATIONAL MORTGAGE ASSN CHEVRON CORP MICROSOFT CORP GENERAL ELECTRIC CAP CORP US TREAS. NOTE JOHNSON AND JOHNSON JOHNSON AND JOHNSON

Year of Maturity 2016 2017 2018 2013 2012 2013 2012 2028 2010 2011 2010 2011 2020 2015 2009 2011 2012 2011 2014 2019 2013 2012 2013 2014 2036 2012 2014 2014 2014 2026 2012 2012 2017

Interest Rate % 2.625 4.500 3.875 2.750 3.375 3.125 1.375 5.250 3.625 4.110 2.875 3.000 5.550 5.350 3.625 4.000 4.125 4.500 4.600 5.125 4.500 4.650 5.400 5.550 4.500 5.125 2.750 3.950 2.950 5.550 3.875 5.150 5.550

ERS Fixed Income Securities

Georgia Defined Contribution Plan Fixed Income Securities

Total ERS and Georgia Defined Contribution Plan Fixed Income Securities

Par Value $ 381,000,000
296,500,000 296,000,000 292,000,000 228,000,000 230,000,000 235,000,000 199,000,000 191,000,000 179,000,000 168,000,000 148,000,000 168,000,000 134,000,000 135,000,000 134,000,000 116,000,000 112,000,000 112,000,000 112,000,000 112,000,000 112,000,000 112,000,000 101,000,000 100,000,000
90,000,000 95,000,000 90,000,000 90,000,000 107,000,000 67,000,000 58,000,000 56,000,000
$ 5,056,500,000
32,000,000
$ 5,088,500,000

Fair Value $ 369,718,590
319,965,010 304,995,440 297,407,840 240,040,680 237,941,900 234,797,900 223,751,620 194,327,220 180,253,000 171,897,600 152,684,200 152,569,200 143,996,400 136,487,700 132,642,580 124,590,960 119,070,560 117,788,160 117,731,040 117,456,640 115,281,600 111,062,560 107,224,630 103,016,000
95,147,100 94,791,950 92,660,400 89,347,500 84,738,650 71,627,020 63,808,700 60,866,400
$ 5,179,686,750
32,777,840
$ 5,212,464,590

34

2009 - Employees' Retirement System of Georgia

Shares 3,111,000 2,133,011 3,452,228
570,948 1,284,194
171,030 1,278,424 2,522,691 1,289,638
922,955 582,623 1,555,307 1,286,976 1,690,262 982,375 3,247,484 2,116,431 4,323,918 761,016 3,772,888

INVESTMENT SECTION

Common Stocks - As of June 30, 2009 -

Company
iShares S&P 500 Index Exxon Mobil Corp. Microsoft Corp. Apple Inc. Johnson & Johnson Google Inc. Procter & Gamble Co. AT&T Inc. Wal-Mart Stores Inc. Chevron Corp. International Business Machines Corp. Hewlett-Packard Co. QUALCOMM Inc. JPMorgan Chase & Co. Pepsico Inc. Intel Corp. Wells Fargo & Co. General Electric Co. Occidental Petroleum Corp. Bank of America Corp.
Total - 20 Largest Holdings
Total - All Holdings

Fair Value $ 287,300,850
149,118,799 82,059,460 81,320,124 72,942,219 72,104,538 65,327,466 62,663,644 62,470,065 61,145,769 60,837,494 60,112,615 58,171,315 57,654,837 53,991,330 53,745,860 51,344,616 50,676,319 50,082,463 49,802,122 $ 1,542,871,905
$ 6,857,211,226

A complete listing is available upon written request, subject to restrictions of O.C.G.A. Section 47-1-14.

2009 - Employees' Retirement System of Georgia

35

FINANCIAL SECTION

Independent Auditors' Report
Independent Auditors' Report

KPMG LLP Suite 2000 303 Peachtree Street, NE Atlanta, GA 30308

The Board of Trustees Employees' Retirement System of Georgia:

We have audited the accompanying financial statements of Employees' Retirement System of Georgia (the System), a component unit of the State of Georgia, as of and for the year ended June 30, 2009 as listed in the table of contents. These financial statements are the responsibility of the System's management. Our responsibility is to express an opinion on these financial statements based on our audit. The prior year summarized comparative information has been derived from the System's June 30, 2008 financial statements and, in our report dated September 30, 2008, we expressed an unqualified opinion on those financial statements.

We We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the System's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the System's net assets as of June 30, 2009, and the changes in net assets for the year then ended in conformity with U.S. generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued our report dated September 30, 2009, on our consideration of the System's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

The management's discussion and analysis, the schedules of funding progress, and schedules of employer contributions on pages 37 through 42 and pages 67 through 68, respectively, are not a required part of the basic financial statements, but are supplementary information required by U.S. generally accepted accounting principles. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it.

Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information included in the administrative expenses schedule is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the financial statements taken as a whole. The introductory, actuarial and investment sections have not been subjected to the auditing procedures applied by us in the audit of the basic financial statements and, accordingly, we express no opinion on them.

September 30, 2009 36

2009 - Employees' Retirement System of Georgia

FINANCIAL SECTION
Management's Discussion and Analysis (UNAUDITED)
- June 30, 2009 -
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, 2009. The discussion and analysis of the System's financial performance is within the context of the accompanying basic 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 eight other defined benefit pension plans and three defined contribution plans.
The defined benefit pension plans include: Employees' Retirement System (ERS) Public School Employees Retirement System (PSERS) Legislative Retirement System (LRS) Georgia Judicial Retirement System (GJRS) Georgia Military Pension Fund (GMPF) State Employees' Assurance Department Active Members Trust Fund (SEAD-Active) State Employees' Assurance Department Retired and Vested Inactive Members Trust Fund (SEAD-OPEB) Superior Court Judges Retirement Fund (SCJRF) District Attorneys Retirement Fund (DARF)
The defined contribution retirement plans include: Georgia Defined Contribution Plan (GDCP) 401(k) Deferred Compensation Plan (401(k)) 457 Deferred Compensation Plan (457)
Financial Highlights
The following highlights are discussed in more detail later in this analysis: The net assets of the System decreased by $3.0 billion, or 18.5%, from $16.1 billion at June 30, 2008 to $13.2 billion at June 30, 2009. The decrease was due primarily to declining equities markets in 2009. For the year ended June 30, 2009, the total additions to net assets were a decrease of $1.7 billion compared to a decrease of $152 million for the year ended June 30, 2008. For the year ended June 30, 2009, the additions consisted of employer and member contributions totaling $422 million, insurance premiums of $8.4 million, net investment loss of $2.1 billion, participant fees of $1.4 million, and other income of $1.0 million. For the year ended June 30, 2008, the additions consisted of employer and member contributions totaling $445 million, insurance premiums of $8.6 million, net investment loss of $608 million, participant fees of $1.7 million, and other income of $1.0 million.

2009 - Employees' Retirement System of Georgia

(continued)
37

FINANCIAL SECTION
Management's Discussion and Analysis (UNAUDITED)

Net investment loss of $2.1 billion in 2009 (comprised of interest and dividend income, the change in fair value of investments, and other, reduced by investment expenses) represents a $1.5 billion additional decline, compared to the net investment loss of $608 million for the year ended June 30, 2008. The net investment loss is due primarily to declining equities markets in 2009.
The total deductions were $1.3 billion and $1.2 billion for the years ended June 30, 2009 and 2008, respectively. For the year ended June 30, 2009, the deductions consisted of benefit payments of $1.2 billion, refunds of $18 million, death benefits of $26 million, and administrative expenses of $21 million. For the year ended June 30, 2008, the deductions consisted of benefit payments of $1.15 billion, refunds of $20 million, death benefits of $29 million, and administrative expenses of $23 million.
Benefit payments paid to retirees and beneficiaries increased by $92.7 million, or 8.1% from $1.15 billion in 2008 to $1.24 billion in 2009. 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 as well as recording liabilities involving retroactive benefit payments (see note 7).
Overview of the Financial Statements
The basic financial statements include (1) the combined statements of net assets and changes in net assets, (2) the combining statements of net assets and changes in net assets, and (3) notes to the financial statements. The System also includes in this report additional information to supplement the financial statements.
In addition, the System presents two types of required supplementary schedules, which provide historical trend information about the plans' funding. The two types of schedules include (1) a schedule of funding progress and (2) a schedule of employer contributions.
The System prepares its financial statements on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles. These statements provide information about the System's overall financial status.
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. This statement is presented on page 43.
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, participant fees, and net investment loss, which includes interest and dividends and the net 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. This statement is presented on page 44.
The Combining Statement of Net Assets and the Combining Statement of Changes in Net Assets present the financial position and change in financial position for each of the funds administered by the System, including the Pooled Investment Fund that holds and invests funds from each of the participating plans and funds. These statements begin on page 45.

(continued)

38

2009 - Employees' Retirement System of Georgia

FINANCIAL SECTION
Management's Discussion and Analysis (UNAUDITED)

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 49.
There are two Required Supplementary Schedules included in this report.These required schedules are applicable to five of the 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, ongoing 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 67.
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 69.
Additional information is presented, beginning on page 71. This section includes the Administrative Expenses Schedule. The Administrative Expenses Schedule 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 at June 30, 2009 and 2008 is as follows:

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

Net Assets (in thousands)

2009

2008

Amount Change

Percentage Change

$

137,999

13,103,879

9,791

13,251,669

133,963 16,106,069
12,573 16,252,605

4,036 (3,002,190)
(2,782) (3,000,936)

3.0 % (18.6) (22.1) (18.5)

Liabilities: Due to brokers and accounts payable
Net assets

94,537 $ 13,157,132

109,048 16,143,557

(14,511) (2,986,425)

(13.3) (18.5) %

2009 - Employees' Retirement System of Georgia

(continued)
39

FINANCIAL SECTION
Management's Discussion and Analysis (UNAUDITED)

The following table presents the investment allocation at June 30, 2009 and 2008:

Asset allocation at June 30 (in percentages): Equities U.S. Treasuries U.S. Agencies Corporate and other bonds Mutual and common collective trust funds and separate accounts Short-term securities
Asset allocation at June 30 (in thousands): Equities U.S. Treasuries U.S. Agencies Corporate and other bonds Mutual and common collective trust funds and separate accounts Short-term securities

2009
52.3 % 23.3
2.0 14.5
6.1 1.8

2008
55.6 % 25.8
4.1 7.3 5.7 1.5

$ 6,857,211 3,054,228 256,591 1,901,645 798,581 235,623
$ 13,103,879

8,946,541 4,153,549
666,980 1,179,601
915,120 244,278 16,106,069

The total investment portfolio decreased by $3.0 billion from 2008, which is due primarily to declining equities markets in 2009.
The investment rate of return in fiscal year ended June 30, 2009 was (13.0)% with a (27.3)% return on equities and a 7.5% return on fixed income investments. The five-year annualized rate of return on investments at June 30, 2009 was 2.0%, with a (1.2)% return on equities and a 5.6% return on fixed income investments.

(continued)

40

2009 - Employees' Retirement System of Georgia

FINANCIAL SECTION
Management's Discussion and Analysis (UNAUDITED)

A summary of the changes in the System's net assets for the years ended June 30, 2009 and 2008 is as follows:

Additions Employer contributions Member contributions Participant fees Insurance premiums Net investment loss Other Total additions

Changes in Net Assets (in thousands)

2009

2008

Amount Change

Percentage Change

$ 298,356 123,509 1,376 8,431
(2,111,007) 903
(1,678,432)

308,962 136,046
1,682 8,620 (608,051)
903 (151,838)

(10,606) (12,537)
(306) (189) (1,502,956)
-- (1,526,594)

(3.4) % (9.2) (18.2) (2.2) 247.2
-- 1,005.4

Deductions Benefit Payments Refunds Death Benefits Administrative expenses Total deductions Net decrease in net assets

1,242,927 17,547 26,475 21,044
1,307,993 $ (2,986,425)

1,150,192 19,716 28,716 22,884
1,221,508 (1,373,346)

92,735 (2,169) (2,241) (1,840) 86,485 (1,613,079)

8.1 (11.0) (7.8) (8.0)
7.1 117.5 %

Additions The System accumulates resources needed to fund benefit payments through contributions and returns on invested funds. In fiscal year 2009, total contributions decreased 5.2%, reflecting a contribution percentage that decreased along with a decrease in the number of active contributing members. Net investment loss increased by $1.5 billion, due primarily to declining equities markets in 2009.
Deductions For fiscal year 2009, total deductions increased 7.1%, primarily because of an 8.1% increase in benefit payments. This was due to an increase of approximately 7.5% in the number of retirees receiving benefit payments across all defined benefit plans and to postretirement cost-of-living increases in benefits as well as recording liabilities involving retroactive benefit payments in 2009. Refunds decreased 11%, which was due primarily to a decrease in the number of refunds processed during 2009. Administrative expenses decreased 8.0% over the prior year, primarily due to decreases in the employer portion of health insurance, computer services, and contractual services.

2009 - Employees' Retirement System of Georgia

(continued)
41

FINANCIAL SECTION
Management's Discussion and Analysis (UNAUDITED)

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, 2008 and 2007 actuarial valuations, the latest valuations available, indicate the actuarial value of assets and funding ratios for the five applicable defined benefit retirement plans were as follows:

Actuarial value of plan assets (in thousands)

Funding ratio

ERS PSERS LRS GJRS GMPF

June 30, 2008 $ 14,017,346
791,855 30,706
313,315 5,269

June 30, 2007 13,843,689 785,460 30,049 297,090 4,165

June 30, 2008 89.4 %
102.7 125.6 116.7
27.6

June 30, 2007 93.0 %
105.3 123.4 119.2
20.9

In management's opinion, the System continues to operate on an actuarially sound basis, as evidenced by the funding ratios. 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. GMPF is a relatively new plan that was established in 2002 and is being increasingly funded over time in accordance with contribution amounts recommended by the actuary.
Requests for Information
This financial report is designed to provide a general overview of the System's finances for all those with interest in the System's finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to Employees' Retirement System of Georgia, Two Northside 75, Suite 300, Atlanta, GA 30318.

42

2009 - Employees' Retirement System of Georgia

FINANCIAL SECTION
Combined Statement of Net Assets

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia) (A Component Unit of the State of Georgia)
COMBINED STATEMENT OF NET ASSETS June 30, 2009 (with comparative totals as of June 30, 2008) (In thousands)

ASSETS
CASH RECEIVABLES:
Employer and member contributions Interest and dividends Due from brokers for securities sold Other
Total receivables
INVESTMENTS - AT FAIR VALUE: Short-term U.S. Treasuries U.S. Agencies Corporate and other bonds Common stocks Mutual funds, common collective trust funds, and separate accounts 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
See accompanying notes to financial statements.

2009

$

6,858

27,277 56,471 45,433
1,960
131,141

2008
5,535
38,127 67,428 19,389
3,484 128,428

235,623 3,054,228
256,591 1,901,645 6,857,211
798,581
13,103,879

244,278 4,153,549
666,980 1,179,601 8,946,541
915,120
16,106,069

9,791

12,573

13,251,669 16,252,605

66,649 27,888
94,537

42,017 67,031
109,048

$ 13,157,132 16,143,557

2009 - Employees' Retirement System of Georgia

43

FINANCIAL SECTION
Combined Statement of Changes in Net Assets

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia) (A Component Unit of the State of Georgia)
COMBINED STATEMENT OF CHANGES IN NET ASSETS Year Ended June 30, 2009 (with comparative totals for the year ended June 30, 2008) (In thousands)

NET ASSETS HELD IN TRUST FOR PENSION BENEFITS BEGINNING OF YEAR
ADDITIONS: Contributions: Employer Member Participant fees Insurance premiums Administrative expense allotment
Investment loss: Net decrease in fair value of investments Interest and dividends Other Total investment loss
Less investment expenses Net investment loss Total additions
DEDUCTIONS: Benefit payments Refunds of member contributions and interest Death benefits Administrative expenses Total deductions Net decrease in net assets
NET ASSETS HELD IN TRUST FOR PENSION BENEFITS END OF YEAR
See accompanying notes to financial statements.

2009

2008

$ 16,143,557 17,516,903

298,356 123,509
1,376 8,431
903

308,962 136,046
1,682 8,620
903

(2,526,222) 423,042 1,608
(2,101,572)

(1,101,895) 504,993 1,846
(595,056)

(9,435) (2,111,007) (1,678,432)

(12,995) (608,051) (151,838)

1,242,927 17,547
2 26,475 21,044
1,307,993
(2,986,425)

1,150,192 19,716 28,716 22,884
1,221,508
(1,373,346)

$ 13,157,132 16,143,557

44

2009 - Employees' Retirement System of Georgia

45

2009 - Employees' Retirement System of Georgia

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia) (A Component Unit of the State of Georgia)

COMBINING STATEMENT OF NET ASSETS June 30, 2009 (In thousands)

Assets Cash
Receivables Employer and member contributions Interest and dividends Due from brokers for securities sold Other Unremitted insurance premiums
Total receivables
Investments - at fair value: Short-term U.S. Treasuries U.S. Agencies Corporate and other bonds Common stocks Mutul funds, common collective trust funds, and separate accounts Equity in pooled investment fund
Total investments
Capital assets, net
Total assets

Defined Benefit Plans

$

6,355

24,250
1,590 1,270
27,110


12,294,758
12,294,758 9,791
12,338,014

Pooled Investment
Fund
1

Defined Contribition Plans

Georgia Defined Contribution
Plan
457

401(k) Plan
22

457 Plan
23

56,231 45,433

101,664

727

1,606

694

218

20

2









157

213







945

1,783

909

229,299 3,030,566
247,476 1,901,645 6,857,211

12,266,197
12,367,862

6,324 23,662
9,115
44,050
83,151
84,553


309,207
309,207
311,012


489,374
489,374
490,306

Liabilities
Accounts payable and other Due to brokers for securities purchased Insurance premiums payable Due to participating systems
Total liabilities
Net assets held in trust for pension benefits

62,583
1,270
63,853
$ 12,274,161

1,166 27,888
12,338,808
12,367,862


585
585
83,968

1,256
1,256
309,756

1,059
1,059
489,247

Eliminations
(1,270) (1,270)

(12,338,808) (12,338,808)

(12,340,078)
(1,270) (12,338,808) (12,340,078)

See accompanying notes to financial statements.

Total 6,858
27,277 56,471 45,433
1,960
131,141
235,623 3,054,228
256,591 1,901,645 6,857,211
798,581
13,103,879 9,791
13,251,669
66,649 27,888
94,537 13,157,132

FINANCIAL SECTION
Combining Statement of Net Assets

FINANCIAL SECTION
Defined Benefit Plans - Combining Statement of Net Assets

46

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia) (A Component Unit of the State of Georgia)

DEFINED BENEFIT PLANS - COMBINING STATEMENT OF NET ASSETS June 30, 2009 (In thousands)

Assets
Cash
Receivables Employer and member contributions Interest and dividends Due from brokers for securities sold Other Unremitted insurance premiums
Total receivables

Employees' Retirement
System

$

5,627

Public School Employees Retirement System
267

Legislative Retirement
System
64

24,114
1,584
25,698

























Defined Benefit Plans

Georgia Judicial Retirement System

State Employees' Assurance Department
Active

State Employees' Assurance Department
OPEB

155

62

42

136

























119

1,151

136

119

1,151

Investments - at fair value: Short-term U.S. Treasuries U.S. Agencies Corporate and other bonds Common stocks Mutul funds, common collective trust funds, and separate accounts Equity in pooled investment fund
Total investments
Capital assets, net
Total assets


10,646,483
10,646,483 9,791
10,687,599


598,901
598,901
599,168


23,601
23,601
23,665


248,178
248,178
248,469


144,003
144,003
144,184


627,209
627,209

628,402

Liabilities
Accounts payable and other Due to brokers for securities purchased Insurance premiums payable Due to participating systems
Total liabilities Net assets held in trust for pension benefits

60,249
1,254
61,503 $ 10,626,096

1,850
1,850 597,318

18 3
21 23,644

195 13
208 248,261

23
23 144,161

203
203 628,199

Georgia Military Pension
Fund
60

Superior Court Judges
Retirement Fund
75

District Attorneys Retirement
Fund
3























6











6





































5,170

1,213



5,170

1,213









5,230

1,288

9

1

37

7



















1

37

7

5,229

1,251

2

Defined Benefit Plans Total
6,355
24.250
1,590 1,270 27,110

12,294,758 12,294,758
9,791 12,338,014
62,583
1,270
63,853 12,274,161

2009 - Employees' Retirement System of Georgia

See accompanying notes to financial statements.

2009 - Employees' Retirement System of Georgia

FINANCIAL SECTION
Combining Statement of Changes in Net Assets

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia) (A Component Unit of the State of Georgia)

COMBINING STATEMENT OF CHANGES IN NET ASSETS Year Ended June 30, 2009 (In thousands)

Defined Contribution Plans

Georgia

Defined

Pooled

Defined

Benefit

Investment

Contribution

401(k)

457

Plans

Fund

Plan

Plan

Plan

Net assets held in trust for pension benefits - beginning of year
Additions: Contributions Employer Member Participant fees Insurance premiums Administrative expense allotment

$ 15,144,483
291,417 50,382 8,431 903



84,350

341,098

573,626





6,939





15,608

33,432

24,087





750

626

















Investments income (loss): Net increase (decrease) in fair value of investments Interest and dividends Other Less investment expenses Allocation of investment loss
Net investment income loss
Total additions

31 (1,883) (1,983,465)
(1,985,317)
(1,634,184)

(2,406,885) 421,716 (4,930)
1,990,099



384 998
(42) (6,634)
(5,294)
10,314

(49,937) 166 666
(1,225)
(50,330)
(9,209)

(69,784) 131 942
(1,355)
(70,066)
(45,353)

Deductions Benefit payment Refunds of member contributions and interest Death benefits Administrative expenses
Total deductions
Net decrease in net assets
Net assets held in trust for pension benefits - end of year

1,184,556 7,170
26,475 17,937 1,236,138
(2,870,322)
$ 12,274,161



9

21,105

37,257



10,377















310

1,028

1,769



10,696

22,133

39,026



(382)

(31,342)

(84,379)



83,968

309,756

489,247

Total
16,143,557
298,356 123,509
1,376 8,431
903
(2,526,222) 423,042 1,608 (9,435)
(2,111,007) (1,678,432)
1,242,927 17,547 26,475 21,044
1,307,993 (2,986,425)
13,157,132

47

See accompanying notes to financial statements.

2009 - Employees' Retirement System of Georgia

48

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia) (A Component Unit of the State of Georgia)

DEFINED BENEFIT PLANS - COMBINING STATEMENT OF CHANGES IN NET ASSETS Year Ended June 30, 2009 (In thousands)

Net assets held in trust for pension benefits - beginning of year
Additions: Contributions Employer Member Participant fees Insurance premiums Administrative expense allotment

Employees' Retirement
System

Public School Employees Retirement System

Legislative Retirement
System

Defined Benefit Plans

Georgia Judicial Retirement System

State Employees' Assurance Department
Active

State Employees' Assurance Department
OPEB

$ 13,167,778

740,364

28,764

291,484

172,595

737,114

281,206 43,978

5,096 1,472
588

71

1,703

320

4,612









110

175













880

7,551





Investment income (loss): Net increase (decrease) in fair value of investments Interest and dividends Other Less investment expenses Allocation of investment loss
Net investment loss
Total additions

31 (1,883) (1,724,450)
(1,726,302)
(1,401,118)

(97,156)
(97,156)
(90,000)

(3,772)
(3,772)
(3,271)

(38,164)
(38,164)
(31,674)

(22,656)
(22,656)
(21,776)

(96,424)
(96,424)
(88,873)

Georgia Military Pension
Fund

Superior Court Judges
Retirement Fund

District Attorneys Retirement
Fund

4,945

1,437

2

1,323

1,938

80





















24

6

























(657)

(186)



(657)

(186)



666

1,776

86

Deductions: Benefit payments Refunds of member contributions and interest Death benefits Administrative expenses
Total deductions

1,117,158

52,197

1,690

11,111





382

1,938

80

6,597
16,809

261

49





588

110

263







6,636

19,839

175

22

203















24

6

1,140,564

53,046

1,849

11,549

6,658

20,042

382

1,962

86

Net increase (decrease) in net assets

(2,541,682)

(143,046)

(5,120)

(43,223)

(28,434)

(108,195)

284

(186)



Net assets held in trust for pension

benefits - end of year

$ 10,626,096

597,318

23,644

248,261

144,161

628,199

5,229

1,251

2

See accompanying notes to financial statements.

Defined Benefit Plans Total
15,144,483
291,417 50,382 8,431 903
31 (1,883) (1,983,465) (1,985,317) (1,634,184)
1,184,556
7,170 26,475 17,937 1,236,138 (2,870,322)
12,274,161

FINANCIAL SECTION
Defined Benefit Plans - Combining Statement of Changes in Net Assets

FINANCIAL SECTION

Notes to Financial Statements - June 30, 2009 -

(1) General The accompanying basic financial statements of the 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 System (PSERS), Legislative Retirement System (LRS), Georgia Judicial Retirement System (GJRS), Georgia Military Pension Fund (GMPF), State Employees' Assurance Department Active Members Trust Fund (SEAD-Active), State Employees' Assurance Department Retired and Vested Inactive Members Trust Fund (SEAD-OPEB), Superior Court Judges Retirement Fund (SCJRF), District Attorneys Retirement Fund (DARF), Georgia Defined Contribution Plan (GDCP), 401(k) Deferred Compensation Plan (401(k) Plan), and the 457 Deferred Compensation Plan (457 Plan). 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 No. 14, The Financial Reporting Entity, as amended by GASB Statement No. 39, Determining Whether Certain Organizations Are Component Units. Based on these criteria, the System has not included any other entities in its reporting entity.
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 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 and can be amended by state law. The following summarizes authorizing legislation and the plan description of each retirement fund:
(a) ERS is a cost sharing multiple employer 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, 2009, 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
Employers

37,049 67,033 71,272
175,354
744

Benefits

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. Members hired on or after July 1, 1982 but prior to January 1, 2009 are "new

plan" members, subject to the modified plan provisions.

(continued)

2009 - Employees' Retirement System of Georgia

49

FINANCIAL SECTION
Notes to Financial Statements

Effective January 1, 2009, newly hired state employees, as well as rehired state employees who did not maintain eligibility for the "old" or "new" plan, are members of the Georgia State Employees' Pension and Savings Plan (GSEPS). ERS members hired prior to January 1, 2009 also have the option to irrevocably change their membership to the GSEPS plan.
Under the old plan, the new plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60 or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60.
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. Annually, postretirement cost of living adjustments may also be made to members' benefits, provided the members were hired prior to July 1, 2009. 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 and GSEPS are 1.25% of annual compensation. The state is required to contribute at a specified percentage of active member payrolls, determined annually by actuarial valuation. The state contributions are not at any time refundable to the member or his/her beneficiary.

Employer contributions required for fiscal year 2009 were based on the June 30, 2006 actuarial valuation for the old and new plans and were set by the Board on September 18, 2008 for GSEPS as follows:

Employer: Normal Employer paid for member Accrued liability
Total

Old plan
2.02 % 4.75 3.64 10.41 %

New plan
6.77 %
3.64 10.41 %

GSEPS
2.96 % --
3.58 6.54 %

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 unfunded actuarial accrued liability within 26 years, based upon the actuarial valuation at June 30, 2008, on the assumption that the total payroll of active members will increase by 3.75% each year.

(continued)

50

2009 - Employees' Retirement System of Georgia

FINANCIAL SECTION
Notes to Financial Statements

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 175 members eligible to participate in this portion of ERS for the year ended June 30, 2009. Employer contributions of $2,300,000 and benefit payments of $2,306,480 under the SRBP are included in the combined statements of changes in net assets for the year ended June 30, 2009. Cash of $9,790 under the SRBP is included in the combined statements of net assets as of June 30, 2009.

(b) PSERS is a cost-sharing multiple-employer 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. The ERS Board of Trustees, plus two additional trustees, administers PSERS.

Membership As of June 30, 2009, 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

13,804 69,027 40,646
123,477
213

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 $14.75, multiplied by the number of years of creditable service. Death and disability 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 year ended June 30, 2009 were $40.82 per active member and based on the June 30, 2006 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 contribution, the member forfeits all rights to retirement benefits.
(continued)

2009 - Employees' Retirement System of Georgia

51

FINANCIAL SECTION
Notes to Financial Statements

The employer contributions are projected to liquidate the actuarial accrued funding excess within 10 years, based upon the actuarial valuation at June 30, 2008.

(c) LRS is a cost-sharing multiple-employer 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, 2009, participation in LRS is as follows:

Retirees and beneficiaries currently receiving benefits

229

Terminated employees entitled to benefits but not yet receiving benefits

126

Active plan members

218

Total

573

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 $36, multiplied by the number of years of creditable service, reduced by age reduction factors, if applicable. Death 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 year ended June 30, 2009 based on the June 30, 2006 actuarial valuation.
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.

(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. The ERS Board of Trustees and three additional trustees administer GJRS.
(continued)

52

2009 - Employees' Retirement System of Georgia

FINANCIAL SECTION
Notes to Financial Statements

GJRS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly for the purpose of providing retirement allowances for judges and solicitors generals of the state courts and juvenile court judges 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, 2009, participation in GJRS is as follows:

Retirees and beneficiaries currently receiving benefits

201

Terminated employees entitled to benefits but not yet receiving benefits

61

Active plan members

502

Total

764

Employers

97

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.

Annual retirement benefits paid to members are computed as 66 2/3% of state paid salary at retirement for district attorneys and superior court judges and 66 2/3% of the average over 24 consecutive months for trial judges and solicitors, 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.

Employer contributions required for fiscal year 2009 were based on the June 30, 2006 actuarial valuation as follows:

Employer: Normal Accrued liability
Total

12.26 % (8.41)
3.85 %

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 14 years, based upon the actuarial valuation at June 30, 2008, assuming that the amount of accrued liability payment increases 3.75% each year.

2009 - Employees' Retirement System of Georgia

(continued)
53

FINANCIAL SECTION
Notes to Financial Statements

(e) The GMPF is a single-employer defined benefit pension plan 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 ERS Board of Trustees administers the GMPF.
Membership As of June 30, 2009, GMPF had 386 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.
Employer contributions required for the year ended June 30, 2009 were $128.20 per active member and were based on the June 30, 2006 actuarial valuation.
A member becomes vested after 20 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 employer contributions are projected to liquidate the unfunded actuarial accrued liability within 30 years, based upon the actuarial valuation at June 30, 2008.

(f) SEAD-Active was created in 2007 by the Georgia General Assembly to amend Title 47 of the Official Code of Georgia Annotated, relating to retirement, so as to establish a fund for the provision of term life insurance to active members of ERS, LRS, GJRS, and SCJRF. Effective January 1, 2009, members of ERS under the GSEPS plan are not eligible for term life insurance. The SEAD-Active trust fund accumulates in the fund the premiums received from the aforementioned retirement systems, including interest earned on deposits and investments of such payments from active members.

Employee contribution rates of .05% and .02% of members' salaries for old plan members and new plan members, respectively, were appropriated for the fiscal year ending June 30, 2009. There were no employer contribution rates required for the fiscal year ended June 30, 2009. Old plan members were hired prior to July 1, 1982, and new plan members were hired on or after July 1, 1982, but prior to January 1, 2009.

According to the 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.

(continued)

54

2009 - Employees' Retirement System of Georgia

FINANCIAL SECTION
Notes to Financial Statements
(g) SEAD-OPEB was created in 2007 by the Georgia General Assembly to amend Title 47 of the Official Code of Georgia Annotated, relating to retirement, so as to establish a fund for the provision of term life insurance to retired and vested inactive members of ERS, LRS, GJRS, and SCJRF. The SEAD-OPEB trust fund accumulates in the fund the premiums received from the aforementioned retirement systems, including interest earned on deposits and investments of such payments from retired and vested inactive members.
Employee contribution rates of .45% and .23% of members' salaries for old plan members and new plan members, respectively, were appropriated for the fiscal year ending June 30, 2009. There were no employer contribution rates required for the fiscal year ended June 30, 2009. Old plan members were hired prior to July 1, 1982, and new plan members were hired on or after July 1, 1982.
According to the 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.
(h) SCJRF is a single-employer 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, 2009, SCJRF had 27 retirees and beneficiaries currently receiving benefits and no active members. No new members are allowed into SCJRF.
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.
(i) 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, 2009, DARF had 7 retirees and beneficiaries currently receiving benefits and no active members. No new members are allowed into DARF.

2009 - Employees' Retirement System of Georgia

(continued)
55

FINANCIAL SECTION
Notes to Financial Statements

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. Employer contributions are not actuarially determined, but are provided on an as needed basis to fund current benefits.

(j) 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, 2009, participation in GDCP is as follows:
Retirees and beneficiaries currently receiving benefits Terminated employees entitled to benefits but not yet receiving benefits Active plan members
Total
Employers

1 98,846 15,534
114,381
377

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 $5,000 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.

(k) The 401(k) Plan was established by the State of Georgia Employee Benefit Plan Council (the Council) in accordance with Georgia Law 1985, page 441, as amended, Official Code of Georgia, Sections 45-1850 through 45-18-58, and Section 401(k) of the Internal Revenue Code (IRC). On October 1, 1994, activity commenced when the 401(k) Plan became available to employees of the State of Georgia Community Service Boards (CSBs). On December 1, 1998, the 401(k) Plan became available to employees of the Georgia Lottery Corporation (the GLC).

Effective July 1, 1998, the State of Georgia Employee's Deferred Compensation Group Trust (Master Trust) was formed for the State of Georgia Deferred Compensation Program to serve as the funding medium for the 401(k) Plan. At that time, the 401(k) Plan began operating on an employee elective deferral basis for all state employees working at least 1,000 hours in a 12-month period. All assets of the 401(k) Plan are held in trust for the exclusive benefit of the participants and their beneficiaries.
(continued)

56

2009 - Employees' Retirement System of Georgia

FINANCIAL SECTION
Notes to Financial Statements

The assets of the 401(k) Plan and the State of Georgia Employees' Deferred Compensation 457 Plan are commingled in the Master Trust with the respective trusts owning units of the Master Trust. Participant contributions are invested according to the participant's investment election. If the participant does not make an election, investments are automatically defaulted to a Lifecycle fund based on the participant's date of birth.

Effective July 1, 2005 (HB275), ERS became the trustee of the 401(k) Plan. ING LLC and State Street Bank and Trust Company hold, administer, and invest the assets of the Master Trust.

Contributions and Vesting The 401(k) Plan requires participating CSBs and the GLC to annually contribute 7.5% of all eligible employees' base salary (limited to a maximum of $230,000 base salary for 2008). Through December 31, 2001, the 401(k) Plan allowed individual participants to defer up to the lesser of 15% of eligible gross compensation earned (increased to 100% of eligible compensation as of January 1, 2002) or up to limits prescribed by the IRC.

Effective January 1, 2009, in accordance with O.C.G.A. 47-2-350 through 47-2-360, newly hired state employees, as well as rehired state employees who did not maintain eligibility for the ERS "old" or "new" plan, are members of the Georgia State Employees' Pension and Savings Plan (GSEPS). The GSEPS plan includes automatic enrollment in the 401(k) plan at a contribution rate of 1% of salary, along with a matching contribution from the state. The state will match 100% of the employee's initial 1% contribution. Employees can elect to contribute up to an additional 4% and the state will match 50% of the additional 4% of salary. Therefore, the state will match 3% against the employee's 5% total savings. Contributions greater than 5% do not receive any matching funds. Employees who are not participants of the GLC, CSB, or GSEPS plans do not receive any employer contributions in their 401(k) plan.

The employer contributions for both the CSB/GLC plan and the GSEPS plan are subject to vesting schedules which determine eligibility to receive all or a portion of the employer contribution balance at the time of any distribution from the account after separation from service.

Employer contributions for the CSB/GLC vest according to the following schedule:

Less than 2 years 2 3 4 5 6 or more

--% 20 40 60 80 100

For CSB/GLC participants whose services terminated prior to January 1, 2002, the following vesting schedule applies:

Less than 3 years 3 4 5 6 7 or more

--% 20 40 60 80 100

2009 - Employees' Retirement System of Georgia

(continued)
57

FINANCIAL SECTION
Notes to Financial Statements

Employer contributions for the GSEPS plan vest according to the following schedule:

Less than 1 year 1 2 3 4 5 or more

--% 20 40 60 80 100

Employee contributions and earnings thereon are 100% vested at all times. The 401(k) Plan also allows participants to roll over amounts from other qualified plans to their respective account in the 401(k) Plan on approval by the 401(k) Plan Administrator. Such rollovers are 100% vested at the time of transfer.
Distributions The participant may receive the value of their vested accounts upon attaining age 59.5, qualifying financial hardship, or retirement or other termination of service (employer contribution balances are only eligible for distribution upon separation from service). Upon the death of a participant, his or her beneficiary shall be entitled to the vested value of his or her accounts. Distributions are made in installments or in a lump sum.

(l) The 457 Plan was established by the State Personnel Board in accordance with Georgia laws 1974, page 198 as amended, Official Code of Georgia, Sections 45-18-30 through 45-18-36, and Section 457 of the Internal Revenue Code (IRC). The 457 Plan is available to employees of the State of Georgia and county health departments and permits such employees to defer a portion of their annual salary until future years. Employee contributions and earnings thereon are 100% vested at all times.
Effective July 1, 1998, the State of Georgia Employee's Deferred Compensation Group Trust (Master Trust) was formed for the State of Georgia Deferred Compensation Program to serve as the funding medium for the 457 Plan. All assets of the 457 Plan are held in trust for the exclusive benefit of the participants and their beneficiaries. The assets of the 457 Plan and the State of Georgia Employees' Deferred Compensation 401(k) Plan are commingled in the Master Trust with the respective trusts owning units of the Master Trust. Participant contributions are invested according to the participant's investment election. If the participant does not make an election, investments are automatically defaulted to a Lifecycle fund based on the participant's date of birth.
Effective July 1, 2005 (HB275), ERS became the trustee of the 457 Plan. ING LLC and State Street Bank and Trust Company hold, administer, and invest the assets of the Master Trust.
Distributions The balance in the employee's account in the 457 Plan is not available to the employee until termination, retirement, death, or unforeseeable emergency as defined in the 457 Plan.

(continued)

58

2009 - Employees' Retirement System of Georgia

FINANCIAL SECTION
Notes to Financial Statements
(3) Significant Accounting Policies and System Asset Matters
(a) Basis of Accounting The System's basic 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 benefits and refund payments are recognized as deductions when due and payable.
(b) Reclassifications Certain amounts have been reclassified to conform to the current period presentation.
(c) 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. There are no investments in, loans to, or leases with parties related to the System.
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 financial statements.
(d) Capital Assets Capital assets, including software development costs, are stated at cost less accumulated depreciation. The capitalization thresholds are $100,000 for buildings and building improvements and $5,000 for equipment and vehicles. Depreciation on capital assets is computed using the straight line method over estimated useful lives of five to forty years. Depreciation expense is included in administrative expenses. Maintenance and repairs are charged to administrative expenses when incurred. When assets are retired or otherwise disposed of, the costs and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in the statements of changes in plan net assets in the period of disposal.
(e) Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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.

2009 - Employees' Retirement System of Georgia

(continued)
59

FINANCIAL SECTION
Notes to 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 the Board of Trustees. 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 $250,000 of insurance coverage per participant in the System. Temporary cash on hand not committed for a specific purpose is invested overnight.
Investments State statutes authorize the System 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 obligations unconditionally guaranteed by 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 $235,623,000 at June 30, 2009.
U.S. Treasury obligations.
Other short-term securities authorized, but not currently used, are: Commercial paper, with a maturity of 180 days or less. Commercial paper is an unsecured promissory note issued primarily by corporations for a specific amount and maturing on a specific day. The System considers for investment only commercial paper of the highest quality, rated P-l and/or A-l by national credit rating agencies.
Master notes, an overnight security administered by a custodian bank and an obligation of a corporation whose commercial paper is rated P-l and/or A-l by national credit rating agencies.
Investments in commercial paper or master notes are limited to no more than $500 million in any one name.
(b) Long-Term Fixed income investments are authorized in the following instruments: U.S. and foreign government obligations. The System held U.S. Treasuries of $3,054,227,900 at June 30, 2009.
Obligations unconditionally guaranteed by agencies of the U.S. Government. The System held agency bonds of $256,591,570 at June 30, 2009.
Corporate bonds with at least an "A" rating by a national rating agency. The System held corporate bonds of $1,901,645,120 at June 30, 2009.
Private placements are authorized under the same general restrictions applicable to corporate bonds.

(continued)

60

2009 - Employees' Retirement System of Georgia

FINANCIAL SECTION
Notes to Financial Statements

Mortgage investments are authorized to the extent that they are secured by first mortgages on improved real property located in the state of Georgia.

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 65% of the total invested assets on a historical cost basis may be placed in equities. 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 totaling $6,857,211,226 at June 30, 2009.

The State of Georgia Employee's Deferred Compensation Group Trust (Master Trust) invests in various mutual funds, common collective trust funds, and separate accounts, as selected by participants. Each participant is allowed to select and invest contributions into 3 mutual funds, 7 common collective trust funds, and 4 separate accounts, as authorized by the Board of Trustees. Mutual funds, common collective trust funds, and separate accounts are reported at the fair value of participant balances.

Substantially all of the investments of ERS, PSERS, LRS, SCJRF, GJRS, GMPF, and SEAD, and certain investments of GDCP are pooled into one common investment fund. Investments of approximately $39,101,000 at June 30, 2009 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 fair value of each plan's equity in the pooled common investment fund at June 30, 2009 were as follows (dollars in thousands):

Fair value

Units

Employees' Retirement System Public School Employees Retirement System Legislative Retirement System Georgia Judicial Retirement System State Employees' Assurance Department - Active State Employees' Assurance Department - OPEB Georgia Military Pension Fund Superior Court Judges Retirement Fund Georgia Defined Contribution Plan

$ 10,646,483 598,901 23,601 248,178 144,003 627,209 5,170 1,213 44,050
$ 12,338,808

5,091,161 286,395 11,286 118,679 68,862 299,932 2,472 580 21,065
5,900,432

2009 - Employees' Retirement System of Georgia

(continued)
61

FINANCIAL SECTION
Notes to Financial Statements

Credit Risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations to the Employees' Retirement System. State law limits investments to investment grade securities.
It is the System's investment policy to require that the bond portfolio be of high quality and chosen with respect to maturity ranges, coupon levels, refunding characteristics and marketability. The System's policy is to require that new purchases of bonds be restricted to high grade bonds rated no lower than "A" by any nationally recognized statistical rating organization. The quality ratings of investments in fixed income securities as described by Standard & Poor's and by Moody's Investors Service, which are nationally recognized statistical rating organizations, at June 30, 2009 and 2008, are shown in the following chart:

Quality Ratings of Fixed Income Investments Held at June 30, 2009 and 2008

Investment Type U.S. Treasuries U.S. Agencies Corporate Bonds
Total Corporate Bonds Total Fixed Income Investments

Standard & Poor's/ Moody's
Quality Rating

June 30,2009 Fair Value

$ 3,054,227,900

AAA/Aaa

256,591,570

AAA/Aaa AAA/Aa AA/Aa
AA/A A/A

214,022,600 239,143,500 1,208,611,810 132,642,580 107,224,630

1,901,645,120

$ 5,212,464,590

June 30, 2008 Fair Value
4,153,548,520
666,980,197
809,657,780 --
369,943,700 -- --
1,179,601,480
6,000,130,197

The investment policy requires that repurchase agreements be limited to the purchase of U.S. Treasury or Agency obligations or corporate bonds rated no lower than "A" by any nationally recognized statistical rating organization with a market value in excess of funds advanced. As of June 30, 2009, the System held repurchase agreements of $235,623,000.
Mutual funds, common collective trust funds, and separate accounts investments of the deferred compensation plans are not considered to have credit risk and do not require disclosure of credit risk rating.
Concentration of Credit Risk. Concentration of credit risk is the risk of loss that may be attributed to the magnitude of a government's investment in a single issue. On June 30, 2009, the System did not have debt or equity investments in any one organization, other than those issued or guaranteed by the U. S. Government or its agencies, which represented greater than 5% of plan net assets.

(continued)

62

2009 - Employees' Retirement System of Georgia

FINANCIAL SECTION
Notes to Financial Statements

Interest Rate Risk. Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. While the System has no formal interest rate risk policy, active management of the bond portfolio incorporates interest rate risk to generate improved returns. This risk is managed within the portfolio using the effective duration method. This method is widely used in the management of fixed income portfolios and quantifies to a much greater degree the sensitivity to interest rate changes when analyzing a bond portfolio with call options, prepayment provisions, and any other cash flows. Effective duration makes assumptions regarding the most likely timing and amounts of variable cash flows and is best utilized to gauge the effect of a change in interest rates on the fair value of a portfolio. It is believed that the reporting of effective duration found in the table below quantifies to the fullest extent possible the interest rate risk of the System's fixed income assets.

Effective Duration of Fixed Income Assets and Repurchase Agreements by Security Type

Fixed income and repurchase agreements security type
U.S. Treasuries U.S. Agencies Corporate Bonds Repurchase Agreements
Total

Market Value June 30, 2009
$ 3,054,227,900 256,591,570
1,901,645,120 235,623,000
$ 5,448,087,590

Percent of All Fixed Income Assets and Repurchase Agreements
56.1 % 4.7
34.9 4.3
100.0 %

*Total Effective Duration (Years) does not include Repurchase Agreements

Effective Duration (Years)
5.2 3.2 4.4 --
4.8*

Mutual funds, common collective trust funds, and separate investments of the deferred compensation plans are not considered to have interest rate risk and do not require disclosure of interest rate risk.

(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 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 $3,455,401,939 at fair value at June 30, 2009. The collateral value was equal to 105.8% of the loaned securities' value at June 30, 2009. The System's lending collateral was held in the System's name by the tri-party custodian.

2009 - Employees' Retirement System of Georgia

(continued)
63

FINANCIAL SECTION
Notes to Financial Statements

Loaned securities are included in the accompanying statements of net assets since the System maintains ownership. The related collateral securities are not recorded as assets on the System's 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. 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.

(6) Capital Assets The following is a summary of capital assets and depreciation information as of for the year ended June 30, 2009:

Capital Assets: Land Building Equipment Vehicles Computer Software

Balance at

Balance at

June 30, 2008 Additions Disposals June 30, 2009

$ 944,225 2,800,000 1,039,850 13,381
14,344,610
19,142,066

345,219
345,219

(21,090)
(21,090)

944,225 2,800,000 1,363,979
13,381 14,344,610
19,466,195

Accumulated depreciation for: Building Equipment Vehicles Computer software

(280,000) (579,770)
(2,722) (5,707,032)
(6,569,524)

Capital assets, net

$ 12,572,542

(70,000) (184,419)
(1,911) (2,868,921)
(3,125,251)
(2,780,032)

19,081

19,081
(2,009)

(350,000) (745,108)
(4,633) (8,575,953)
(9,675,694)
9,790,501

During fiscal year 2009, the System did not experience any capital asset impairment loss with respect to the provisions of GASB Statement No. 42, Accounting and Financial Reporting for Impairment of Capital Assets and for Insurance Recoveries.
(7) Commitments and Contingencies Employees' Retirement System of Georgia In January 2007, multiple retirees filed a civil action in Fulton County Superior Court against the Employees' Retirement System of Georgia (ERS) seeking additional benefits retroactive to the time of their retirement dates for a class of those retirees who elected survivorship options and who retired during the preceding twenty-year period. Plaintiffs alleged that ERS did not use updated mortality tables in the calculation of their benefits. These claims were identical to those brought against the Teachers Retirement System of Georgia (TRS) under class action, by the same attorneys, in 2004. On February 19, 2009 the Court of Appeals issued a final ruling against TRS in favor of the plaintiffs and also denied the parties' motions for reconsideration. Because of this final decision against TRS, ERS has conceded liability on the breach of contract claim.

(continued)

64

2009 - Employees' Retirement System of Georgia

FINANCIAL SECTION
Notes to Financial Statements

At June 30, 2009, management estimates a liability of approximately $43 million based on the final judgment and estimated final payments. This amount is recorded in accounts payable and other liabilities in the accompanying statement of plan net assets. Although the ultimate liability may vary from the amount recorded, management believes that it will not have a material impact on the financial statements of the System.
The System is subject to legal actions in the ordinary course of its business. In the opinion of management, the System has adequate legal defenses with respect to such actions and their final outcome will not have a material adverse effect upon the financial status of the System.
Public School Employees Retirement System On August 7, 2008, multiple retirees filed a civil action in Fulton County Superior Court against Public School Employees Retirement PSERS seeking additional benefits retroactive to the time of their retirement dates for a class of those retirees who elected survivorship options and who retired during the preceding twenty-year period. The case asserts the same claims as were asserted against the TRS and ERS above. Because of the final decision against TRS, PSERS has conceded liability on the breach of contract claim.
At June 30, 2009 management estimates a liability of $856,000 related to retroactive benefits and related attorneys' fees. These amounts are recorded in accounts payable and other liabilities in the accompanying statement of plan net assets. Although the ultimate liability may vary from the amount recorded, management believes that it will not have a material impact on the financial statements of the System.

(8) Funded Status and Funding Progress The funded status of each plan as of June 30, 2008, the most recent actuarial valuation date, is as follows (dollar amounts in thousands):

ERS PSERS LRS GJRS GMPF

Actuarial value of plan
assets (a)

Actuarial accrued liability (AAL) entry age
(b)

Unfunded AAL/(funding
excess) (b-a)

$ 14,017,346 791,855 30,706 313,315 5,269

15,680,857 770,950 24,454 268,516 19,124

1,663,511 (20,905) (6,252) (44,799) 13,855

Funding ratio (a/b)
89.4 %
102.7 125.6 116.7
27.6

Annual covered payroll
(c)

Unfunded AAL/(funding
excess) as percentage of covered payroll
[(b-a)/c]

$ 2,809,199 N/A
3,778 51,102
N/A

59.2 %
N/A (165.5)
(87.7) N/A

No statistics regarding covered payroll are available. Contributions are not based upon members' salaries, but are simply $4.00 per member per month for nine months each fiscal year.
No statistics regarding covered payroll are available. Active and inactive plan member information is maintained by the Georgia
Department of Defense.
The schedules of funding progress, presented as required supplementary information (RSI) following the notes to the financial statements, present multiyear trend information about whether the actuarial values of plans assets are increasing or decreasing over time relative to the AALs for benefits.

2009 - Employees' Retirement System of Georgia

(continued)
65

FINANCIAL SECTION
Notes to Financial Statements

Additional information as of the latest actuarial valuation follows:

Valuation date Actuarial cost method Amortization method
Remaining amortization period Asset valuation method
Actuarial assumptions Investment rate of return Projected salary increases
Postretirement cost-of-living adjustment

ERS
June 30, 2008 Entry Age Level percent of pay, open 26 years 7-year smoothed market

PSERS
June 30, 2008 Entry Age Level dollar, open 10 years 7-year smoothed market

LRS
June 30, 2008 Entry Age Level dollar, open N/A 7-year smoothed market

7.50% 5.45-9.25% None

7.50% N/A 3.00% annually

7.50% N/A 3.00% annually

Valuation date Actuarial cost method Amortization method
Remaining amortization period Asset valuation method
Actuarial assumptions Investment rate of return Projected salary increases
Postretirement cost-of-living adjustment

GJRS June 30, 2008 Entry Age Level percent of pay, open
14 years 7-year smoothed market

GMPF June 30, 2008 Entry Age Level dollar, open
30 years 7-year smoothed market

7.50% 6.00% None

7.50% N/A None

Includes inflation rate of 3.75% in 2007 and 3.75% in 2008.

66

2009 - Employees' Retirement System of Georgia

2009 - Employees' Retirement System of Georgia

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia) (A Component Unit of the State of Georgia)
REQUIRED SUPPLEMENTARY SCHEDULES (Unaudited) SCHEDULES OF FUNDING PROGRESS (In thousands)

FINANCIAL SECTION
Required Supplementary Schedules (UNAUDITED)

Employees' Retirement System

Actuarial valuation
date
6/30/2003 6/30/2004 6/30/2005 6/30/2006 6/30/2007 6/30/2008

Actuarial value of plan assets
(a)
$ 12,428,736 12,797,389 13,134,472 13,461,132 13,843,689 14,017,346

Actuarial accrued liablility (AAL) entry age (b)
12,370,563 13,106,648 13,512,773 14,242,845 14,885,179 15,680,857

Unfunded AAL/(funding
excess) (b-a)
(58,173) 309,259 378,301 781,713 1,041,490 1,663,551

Funding ratio (a/b)
100.5 % 97.6 97.2 94.5 93.0 89.4

Annual covered payroll
(c)
2,489,490 2,445,619 2,514,430 2,630,167 2,680,972 2,809,199

Unfunded AAL/ (funding excess) as percentage of covered payroll
[(b-a)/c]
(2.3) % 12.6 15.0 29.7 38.8 59.2

Public School Employees Retirement System

6/30/2003 6/30/2004 6/30/2005 6/30/2006 6/30/2007 6/30/2008

734,879 743,815 753,767 766,277 785,460 791,855

664,207 666,883 671,040 691,651 746,078 770,950

(70,672) (76,932) (82,727) (74,626) (39,382) (20,905)

110.6 111.5 112.3 110.8 105.3 102.7

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Legislative Retirement System

6/30/2003 6/30/2004 6/30/2005 6/30/2006 6/30/2007 6/30/2008

27,157 27,892 28,462 29,172 30,049 30,706

21,898 22,023 23,531 23,407 24,357 24,454

(5,259) (5,869) (4,931) (5,765) (5,692) (6,252)

124.0 126.6 121.0 124.6 123.4 125.6

3,434 3,402 3,586 3,602 3,688 3,778

(153.1) (172.5) (137.5) (160.0) (154.3) (165.5)

Georgia Judicial Retirement System

6/30/2003 6/30/2004 6/30/2005 6/30/2006 6/30/2007 6/30/2008

237,683 250,313 264,924 279,564 297,090 313,315

185,825 196,502 213,060 229,837 249,278 268,516

(51,858) (53,811) (51,864) (49,727) (47,812) (44,799)

127.9 127.4 124.3 121.6 119.2 116.7

38,867 40,908 42,916 45,308 48,621 51,102

(133.4) (131.5) (120.9) (109.8)
(98.3) (87.7)

Georgia Military Pension Fund

6/30/2003 6/30/2004 6/30/2005 6/30/2006 6/30/2007 6/30/2008

609 1,250 2,176 3,100 4,165 5,269

11,098 12,343 14,454 17,625 19,887 19,124

10,489

5.5

11,093

10.1

12,278

15.1

14,525

17.6

15,722

20.9

13,855

27.6

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

This data, except for annual covered payroll, was provided by the System's actuary. No statistics regarding covered payroll are available. Contributions are not based upon members' salaries, but are simply $4.00 per member per month for nine months each fiscal year. No statistics regarding covered payroll are available. Active and inactive plan member information is maintained by the Georgia Department of Defense.
See accompanying notes to required supplementary schedules and accompanying independent auditors' report.

67

FINANCIAL SECTION
Required Supplementary Schedules (UNAUDITED)

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia) (A Component Unit of the State of Georgia)

REQUIRED SUPPLEMENTARY SCHEDULES (unaudited) SCHEDULES OF EMPLOYER CONTRIBUTIONS (In thousands)

Employees' Retirement System

Year ended June 30
2003 2004 2005 2006 2007 2008

State annual required
contribution

$

246,172

245,388

243,074

258,482

270,141

286,256

Public School Employees Retirement System

2003 2004 2005 2006 2007 2008

4,121 833 833
3,634 6,484 2,866

Legislative Retirement System Georgia Judicial Retirement System Georgia Military Pension Fund

2003 2004 2005 2006 2007 2008
2003 2004 2005 2006 2007 2008
2003 2004 2005 2006 2007 2008


1,558 1,594 1,683 1,778 2,395
591 617 891 891 1,005 1,103

Percentage contributed
100 % 100 100 100 100 100
86 100 100 100 100 100
N/A N/A N/A N/A N/A N/A
N/A 100 100 100 100 100
100 100 100 100 100 100

This data was provided by the System's actuary. See accompanying notes to required supplementary schedules and accompanying independent auditors' report.

68

2009 - Employees' Retirement System of Georgia

FINANCIAL SECTION
Notes to Required Supplementary Schedules

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia) (A Component Unit of the State of Georgia)
NOTES TO REQUIRED SUPPLEMENTARY SCHEDULES June 30, 2009

(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 1/7th 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 twoyear 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 return Projected salary increases Post-retirement cost-of-living adjustment

June 30, 2008 Entry age Level percent of pay, open

June 30, 2007 Entry age Level percent of pay, open

26 years 7-year smoothed market

15 years 7-year smoothed market

7.50% 5.45-9.25% None

7.50% 5.45-9.25% 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 return Projected salary increases Post-retirement cost-of-living adjustment

June 30, 2008 Entry age Level dollar, open
10 years 7-year smoothed market
7.50% N/A 3% annually

June 30, 2007 Entry age Level dollar, open
15 years 7-year smoothed market
7.50% N/A 3% annually

Includes inflation rate of 3.75% in 2007 and 3.75% in 2008.

2009 - Employees' Retirement System of Georgia

(continued)
69

FINANCIAL SECTION
Notes to Required Supplementary Schedules

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia) (A Component Unit of the State of Georgia)
NOTES TO REQUIRED SUPPLEMENTARY SCHEDULES June 30, 2009

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 return Projected salary increases Post-retirement cost-of-living adjustment

June 30, 2008 Entry age Level dollar, open
N/A 7-year smoothed market
7.50% N/A 3% annually

June 30, 2007 Entry age Level dollar, open
N/A 7-year smoothed market
7.50% 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 return Projected salary increases Post-retirement cost-of-living adjustment

June 30, 2008 Entry age Level percent of pay, open

June 30, 2007 Entry age Level percent of pay, open

14 years 7-year smoothed market

16 years 7-year smoothed market

7.50% 6.00% None

7.50% 6.00% None

Georgia Military Pension Fund: Valuation date Actuarial cost method Amortization method Remaining amortization period of the Funding Excess Asset valuation method Actuarial assumptions: Investment rate of return Projected salary increases Post-retirement cost-of-living adjustment

June 30, 2008 Entry age Level dollar, open
30 years 7-year smoothed market
7.50% N/A None

June 30, 2007 Entry age Level dollar, open
30 years 7-year smoothed market
7.50% N/A None

Includes inflation rate of 3.75% in 2007 and 3.75% in 2008.

70

2009 - Employees' Retirement System of Georgia

FINANCIAL SECTION
Additional Information

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia) (A Component Unit of the State of Georgia)
ADMINISTRATIVE EXPENSES SCHEDULE CONTRIBUTIONS AND EXPENSES Year Ended June 30, 2009 (With comparative totals for the Year Ended June 30, 2008) (In thousands)

Contributions: Employees' Retirement System Public School Employees Retirement System Legislative Retirement System Georgia Judicial Retirement System State Employees' Assurance Department - Active State Employees' Assurance Department - OPEB Georgia Defined Contribution Plan 401(k) Plan 457 Plan Superior Court Judges Retirement Fund District Attorneys 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

2009

$

16,809

588

110

175

22

203

310

1,028

1,769

24

6

21,044

4,887 511 354 621 33
6,406
167 47 86 15
315
4,802 1,565 2,538
482 153 115 131
9,786

2009 - Employees' Retirement System of Georgia

2008
18,805 588 110 175 22 203 310
1,472 1,169
30 --
22,884
4,272 430 304 961 50
6,017
258 78 62 26
424
4,491 3,807 2,317
646 257 155
59
11,732
(continued)
71

FINANCIAL SECTION
Additional Information

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA (Including All Plans and Funds Administered by the Employees' Retirement System of Georgia) (A Component Unit of the State of Georgia)
ADMINISTRATIVE EXPENSES SCHEDULE CONTRIBUTIONS AND EXPENSES Year Ended June 30, 2009 (With comparative totals for the Year Ended June 30, 2008) (In thousands)

Management fees: Building maintenance
Other services and charges: Temporary services Supplies and materials Repairs and maintenance Courier services Depreciation Miscellaneous Office equipment
Total expenses
Net income

2009

$

636

521 147
41 14 3,125 49
4

3,901

21,044

$



See accompanying independent auditors' report.

2008
636
733 125
48 14 3,094 53
8
4,075 22,884


72

2009 - Employees' Retirement System of Georgia

www.ers.ga.gov

Two Northside 75, Suite 300 Atlanta, GA 30318-7701
(404) 350-6300 (800) 805-4609 (404) 350-6304 fax